Battle over Teacher Pensions Looming

As the General Assembly session drags on and the Maryland Budget Crisis gets more and more acute, the General Assembly is looking to get cute on some of its accounting. In the Gazette today, a story about teacher pensions shows demonstrates the biggest problem with our current budgeting and spending priorities:

With the end of this year’s legislative session in sight, a group of budget negotiators is preparing for what could be a contentious battle over whether to begin shifting teacher pension costs to the counties.

“It is the most controversial issue” in the fiscal 2011 budget, said Sen. David R. Brinkley (R-Dist. 4) of New Market, who has been on conference committees in previous legislative sessions. “The House has its stand, the Senate has its stand, and the conference committee has to hammer it out.”

On Thursday, the House debated the state budget. Delegates are scheduled to vote today on the budget but have said they would not support plans to shift pension costs to the counties.

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Once the delegates approve their version of the budget, they will send it to the Senate for reconciliation.

If the Senate disagrees with the House’s version of the budget, a 10-member conference committee will be set up to reach agreement on the spending plan. The conference committee is scheduled to begin its work at 2 p.m. Monday, Brinkley said.

While the assumption is legislators will disagree on the fiscal 2011 spending plan, which legislators were selected for the committee has not been announced.

The House is taking the “ostrich approach,” Brinkley said, by “sticking their head in the stand and not dealing with [pensions].”

The counties negotiate pensions with teacher unions, but the state foots the bill. Some say there is no incentive for the counties to rein in costs. Meanwhile, the counties argue that they cannot afford to assume pension costs and that the state is in the better position to fund them.

On March 24, the Senate approved a $13.2 billion budget that includes the measure to begin shifting some of the costs of pensions for teachers to the counties in fiscal 2012. The action surprised some legislators, education and government officials who assumed the cost shift proposal would not be discussed until next year.

Odd that among all the discussions of shifting pensions costs around, not one Delegate or Senator has questioned whether or not we should be funding such exorbitant pensions to begin with.

I find it humorous first that sometime in the past the state agreed to fund county teacher pensions, but they did (surely at a time when the state was flush with money). Now that the pension liabilities are getting so big, the state wants to shed itself of the responsibility. So now that the counties negotiated a big pension obligation and then shifted to the funding responsibility to the state, now they don’t want to take responsibility for it.

If the General Assembly had any huevoes to stand up to the teachers union (and all government unions) and say, we aren’t going fund defined benefit pensions any more for workers going forward. Teachers and other state employees should be just like private sector employees and have 401k plans or something similar. Defined contribution plans are much smarter, much more cost effective and puts control of the money where it should be, in the individual worker’s hands.

Of course, that ain’t gonna happen, so the state, in order to balance the budget will start foisting pension liabilities to the counties–which will help no one at all.

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