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The County Council deferred a vote Tuesday on a bill aimed at overhauling the county's disability retirement system, after the county executive and police union officials disagreed on the inclusion of a two-tiered disability designation.

The two-tiered provision, included in a bill sponsored by council members Philip M. Andrews and Duchy Trachtenberg, would create a partial incapacity category with reduced benefits — already in place with county firefighters. The current system grants one level of benefits for county employees approved for disability retirement, other than firefighters, who negotiated a two-tiered system a few years ago.

The council bill proposes a partial retirement benefit of 52.5 percent of an employee's final earnings, and would raise the full disability benefit to 70 percent of final earnings, up from 66 2/3 percent. The bill would apply to current employees who have not been injured and have not yet applied for disability benefits.

The two-tiered provision was part of the "fundamental changes" that the bill's sponsors said were necessary to reform the current system. But police union representatives disagreed with the proposed two-level system, including the apparent difference between what is proposed in the bill and the benefits received by other employees not subject to the same disability laws.

For service-connected disabilities, Montgomery County school teachers, principals and all school employees, as well as all state employees, including the Maryland State Police, receive a minimum disability retirement benefit of 66 2/3 percent, the union wrote in a memo to the council.

The county's inspector general and a task force convened by County Executive Isiah Leggett determined last year that the current system is inadequate. The IG called for strengthened internal controls and better oversight of the system, whose lax rules allowed a much greater number of employees in the county, specifically police officers, to receive disability retirements than in other jurisdictions in the region.

But after months of informal negotiations, Leggett (D) and the police union failed to reach agreement on the issue, leaving the bill's outcome in doubt.

"The question becomes: Can the [two-tiered] provision be done through legislation or through bargaining, and whether it's done now or later," said Trachtenberg (D-At large) of North Bethesda. She and Andrews (D-Dist. 3), of Gaithersburg, included the provision based on national studies and a consultant's report that deemed the two-tiered system a best practice in retirement disability systems.

"The sticking point for me is to have meaningful reform of the system, and I feel that the most meaningful reform for the general public would be the two-tiered system," Trachtenberg said.

Some council members have recommended passing a bill that includes other provisions that the union and executive branch agree on, such as requiring periodic medical exams and creating a disability review board, and allowing Leggett and the police union to revisit the two-tiered provision when they return to the bargaining table in the fall to formally hash out the union's three-year contract.

If that timeline were adopted, the council could be closer to passing a bill for a reformed system, said Councilman Michael J. Knapp (D-Dist. 2) of Germantown.

Andrews did not rule out passing a bill without the two-tiered provision.

The ultimate goal is to get as much reform as possible, Andrews said. "People agree we have a problem, and that's the first step."

Negotiations between the police union and executive branch on the disability issue are done for now, said Timothy L. Firestine, the county's chief administrator, who briefed the council Tuesday morning on the status of the negotiations.

"When it comes to public safety [a two-tiered structure] does seem to make sense," Firestine said. "The number of firefighters on disability dropped after the two-tiered structure went into place."

The county pays about $38 million each year in disability retirement benefits for county employees, including public safety employees. The proposed two-tiered system would save the county an estimated $3 million annually, according to an actuarial analysis.

The council could vote on the bill next Tuesday, Andrews said.