Category Archives: Uncategorized

Defending Joe Vallario

By Barry Rascovar

May 6, 2014 — THERE’S NO DENYING Del. Joseph F. Vallario, Jr. of Prince George’s County is a stingy gatekeeper when it comes to loosening Maryland’s civil and criminal laws.

But is the gruff chairman of the House Judiciary Committee in Annapolis really the scourge of the legislature, the anti-Christ intent on malevolently doing in all liberal causes?

Judiciary Committee Chair Del. Joe Vallario

Judiciary Committee Chair Del. Joe Vallario

A recent op-ed in The Baltimore Sun by Sidney Rocke, an attorney with the Federal Energy Regulatory Commission, accuses the conservative Vallario of being a one-man, “dictatorial” wrecking crew — especially on bills Rocke favors.

It’s true Vallario is inordinately protective of criminal defense attorneys. He’s one himself and he takes a hard line on bills that might narrow their legal practices — and their income — or make it more difficult for defense attorneys to win their cases. “Let ’em go Joe” is what Rocke says staffers call Vallario.

But to blame the defeat of liberalizing legislation solely on Vallario is a misreading of the inner workings of the Maryland General Assembly.

Serving Legislative Leaders

Vallario has performed a useful role for legislative leaders over the past 21 years.

He disposes of bills that are too sweeping, too revolutionary, too inflammatory, too impractical, too poorly thought out, too poorly drafted or ahead of their time.

Yet he does so with a majority vote from others on his Judiciary Committee. The panel is intentionally configured to act as the General Assembly’s execution squad.

Every legislature needs such a panel, where the presiding officer sends well-meaning but unrealistic crime and punishment bills for burial.

Intervention Yields Results

Sometimes important bills get the same treatment. Then the House speaker or the governor steps in to urge Vallario and other committee members to yield on bills such as marijuana decriminalization or handgun control. The pressure usually works.

It’s an old story in Annapolis, something Rocke neglected to include in his angry op-ed. Killer committees have been around a long time.

Remember Joe Owens, the highly conservative Judiciary Committee chairman from liberal Montgomery County?

Abominable ‘No’ Man

He dominated that committee for 14 years, earning the sobriquets “Killer Joe” and “the Abominable ‘No’ Man.”

Owens helped defeat or delay all sorts of liberal reforms on gun control, drunk driving, child support and victim rights. One year, 61 percent of the bills sent to his committee bit the dust.

Joe Owens was a colorful and controversial figure: direct, open and honest.

“Let’s face it,” he once said, “the majority of bills we get should not be passed. . . [T]his is not a little contest. . . When we pass a bill, four million people have to live by it.”

Crusty But Lovable

Over in the Senate, irascible Walter M. Baker of Cecil County served the same role for 17 years chairing the Judicial Proceedings Committee.

Crusty, curmudgeonly and a determined conservative thinker, Baker had a drawer filled with idealistic reform bills he side-tracked. “The only good bill is a dead bill,” he used to quip to the entertainment of his colleagues.

Former Sen. Walter M. Baker

Former Sen. Walter M. Baker

Still, Baker conducted fair and deliberate hearings. He yielded when pressed to do so by the Senate president or governor while always defending his belief in limited government.

Political Counterweights

Often over the past 50 years conservatives chairing Maryland’s judicial panels have served as counterweights.

Vallario’s proclivity for killing bills balanced the liberal attitude of Sen. Brian Frosh’s Judicial Proceedings Committee.

Senate Judicial Proceedings Chair Brian Frosh

Senate Judicial Proceedings Chair Brian Frosh

Owens’ “killer committee” balanced the liberal mindset of Sen. Joe Curran, who chaired Judicial Proceedings for 16 years.

Earlier in Curran’s tenure running Judicial Proceedings he was paired against another conservative legal thinker chairing the House Judiciary Committee, Thomas Hunter Lowe of Talbot County — who later kept a firm hand on that panel as Speaker of the House.

House Speaker Thomas Hunter Lowe

House Speaker Thomas Hunter Lowe

To blame the demise of reform legislation on Joe Vallario is to miss the bigger picture.

