By Rachel Konopacki | Aegis staff
Harford Schools Superintendent Robert Tomback said Wednesday he will have no choice but to cut staff and possibly close some school buildings if teacher retirement costs are pushed onto the local school system by the state.
“If this cost or partial cost of the total is shifted to the county and/or HCPS it will cause tremendous damage,” warned the school system’s presentation given during a pre-legislative session meeting with state legislators in Bel Air.
In the past two Maryland General Assembly sessions, the governor and legislative leaders have considered pushing part of teacher pension costs onto local governments in an effort to rein in state spending. Maryland is only one of three states which funds 100 percent of teacher pension costs.
The pension issue is expected to dominate the 2011 session when it opens in mid-January.
For fiscal 2011, the state funded $34.3 million in retirement costs for retired teachers who worked in Harford County Public Schools, Tomback said.
The school system opposes any shift of the funding responsibility from the state to the county government or school systems.
If the expense is going to be transitioned to the counties, County Executive David Craig said at the same meeting Wednesday, it should go directly to the school budget and not be included in the county’s annual maintenance of effort requirements for school funding.
“It [pension cost] should be transferred to the board of education and not to the county government,” he said. “The board of education should figure out where to get the money. They want to control the salaries, they should figure out how to pay for it.”
In 2009, a bill was proposed to gradually shift teacher retirement to counties until the state share was reduced to 50 percent.
Last session, the 2010 Budget Reconciliation and Financing Act, which was ultimately rejected in the House of Delegates, would have shifted the pension costs onto local school systems, community colleges and libraries, but not the local governments.
Under this proposal, the school system would pay $2.6 million in FY2012; $7.8 million in FY2013; $13.3 million in FY2014; and $13.8 million in FY2015.
A state commission that has been studying pension reform has under consideration several proposals for shifting pension costs for retired teachers to the counties. The panel is expected to vote early next week on its final a recommendation to the governor and legislative leaders.
“If we are going to make cuts that is where we would have to cut – salaries and benefits,” Tomback said of the impact of having to take on pension costs.
Eighty-three percent of the school system’s budget represents salaries and benefits, he said.
If teacher pensions were to be shifted in full onto the county, Craig said the county would have a $37 million annual liability and would have to raise property tax rates.
“We will call it a tax because of the teacher pension,” he said
Craig, a onetime teacher and assistant principal who is retired for the local school system, said the state needs to do two things to help with the budget problem regarding teacher pensions: discontinue the use of the corridor funding method and fire investment managers.
To explain the corridor funding method Craig used the example of buying a car with a seven year loan, knowing that in five years the car will no longer work.
“You are paying two years on a car you don’t have,” he said.
Craig said the state retirement agency should re-evaluate its investment strategies and the people who manage them.
“Whomever they have hired, they need to go fire,” he said.
Craig said he would fire investment managers on his own staff after four bad quarters.
“They have had 40 bad quarters of funding,” he said of the state pension system.