Stop the Cost Shift Cuts

Below is a statement put out by the Montgomery County Council announcing the launch of a statewide coalition’s website opposing the State’s plan to shift teacher pensions onto the counties. The site is www.stoptheshiftmd.com. Read on to see the statement and join us in fighting to protect key priorities here in Montgomery County. Thank you.


Maryland’s counties and school systems face a serious problem in Annapolis right now. Governor O’Malley has proposed shifting half the cost of teacher and other pensions from the state to the counties. The County Council, County Executive Ike Leggett, and Montgomery County Public Schools (MCPS), as well as our employee organizations and our counterparts throughout the state, strongly oppose this shift. As Board of Education President Shirley Brandman said on Feb. 14, the shift “will have an immediate negative impact on the important services that our local governments provide.”

For Montgomery County, the proposed pension shift would cost $47 million in Fiscal Year 2013 and $315 million over the next five years. The measures proposed to help counties pay the cost are inadequate and may not be enacted in any event.

How much is $47 million? It pays for the jobs of nearly 500 teachers, firefighters, police officers, and other vital County personnel. It is more than the County’s general fund budgets for housing, transportation, and environmental protection combined. Our entire budget for libraries is less than $30 million.

The recessionary County budgets of the past three years required painful cuts that have seriously affected our residents and employees alike. For the coming year we face a further budget gap of $135 million and more hard decisions. If we now have to absorb another large burden from the state, there will be real damage to all our vital services—our schools, college, police, fire and rescue, safety net, libraries, parks, housing, transportation, recreation, and many others.

We understand that the state too must balance its budget and faces hard choices. But it is the state that sets the basic structure of pension benefits. In 2006 the state raised pension benefits by 29 percent, retroactive to 1998, but failed to provide sufficient funding. In fact, the state’s financial support for the pension fund has fallen short for many years. Counties should not be asked to assume financial responsibility for costs not of their making. We have cut services to the bone, and we have reached our limit on taxes.

Elected officials and concerned organizations throughout the state, including the Maryland Association of Counties, the school community, and employee organizations, have joined together to convey this message to the Governor and the General Assembly. The coalition’s web address is www.stoptheshiftmd.com. There you can learn how you can make a difference. The General Assembly will make its decision on the pension shift soon, probably by mid-March. The stakes for all our County residents are very high.


Daily Journal (Cost Shift Edition)

The past week has been frantic. We are in the fight of our lives on this proposal to shift costs for teacher pensions from the state to the counties. Yesterday I was in Annapolis for a strategy meeting with stakeholders and I joined a press conference with County Executives from many of the biggest counties in the state. The press event kicks off our campaign to fight the cost shift and was well covered in the media, with stories in the Post, Examiner, Gazette, Patch, and some greatly TV news coverage including the following story from NBC:


Last night I attended a county-wide forum sponsored by the Montgomery County PTA’s about the education. The PTA has come out strongly against the cost shift, noting that it will greatly weaken our ability to fund MCPS. I made the point that the primary reasons the state pension plan faces such a large deficit is that the state adopted a very risky funding policy that resulted in chronic underfunding, then the state increased benefits retroactively, and then the markets tanked.

Now state officials are trying to say that we should “share some responsibility” for the cost of the pensions. But we don’t share any responsibility for the mistakes they made! We don’t control how much they contribute to the fund or how large the benefits are.

During the middle of the PTA forum, I noticed a tweet from Governor O’Malley about comments he made at a convention that evening. He talked about how even in tough times, the state had kept funding for education as a high priority. While it is true that the state increased spending today on education salaries, it is also true that the state knowingly underfunded its pension obligations for education employees.


Myth Buster: The State Determines Pension Benefits, Not Counties

One of the allegations I sometimes hear about the Governor’s plan to shift costs to the counties for teacher pensions is that the counties set the pensions or determine how big the benefits will be. This came up in a recent Gazette article, which stated:

“The argument of [Senate President Mike] Miller and others who have sought to shift the burden is two-pronged: Only three states currently foot the whole bill for teacher pensions, and local school boards set teacher salaries on which pensions get based. So why should the state, without a say in the matter, be stuck with the retirement tab?”

This is wrong! The state, and only the state, sets the pension benefits. And they can adjust those benefits up or down regardless of what any local agency does or wants.