Legislating in the State House is a delicate balancing act.

Senators and delegates come together in Annapolis with 188 points of view. They represent different parts of the state whose citizens hold diverse perspectives on the same issue.

Agreement Isn’t Easy

No wonder so many bills fail to win majority approval. Passing legislation is an art. Getting a green light from the Judiciary Committee takes lots of patience, negotiation, coalition-building and tactical smarts. It won’t happen just because a bill is well-intentioned.

Vallario faces a difficult challenge running for reelection this year in a new, unfamiliar northern Prince George’s County district. He may not return. Frosh definitely won’t be back: He’s running for attorney general.

We could end up with two new chairmen of these important committees. One of them might become the next stingy gatekeeper.

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O’Malley’s Boring Valedictory

By Barry Rascovar

Jan. 27, 2014 — YES, THERE ARE TIMES when a picture is worth a thousand words — and more. Such was the case in Annapolis on Thursday when Gov. Martin O’Malley turned in an all-too predictable, stilted and boring valedictory in his concluding State of the State Address.

Judge for yourself in the photo below.

The facial expressions of Senate President Mike Miller, House Speaker Mike Busch, Attorney General Doug Gansler, Court of Appeals Chief Judge Mary Ellen Barbera and Lt. Gov. Anthony Brown speak volumes.

Gov. Martin O'Malley's final State of the State Address

Maryland Gov. Martin O’Malley’s final State of the State Address fails to excite his State House audience.

“Who’s that over there?”

“When is this going to end?”

“What’s next on my schedule?”

“What do I want for lunch?”

“Why can’t I stay awake?”

There’s a reason for the tepid legislative response. They’d heard nearly every bit of O’Malley’s speech before. There was nothing new in his text, no surprises, no informal, heartfelt ad libs.

The one exception: A cryptic line from an Irish writer O’Malley dangled for listeners but never explained.

“The only things worth doing are the things that might possibly break your heart.”

Go figure.

Put O’Malley before a large audience in a formal setting and he delivers a stilted, overly theatrical speech. Yet this same politician, placed in front of a campaign crowd, turns dynamic.

O’Malley’s Place in Maryland History

He missed a golden opportunity last week to sum up his time as governor the way historians are likely to judge it.

O’Malley served during the worst economic times in 70 years. He kept Maryland’s ship of state afloat and in good shape during the Great Recession.

He did it by slowing, rather than reversing, the rate of government growth.

He shrank employee ranks, but did it through attrition rather than layoffs.

He used budgeting gimmicks and fund-shifting to keep things together in lean years.

He raised taxes often — maybe too often — to avert massive state and local cutbacks.

Now Maryland is gradually emerging as a state with a solid foundation, an educated work force and an optimistic future.

What Lies Ahead

Are there big problems O’Malley will leave behind a year from now?

Yes, indeed.

  • A hostility in Annapolis toward the private sector (“tax the rich”) that could cost Maryland jobs and businesses.
  • A deeply flawed health care insurance program that may unravel.
  • A progressive agenda that relies too heavily on taxation and government mandates to solve basic social woes.
  • An ineffective and weak economic development program given a low priority.
  • A belated effort to improve transportation options that was placed on a back burner.
  • A tax system lacking in equilibrium and fairness.
  • Structural budget gaps that will handicap future governors.
  • A bitter split between conservative rural and newer suburban areas and the liberal population core in Central Maryland.

O’Malley, meanwhile, has turned his focus to a far larger political objective on the national scene. He does have an interesting tale to tell, even if he stretches the truth about the Maryland story.

What he didn’t do in his valedictory was to lay out a “way forward” for his successor.

Yes, he brought us through the Great Recession in surprisingly sound shape.

But governing in a time of gathering prosperity, while facing a bitter political divide, requires a different mindset.

O’Malley left us in the dark on that one.

O'Malley at State of the State

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Ditched by Dutch

By Barry Rascovar

Jan. 23, 2014 — DUTCH RUPPERSBERGER’s gubernatorial ambitions wound up in the political ditch this week. We shouldn’t be surprised.

