Monthly Archives: August 2013

MD State Pension System — An Insider Perspective

Getting all the facts straight in the Maryland’s pension fund arena continues to be a work in progress.

Dean Kenderdine, executive director of MRPS, sent along this comment to clarify remarks published here by Hagerstown Del. Andy Serafini about the pension fund’s move to shrink it’s projected rate of return on future investments.SRPS_Logo

Here’s what Kenderdine wrote:

“Mr. Rascovar:

“I have read with interest your writings on the Maryland Retirement and Pension System, as well as the responses it has elicited from state officials, past and present, who have been directly involved with the public policy behind the system.  The recent post from Delegate Andrew Serafini prompts me to offer one important correction to your readers.

“In discussing the system’s assumed annual rate of return, Delegate Serafini cites recent actions by Moody’s in [its] analysis of states for their credit ratings.  The delegate is correct when he states that the system’s board of trustees recently lowered the system’s assumed rate of return from 7.75% to 7.55%.  This is one of several economic and demographic assumptions that go into determining the annual contribution required of the system’s employers, including the state.  It is the rate used for funding purposes.

“The board took this action after extended and careful deliberation, with the benefit of advice from the system’s investment consultant and actuary who, in addition, gathered detailed input from a number of economists and investment professionals.  Like other public pension plans, the Maryland system, its expert advisors and the board of trustees have taken a long-horizon look to the future in making the investment return assumption.  The system is indeed, a long- term investor whose returns over the past 25 years, inclusive of the recent Great Recession, have been 7.85%.

“Delegate Serafini states that ‘municipal analysts are also saying [Maryland’s] investment assumptions need to be further reduced – lower than what the retirement board recently did from 7.75% to 7.55%.’  It should be made clear that the rating agencies have not expressed the same opinion.  None of the three rating agencies has indicated to Treasurer Nancy K. Kopp, Maryland’s lead in the oversight of state debt, that the state’s assumed rate of return should be lowered.

“Moody’s has recently adopted a new practice where they measure all public pension plans’ liabilities using a common assumed rate of return, which they arbitrarily set at approximately 5.5%.  According to Moody’s, in [its] June 27, 2013 report entitled ‘Adjusted Pension Liability Medians for U.S. States,’  [this has been done] to ‘achieve greater comparability and transparency in our credit analysis…’ of all states.  It is Moody’s effort to achieve comparability in the accounting of pension liabilities.  In its April 17, 2013 report entitled Adjustments to US State and Local Government Reported Pension Data, Moody’s states that “[o]ur adjustments are not intended as a guide, standard or requirement for state or local governments to report or fund their obligations.”  Moody’s goes on to say “We recognize the value of the actuarial approach for governments, who are ultimately concerned with budgetary planning.”

“Moody’s reviewed the status of the State’s pension systems when reviewing the State’s creditworthiness for its last bond sale in July 2013.   Maryland retained its Aaa rating from Moody’s. The Moody’s report is available at http://www.treasurer.state.md.us/media/56252/moodys_2013_2nd.pdf.

Is the End Near for MD Republicans?

By Barry Rascovar / August 29, 2013

It’s hard to tell how things can get worse for Maryland’s Republican Party:

  •   A nasty civil war is raging on the Upper Eastern Shore over replacing one of the GOP’s few bright lights, state Sen. E. J. Pipkin, who opted to pursue a master’s degree in sports management in Texas.
  •   The Lower Eastern Shore’s GOP senator, Richard Colburn, is trying to explain to auditors (and the public) why he reimbursed himself from his campaign fund for $4,600 worth of Oriole baseball tickets, $23,000 in meals, $3,900 in lodging, $3,400 in gas and $600 for flowers.
  •   An Anne Arundel County delegate got himself arrested yet again for potentially lethal intoxication, this time while driving a weaving car at 70 mph with an expired license. Don Dwyer refuses to take the hint from colleagues to resign. He’s got a serious addiction he needs to address before he’s fit for elective office.
  •   The latest state GOP staff director to resign is David Ferguson. His sudden departure fueled reports Ferguson was fed up with the new party chair, Diana Waterman, who won her job in a disputed, internecine internal election. (She replaced ex-Sen. Alex Mooney, who left Maryland to run in a Republican-friendly congressional district in West Virginia.) The state party once again is short on cash and lacks the kinds of candidates to filed a viable statewide ticket next year.

