Tuesday, March 30, 2010

Pension Surprise Wrong for Montgomery County

By Patricia B. O’Neill, President, Montgomery County Board of Education.

Last week, in a surprising move, the Maryland Senate voted to transfer hundreds of millions in teacher pension costs from the state to local governments out of concern that the expenditure is unsustainable. As president of the Montgomery County Board of Education, I must say that this was a total surprise to us, especially given that the move was championed by one of our own legislators, Senator Rich Madaleno. It is comforting for now that the proposal appears to have stalled, with the House Appropriations Committee recommending a study of the implications of the cost shift. It is the right and respectful thing to do, and Delegate Norman Conway, chair of the committee, is right; a seismic shift of this magnitude should only be undertaken after a comprehensive study involving all stakeholders. At the very least, those who are going to be affected adversely by this shift should have been aware of this instead of reading about it in the papers and blogs.

This is nothing personal against Senator Madaleno. Here in Montgomery County, we love and respect Senator Madaleno. He is usually a trusted ally who fearlessly goes to bat for Montgomery County using his intellect, charm, and boundless energy. It was, therefore, a stunning shocker when we on the Montgomery County Board of Education learned, without any prior warning, that he had introduced legislation that would shift in yearly installments the obligation for teacher pensions to local jurisdictions. We wish he had spoken to us before hand. If this legislation passes, it will be hard to find in the history of Montgomery County a more devastating fiscal blow delivered by one of our very own. There is no one that I have spoken to that understands why Senator Madaleno chose to lead this fight that could in essence jeopardize the retirement income of the teachers and staff of Montgomery County Public Schools.

Senator Madaleno has tried to explain why he decided to sponsor a plan to shift these funds from the state to the local jurisdictions. It is very simple, he says, the system in its current form is unsustainable. If this is correct, then, it is puzzling how merely shifting the burden to counties solves the problems. The only explanation would be that the proposed legislation is a Trojan horse carefully designed to force a conclusion to Madaleno’s thesis – that the pension plan for our hard working teachers and staff is unaffordable and unsustainable. Let’s be clear — the cost to Montgomery County of the Madaleno-inspired shifts would be staggering, and in this climate quite simply unaffordable. Senate staffers have calculated that it would cost us $13 million in FY 2012, $41 million in FY 2013, $69 million in FY 2014, and $70 million in FY 2015. Let’s also be clear — if this bill passes, the options are limited and unpalatable. These are funds that would be competing with other needs. If taxes are not raised, our staff would be forced to absorb the expenses through reduced pensions or vastly increased employee contributions to the pension fund. These cuts, if passed on to Montgomery County Public Schools (MCPS), would be devastating. The effect would be to decimate our instructional program as we know it today. These cuts could represent losses of hundreds of teachers; as many as 140 in FY 2012, 440 in FY 2013, 740 in FY 2014, and 751 in FY 2015. The county is already reeling from the effects of a global recession, and the Board of Education has been working closely with the County Executive, County Council, and our unions to brave a very tough fiscal climate, beginning with this year when our unions agreed to forgo $79 million in raises in order to close the fiscal gap.

For next year, the school system has had to accept an unprecedented $137.7 million in additional cuts. As we struggle with these cuts, we are doing everything in our power to avoid cutting those investments that have made a difference in the lives of our youngsters. I have been on the Board of Education for more than ten years and I have not seen anything quite like this. In all of this financial tsunami, I have been impressed with the cool-headed approach of the leadership of all our unions representing our teachers, support staff, and administrators. They have shown a great willingness to work with us through these issues. The timing of this legislation couldn’t have been more inappropriate. I call upon Senator Madaleno and all our representatives in the name of all that is fair and decent to fight this pension shift. It could have devastating consequences to our teachers and staff. Beyond the fiscal cost, the loss in morale for staff that is faced with forgoing any salary increases again next year is incalculable. We have always prided ourselves on ensuring that the best and committed are retained in our classrooms. This we do by compensating them fairly and ensuring that their wages and classroom preparedness are on par if not superior to neighboring jurisdictions. This proposal is a giant step backwards in that regard. Our teachers and staff deserve better than this.

Finally, I believe that any attempt to compromise what our teachers and staff have earned in terms of their retirement is, quite simply, morally wrong. The pension plans for MCPS employees have been unfairly compared to those of employees in the private sector. When most employees in the private sector were investing their defined contributions in the financial markets, our employees were earning the same in the form of defined benefits that they would need in their retirement years. Our employees did not have the flexibility of investing these funds themselves and presumably making a substantial profit. By working in our classrooms, they chose a conservative option of earning their benefits over the years. What Senator Madaleno’s proposal does ironically is to put at great risk the earned fruits of the hard labor of the incredibly dedicated men and women that toil daily to secure the future of our children. That is just not right. The economic challenges that we face today are not for a single individual to bear alone. As elected officials, we are a team sworn to protect the interests and the future of our citizens. A key part of that problem solving is communication and dialogue. What just happened is a sobering commentary on how we conduct business – in silos, with little connections to each other. As President of the Montgomery County Board of Education, I pledge on behalf of the Board that I will work alongside all key players to ensure that our delegation in Annapolis fights for and represents our interests. These times that we live in call for nothing less.