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Time for heads to roll

December 01, 1998

The latest foul-up with Maryland's pension system ought to give the legislature a clue: It's time to fire somebody. Lawmakers are blaming the mistake, which could cost the state $80 million a year, on the state's actuarial consultant. But somebody on the state payroll should have double-checked the consultant's work. It's time to dismiss whoever was asleep at the switch, because the state will be paying for this blunder well into the next century.

According to an Associated Press report, there are two problems. The first is that the retirement system's managers have been using outdated mortality tables, which list average life expectancies for retirees.

Because of advances in medical care and nutrition, life expectancy is increasing. If retirees live longer than the retirement system expects them to, the state must find more money to cover the cost of their pensions. That mistake will cost up to $59 million a year.

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The second error was underestimating the cost of paying retirees for unused sick leave and for crediting their military service toward retirement. Estimated cost: $21 million a year.

The problems came to light last week, angering lawmakers like state Sen. Robert Neall, R-Anne Arundel, who backed last session's plan to add $140 million in new annual benefits to a system rated as one of the stingiest in the U.S. Neall went so far as to suggest that the bad news was withheld deliberately, until after pension improvements were passed.

That's a serious charge, but even if this is a colossal mistake, somebody should have prevented it, given that the General Assembly was making a decision that will add $3 billion in retirement systems costs in the next 25 years.

Our suggestion: Start with Fred Puddester, state budget secretary and a member of the pension system board. He's already confessed to being "personally and professionally embarrassed" over the matter. He ought to be asked whether someone he trusted fouled up, or lied to him outright. Lawmakers ought to take a hint from their deer-hunting constituents, and go hunting for a hide they can nail to the barn door.

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