Here is a good example.

In 2006, the General Assembly passed a significant hike in teacher pensions. The bill increased benefits almost 30% and made the increase retroactive for a worker’s salary to include years as far back as 1998.

The state passed this legislation. The counties are not Delegates or Senators. They do not have a vote in Annapolis.

I agree that the state’s teacher pensions were too low.

The problem is that the state passed the pension benefit increase without paying for it. This change alone cost the state over $120 million a year.

And now Annapolis leaders want to convince voters that they weren’t really even responsible for the cost increase in the first place.

Advocates for the cost shift should drop the myths. The counties did not cause the state’s pension problems. The truth is that the state wanted to increase the benefits to the level they are at now but failed to pay for them. Now the state wants county governments to step in to cover their responsibility.

The state caused its problems, and the state has a responsibility to fix them.

Hearing on the Capital Budget

Today was jam packed with council session and a committee meeting on small business issues. Wheaton is very much on our mind as we sort through redevelopment ideas and county investments.

Tonight featured a hearing on the county capital budget. It was interesting and residents spoke compellingly about a diverse array of topics.

I expect that we are going to make significant changes to the capital budget. I am looking to protect the Purple Line and biking facilities, and I am waiting to hear about MCPS needs.

Meanwhile I am working hard on an effort to stop the Annapolis cost shift to county governments for pensions.

I’m continuing my focus on the Purple Line, working with my colleague George Leventhal to keep that priority on track.

I’m excited to tackle these big picture challenges while delving far into the weeds of capital projects. It’s a nice mix.


Daily Journal (Silver Spring Transit Center, County Debt Limit, Small Business)

Today’s T&E committee started with a briefing on a new agreement to govern the Blue Plains Waste Water treatment facility, where most of our sewage is treated.

Then we moved on to discuss the terrible news about problems with the construction at the Silver Spring Transit Center. We do not know yet how this will be resolved but there will be a long delay in opening the transit center. How long? Long. We don’t know.

Then the full council met to discuss legislation that is pending in Annapolis. No real news there but we are working closely with our delegation to protect the county from a proposal to change who is responsible for funding teacher pensions. The state has been responsible for that for 85 years but has managed the pension badly and now wants to foist the pension deficit onto county governments. Montgomery County would be responsible for paying over $40 million in state pension funding in just the first year alone, and according to the state projections these costs are expected to increase about 10% per year.

In the afternoon, at a joint meeting of the GO committee with the Planning, Housing and Economic Development Committee we discussed concerns about small businesses and redevelopment. I was pleased to hear that the County Executive is depositing $2 million into the revolving small business loan program; I requested that the council discuss policy objectives for how those loans would be made. Can we fund clean-tech startups? Child care companies? Can we target the loans to problems we want to address, such as unemployment in the Hispanic community?

I was also pleased to learn that the County Executive is exploring partnerships with community banks to make loans, perhaps helping close deals on certain loans that the banks would not be able to fully finance themselves.

These are promising developments—we can and must do better to grow our own job creator right here in Montgomery County.

The day continued with a final committee meeting to set our assumptions for the capital budget. We set our annual borrowing for that budget at $295 million and addressed some technical issues that will likely result in reducing the funds available for the $4 billion capital budget by another few tens of millions.

To polish off the day, or evening, I met with a group of activists in the Chevy Chase area that calls itself the “District 1 caucus.” Included among them was former Councilmember Scot Fosler. We had an interesting conversation about the nature of the County Executive position. Did you know that Fairfax County does not have an elected County Executive? They have a county manager type position. It was a treat to meet Scot; last Friday I met Bill Scher, also a former council member.

Which reminds me that today I got a call from former Governor Parris Glendening, who is inviting me to join a select group of local officials from around the country in a program hosted by Smart Growth America, the non-profit policy organization that he founded. I was thrilled to get the Governor’s call and I’m looking forward to getting involved with this effort to support and build smart growth champions around the country.

Meanwhile tomorrow at full council session I am introducing a new bill that I drafted on big box retailing issues and considering recommendations I want to make for our county cable plan operations. And tomorrow our T&E committee will return, and possibly conclude, the issue of take home vehicles for county employees that I have been working on for some time.

Lots going on!