Over the past decade, the annual cost of funding Maryland’s public school teacher pensions has more than doubled, from $403 million in 2001 to $900 million in 2011. Although county governments employ public school teachers, the state pays the full cost of their employer pen­sion contributions. Costs will continue to increase despite several pension benefit reforms passed during the 2011 legislative session, soon exceeding $1 billion annually.

In the past several years, state legislators floated vari­ous proposals to shift the cost of funding teacher pensions to Maryland’s counties, rather than require the state to continue paying the full amount of such funding. In its final recommendations following a comprehensive review of the state’s public employee benefits, the Public Employees’ and Retirement Benefits Sustainability Commission (hereafter “the Commission”) called such a cost shift “a vital compo­nent of a sustainable system.”

In light of the state’s difficult fiscal situation, the struc­ture of teacher compensation policy, and the state’s new Race to the Top-related push for teacher quality evaluation procedures, this policy report supports a partial, phased cost shift of teacher pension contributions to Maryland’s counties. Below, we explain the rationale behind cost shift­ing, discuss the various elements of a feasible cost shifting proposal, and explore the possible consequences of cost shifting for both teachers and students.

To read the full report, please click the link below.