By Barry Rascovar
It takes quite a bit for the quiet, diplomatic State Treasurer, Nancy Kopp, to criticize her fellow Democrat, Gov. Martin O’Malley. But she gently laid it on the line in opposing O’Malley’s $100 million budget cut for state pension contributions.
“It’s a question of trust,” Kopp said, as reported last week by MarylandReporter.com.
Bond rating agencies will look askance at O’Malley’s effort to permanently reduce by $100 million a year the state’s commitment to funding future pensions. “It will be very difficult to defend” when the agencies question her, she told legislators.
What Kopp didn’t say, but others are filling in the blanks, is that O’Malley’s action is a cold, calculated slap in the face of state workers.
He is reneging on an agreement he made with them just a few years ago.The irony is that the very same “working families” O’Malley defends so passionately are the ones hurt most by his callous action.
O’Malley walks away
Working-class state employees and teachers were asked in 2011 to pay more into the pension fund and accept lower future benefits. Now they are watching the governor walk away from his part of the deal.
That will “be dimly viewed” by rating agencies, noted retirement fund executive director Dean Kenderdine. For good reason.
What he and Kopp don’t know is how close Maryland could come to losing its coveted Triple-A bond rating because of O’Malley’s pension-funding duplicity.
The good news is that the General Assembly’s budget panels aren’t likely to accept the governor’s high-handed action.
When cuts are made, it’s a near certainty lawmakers will see that O’Malley’s pension grab is countermanded and that the next governor will be required to commit an extra $300 million annually to close Maryland’s yawning pension-fund gap.
From the governor’s perspective, taking another $100 million from the state’s allocation to the retirement fund makes sense.
The move doesn’t endanger anyone’s immediate retirement benefits. It helps O’Malley avoid cuts in other programs. It shrinks the state’s long-term structural deficit. And it only delays by a year the retirement agency’s target for reaching 80 percent of full funding.
O’Malley also knows that calculating pension and retirement shortfalls is more an accounting shell game than a science.
Does the state really need on hand today 100 percent of the money required to pay off all future retiree benefits — 192,000 of them — decades from now?
The laws of probability are prohibitive that Maryland, or any other pension fund, will ever have to make a one-time, all-in payout.
Enough to pay current IOUs
Maryland’s $40 billion pension fund has more than enough money to write current retirement checks.
A 2011 law set out a gradual schedule for raising the state’s retirement accounts to 80 percent of full funding in a decade or so, and to reach 100 percent in two decades.
That was a sensible approach — but not if O’Malley and his gubernatorial successors override that law and continue to use the pension fund as a grab bag whenever there’s a need for an extra $100 million or so elsewhere in state government.
Barry Rascovar’s other commentaries can be viewed at www.politicalmaryland.com
I’ve been pursuing this continuous pension cut habit for several years. O’Malley shorted the fund $100M last year too. Don Schaefer fully funded the fund. He increased employee contributions, other employee adjustments and increased state contributions. Immediately Parris Glendening and every governor since has been robbing the system.
The foxes are in the hen house. Nancy Kopp and even AFCSME have been supporting the underfunding and bragging about the systems sub par investment performance. Incidentally, the board is predominantly O’Malley appointees and former elected officials.
It’s true that not all employees will retire simultaneously. But, now the underfunding is diminishing the funds ability to pay future employees. An underfunded pension was the primary reason Detroit. If you’re interested the PEW Charitable Trust has been studying government pensions. Maryland is not alone. PEW helped Kansas recover by creating an hybrid system. Most other states, like Maryland, are in denial. They refuse PEW’s charitable help and expertise.
There is a petition on http://www.change.org demanding that they halt the raid on the State Retirement Fund.
O’Malley and the rest can’t use the transportation fund any more to offset their irresponsible spending so now they have targeted the pension fund. The three stooges continue to play their games. When are the people of Maryland going to realize what evil the democrats in this state are.
Commitments are made for breaking. He is taking his queues from the federal leadership. Say what it takes to get what you want. Then, once you have what you need from the other side, change what you do to suit your own agenda.
Curious !!! Not one outraged comment for this arrogant money grab by O’Malley/Brown. The fact that he would even try is one more devastating indication of his character, as if we needed more.
Besides already loading up the next governor with a $300 million ticket for which he claims credit in “BALANCING HIS CURRENT BUDGET!!!”, what would another $100 million mean???
Oh, and before we forget, we were already supposed to have cured our $1 billion structural budget shortfall with a “ONE TIME” tax .
And Brown just runs along as if on a leash. Amazing.