Baltimore unions and Mayor Stephanie Rawlings-Blake have struck a deal on her latest sweeping pension change, which would switch some new city employees from a traditional pension system to a 401(k)-style plan.

The agreement -- which was passed by a City Council committee Thursday -- will give new workers an option of selecting a 401(k)-style plan or a "hybrid" plan that combines such an account with a traditional pension.


Glenard S. Middleton, director of the union that represents city workers, said he negotiated with Rawlings-Blake directly on the issue and got about two-thirds of what the unions wanted. The "hybrid" plan will be two-thirds traditional pension and one-third 401(k)-style plan, officials said.

"We think it's a good compromise," Middleton said. "It's taken a long process -- over nine months. What we arrived at we think is fair and equitable."

The pension system for municipal employees faces $686 million in unfunded liabilities, according to city documents. Fully funded in 2003, the system has weakened each year and is now only 68 percent funded.

The compromise bill -- which is an amended verision of Rawlings-Blake's initial call for all new workers to go into a 401(k)-style plan -- will go before the full City Council on Monday.

City finance director Harry Black said the bill is a good step forward for the city's long-term fiscal health.

"It's going to help out a great deal, but it's not to say the city 10 or 15 years down the road won't need to revisit this," Black said. "The bottom line is if we're able to get passed in the council it will help us out a great deal. It will allow us to significantly slow down the growth of the unfunded pension liability."

Under the proposal, new city employees would be required to contribute 5 percent of their salaries to their retirement accounts.

The bill does not affect police or fire department employees or elected officials, which have their own pension systems.