The six-term Central Maryland congressman and two-term Baltimore County Executive isn’t a gambler. He likes a sure thing. In politics that means a race in which he is the heavy favorite.

Dutch Ruppersberger

Dutch Ruppersberger

That wasn’t the case in the governor’s campaign, where two Democrats already have $13 million on hand and likely will dominate this race.

Yet neither Attorney General Doug Gansler nor Lt. Gov. Anthony Brown has sparked excitement from the voting public.  Neither man has come across as anything more than a plastic politician.

That left the door open for the garrulous and personable Ruppersberger, who is never at a loss for words and loves the “people” part of politics.

He’s also the only Maryland politician widely known just by his first name — a sure sign of connection with Jane and John Q. Citizen.

Drawbacks to Consider

But raising $5 million in a short time frame looked daunting. Many of his supporters among the political elite have already endorsed Brown. His polls showed him running well in the Baltimore region, but  he had work to do elsewhere in the state.

Moreover, Ruppersberger, 68, may not have the energy for a statewide campaign where he isn’t the front-runner. He’s also not up to date on in the details of state issues, having focused on congressional matters for the past 13 years.

Leaving a safe seat in Congress isn’t the norm.

On top of that, Ruppersberger is the ranking Democrat for another year on the House Intelligence Committee, which makes him a VIP entitled to special insider briefings, White House invitations and overseas trips.

But he concludes his stay on the intelligence panel after this year, returning to his status as a non-VIP minority member of the House. That unappealing prospect prompted Ruppersberger to consider running for governor.

Now it won’t happen. He’s decided to remain in Congress, even with lower visibility and diminished importance.

Who Else Might Run?

Will another member of the Maryland delegation now jump into the gubernatorial campaign?

John Delaney, a freshman congressman representing parts of Western Maryland and Montgomery County — it’s the state’s “odd couple” district — is staking out ground as a maverick Democrat promoting outside-the-box solutions and tweaking the political powers that be.

John Delaney

John Delaney

Still, a run for governor doesn’t seem likely.

It’s late to start from scratch. Yes, the wealthy Delaney could self-fund his campaign but he has no track record in public office, isn’t well-versed in Annapolis matters and is a total unknown outside of his district.

But Delaney understands that clashing over health care insurance with Gov. Martin O’Malley plays well in Western Maryland and that being out front on raising the minimum wage helps in Montgomery County.

So Delaney’s outspoken jabs serve an important purpose for his reelection bid and for other possible races later. We can expect more of this sort of headline-grabbing from him in the future.

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MD’s Fundraising Loophole

By Barry Rascovar

Dec. 27, 2013 — LT. GOV. ANTHONY BROWN has a key advantage over his main foe for governor, Attorney General Doug Gansler.

Brown can continue raising millions of dollars during the General Assembly session through his conjoined ticketmate, Howard County Executive Ken Ulman.

But Gansler cannot solicit funds during that 90-day period because his political partner on the ballot is Del. Jolene Ivey of Prince George’s County. Both are elected state officials and thus are barred from doing any fund-raising until mid-April.

Loophole in State Law

It’s a quirk of Maryland’s campaign finance law that is inherently dangerous to the public good.

It contradicts the spirit and intent of the campaign law that seeks to curb fund-raising that could involve quid pro quos on bills.

The state elections board ruling notes that since Ulman isn’t an elected state official he can continue soliciting campaign funds during the legislative session, even though his ticketmate, Brown, fundraising for that 90-day period.

Brown-Ulman campaign

Brown-Ulman campaign

It’s a preposterous situation, one that Linda Lamone, the state elections board chief, should have recognized. To condone such a devious and mischievous loophole gives Brown, through Ulman, a powerful tool for leveraging special interests during the General Assembly session.

What makes this so ridiculous is that every dollar raised by Ulman directly benefits Brown. It’s a charade to pretend otherwise.

The two men are part of a united pairing on the ballot. You can’t vote for one without the other. They share a single ballot line. They are joined at the head, hip and heart.

