Posts Tagged 'Benefits'

Pension changes coming in FY 2012

The State Teachers Pension has been a topic of budget discussions throughout this session of the General Assembly.  In addition to O’Malley’s proposed changes, many bills were introduced to make additional changes to the pension plan.  However, none of the bills made any progress beyond public hearings.

The House and Senate have passed the Budget Reconciliation and Finance Act (BRFA), including an employee contribution increase to 7% while maintaining the 1.8% benefit multiplier at retirement.  New employees will automatically contribute 7% and have a 1.5% benefit multiplier.  These changes will go into effect on July 1st.

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Governor releases FY 12 state budget – Public libraries flat funded; Some changes to pension

On Friday, January 21st, Governor O’Malley released the Maryland state budget proposal.  Two areas are of most interest to libraries:

Library Funding

It appears that public libraries, the State Library Resource Center (SLRC) and the Regional libraries have all been flat funded, with only the formula causing a small change.

Pensions

The Governor is proposing retaining the existing defined benefits system.  However, the proposal includes a one-time choice for current employees to a) continue to contribute 5% with a 1.5% benefit multiplier (reduced from 1.8%) or b) increase their contribution to 7% and continue to earn benefits with a 1.8% multiplier.  New employees will automatically contribute 7% and receive a 1.5% benefit multiplier.  More information about the pension system and other benefits is available on the Governor’s web site. 

Budget Announcement

To view the proposed budget, Powerpoint presentations, budget highlights, video of the announcement and more, visit the budget announcement on the Governor’s web site.  The budget proposal has now been turned over to the General Assembly.

Benefit Sustainability Commission’s complete recommendations available

The complete recommendations of the Benefit Sustainability Commission have been posted on the General Assembly’s web site.  The recommendations are in the form of a letter to Governor O’Malley, Senate President Mike Miller and House Speaker Michael Busch.

Shifting pension costs to local government recommended by Benefits commission

The Public Employees’ and Retirees’ Benefit Sustainability Commission is a bi-partisan group established by Governor O’Malley.  Their charge is to study and make recommendations on how manage the rising costs of health and retirement benefits for state workers, including teachers and librarians in Maryland.

On Monday, the commission voted on several recommendations.  The recommendation with the biggest impact for libraries is to push 50% of the pension costs back to the local boards of education and libraries, to be phased in over 3 years.  It appears that a recommendation to have the state help fund social security costs will be used to offset the local government’s increase in pension costs, but the details are unclear.  Another recommendation is to study the feasibility of adopting a Hybrid Cash Balance pension plan, which would combine a 401 (k) plan with the existing traditional pension plan.

See today’s Maryland Reporter article for further explanation of all of the recommendations.


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