Board of Education Opposes Shifting of State Pension Costs to Local Government

February 14, 2012
Montgomery County Board of Education President Shirley Brandman, on behalf of the Board of Education, released the following statement regarding Governor Martin O’Malley’s proposal to shift pension costs to local governments:

The Montgomery County Board of Education strongly opposes any effort to shift state pension costs to local governments. In real fiscal terms, this shift would have a devastating impact on counties and school districts that are already facing significant fiscal challenges. Montgomery County Public Schools (MCPS) has already reduced its budget by more than $400 million since Fiscal Year (FY) 2009, requiring an increase in class sizes; the elimination of 1,300 positions—mostly teachers and school support staff— and a more than 20 percent reduction in central services. It has required our employees to give up their cost of living raises for the past three years and longevity increases for the past two years.  All of these reductions have occurred as MCPS has seen dramatic growth in its student enrollment, now at an all-time high of 146,500 students.
The Board believes that teacher retirement should remain as a state-funded categorical program and that funding the pension system should not be the responsibility of local governments. The General Assembly determines how much employees contribute and how much retirees will receive. The State Retirement Agency invests pension funds and administers the program. Local officials have had very little input into how the fund is managed or operated. Indeed, actions that led to  underfunding of the pension—including the 2006 enhancement of benefits and the so-called “corridor funding,” which allows underfunding by up to 10 percent—were the result of state-level decisions.

Shifting the burden from state to local government will not improve the long-term health of the pension fund,
which should be the primary interest. However, it will have an immediate negative impact on the important services that our local governments provide. We are ready and willing to work with our colleagues in the state legislature to fix our state pension system. But the solution to this problem cannot be to simply pass the buck to our county citizens and students. The County Council, the County Executive and the Board are joined by our parents, students and staff in expressing our deep concern over this proposal. We urge the General Assembly to work with us to find other, more sustainable solutions to this issue.

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