A lesson plan for teacher pensions

Senate President Thomas V. Mike Miller wants it. Gov. Martin O'Malley says he's considering it. And local elected leaders are strongly opposed — to the point where they've been willing to give up millions of dollars in state aid to prevent it.

The "it" in question is a plan to require Baltimore and the 23 counties to at least share in (if not ultimately assume) the cost of teacher pensions. The appeal — and opposition — is rooted mostly in how the move would potentially transfer the cost from the state to local government.

The issue is really more complicated than that, however. The current system is, on its face, absurd. The budgets of local school systems, including teacher pay, are approved by local governments. Yet they can make those decisions without the least concern over the ramifications on the cost of teacher pensions. And since pension benefits are based on a percentage of salaries, it means state taxpayers have no choice but to underwrite every local pay raise.

But the effect of this is really much worse. Those jurisdictions with the highest teacher salaries end up benefiting disproportionately. The rich get richer.

Montgomery County is the biggest winner in the teacher pension lottery with more than $168 million in benefits in the current fiscal year — or about $1,200 per pupil. Only in Worcester County (where teacher salaries are underwritten by vacationland Ocean City's property tax largesse) is the per-pupil retirement benefit higher.

Yet the basic education funding formula — the one that ensures local systems have enough to adequately teach their children — ranks Montgomery and Worcester counties in the bottom three jurisdictions statewide. Both have the tax base to support public education without state taxpayers assuming a majority of the burden.

This is particularly galling right now. At a time when state government is trying to cut back and faces a potential $1.1 billion deficit in the next fiscal year, Montgomery and Worcester counties are seeing a robust increase in state aid — mostly because of the rising cost of pensions.

Between Fiscal 2011 and Fiscal 2012, state aid to all local governments grew at an anemic 1.3 percent. In Baltimore, it was just .2 percent. Some of the rural jurisdictions actually saw declines — Garrett County lost 4.1 percent and Calvert wound up minus-3.7.

That's quite a contrast to those counties on the pension aid gravy train. Aid directed toward Montgomery County grew 5.2 percent. Worcester was just behind at 5.1 percent over the same period.

Enough is enough. We do not advocate a reduction in teacher pensions, nor would we support a reduction in state aid to education generally. But in a time of fiscal restraint, it's absolutely outrageous to apportion taxpayer dollars this way.

Local governments are, admittedly, facing difficult financial circumstances, too. Losses in the real estate industry have a disproportionate impact on Baltimore and the counties, which are far more dependent on property tax revenue than state government.

But there's a big difference between state taxpayers underwriting schools in the city, where per-pupil wealth -- a measure of household income and property value -- is estimated at $291,018 (slightly more than half the statewide average of $505,354), and shipping those same dollars to Worcester County, where it's close to $1.3 million, according to a recent analysis by the Department of Legislative Services.

The state taxpayer's role should be to ensure each student receives an adequate education. The current teacher pension formula works against this goal by providing more to those local systems that can already afford to pay their teachers well.

It's outrageous. It's unfair. And it's fiscally irresponsible. But it's also proven hard to change because no jurisdictions want to lose a dime in education aid, and some of the biggest beneficiaries (Montgomery and Prince George's counties are the top two) have the greatest political clout in Annapolis.

A more sensible arrangement would be to gradually require local governments to share in the cost of teacher pensions or at least change the formula to reflect per-pupil wealth. That might not do all that much to help Governor O'Malley balance his next budget in Fiscal 2013, but it would restore some rationality in the education aid formula, particularly as pension costs are only going to rise.

Teachers will fight this (they'll see it as a means to cap future pay and pension increases), and so will local governments. But if the state's elected leaders are serious about looking out for the best interests of taxpayers — and for schools in communities of modest household income — they'll do the right thing and reform the teacher pension formula.

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