Board Approves Pension Improvements

May 9, 2006
Action Would Allow New Employees to Retire after
30 Years of Service with About 60 Percent of Their Salary

County Council Asked to Fund $13.2 Million Pension Plan Improvements

The Montgomery County Board of Education approved pension changes proposed by Superintendent Jerry D. Weast for Montgomery County Public Schools (MCPS) employees that will boost their retirement earnings to as much as 60 percent of the final salary upon retirement.

“We have been asking more and more of all our staff as we strive to continuously improve academic, social, and emotional outcomes for children. The results they have achieved are substantive and truly impressive,” said Board Vice President Sharon Cox. “A competitive benefit package is critical to our ability to recruit and retain the best and continue to make progress.”

The Board voted 7 to 0 to approve the pension plan changes. Board President Charles Haughey recused himself from the discussion and vote on the issue because his wife is an MCPS principal.

“At a time when half of all teachers across the nation quit in the first five years of teaching, we need to create a better pension system to increase employee retention and reward our hard-working employees,” said Dr. Weast. “I believe we have the best education workforce in America, and it is imperative that we reward them and take care of them with a pension system that provides more retirement security.”

MCPS is the only school system in the state that offers its employees a supplemental pension in addition to the state pension. The Board’s changes will increase the new state multiplier of 1.8 percent to 2 percent. The multiplier is used to calculate an employee’s retirement benefit based on a worker’s final salary.

The Board’s action also improves the pension benefits for those MCPS workers who are not eligible to participate in the state retirement system. Currently, MCPS provides the same benefits as the state for about 4,800 supporting services employees. Under Dr. Weast’s plan approved by the Board today, the county pension for these workers will match the new state plan.

The new state pension plan raises the multiplier from 1.4 percent to 1.8 percent and increases the employee contribution to the plan from 2 percent to 5 percent over the next three years.

The pension improvements received strong support from the three MCPS employee associations—the Montgomery County Education Association (MCEA), SEIU Local 500, and the Montgomery County Association of Administrative and Supervisory Personnel (MCAASP).

“Our students deserve excellent teachers who are focused on student achievement and committed to the profession,” said Bonnie Cullison, president of MCEA. “The Board’s passage of the improved supplement provides an incentive for the best educators to come here to stay with us through an entire career. We thank the superintendent and the Board for this bold move.”

“I applaud the Montgomery County Board of Education in continuing its long-standing practice of providing its employees who are not eligible to participate in the state pension system with the same core benefit the state provides to teachers,” said Merle Cuttitta, president of SEIU Local 500. “Our supporting services employees deserve the same level of retirement benefits so that they and their families can secure a future that allows them to live with dignity after many years of service to the school system, the community, and students.”

MCAASP President Rebecca Newman thanked the Board for its support of state pension reform and for its action to improve the local pension program. Newman said the Board’s actions sends a strong message to employees that the Board “understands the financial challenges of living in Montgomery County, is willing to aggressively compete for the most qualified employees, is committed to retaining employees, and is actively investing in its employees as the best way to insure success of students.”

The cost of the pension changes total $13.2 million in Fiscal Year 2007. The Board’s action today is now forwarded as a budget amendment to the County Council, which is considering the Board’s $1.8 FY 2007 Operating Budget. The cost to the county decreases to $8 million in FY 2009 and remains there.

The employee contribution to the state and local pension plans rises from 3.3 percent in FY 2007 to 5.5 percent in FY 2009.

The plan to improve employee pensions received early support from Montgomery County Councilmembers Steven Silverman and Michael Subin. They have asked their Council colleagues to support the pension improvements for MCPS employees in an April 25, 2006, letter to their colleagues.

“MCPS competes for teachers and other staff directly with Fairfax County and other major metropolitan areas beyond the state of Maryland. Providing a competitive retirement income to our teachers and other staff permits MCPS to compete, attract, and retain outstanding talent,” Councilmembers Subin and Silverman wrote in the letter.

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