To pretend the two are separate candidates is laughable. Brown couldn’t even file for governor without Ulman being there to sign on the same dotted line. They might as well call their joint candidacy “Brulman.”

Gansler’s allies filed suit to overturn Lamone’s implausible ruling. On moral and ethical grounds, attorney Dan Clements should win that lawsuit. Legally, though, Brown and Ulman may find a way to retain their fundraising advantage.

Clear and Present Danger

To allow one member of a gubernatorial team to avoid the fundraising ban could lead to scary situations.

When the Brown-Ulman team’s aggressive fundraisers call on special interests that have important bills pending in the legislature, those groups will eagerly write big checks.

Otherwsie, they risk angering Brown and the O’Malley administration. Suddenly, bills they are pushing could die, and bills they oppose could miraculously pick up the votes needed for passage.

There’s no way to segregate Ulman’s fundraising from Brown’s campaign. Whatever is collected during the legislative session will be spent by Brown’s minions, not Ulman’s. They are a collective “we,” not two individual “I”s.

A similar situation exists in the Republican primary: Harford County Executive David Craig can continue raising funds during the 90-day session but his running mate, Del. Jeannie Haddaway-Riccio of Talbot County, cannot.

Craig-Riccio-Haddaway team

Craig-Riccio-Haddaway team

That gives Craig’s fund-raising team added leverage in approaching special interests eager to win favor with another delegate during legislative deliberations.

Unfair?

You bet.

Unethical?

Yup.

Illegal?

If it isn’t, it should be.

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Time for Coalition Government in Washington

It Works Everywhere Else — Why Not Here?

By Barry Rascovar

October 2, 2013 — Coalition politics.

In Germany, it’s the norm. In Switzerland, “the Magic Formula” prevailed for 50 years.

It’s a common vehicle for governing in most other European nations as well as Indonesia, Japan, New Zealand, Australia, Israel, Turkey, Pakistan, Ukraine, Ireland and Britain.

Why not coalition government in the United States?

Wikipedia defines it this way:

“A coalition government is a cabinet of a parliamentary government in which several political parties cooperate, reducing the dominance of any one party within that coalition. The usual reason given for this arrangement is that no party on its own can achieve a majority in the parliament. A coalition government might also be created in a time of national difficulty or crisis. . . to give a government the high degree of perceived political legitimacy, or collective identity it desires while also playing a role in diminishing internal political strife.”

Gridlock in Washington

This might be the best, and possibly the only, way to resolve what is fast becoming an unresolvable impasse in the nation’s capital.

Republicans and Democrats are in gridlock. One controls the House, the other the Senate and White House. They can’t agree on a budget or almost anything else. They can’t even keep the government open.

House Speaker John Boehner caved in to the far right wing of his party and demanded capitulation from President Obama on healthcare reform in exchange for funding the government for another six weeks.

House Speaker John Boehner

House Speaker John Boehner

What ransom demands come after that is anyone’s guess.

All this plays out with a looming Oct. 17 deadline for raising the nation’s debt ceiling. Reneging on U.S. IOUs could cause a financial meltdown. Yet it may happen.

There doesn’t seem to be an exit strategy. Government workers, meanwhile, have become pawns moved about the game board by each side.

Given this near-hopeless situation, it could be time to consider an American-style coalition government. Less ideologically extreme Republicans could strike an accord with pragmatic Democrats to form a ruling majority in the House of Representatives.

Boehner would remain speaker but without the Tea Party support that has turned him into an empty vessel as a leader. Instead, he’d stay in power with support from Democratic leader Nancy Pelosi.

House Speaker Nancy Pelosi

House Speaker Nancy Pelosi

Each side would have to give a little and each side would have to put practicalities ahead of partisan warfare. They’d have to agree on a list of measures to jointly promote, such as immigration reform, and which measures to consign to the junk pile, such as the current effort to jettison Obamacare.

With Congress’ approval rating at 10 percent — and that’s before the government shutdown — the best way to win back public favor is to show you can actually solve problems in this country.

The Tea Party types want to dramatically shrink government and re-shape it in their conservative-libertarian image. Compromise is not in their dictionary.

