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Pension plan contains less money than teachers sought

Thursday, March 16, 2006

ANNAPOLIS — Efforts to enhance teacher and state employee pensions are focusing on a watered-down proposal that falls far shy of a $500 million plan sought by the state teachers union.

Key lawmakers said the legislature is likely to limit its spending to between $100 million and $150 million.

‘‘The ceiling is going to be determined by what’s cut out of the budget,” said House Speaker Michael E. Busch (D-Dist. 30) of Annapolis, who did not say how much the House would be willing to spend. ‘‘It won’t be in the half-billion dollar range, but it will be significant.”

Pension reform would boost only retirement paychecks, not health care or other benefits.

Sen. Katherine A. Klausmeier’s plan would increase the teacher contribution rate from 2 percent to 5 percent over three years, raise the multiplier used to determine an employee’s retirement accrual from 1.4 percent to 1.8 percent and be retroactive to 1998.

The state teachers union is backing a bill by Senate Majority Leader Nathaniel J. McFadden (D-Dist. 45) of Baltimore that would boost the multiplier to 2 percent and provide full retroactivity to the teacher’s hire date.

But Del. Murray D. Levy, a member of the Special Joint Committee on Pensions, said full retroactivity would cost $6 billion.

‘‘That’s equal to all the outstanding [general obligation] bonds in the state of Maryland,” said Levy (D-Dist. 28) of La Plata. ‘‘That is the most expensive variable.”

Klausmeier (D-Dist. 8) of Baltimore said she proposed her bill simply because no other plan had been put on the table. Now, it’s considered the most feasible scenario.

‘‘There was no way that they were going to get everything they wanted,” she said. ‘‘It’s a starting point and if we can get them more, that’s great.”

The Department of Legislative Services has not completed a fiscal analysis of Klausmeier’s bill, but Levy said the price tag is about $120 million.

Last week, the Senate Budget and Taxation Committee recommended using $45 million of $65 million overallocated for state employee health insurance on teacher pensions.

The suggestion is ‘‘not intended to be viewed as any kind of ceiling,” said Senate Budget and Taxation Committee Vice Chairman Patrick J. Hogan (D-Dist. 39) of Montgomery Village. ‘‘It should be viewed as a sign of momentum.”

However, only Gov. Robert L. Ehrlich Jr. (R) has the authority to add or shift funding within the state budget and it is unclear if he will follow the panel’s advice.

‘‘I think the governor would be interested in seeing a bit more detail from the legislature” before making budget decisions, said Ehrlich spokesman Henry P. Fawell.

Senate President Thomas V. Mike Miller Jr. said the governor’s failure to put money toward pension reform prevents the legislature from making a bigger commitment. He said the Senate would likely spend less than the $120 million cost of Klausmeier’s proposal and a compromise would have to be worked out with the House.

‘‘The bridge has got to be reached between what the House feels is important and what the Senate feels is important,” said Miller (D-Dist. 27) of Chesapeake Beach. ‘‘A major factor is this has got to be a sum that can be counted on by teachers [in the future].”