What a pathetic situation.Cockeyed Maryland GOP

Bickering Eastern Shore Republicans are so torn they could hand their hated foe, Democratic Gov. Martin O’Malley, the power to name the next Upper Shore senator. Not only is the GOP losing its most articulate Senate spokesman, the party could end up losing this seat in 2014.

Indeed, Senate Republicans might well find themselves greatly diminished next year. Democrats could pick up Sen. Allan Kittleman’s seat in Howard County when he runs for county executive, the seat of retiring Sen. Nancy Jacobs in Harford County and possibly Pipkin’s old seat if the squabbling Upper Shore Republicans savage each other in a brutal primary, as seems likely.

You have to wonder why the commotion. Republicans have made themselves irrelevant in Maryland’s populous midsection. The chances of electing a Republican in Baltimore City or Prince George’s County, for instance, come down to Slim and None — and Slim left town decades ago.

Shrinking Voter Appeal

Except in rural counties and a few suburban outposts, the state GOP is Maryland’s incredible shrinking party.

Ten years ago, 30 percent of Maryland voters registered Republican. That is now down to 25 percent. Even independents outnumber Republicans by 9,000 in Montgomery County, 13,000 in Prince George’s and 19,000 in Baltimore City.

The news isn’t much better in important Republican strongholds. Since 2003, Frederick County  Democrats have added nearly twice as many voters to its rolls as did Republicans. Independent voters increased twice as fast as new GOP registrants, too.

In Harford County, independent registrants since 2003 equal the number of new GOP voters.

In Anne Arundel County, Democrats, not Republicans, registered more new voters in the past 10 years; both parties were eclipsed by a wide margin by new independent voters.

In Baltimore County, which contains the largest number of Republicans, independent voters registered at twice the rate as Republicans; the number of new Democratic voters grew three times as fast.

GOP No More

The state’s Grand Old Party is no longer grand, is not aging well and is not much of a political party. The battle between pragmatic conservatives and ideological purists looks like a bunch of vultures fighting over the scant remains of an unrecognizable skeleton.

This follows a trend in many other urban states where the GOP no longer has a message that resonates with voters. It seems lost on a stormy sea.21492061-surviving-adGOP on stormy sea

More and more it is turning into a party of neo-Dixiecrats — hostile to minorities of all stripes; hostile to immigrants; hostile to the poor; hostile to government spending regardless of its purpose; hostile to federal authority of any kind, and incendiary in its seething hatred of a president who is both black and liberal.

It is not a pretty picture. Look around the country where Missouri Republicans voted to outlaw federal gun-law enforcement. Look at North Carolina and Texas where Republicans voted to deter blacks and Hispanics from voting. Look at Arizona and other Republican states that voted to nullify federal immigration policies.

Today’s Republican Party, both in Maryland and nationally, lacks a coherent set of values and beliefs that can capture statewide offices in Annapolis or the national presidency.

The upcoming insanity in Washington over raising the nation’s debt ceiling (let’s not pay our IOUs) and notching up sequestration’s budget screws could come to symbolize the growing futility and disintegration of the GOP.

It’s no longer the Party of Lincoln — and that’s the greatest tragedy.

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Who Does the Truth Hurt — Gansler or Brown?

By Barry Rascovar / August 19, 2013

THAT OLD ADAGE, “the truth hurts,” could prove a double-edged rapier for Maryland’s main gubernatorial contenders, Attorney General Doug Gansler and Lt. Gov. Anthony Brown.

Yes, Gansler was too blunt in addressing a group of volunteer supporters. He dared voice what many have been saying privately — that Brown’s sparkling resume masks the fact he has only a smattering of substantive accomplishments.

Attorney General Doug GanslerAnd yes, Gansler blurted out what is all too clear but rarely discussed so openly — that Brown hopes to win election by touting the fact he would be Maryland’s first black governor.

As the attorney general put it, such a “first” is a “laudable goal” but “you need a second sentence” that describes what you’ve done to earn it.

Brown’s Response

Brown’s camp Immediately sought to sensationalize Gansler’s comments. A Brown spokesman said the attorney general was “out of control,” that he should not “attack other Democrats,” that Gansler is “the only one talking about race,”  that Gansler had “belittled the record of a war veteran who served in Iraq.”

Oh, please. Cue the national anthem.

Apparently it would be unpatriotic, un-Democratic, and downright racist to vote for someone with loose lips like Gansler.

While this attack-dog rhetoric makes for a neat propaganda pitch, the truth isn’t nearly so one-sided.