Their problem is that they don’t have anywhere near the votes to run things. But they do have sufficient numbers to put Boehner’s speakership in jeopardy. He lacks the backbone to take on these absolutists and discipline them.

The House Speaker is fast running out of options.

A  Stark Choice

Democrats repeatedly have made it clear they aren’t going to yield to Republicans on the president’s bedrock achievement. There’s no room for negotiations.

Letting the federal government shut its doors isn’t a long-term answer for Republicans, either. Nor is refusal to raise the nation’s debt ceiling.

Either step contains severe economic consequences for the United States. It could spark a second Great Recession.

So if Boehner wants to salvage his reputation, make it job secure, avoid endangering congressional Republicans in next year’s election and avert an economic meltdown, he should consider a Grand Coalition.

It works in most other democracies when the two major parties are at loggerheads. There’s no better time than now to try it out.

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The Working Family’s Governor

Throughout his two terms as governor, Martin O’Malley has portrayed himself in words and deeds as a champion of Maryland’s working class. He’s a neo-New Dealer who sees his political future through the lens of becoming known as “the working family’s governor.”

Now O’Malley has joined the Democratic stampede to support a major jump in the state’s minimum wage. He also has made it clear he will not be sponsoring any bills to lower Maryland’s corporate income tax as a sop to the business community.

Neither move is unexpected.

Jumping on the Bandwagon

The drumroll from liberal Democrats for a higher minimum wage is building rapidly. It’s natural to jump on this bandwagon as state legislators start campaigning for reelection.

Gov. Martin O'Malley

Gov. Martin O’Malley

For O’Malley, it’s also a no-brainer. He’s looking to run for higher office nationwide. What better way to impress liberal Democrats who will vote in presidential primaries in 2016 than to show your admiration and support for working men and women?

With an improving economy in Maryland, O’Malley and legislative leaders know that boosting the minimum wage may not be the giant job-killer opponents claim. Besides, hiking the wages of lower-income folks will be a big hit with them at the ballot box.

Still, there’s no denying many low-wage employers will make cuts in staffing to compensate for paying higher wages. That’s an economic truth O’Malley & Co. don’t want to face.

It’s also true that raising the state minimum wage by $2.75 or more from the current hourly rate of $7.25 could crush many small business owners. They can’t afford to see their payroll expenses rise nearly 40 percent.

Another verity is that minimum-wage jobs are not supposed to be career positions. They are not designed for people seeking to raise a family on that meager income.

The Real Purpose of Minimum Wages

Historically, minimum wage jobs were filled by young people seeking to start their careers by showing solid work ethics at these part-time positions. It’s a building block for people. It’s not supposed to be a lifetime job, only a part-time way to add to your resume, provide supplemental funds for your family, or add extra money to pay your way through college.

Still, a series of small increases in Maryland’s minimum wage does make sense, especially if Republicans in Congress continue to block any effort to do the same thing nationally. It must be a balancing act, though, to make sure the wage increases don’t jeopardize existing jobs.

One way to offset this blow to business is to work out a deal for lowering corporate taxes. O’Malley, though, isn’t interested.

In an appearance before a state business group, the governor once again showed his disdain for addressing the problems businesses face in Maryland, which has one of the highest corporate tax rates in the region.

A Package Deal?

Legislators seem a bit more amenable to discussing a cut in the corporate levy. And why not?Maryland is at a competitive disadvantage with the higher business tax rate.

Attorney General Doug Gansler, who is running for governor, already has voiced his support for phasing in a corporate tax reduction that might help the state attract job-creating companies.

If, indeed, tax revenues continue to grow, there will be ample funds to start shrinking the levy on corporations as part of a package deal that includes a higher minimum wage.

Eventually, even O’Malley might have to set his animosity toward businesses aside long enough to support such a package. It’s a small price to pay for easing the path to passage for a higher minimum wage.

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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

MD State Pension Fund Revives

BY BARRY RASCOVAR / July 31, 2013

A funny thing happened to the Maryland state pension fund on the way to fiscal perdition: It recovered lost ground, reformed itself and came up with a 10-year plan to put its retirement programs on solid, long-term footing.

