Maryland Teachers to Push Pension Proposal
Improved fiscal outlook may increase chances for legislative victory.
Kay Francis, a teacher at Severn Elementary School in Maryland’s Anne Arundel County district, had dreamed of retiring in 2005. The 66-year-old grandmother planned to travel to see family and friends, rent out a room in her house, and perhaps do some tutoring to supplement her pension.
But the dream evaporated when she realized last year what her pension would be.
“With the pension check I would make a little over $1,000 a month—that’s less than the payment on my home mortgage,” said Ms. Francis, who has taught in Maryland for 20 years and makes $61,000 a year. She now says she won’t be able to retire before 2007, if then.
“I am ready to retire, but I cannot survive on my pension,” said Ms. Francis who was recently diagnosed with multiple sclerosis and says she tires easily.
Officials from the Maryland State Teachers Association say they are hearing stories every day about teachers who are either forced to delay retirement or who have already retired and are struggling to make ends meet. According to the union, the state’s teacher-pension benefit of 38 percent of preretirement pay is the lowest in the nation.
As state lawmakers gathered in Annapolis last week for the Jan. 11 opening of the legislature’s 2006 session, the MSTA was renewing its push for a bill that would increase the pension benefit to 60 percent of pay. The union says that under the current system, a teacher with 30 years of service who retired at a final salary of $60,000 would get $21,600 in annual pension payments. The MSTA proposal would increase that to $36,000.
Union officials say that Maryland’s low pension is keeping highly qualified teachers out of the state.
“Today, students are expected to reach higher achievement levels than ever before, and we need a stable staff in the 1,400 [public] schools across the state,” said MSTA President Patricia A. Foerster, adding that the cost and strain of hiring new teachers is overwhelming for schools. She said 50 percent of teachers leave the state’s schools before completing their fifth year.
This is the third year that a pension-reform bill is being introduced in the Maryland legislature; the past two years, such proposals died in committee in both chambers despite bipartisan support. Lawmakers say the measures stalled because the state was dealing with budget shortfalls.
The union hopes this year will be different.
The state has a $1 billion surplus and despite initial reports that the cost of the pension proposal could run above $450 million for all state employees a year, some critics of past legislative proposals say they are willing to work on a balanced bill that takes into consideration other pressing budgetary needs.
“We believe this will be the year,” Ms. Foerster said.
A legislative task force established last spring to study the pension issue is expected to issue a report soon, and Ms. Foerster said she hopes a bill will be introduced within the first three weeks of the session covering all of the state’s 120,000 public employees, including the 62,000 MSTA members.
The debate over pension reform is not unique to Maryland.
Faced with a tepid stock market, a rise in life expectancy, and teacher contracts that critics say inflated pensions, many states have been seeking ways to tweak or even overhaul how they underwrite retirement benefits for teachers and other state employees.
And a recent survey of state fiscal officers by the National Conference of State Legislatures found that state pension costs were listed as one of the top three issues going into the 2006 session in Alaska, Washington state, and West Virginia. ("Legislatures Open Amid Fiscal Surge," Jan. 4, 2006.)
Meanwhile, Maryland’s benefit indeed appears to be low, said James Mossman, the president of the Sacramento, Calif.-based National Council on Teacher Retirement. He added, however, that the teachers’ contribution in Maryland of 2 percent of their annual salary also is one of the lowest in the nation.
To bolster their case, MSTA officials usually point to neighboring Pennsylvania, which gives teachers a pension benefit of 75 percent of their average final salary.
When Maryland introduced its current pension plan in 1980, teachers who had been working in the state before that year had the option of staying in the old plan, under which they would contribute 5 percent to 7 percent of their checks to their retirement and get a pension equal to 50 percent of their final average salary.
Lawmakers like state Delegate Herbert H. McMillan, a Republican, point out that Pennsylvania teachers pay 7.5 percent of salary into their pension plans, almost four times the percentage in Maryland. That difference, he and others say, makes comparisons between the two states unfair.
Ms. Foerster said the union is open to discussing higher contributions by teachers.
Lawmakers also worry about an MSTA demand that all teachers get the increased pension benefit retroactively, which means teachers who have paid less into the system so far would get the same benefits as those who could end up paying more in the future under new legislation.
Mr. McMillan said that the state continues to have a structural budget deficit, and that the revenue surplus does not match up to anticipated expenditures. “Every penny of the $1 billion surplus is necessary to fully fund Thornton education improvements for the next two years,” he said, referring to a school finance commission headed by Alvin Thornton, the associate vice provost at Howard University in Washington, whose work led to a state-mandated increase in school aid.
Of the state’s $25.9 billion fiscal 2006 budget, $414 million is allotted to pensions for teachers and other state employees.
‘Nobody Works Harder’
Maryland legislators who have supported a pension overhaul in past years say that there are ways to fit needed changes into the state budget despite other demands on revenue.
“Because of fiscal realities, teachers may not get 100 percent, but in the legislative process you compromise,” said Delegate John Leopold, a Republican and a member of the House appropriations committee, where pension bills died in past years.
He added that lawmakers this year are showing a “keen interest in coming up with a solution that is both fiscally responsible and responsive to the needs of teachers.”
Such a solution, he said, could include an increased contribution from teachers, or combining the teachers’ pension system with a 401(k)-style plan, which many employers offer as a way to allow workers’ tax-deferred savings for retirement.
Meanwhile, the MSTA is pulling out all the stops to win approval of a pension bill. Through its “Push for Pensions” campaign, it is exhorting teachers to take an active role by asking lawmakers to back the bill, attending “lobby nights” in the state capital, and hosting “house parties” to spread awareness.
Ms. Francis, who says she loves teaching but is ready for a slower-paced life, has been lobbying tirelessly, meeting with lawmakers and picketing on street corners.
But, she said, “I am tired of standing by McDonald’s with a big sign. … I worked hard and gave all here.”
“We deserve this,” she said of a more generous pension. “Nobody works harder than teachers do.”
Vol. 25, Issue 19, Pages 18,24