Brown’s campaign promotes the fact he’d be the first black Maryland governor. (Although with a Swiss mother and a Jamaican father it is a stretch to call him an African American.) His followers are trying to rally black voters to his cause by making that very claim. On Friday, the candidate himself even encouraged black county officials to support their own kind.

It’s no small point, either, with up to a third of the Democratic primary vote likely to come from African Americans.

Segmenting the Vote

Brown is quite openly targeting the state’s large African American vote centered in Prince George’s County and Baltimore City. To deny that obvious strategy is to deceive Marylanders of your true intentions.

There’s nothing wrong in segmenting the voting populace that way. Gansler is seeking support from the state’s Jewish voters and lawyers. Del. Heather Mizeur is going after the gay and lesbian vote. (This would be another “first” for Maryland.) It is a time-honored tradition — you solicit backing from demographic groups where there is a personal affinity.

Lt. Gov. Anthony BrownAt this early stage, we don’t know what else Brown will add to his demographic strategy. He’s been mute on his campaign platform other than continuing O’Malley’s liberal social spending policies. He’s yet to outline what he’d do differently or how he’d pay for new initiatives.

But we do know Brown’s main objective is to win a lopsided vote from Maryland’s blacks. That is his key to victory.

So when Montgomery County Councilwoman Valerie Ervin, an ardent Brown supporter, goes overboard and accuses Gansler of “playing the race card,” she had better re-examine how Brown is running his own campaign. The lieutenant governor already is playing that game.

What Has He Done?

Gansler’s second point — Brown’s thin list of achievements next to his own — is what he wants to impress on voters.

Brown’s tenure in the House of Delegates wasn’t marked by great personal accomplishments. His nearly seven years as lieutenant governor have witnessed lock-step loyalty to O’Malley’s programs, continuous speech-making and a few items he claims credit for. It’s not a gourmet menu he offers voters.

Even Brown’s military service has been greatly magnified.

While stationed in Iraq for a year as a colonel in the Army Reserves, Brown wasn’t battling armed Shiite dissidents. Instead, he was shuttled by armored caravan from the heavily fortified U.S. headquarters in the Green Zone to a government-protected building where he  educated Iraqi lawyers on how to run a democratic justice system.

It was important work that seriously disrupted his home life and required enormous personal sacrifice. But this alone doesn’t qualify anyone to be Maryland governor.

The Fallout, Pro and Con

Will Gansler’s “gaff,” as newsies are calling it, damage his gubernatorial chances?

Yes and no.

He has given the Brown camp juicy ammunition that will help pump up enthusiasm for Brown in African American communities. Gansler’s words will be repeated often during Brown’s get-out-the-vote drive next year.

On the other hand, whoever leaked the tape of Gansler’s remarks may have done him an enormous favor.

Gansler is now talking openly about looking beyond a candidate’s race, ethnic origin or sexual orientation to the issues. It’s now mandatory he prove to voters his record in public service (as attorney general and state’s attorney for Montgomery County) is superior to Brown’s.

It may come with the added necessity of going negative — telling Democratic voters what Brown hasn’t done during his two terms as lieutenant governor.

Gansler already is seeking to put Brown on the defensive by asking what the lieutenant governor would do about Maryland’s prison crisis. Thanks to Gansler’s “gaff,” the campaign for governor could develop a sharpened focus sooner than anyone expected. It also guarantees next year’s gubernatorial debates will be humdingers.

Politicians as Truth-Tellers

What the attorney general told his volunteers was refreshing in its directness and honesty. He didn’t demean his opponent or call him names. (Listen to the tapes.) He simply made a statement about Brown’s record and campaign strategy.

Such truth-telling can be a hit with voters. Just ask New Jersey’s outspoken governor, Chris Christie, perhaps the most popular Republican in America. Look at the notoriety Vice President Joe Biden receives when he lapses into political candor.

And remember this state’s fascination and love affair with William Donald Schaefer when as governor and mayor he said what was on his mind, even if it wasn’t politically correct.

Remember, too, that we’re still in the “dog days of August,” many, many months removed from the time when voters look seriously at the candidates.

But we now can say that the first “shot across the bow” in Maryland’s gubernatorial campaign has been fired.

