Pension blame game

Howard County Executive Ken Ulman raised a few eyebrows recently when he said that if the legislature decides to transfer some teacher pension costs to the counties, as a state budget commission recently recommended, the costs should be paid by local school boards rather than out of the county general funds. Mr. Ulman argued that since the school systems have sole authority to hire school personnel, they should be responsible for their pension costs.

Despite the fact that this is the very same argument state budget analysts have been making for years in questioning the state's practice of picking up 100 percent of the teacher pension tab, Mr. Ulman was quick to add that he opposes any change to the status quo. But his remark was clearly a nod to the possibility that the present arrangement may not be sustainable. At a time when pension costs are rising faster than growth in state and local revenues, some sort of adjustment seems almost inevitable. At best, the process could force the state and local governments to evaluate where teacher pensions fit into their priorities, among classroom programs, public safety and other services. But more likely, as Mr. Ulman's remarks suggest, it will turn into an exercise of political blame-shifting.

From Mr. Ulman's perspective, shifting teacher pension costs to county government makes no sense. Local school boards determine how much their teachers are paid, while the state devises the formula for calculating benefit levels based on that amount. Mr. Ulman argues that's unfair because it leaves county officials stuck in the middle, on the hook for millions of dollars in pension costs to honor agreements they had no part in negotiating.

Howard County already devotes about 62 percent of its general fund revenues to education. At a time when it, like every other jurisdiction across the state, is struggling to pay its bills, Mr. Ulman argues that adding teacher pension costs to the mix could force even bigger cutbacks on other essential services such as police, fire, transportation and corrections.

Yet local school boards aren't eager to take on responsibility for teacher pension costs either. Unless county governments added the full cost of those payments to school systems' annual operating budgets, the money would have to come out of existing programs, and the amount would rise sharply in coming years.

In Howard County, for example, a recent proposal by a state budget commission to transfer some pension costs to the counties while equalizing payments among Maryland's richest and poorest school districts would raise the school system's pension costs from $8.3 million in 2012 to $25.9 million the following year and $43.8 million in 2014.

Since 80 percent of Howard County's $675 million education budget goes to pay personnel, school officials say those ballooning pension payments would almost certainly require cutting programs, laying off teachers and increasing class sizes. Education officials worry that reductions on that scale could jeopardize the quality of classroom instruction and damage the system's longstanding reputation for excellence.

Ultimately, though, Mr. Ulman is playing a game of semantics. Howard County's school system, like those in the rest of Maryland, doesn't have the ability to levy taxes. It submits a budget request to the executive, and he decides how much the county can afford. Whether the bill for teacher pensions is sent directly to him or first to the school system, he's ultimately the one who would have to pay it.

What he's asking for is political cover, but that doesn't change the fact that he is the one who would decide whether it is more important to maintain existing programs in the school system, avoid further cuts to public safety and other general government functions or keep the county's property tax rate stable. It's understandable that Mr. Ulman would want to pass that buck, but no matter how the legislature couches a shift in teacher pension costs, it stops with him.

In the meeting with county legislators in which Mr. Ulman made his remarks, he also implored them not to adopt an idea being considered by the O'Malley administration to shift pension costs in such a way that wealthier counties (like his) pay more, and poorer jurisdictions (like Baltimore City) pay less. "We've asked our citizens to pay more for great schools and a great quality of life," Mr. Ulman said. "To ask them to pay more for others' teachers is a bit much."

But for years, poorer jurisdictions have, effectively, been subsidizing richer ones when it comes to teacher pensions. Places that pay their teachers more than the state average (such as Howard County) get more benefit from the state picking up the tab for pensions than do jurisdictions that pay less than average. Even under the plans being considered by the governor, the state would still pick up 60 percent of the cost of pensions, so this reverse- Robin Hood dynamic would remain in effect. Some sort of wealth equalization in the transfer of pension costs could simply serve to even things out.

For taxpayers, the political posturing foreshadowed by Mr. Ulman's remarks is likely to grow frustrating. After all, whether the pensions are part of the state budget, the county budget or a school system budget, the money is still coming out of taxpayers' wallets. They deserve an honest conversation about how best to allocate limited resources, not how best to manage the political fallout from the tough choices that will require.

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