By Megan Poinski
As counties struggle to meet their education funding requirements under the state’s maintenance of effort program, legislators wonder if shifting teacher pension costs under Gov. Martin O’Malley’s budget plan would make a difference.
The topic came up during a briefing on maintenance of effort funds and K-12 education held Friday afternoon jointly by the House Appropriations and Ways and Means committees. Maintenance of effort is the state law that requires each county to fund schools at a level of at least the same amount per student each year in order to get the same amount of state funding.
After Legislative Services analysts Rachel Hise and Mark Collins explained the maintenance of effort program and how it works, delegates juxtaposed the law with O’Malley’s budget proposal, which would require counties to pick up part of the tab for teacher pensions.
As the bill is written now, Collins said, teacher pension costs would not be counted toward maintenance of effort. However, the legislature will be able to discuss and negotiate that as the budget bill goes through the General Assembly.
Hise said the funds could depend on who in the county pays the pension funds. If the county pays them to the schools, they might be able to be counted toward maintenance of effort. If the county pays them to the State Retirement System, they could not.
“I think we are a long way from knowing how it will all play out and the opportunities here,” Collins said.
Since the recession began in fiscal year 2010, counties have struggled to meet their maintenance of effort standards. Collins said the state has a set minimum per pupil amount that each county must fund, and that has been consistently met. There has been more of a struggle to keep up with the additional money that counties could more easily provide before the economy got worse.
Currently, seven counties – Anne Arundel, Dorchester, Kent, Montgomery, Queen Anne’s, Talbot and Wicomico – are not meeting maintenance of effort for this year. According to charts prepared by Legislative Services staff, Montgomery County is the furthest from where it should be – more than $127 million short – and is slated to be penalized $26 million in its fiscal year 2013 budget.
Hise said that prior to 2010, nobody ever struggled with meeting maintenance of effort. But Montgomery County has not been able to meet it over the last three years.
Maintenance of effort works well to fund schools in good economic times, Hise said. In bad economic times, however, counties have significant problems with it. Counties can apply for waivers if they think they will fall short of maintenance of effort goals, but none of the counties this year have applied for them. Hise said that penalties for not meeting the goals have been cut, and four of the counties falling short this year have no penalty.
Changes to the maintenance of effort formula to make it work better in tough economic times have been drafted, considered and discussed in the General Assembly in past years, but have never become law. As of Friday, no bills on maintenance of effort have been proposed during this session.
Why should the counties contribute to the State Pension Plan and have no representation on it? The idea that the counties have contributed to the problem by hiring more teachers is wrong. The counties hired teachers at the urging of Glendening administration, the issue was made worse by Ehrlick passing Thornton with no funding to support it and now O’Malley administration and Miller say its the counties fault. The counties did everything the state asked and now are being punished for it in order to balance the state irresponsible spending
It seems that if the state is willing to pass off the responsibility of teachers pensions onto the counties, then the counties should have some room for re-negotiating the pension plans.