A recommendation by Gov. Martin O’Malley to shift the cost of teacher pensions from the state to county government would cost Harford County an estimated $9.8 million in the next fiscal year, an amount equal to the salaries of 171 teachers or 169 police officers, according to County Executive David Craig.
Craig told the Harford County Delegation in a Feb. 15 letter that the move could result in the elimination of non-educational services in the county budget, employee layoffs, and/or tax increases to meet the new mandate.
Speaking at a press conference held to urge the Maryland General Assembly to oppose the pension shift, Craig said of the Governor’s budget proposal, “Claiming that you are balancing a budget by shifting a cost is disingenuous at best.” He called the teacher pensions “unsustainable” and said that local governments do not determine education salaries, benefits or the size of staff, nor do the counties control the investment of the teacher pension fund, “Stating that county governments have helped cause the problem is totally inaccurate and incorrect.” In fighting the shift, Craig said there should be “no compromise.”
Craig was joined in opposition to the shift by county and school officials including Harford Schools Superintendent Robert M. Tomback, School Board President Leonard Wheeler and Sheriff Jesse Bane.
Claiming that state decisions helped drive teacher pension costs, Tomback said that the schools “stand shoulder to shoulder with the county executive.” School Board President Leonard Wheeler said of the Governor’s budget proposal, “it is one that I reject because it will send us backwards,” adding that it would have a “chilling effect on the survival of our nation and the world…An educated society is going to solve the problems we created.”
Harford County Sherriff Jesse Bane said that the economic downturn had already taken a toll on his budget and, “while I’m being creative, I am struggling to hold the line on crime.” Combined with increases in calls for service, concerns about traffic fatalities and no increases in staff, he said future funding cuts would be “devastating”, adding “I have nothing left to cut but personnel.”
Speaking after the press conference, Craig said that he would not include the cost of the pension shift in his proposed budget for the fiscal year 2013. Craig’s proposed budget is due to the Harford County Council before April 1, which comes prior to the conclusion of the 2012 Maryland General Assembly.
Craig said that if the state budget that is passed during the legislative session includes the pension shift, changes to the Harford County budget for fiscal year 2013 would have to come from later amendments. Craig said he would not use Harford County’s fund balance, a portion of which was used to pay one-time bonuses to all county employees, to pay for the pension shift next year, because the county fund balance was one-time-only money.
Below is the text of a news release from the Office of the County Executive following the press conference held earlier today:
(Bel Air, MD) – – Harford County Executive David R. Craig, joined by the Superintendent of Schools, members of the Board of Education, the Sheriff of Harford County, the director of the Public Library System, fire service leaders, public employee union representatives, and leaders of non-profit organizations, today urged the Maryland General Assembly not to adopt the recommendation of Governor Martin O’Malley to shift the cost of teacher pensions from the State to county governments. The potential first year cost to Harford County would be approximately $9.8 million, which would have dire consequences for the county budget and for every entity that depends upon county funds.
“The Governor frequently reminds us that there are three cost drivers affecting teacher pensions: pension benefits, salary increases, and investment returns. None of these things, however, are controlled by county governments,” County Executive Craig stated. “Rather than forcing counties to share in the funding of a system that is broken and by the state’s own admission unsustainable, the Governor and the General Assembly should address the long-term sustainability of the pension system before asking others to fund it,” the County Executive remarked.
To demonstrate the dramatic difference in cost of such pension matters, County Executive Craig advised Harford County currently pays $7,605,312 for pensions of its civilian personnel. If the legislature decides to shift the cost of teacher pensions to the counties, the new obligation would more than double the amount Harford County spends on pensions.
“The State budget problems were caused by the State, not by the counties. Failure to the State to properly address their fiscal problems instead of passing the buck to the counties is unconscionable,” County Executive Craig stated.
Harford County is joined by counties throughout Maryland, as well as the Maryland Association of Counties (MACo) and the state’s numerous public employee and teachers unions in opposing the governor’s proposal to shift the cost of teacher pensions from the State to the counties. If approved by the Maryland General Assembly, the abrupt shift of teacher pensions would end an 80 year practice and would have dire fiscal consequences to the counties.
In a February 15, 2012 letter to Harford County’s Delegation to the Maryland General Assembly, County Executive Craig urged the delegates and senators to oppose the governor’s proposal. County Executive Craig advised that should the State pass along the cost of teacher pensions to the counties, the immediate impact to Harford County could result in the elimination of non-educational services in the county budget, layoffs of personnel, and/or an increase in taxes to meet the challenge of this new mandate.
Below is the text of talking points made at the press conference today by Harford Schools Superintendent Robert Tomback:
–The Governor’s Budget Reconciliation and Financing Act (BRFA) of 2012 includes a proposal to shift to the counties a significant share of the cost of the state teacher pensions. Senate Bill 152/House Bill 87 shifts a substantial share of teacher pension costs to Harford County.
–Overall the Governor’s proposal would shift approximately $240 million in teacher retirement costs from the State to local governments. The financial impact on local governments, and their capacity and willingness to invest in local school systems in the future, will be enormous.
–It is important to remember that this is the state’s retirement system, so while it is true that the salaries approved locally directly impact the state’s obligation to pay individual retirees their state pensions, it is also true that the General Assembly sets the employee contribution rates, and the multiplier that is used to determine the calculation of all pensions. In addition, the State Retirement Agency makes the investment decisions and administers the program. In other words, it is not only local decisions that drive state retirement costs.
–Also the state’s labor relations law dictates that Boards of Education negotiate contracts with employee unions through a state-dictated collective bargaining process, and must do so in good faith based on available state and local funding. Local boards negotiate salaries and health benefits in the context, but not retirement benefits, which are determined by state law.
–This is also happening at a time when the school system is gearing up to implement additional federal standards under Race to the Top, which is costly to the school system. Furthermore, the General Assembly and the Maryland State Department of Education have not relaxed additional mandates for local school systems.
–HCPS is entirely fiscally dependent on state, local, and federal funding. Funding from these sources has declined in recent fiscal years. If the proposal to shift costs to the counties is worked through the legislative process, it could cost Harford County as much as and estimated $14,712,757 million during a possible four or five year implementation process according to the Department of Legislative Services.