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

On Friday, January 21^st, 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.

Elected officials forecast budget challenges and possible solutions

At the Maryland Association of Counties (MACO) Conference, Governor O’Malley, Senate President Mike Miller and House Speaker Michael Busch are talking with local elected officials about the challenges facing them as they wrestle with the state budget and a projected $1.6 billion shortfall.

O’Malley has promised not to pass along any teacher pension costs this year, adding that the pension system must be changed first.  However, the General Assembly could still decide to shift some of the costs.  Miller and Busch also warned that the budget will very likely include a reduction in local aid.  Local officials are concerned with the impact and that tax payers will suffer.  For more information, check out the following articles:

• Baltimore Sun blog posting – O’Malley promises not to shift teacher pensions
• Baltimore Sun article – Local officials to make their case to the state
• Gazette article – Assembly faces puzzling predicament

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.

Pension Costs by County

The Department of Legislative Services developed a presentation on costs for the Benefit Sustainability Commission.  On page 51, the presentation indicates the different pension shifts proposed and the breakdown by county for libraries, community colleges and schools.

The Washington Post recently ran an article discussing the difficult budget decisions that Governor O’Malley would be facing, including the possibility of shifting the pension costs to the counties.  (You may need to set up a free login to access the article.)

State Teachers Pension update

Maryland’s State Teachers Pension costs are still a concern and will be examined closely.  The Joint Committee on Pensions is studying the issue.  In addition, members of a group of non-elected experts will be announced soon.  Their charge will be to study and make recommendations to state legislators.  For more analysis, go to the July 2^nd Gazette article.

House and Senate disagree over shifting Teacher Pension costs

A couple of weeks ago, the Senate voted in favor of beginning to shift the cost of teacher pensions to the county/local level beginning in FY 2012.  The House recently refused that proposal, stating instead that although this is an issue, more evaluation is needed to gauge the impact of such a change.  The issue will go to Conference Committee and, according to an article in the Gazette, the outcome is unclear.  For more details, see the Gazette article.

Senate Committee amendment would begin shift of pension costs to local governments

The Maryland Library Association and its Legislative Panel, along with other stakeholders like the Maryland State Education Association (MSEA) and the Maryland Association of Counties (MACo) are watching carefully the amendment passed in the Senate’s Budget and Tax Committee that would begin the process of passing the costs of the teacher pensions back to the counties.

While this amendment passed in the Senate committee, it still has to be voted on, both on the Senate floor and then in the House.  Current wisdom is that any attempt to pass the teacher pensions back to the counties will fail this year because of its controversial nature in an election year, but expect it back next year.  We will continue to monitor the situation.  Check this blog for any future updates.

For a little more detail  about the amendment, check out the Gazette newspaper online article entitled “State Senate budget panel approves teacher pension shift.”

Pension bills introduced in General Assembly

Two bills have been filed in the Maryland General Assembly dealing with pensions.

• SB 959 – Senator Miller has filed the same bill as last year.  This bill would push a portion of the teacher pensions back on the counties.
• HB 1374 – This bill would allow state employees to voluntarily leave the state pension system for a joint contribution system modeled after private industry.

Both bills are unlikely to make progress this year because it is an election year.  The counties and the school systems, as well as libraries, are monitoring these bills closely.

For more details, including the text of the bills, search for the bill number on the Maryland General Assembly’s web site.

O’Malley releases FY 11 budget for Maryland

Governor O’Malley released the details of the FY 11 budget today.  The budget closes the $2 billion deficit.  While the budget appears to be cutting an additional $330 million in local support, apparently it is not coming out of libraries.  Most of the changes in funding to libraries seem to be based on normal population increases and decreases and the wealth/population formula.  Some of the highlights regarding libraries are:

•  State teachers’ and librarians’ pensions are fully funded.
• The County Public Libraries received a slight reduction of $187,070.  The FY 11 proposed state appropriation is $33,032,330; the FY 10 appropriation was $33,219,400.
• The State Library Resource Center (SLRC) received a small gain of $25,473, however, this does not begin to restore the significant reduction received in FY 10.  The FY 11 proposed appropriation is $9,408.107; the FY 10 appropriation was $9,382,634.
• The Regional Libraries received a small gain of $23,733.  The FY 11 proposed appropriation is $6,185,646; the FY 10 appropriation was $6,161,913.

 The press release from the Governor’s office includes some additional highlights.  This page also provides links to a PowerPoint presentation, the Budget in Brief and Budget Highlights.

 The Budget Bill is SB 140 and the Budget Reconciliation and Financing Act of 2010 (BRFA) is SB 141.  These bills should be available for viewing on the Maryland General Assembly’s web site on January 21^st.

FY 2011 state budget may have 0% growth; pensions on hold for this session

The Spending Affordability Committee, chaired by Delegate John Bohanan, will be meeting with the Governor on December 17^th to make its formal recommendation of what amount, if any, the state can afford to grow the FY 2011 state budget.  While it is projected that Maryland might see actual growth (3.4%) in revenues, the Committee is leaning toward recommending an unprecedented 0% increase.  Last year they recommended a 0.7% increase.

The Governor is not legally obligated to follow the recommendation of the Committee, but for the most part, he does so.  With a 0% increase in the budget, any inflationary or mandatory cost increases (e.g. health insurance) would have to be counter-balanced by cuts in other programs.

Another suggestion has been to shift some or all of the costs of the State Teachers Pension, which is currently fully funded by the state, to the local government.  House Speaker Michael Busch feels strongly that pensions will not be on the table this year because of upcoming elections.  However, it is inevitable that pensions will be addressed at some point during the next two sessions.