State teachers union blasts pension change panel

The executive director of the state teachers union criticized Thursday the panel considering changes to the Maryland public employees' pension system, saying the process is "offensive" and "rushed."

David E. Helfman, executive director the Maryland State Education Association, said the panel is driven by a desire to quickly cut $400 million to $500 million from the plan rather than by "solid thinking" about the best ways to cure the system.

Helfman's members have much at stake: The influential Public Employees' and Retirees' Benefit Sustainability Commission is considering reducing benefits, increasing employee contributions or scrapping the system and moving to a 401(k)-type plan. Teachers make up about 60 percent of the state's retiree pool.

Casper R. Taylor Jr., a former speaker of the House of Delegates who chairs the eight-member commission, denied that the panel is on a short-term cost-cutting mission.

"I have never heard anybody use the word 'target' or speak to me about targets," he said. Rather, the commission's goal is to create a retirement system that is "fiscally sound and sustainable."

The commission is required by law to issue a report by Dec. 15. Taylor said he is confident the group will meet the deadline.

Maryland's pension system has 65 percent of the funds needed to pay the $33 billion it owes to retirees — and costs are ballooning. State obligations totaled $919 million in the current budget year; next year they will reach $1 billion, according to a spokesman for the state's retirement system.

In an effort to deal with the rising costs and projected shortfalls, the state Senate passed legislation this year that would have shifted millions of dollars in teacher pension payments to the counties. County executives said the move would force local governments to raise taxes or drastically cut services. The House killed the idea and created the panel instead.

But the group hasn't had much time to examine an overhaul to the sprawling system. Members were appointed by Gov. Martin O'Malley and the presiding legislative officers in September. A vote on proposed changes to the pension system planned for Monday was delayed a week to give commissioners more time to "ponder all the options," Taylor said.

The panel's recommendations are not legally binding but are expected to carry significant weight in Annapolis when lawmakers look for ways to shrink an expected $1.6 billion budget shortfall.

There appears to be one area of agreement between Taylor and Helfman: Both believe that the state cannot legally touch cost-of-living increases. Reducing those increases would net hundreds of millions of dollars for the state.

The commission has an important audience outside Maryland. Analysts with each of the three credit rating agencies that evaluate the state's bond rating have expressed eagerness to review its work.

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