The political tug of war over teacher pension costs is escalating, as Howard County Executive Ken Ulman asked state legislators to put the burden of any shift of those payments from the state to local governments directly on the county school board.
Although he opposes any shift in pension costs, Ulman told Senate Budget and Taxation Committee Chairman Edward J. Kasemeyer and six of Howard's eight state delegates on Monday that if local governments are saddled with a portion of that bill, he'd hope to see the county's general treasury preserved by placing the added cost directly on the schools.
A state commission headed by former House Speaker Casper R. Taylor recommended a shift of some teacher pension costs after a meeting in Annapolis on Monday. The commission also suggested requiring local school boards to pay those costs, as Ulman advocated, according to Andrea Mansfield, associate director of the Maryland Association of Counties.
That would benefit Ulman and other local government leaders because of the way Maryland pays for education, which typically consumes half or more of local revenues. Local governments levy taxes and then allocate money for schools, but school boards decide how to spend it.
If pension costs are borne directly by school boards, those officials would have to wrestle with how to pay the bills, removing that burden from elected county executives and Baltimore's mayor. Instead, Ulman agreed, school board members would likely ask for more money from his administration, but he'd rather face that fight, he said.
"It would pose a political challenge," Ulman said after the delegation meeting at the county's George Howard Building in Ellicott City, "but I'm much more able to handle that."
Kasemeyer said that could be a significant decision. "Who you put the burden on is a big issue," he said after the meeting.
Howard's schools and bond interest for school construction account for about 61 percent of the county's $824 million locally funded budget this year, county budget director Raymond S. Wacks said. But once the school board gets that money, Ulman and the County Council have no control over it. When state aid is cut for expenses like highways and police, the money has to come from the much smaller portion of the budget that Ulman controls. After automatic costs like employee pay, health care, interest on debts, energy and pensions are paid, only about 15 percent of the budget is left to work with, Wacks said.
In addition, local governments pay Social Security costs for teachers, he added.
"We have made cuts [in police] for the past two years. There is very little place to cut" without hurting police effectiveness, he told the group.
Ulman and Wacks gave the legislators a briefing on the county's financial outlook. Ulman noted that Gov. Martin O'Malley, a fellow Democrat and political ally, has said he too doesn't favor shifting teacher pension costs, but some legislative leaders and the pension commission are pushing for at least a partial shift to help the state deal with a looming $1.6 billion revenue shortfall next fiscal year.
School Board Chairwoman Janet Siddiqui said later that the board is also opposed to shifting pension costs, but if it does happen, following Ulman's request would create problems.
"It would certainly impact the classroom," she said. "We'll wait and see" what happens. Wacks, meanwhile, tried to make a case that the county budget is already stretched thin, with little prospect for growth in property tax revenues.
"What saved us coming into the recession was the property tax," Wacks said, because it took several years for dropping assessments to be reflected in slowly rising property tax bills. Now that those reductions have taken hold, Wacks said, it will take at least three years — one full assessment cycle — for home values, and revenues, to begin rising again.
Howard's income tax rate is at the legal maximum.
Ulman made one more point on teacher pensions to the legislators — a request not to adopt any teacher pension cost formula that would require Howard's taxpayers to help foot the bill for teachers in other areas. Some formulas under state consideration would require wealthy counties like Howard to pay more. For example, one formula including a wealth factor would cost Howard $23 million more instead of $17 million more without the formula, while less-prosperous Baltimore City's costs would drop from $22 million to $5 million under the same formula.
"We've asked our citizens to pay more for great schools and a great quality of life," Ulman said, referring to the county's maximum local income tax rate. "To ask them to pay more for others' teachers is a bit much," he said.
Howard would already be required to pay an extra $3 million next fiscal year for county schools under a state maintenance-of-effort law that requires local governments to pay at least as much as they did the previous year or face the loss of state education aid.
"Exceeding the maintenance of effort becomes a penalty for you," because once raised, school funding can never be reduced without risking state aid cuts, said Del. Gail H. Bates, the only elected Republican in the room.
But Kasemeyer, who is also Senate majority leader, said Ulman is free to do what two other local governments did this year "Why don't you ask for a waiver of maintenance of effort?" he wondered.
Del. Guy Guzzone, who also attended the meeting along with Dels. Shane Pendergrass, Frank S. Turner, Elizabeth Bobo and Steven DeBoy, said he's not willing right now to even think about the best or worst ways of shifting teacher pension costs, because he doesn't feel they should be shifted.
"I'm not even going there," he said.