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MD Pension Fund — Another View

August 15, 2013

AND NOW FOR a more global perspective on paying for pension fund obligations, here is Del. Andy Serafini of Hagerstown, who emailed me with his own, thoughtful analysis, which is more downbeat than mine. Except for editing to clarify or to make grammatical changes, the thoughts are the Republican delegate’s:

“I read with interest some of the recent posts and comments on the Maryland Pension Plan. I know that politicians have trouble with feeling that we are the subject of every comment but your statement about ‘conservatives warning of doom and gloom,’ or something along those lines got my attention.

“I have attached several pieces of information for your review that might paint a different picture. Certainly, the piece from The Economist, which would never be confused for a conservative publication, speaks volumes. That we make the top for [poorly] funded status is not encouraging.

Del. Andrew Serafini of Hagerstown

Delegate Andrew Serafini

“I have included articles from  CNBC, Washington Times and Wall Street Journal  for your consideration. If you will note specifically it is Moody’s that has stated that the [state’s unfunded pension liability] is much higher and municipal analysts are also saying [Maryland’s] investment assumptions need to be further reduced — lower than what the retirement board recently did [in lowering expectations for investment growth] from 7.75% to 7.55%. Illinois is facing a lawsuit over inflated assumptions on its pension performance.

“Since the 1740s, interest rates have been on a 30-year cycle. The last time they were this low was 1952. They then reached a peak at the end of the Carter administration and beginning of the Reagan administration in 1982. Since that time they have been on a steady decline, until recently.

“Moving from high to low [interest] rates created very high bond investment returns that will not be replicated in a rising [interest] rate environment. As far as the [national]  economy, the Gross Domestic Product numbers were recently revised downward, and with China and other economies slowing, you are correct that the [U.S.] economy may [experience] slow growth in the coming years.

“Washington still has issues that must be addressed (see Milton Ezrati attachment).

“Is it possible that we will see the economy improve and hopefully investment returns for the Maryland State Retirement Agency as well? One would hope.

“The reality is that even with all of the changes [Maryland made in recent years to pension fund] contributions and formulas and getting rid of the corridor [funding method], annual contributions will grow by $500 million in the next few years. [Combine that] with the extra $500 million to service the state’s general-obligation bond debt due to lower real estate values (Maryland led the country in foreclosures [in the spring of 2012]) and, as [Department of Legislative Services chief] Warren Descheneaux says, the concern that the federal government may not pay all of [its Obamacare obligations for] increased medical expenses in Maryland.

“Where will the extra $1 billion to $1.5 billion come from in the next few years [to meet pension and other obligations]? Once again that Wall Street Journal article on how revenues spiked last year due to tax planning has been confirmed by the Comptroller’s Office.

“As a financial planner, I try to look at a realistic expectation and then the “what if” scenarios. This is not pessimistic but realistic. Not planning for possibilities can be devastating. As Bobby Neall stated [in a previous politicalmaryland.com posting], the creators of the corridor [funding method] thought it would be a floor [for state pension contributions], not a ceiling.”

God bless,

Andrew Serafini

Delegate 2A

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MD Pension Fund Mystery Unearthed ! !

August 14, 2013

ONWARD WITH historical clarifications — and a new puzzle connected to Maryland’s pension fund mess and how the state stepped in such deep doo-doo.

First, in response to former state Sen. Bobby Neall’s corrective comments on the true birth-fathers of the now-discredited “corridor funding method,” for state pensions, Maryland State Treasurer Nancy Kopp has chimed in.

She emailed her staff and the pension board that Neall’s version as recounted in www.politicalmaryland.com  is “a very fair and accurate description of the origins” of this unorthodox approach that is now being phased out over 10 years.

SRPS_LogoKopp diplomatically describes it as “the legislature’s prudent attempt to constrain [Gov. Parris Glendening’s intentional] underfunding” of the retirement system. (In truth, it was a raid on the pension fund.) She also notes “the Board of Trustees opposed it from the beginning.”

Kopp explains that “regardless of the legislators’ intention, the corridor-based funding level was always subsequently treated in the budget as the required amount, rather than as a floor.” That short-sighted move helped Glendening pay for new social programs and enhance his reputation, but it created massive pension funding gaps that will take a decade to eliminate.

Neall’s “strong voice and incisive leadership” on pension matters might have prevented this terrible misjudgment, Kopp writes, but by then he had left the state Senate. He was “sorely missed” — an understatement if ever there was one.

And Now. . . . The Mystery

Skip forward a few years and the second pension blunder takes place.

Republican Gov. Bob Ehrlich is facing a Hobson’s choice — sign an expensive pension enhancement bill sponsored by the state teachers union (passed unanimously by both houses) — or risk antagonizing that influential union when he runs for reelection in the fall.