The pension fund topped $40 billion in assets this summer, regaining all its losses (plus $800 million) since the Great Recession swoon that saw a 20 percent drop in just one year. Since the recession’s trough in 2009, the state fund has added a whopping $11.75 billion in earnings, an average of 10 percent a year.

SRPS_LogoThat won’t please the naysayers and conservatives who have been predicting doom and gloom for the retirement program. Thanks to changes that require more local government and employee contributions, lower annual cost-of-living adjustments and longer years of service to qualify for benefits, the future is beginning to look brighter for Maryland’s fund.

A slowly recovering national economy — and stock market — certainly helped.

In bad times like the Great Recession it is easy to forget that the economic cycle, similar to a roller coaster, eventually ends its gut-wrenching plunge and starts climbing upward once again. Signs now point to a lengthy period of slow growth, which could give the Maryland pension fund a string of good-news stories in the years ahead.

Blame It On Glendening And Ehrlich

Not that everything is rosy. Some wretchedly poor decisions in the early part of this century guaranteed deep pension trouble. The worst move came from former Gov. Parris Glendening, who sacrificed the retirement fund’s future so he could spend more during his final years in office.

When Glendening intentionally underfunded the retirement system, the General Assembly — over the vigorous objections of the pension board and Comptroller William Donald Schaefer — adopted a fatally flawed methodology to shrink required state contributions and thus sanction Glendening’s action. Politics triumphed over sound actuarial policy.

This dubious plan, the “corridor funding method,” worked fine when Wall Street was hitting new highs and the pension fund earned double-digit profits. But the scheme collapsed like a house of cards when the stock market’s “technology bubble” burst and then the Great Recession hit. Each year, it seemed, the pension fund was digging a bigger financial hole.

This was compounded by a terrible political decision from former Gov. Bob Ehrlich to curry favor with state teachers by giving them extra pension benefits. He figured that with a few good years of stock market investments the pension board could afford these political goodies that might help him get reelected.

Neither happened. Teachers didn’t support the governor in 2006 and the more generous pensions dragged the retirement programs deeper into a giant pit of unfunded pension obligations.

At Last, Pension Reforms

That precipitated much-needed legislative reforms, which add more local and employee contributions to the system while slowing the growth in the fund’s annual payouts. Then finally this past legislative session, the General Assembly agreed to phase-out the ill-conceived (and illegitimate) corridor funding method

Combined with surging stock prices, what had been a bleak outlook today is a whole lot brighter.

Of course, debates over the viability of pension funds can distort reality if the funds are held to impossible standards. Those bemoaning the condition of Maryland’s state pension program make it sound as if it’s about to go broke. They want the retirement programs 100 percent fully funded.

While that’s not impossible — Maryland’s pensions were at 106 percent of full funding before Glendening messed things up — insistence on such a high standard can mislead the public.

Even in its lean years, the state’s retirement programs remained in good shape. It’s annual earnings and contributions from 244,000 teachers and state workers (and now local governments) are usually enough to come close to offsetting annual payouts to 132,000 retirees. it all depends on the fund manager’s investment success.

For the pension fund to go broke, it would take decades of poor investment results. History tells us that’s quite unlikely.

In the past quarter-century, even with recessions and bursting financial bubbles, the Maryland state pension fund’s annual  investment return averages around eight percent — in line with historic Wall Street rates.

And while the state spends too much on Wall Street professionals to guide its investments (a whopping $225 million last year), these advisers do earn their pay. The actively managed portion of the state’s portfolio added $800 million more than it would have in passively managed index funds favored by conservatives — even after deducting for the hefty consultant fees.

Taking Out A Mortgage

Ten years from today, Maryland’s pension plans should be nearing 100 percent funding. When that happens, trustees are committed to amortizing the state’s future retirement obligations — taking out a long-term loan similar to a 30-year, fixed-rate mortgage. That would take much of the uncertainty and volatility out of the equation.

