Think about this number for a second: 63 billion. $63 billion dollars is how much it’s expected to cost the state’s pension system to pay retirement benefits to teachers, judges, and state employees in the coming years. Here’s another number for you: 45 billion. That’s about how much the state currently has to pay those benefits. So, right now, it’s about $18 billion short of meeting its long-term financial commitments. What does all this mean for state employees looking to retire in the coming years?
To try to close the difference, in 2011, former Gov. Martin O’Malley pushed through legislation that would raise employee contributions to 7% from 5% and trim future benefits. That was supposed to be paired with the state paying an extra $300 million each year to the pension fund. Only thing? That part never actually happened. This year, Gov. Larry Hogan’s proposed budget allotted $150 million extra for the pension fund. The House’s version of the budget, which they passed last Thursday, slashed $75 million out of that to restore cuts in education and ensure pay raises for state workers.
With Sheilah in the studio to talk about it is Dean Kenderdine, Executive Director of the State Retirement Agency. And, with us by phone is Liz Farmer, a reporter for Governing magazine, who has reported on pension systems around the country.
The Maryland State Retirement and Pension System releases an annual financial report each year. You can find the one from 2014 here.