Cecilia Januszkiewicz, the governor’s capable budget secretary in 2006, sent me this email in an attempt to elucidate:

“Saw your pension article. Just for the record, the 2006 pension enhancement was introduced by Mary Dulany James in her capacity as Chairman of the Joint Committee on Pensions. It was not an Ehrlich Administration initiative. It passed both [h]ouses unanimously. It became law without the Governor’s signature. You can look it up.”

Sure enough, the ever-alert Department of Legislative Services reports that the governor did not sign the pension bill Januszkiewicz refers to. Yet all news organizations (The Sun, the Post, the Daily Record, the Gazette, Associated Press) report that Ehrlich signed the pension enrichment bill that day.

Even more baffling, Ehrlich, Lt. Gov. Michael Steele and the governor’s press office went to great lengths to praise his signing of the enrichment bill.

What’s going on?

. . . . The Rest of the Story

Here’s the way it happened: The pension enhancement bill, not sponsored by the administration, passed unanimously in both chambers, as Januszkiewicz wrote.

But so did a second pension bill — this one made minor changes to pension practices, simplified language and corrected grammatical errors. The bill had “no fiscal effect.”

It is the second, revenue-neutral pension bill, HB1430, that Ehrlich refused to sign or veto. Why remains shrouded in the mist of time.

The Republican governor did, though, sign HB1737, the expensive pension enhancement bill (total price tag to the state and counties: $2.1 billion). He vetoed the Senate version because it was duplicative.

End of this mini-mystery. It was a mix-up anyone could make. Case closed. Unless, of course, readers of this blog unearth some new pension twist buried deep in the recesses of Maryland’s state archives.

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puzzle in this pension

Obamacare: A Good Start in Maryland

By Barry Rascovar / August 8, 2013

IT’S A BRAVE, new world for healthcare insurance.

Republicans derisively call it Obamacare. They are bound and determined to kill, cripple or sabotage the program, however unlikely that may be.

They loudly cry that the president’s Affordable Care Act (ACA) will send insurance rates soaring and turn into a monumental debacle.

There’s no question the law is too complex, excessively detailed and bureaucratic. Liberal Democrats who passed it didn’t know enough about the dynamics of health insurance or what drives medical costs.

It’s also true this program is enormously expensive with hypothetical savings that may prove unerringly accurate or insanely off-base.

‘Socialized Medicine’

All this reminds some in the field of the “sky is falling” angst in 1965 when Medicare and Medicaid were created by Congress and Lyndon Johnson. Critics such as Ronald Reagan, Barry Goldwater, Bob Dole and the American Medical Association charged this amounted to “socialized medicine” and a dangerous government expansion that would curb individual freedoms.

Obamacare

Stethoscope

No one knew for sure if the approach would actually guarantee health care coverage for retirees and the poor. No one knew if the programs were affordable.

Nearly 50 years later, we’re still struggling with the latter issue but few question the effectiveness of these insurance programs in guaranteeing medical care for two groups of vulnerable citizens.

Based on what we know to date, Obamacare may follow a similar path.

The difference this time is the active sabotage efforts by the opposition party (Republicans). Such obstructionism to achieve political gains at the polls didn’t occur in 1965.

Still, early signs indicate Obamacare may not be an immediate disaster.

Health insurance rates in Maryland, New York. Colorado and California under the new program turn out to be affordable. (Comparisons with current health-care policies are pointless because mandated coverage is much broader under Obamacare.)

If, indeed, insurers can make money by accepting lower margins on a much bigger pool of customers – a common American business occurrence – everyone might wind up a winner.

$93 Per Month

In Maryland, the state insurance commissioner recently approved rates for individual health coverage under the Affordable Care Act that starts in January. The most basic, bare-bones policy can be purchased through the Maryland Health Connection for as little as $93 a month for a 21-year-old non-smoker in the Baltimore metro area.

The ACA policies also give consumers more benefits, such as free preventive care and a minimum of co-pays.

Additionally, individuals with incomes under $46,000 a year and families earning under $94,000 a year are eligible for federal tax credits that make this insurance even more affordable. State officials estimate three-quarters of uninsured Marylanders will qualify.MD Health Connection

All this sounds wonderful, but we’ve got a long way to go before Obamacare can be judged fairly.

