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Fix teacher pension plans in a fiscally sound manner

November 17, 2005

The Washington County Board of Education this week endorsed the idea of improving the state's teacher pension plan. That makes it nearly unanimous, since most state leaders, Republican and Democratic, agree that Maryland has one of the worst plans in the nation.

But general agreement on this issue won't make it a winner in Annapolis, since there will be plenty of people clamoring for a piece of the state's surplus in an election year.

The tendency will be to try to please everyone with some of that surplus fund, but a comprehensive pension bill may be tough to get through.

Why? Legislative leaders have already agreed to make the coming session as free of contention as possible. And state officials recently heard that future pension obligations are much higher than estimated before any reform.

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In September, Stateline.org reported that all states have combined pension obligations of more than $290 million, making them "ticking time bombs" for local and state budgets.

To cope, Stateline.org's Kathleen Hunter said some states that have Republican governors, as Maryland does, have proposed 401(k)-type plans to replace traditional pension benefit plans.

But in the same article, Richard Ferlauto, director of pension and budget policy at the American Federation of State, County and Municipal Employees, said "a well-managed defined-benefit plan with regular contributions into the system is actually cheaper for taxpayers ..."

The Maryland State Teachers Association would like to change Maryland's traditional pension plan so that instead of getting 38 percent of an educator's highest average annual salary, retirees would receive 60 percent.

Though that's a more than 20 percent increase, MSTA notes that Pennsylvania's retired teachers received 74 percent pensions, although they contribute more than Maryland teachers do.

Local school system officials say the disparity leads teachers to begin their careers here, then move to Pennsylvania, taking the training local taxpayers have paid for with them.

We endorse pension reform, but based on past experience, it must be done so that promises aren't made without building in a way for them to be kept. Pretending that this system can be fixed painlessly would be an insult to teachers and taxpayers.

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