LEVY: MARYLAND NEEDS TO OVERHAUL PRISION SYSTEM NOW ...
Tuesday July 6th 2010 9:56 AM
... Statewide group will examine issue ...
Friday, July 2, 2010
by Marcus Moore | Staff Writer
If Maryland does not do something immediately to curb the amount of money it spends on pensions, residents could be on the hook to cover more of the costs of benefits for government employees, a retiring legislator said Thursday.
"The pot is shrinking, the pie is shrinking, and our promises and commitments are expanding," said Del. Murray D. Levy (D-Dist. 28) of La Plata, a member of the legislature's Joint Committee on Pensions. "Someone has to do something, or we're headed for a worse train wreck down the road."
Del. Melony G. Griffith (D-Dist. 25) of Upper Marlboro, House chairwoman of the pensions committee, agreed, "Our pension liability is growing, and it's becoming a larger amount of our state budget each year."
Levy, a Maryland delegate since 2004, is not seeking re-election. He will remain on the legislature's pensions committee until December, he said.
Meanwhile, a statewide group of nonelected experts is expected to convene to analyze and make recommendations to state legislators on ways to overhaul Maryland's pension system.
In approving Maryland's $13.2 billion fiscal 2011 budget, the General Assembly adopted language that tasked the House and Senate to create the group.
House Speaker Michael E. Busch (D-Dist. 30) of Annapolis is expected to announce his picks for the group in the next two weeks, said Alex Hughes, a spokeswoman for Busch.
Once the chairman is selected, the group will finalize a timeline for analyzing the pension system.
"I don't know what this group is going to come up with that we haven't already discussed," Levy said.
Maryland's pension liabilities grew 77 percent from 1999 to 2008, while the state's overall assets rose 43 percent, according to a report on national pension systems from The Pew Center on the States.
The state's pension system — with more than 350,000 members — is worth roughly $33.7 billion, according to the latest quarterly report from the state's Retirement and Pension System.
Maryland's pension system has been battered the past three years by major stock market declines, and it will take at least five years of good market returns for it to bounce back, said Morris Segall, president of SPG Trend Advisors.
As recently as 2000, the state funded 101 percent of the pension liability, which was well beyond the 80 percent benchmark recommended by the U.S. Government Accountability Office, the report said.
By the end of fiscal 2008, Maryland paid 78 percent of the liability, according to the report.
Last month, a budget shortfall caused the Baltimore City Council to cut future contributions to fire and police pension funds and raise the minimum time before retirement from 20 to 25 years. The council also voted to change the formula for cost-of-living increases, which prompted fire and police unions to sue the city.
Nationally, state pension systems are in "dire straits," Segall said.
"If there are not reforms or changes, the system will just run out of money," he said. "Maryland is no exception. The assets are not sufficient enough to cover the liabilities."
The Gazette
~~~~~~~~~~
/lrs