First, let’s see if there’s enough competition to keep future rates low and affordable. Aetna, using conservative forecasting metrics, has pulled out of Maryland and a few other states for fear of losing money. Was this a wise short-term financial decision or a stupendous long-term miscalculation?

It means there’s one less competitor for those hundreds of thousands of Marylanders who will be eligible to shop for Obamacare health coverage in October.

One big question mark is how many of Maryland’s 740,000 uninsured citizens will seek affordable health-care protection. A big group of new sign-ups is needed to make the program work, especially among the “young invincibles” — healthy 20-somethings and 30-somethings.

We also won’t know for at least a year if the rates approved for 2014 accurately reflect the cost of insuring all those additional consumers.

A Shot In The Dark

Insurance companies are making their best actuarial assumptions as to what it will take to pay the medical expenses of so many newly insured individuals, especially those with preexisting conditions or haven’t seen a doctor in ages and may require costly initial work-ups and treatment.

Will it be more expensive than they expect or are their estimates overly cautious? It’s educated guesswork at this point.

Will the second-year and third-year rates in 2015 and 2016 shoot skyward like a rocket or come down to earth? That is a far more crucial period for establishing the viability of this program and a true baseline for insurance costs.

In Maryland, the big winners of the president’s health insurance program could be this state’s hospitals, especially those with a large proportion of uninsured patients, such as Johns Hopkins, the University of Maryland Medical Center and Sinai Hospital.

Even with Maryland’s unique all-payer rate-setting system that compensates hospitals for charity care, if the number of uninsured in the state shrinks dramatically it should mean more stable financial results for medical centers.

Given the struggles at Maryland hospitals to control rising costs with the meager rate increases approved this summer by super-cautious regulators, more insured patients would be welcome indeed.

Competition Is Key

Obamacare’s success could depend on competition – a word Republicans should be championing – among insurance companies for all the tens of millions of new potential customers. It is a once in a lifetime opportunity for insurers who can dramatically expand their subscriber base while maintaining a decent profit margin.

In states where Republicans haven’t erected intentionally daunting roadblocks, the new health insurance program is off to an encouraging start. Competition for these new members could yet drive down premiums.

It’s still early, though. It helps to remember that we’re only in the formative stages of this Grand Experiment.  ###

(A shorter, less global version of this column ran in the Community Times on August 7.)

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View From the Pension Fund Ground Floor — Bobby Neall

August 7, 2013

THERE’S ALWAYS ROOM for clarification in this blog, especially when the clarifier was there at the Creation.

Below is an email I received from Bobby Neall, the former Anne Arundel County Executive, state Senator and state Delegate who knows more about fiscal and pension finances than just about anyone in Maryland. Here is his valiant effort (with stylistic editing on my part) to get the facts straight in my July 31 post on the history of Maryland’s pension problems:

“Am enjoying your columns immensely. Your most recent one on the pension system conflicts somewhat with my recollection, however.

“Warren Deschenaux [Director of the MD Department of Legislative Services] and I [then a state Senator] devised the so-called corridor methodology [for funding the state’s annual pension appropriation] as a means to prevent then Governor Glendening from diverting required pension contributions to discretionary spending.

” At the time [Glendening] was using the annual funded status of the systems — a mere snapshot — as the determining factor as to how much the [state’s] annual contribution should be.

“The rationale for the corridor [funding method] was as long as the funded status was between 90-110 percent, an amount equivalent to the [state’s] previous year’s contribution was sufficient.

“Given the legislature’s anemic budgetary powers, this was all we could do to prevent the governor from skipping payments altogether.

” So, while our solution was not without flaws, it prevented the hijacking of money properly intended for the pension system.

” It was meant to be a FLOOR.

“Somehow during the Ehrlich term, it became a CEILING, no doubt because of the tightness of money [in the governor’s budget].

“The situation, as I recall it, was made worse by [the decision of the governor and legislature to improve] pension benefits without [the state] making ample provisions for higher commitments to the system.

“So in summary, the choice we faced was either mandate a specific contribution or risk a Prince George’s County-style pension finance scheme [i.e., contribution holidays].

“Clearly, in the second Glendening term our action was warranted and necessary.”

 Bob Neall  

[A further aside: Today, Neall is President of Priority Partners, the state’s largest Medicaid managed-care organization with over 225,000 members. My thanks to him for placing this matter in its proper context. An earlier editing change in the column for accuracy’s sake is due to the diligence of Major Morris Krome, a longtime trustee of the MD state retirement system.]