Trustees also have agreed to lessen the pension fund’s reliance on the unpredictable stock market. Investments are gradually being shifted to private equity placements, which aren’t affected by the emotions and manipulations of Wall Street, and to other alternative investments that are safer and more diversified income producers.

Of course, the next governor could wreck this carefully constructed approach by promising big retirement raises to state workers and teachers in the gubernatorial campaign. Unexpected market upheavals could mean large equity losses for the fund’s managers, too.

Then again, maybe state leaders have learned some painful lessons. Pension giveaways have long-term, negative consequences. Investing too much of the pension fund’s capital in the stock market is a high-risk step that’s not worth taking.

The state retirement board, led by Treasurer Nancy Kopp, seems rejuvenated and headed in the right direction. It rode out the roughest storm in the retirement system’s history and came away the better for it.

(NOTE: This is a revised version that corrects the historical record on how the corridor funding method was adopted a decade ago.)

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Treatment, Not Jail, for Md.’s Troubled Youth

Silver OakBy Barry Rascovar / June 15, 2013

LET’S NOT MAKE A MOUNTAIN out of the Maryland Board of Public Work’s decision to allow a Carroll County facility for troubled juvenile teens (photo on left) to exceed an artificial cap on population set by the state for such treatment centers.

It was a practical, common-sense action that places the welfare of these disturbed teens ahead of a rigid, inflexible capacity limitation set by Maryland legislators — a limit that actually hurts the very youths this restriction was designed to help.

Maryland Treasurer Nancy Kopp, who repeatedly expressed reservations at last week’s meeting about doubling Silver Oak Academy’s population, rightly concluded, “You can’t make the perfect the enemy of the good.”

Yes, it’s been shown in other states that smaller treatment centers for young delinquents are more effective in helping them face up to their problems. A 48-bed center is the ideal, but governments rarely face ideal situations.

Right now, there are 43 youth offenders sitting in detention cells awaiting court-ordered placement. No beds are available in any state treatment center. That is the worst possible outcome for these troubled kids.

Why does this chronic situation keep occurring? Because local political leaders block state attempts to locate such facilities in their communities, so that the kids are close to their families. It’s the old “not in my back yard” (NIMBY) attitude, which overrides society’s obligation to do what’s best for difficult-to-handle youngsters.

Opposition from politicians in Southern Maryland and in Baltimore City has stymied efforts to site juvenile care centers (52 city locations failed to pass the NIMBY test) . So 43 kids languish in detention cells, becoming victims of a broken system. The harm done to them is something Maryland Juvenile Services Secretary Sam Abed says, “I can’t tolerate.”

His interim answer: allowing Silver Oak Academy in Keymar to slowly take in 48 more residents. In essence, the operators will run a mirror-image, companion 48-bed center on the property.

Staffing ratios won’t change. Every step taken by the private operator will be closely followed by the attorney general’s juvenile justice monitor (who preferred an expansion of only 24 beds), the Public Defender’s office and by internal department watchdogs.

This isn’t as Sen. Bobby Zirkin of Baltimore County put it, a “giant step backward.” More accurately, it is a reality check.

Last winter, legislative budget analysts assessed the overcrowding situation and concluded doubling Silver Oak’s capacity “would provide some immediate relief.” It noted that due to repeated local rejection of suggested juvenile  treatment center sites, the state “is multiple years away from having additional. . . capacity available.”

To date, Silver Oak Academy has gotten high marks. There is no indication this will change with 48 extra teens at the facility.

In this instance, the state’s first duty is to get the teens who shouldn’t be there out of detention jails. If that means ignoring an artificial 48-bed limit in the short-term so be it. Treatment should always trump incarceration for young offenders who may yet become model citizens.

 

Thanks for reading these posts

There’s rarely a dull moment in Maryland politics/government — and never a lack topics. This space gives you, the reader, a chance to comb through my most recent posts on happenings in the Free State and our neighbors in Washington, D.C. (It used to be part of Maryland so I consider it fair game.)

Some posts are original, some were published elsewhere. It’s my pleasure to give you the opportunity to peruse and enjoy.

Please, come back often.

Barry