County Executive James T. Smith Jr.
400 Washington Avenue
Old Courthouse Mezzanine
Towson, Maryland 21204
410-887-2450
E-mail Address: jimsmith@baltimorecountymd.gov
Dear Friends of Baltimore County,
Over the past few weeks, you have probably read quite a bit about the changes to pension benefits being proposed for County workers. The issue is very complicated and one that is not easily addressed in a monthly newsletter. However, I will do my best to outline what precipitated this change, and how the change is necessary to ensure the long-term fiscal strength of our County.
In June 2004 the Government Accounting Standards Board issued new regulations requiring governments across the nation to account for health care and retiree benefits for employees on an accrual basis as opposed to the pay-as-you-go basis that had been used in the past. The new requirement goes into effect on July 1, 2007.
Over 30 years, the County’s obligation to fund these benefits is estimated to be approximately $150 million a year for a total of approximately $1.8 billion. I am proud to say that Baltimore County made an initial down payment on this obligation one year ahead of schedule by putting $103 million dollars in a special trust fund in the current budget year.
I am pleased to report that at the time of this update Baltimore County has reached labor agreements with the federation of public employees, firefighters, nurses, and deputy sheriffs. The County also reached an interest arbitration agreement with Lodge 4 of the FOP. Unfortunately AFSCME members did not ratify their contract and have chosen to have the current contract rollover for FY 08.
The negotiation process for this year has concluded and will not be reopened. The issues involving health care and pensions will not be reviewed outside of that forum. Our negotiating team will be revisiting these items with AFSCME’s bargaining unit next year.
Baltimore County realized that in order to protect retiree benefits in the years to come it would have to offer employees incentives to work longer. The longer our employees work, the more significant the savings is to the County taxpayer.
Providing employees with an attractive deferred retirement option program, as well as salary adjustments and pay grade increases, allowed the County to protect the financial solvency of the benefits for its workers and to address a financial issue that other subdivisions and the State of Maryland will need to confront in the near future. Once again Baltimore County’s history of conservative fiscal management has served its employees and its taxpayers well.
Also included in these labor agreements were revisions to the County’s various health care options for employees. While health care costs continue to escalate, by negotiating in good faith with County workers, Baltimore County reached an agreement that allows its work force to protect their excellent health care programs while phasing in rate increases over a five-year period.
The fact that employees were able to lock in their health care costs for the next five years was a very important component of the County’s proposal. The labor group’s Health Care Advisory Committee approved the changes in health care by a vote of 6 to 1.
I am very proud of the quality work produced by the men and women who work for Baltimore County. We have some of the finest and most skilled employees in the nation. Although effecting significant change in a system that has existed for years is never easy, I am confident that we have done the right thing.
Thank you, and please take the time during the month of May to enjoy some of the wonderful outdoor opportunities that are available in Baltimore County.
James T. Smith, Jr.
Baltimore County Executive
Revised May 14, 2007
Courthouse 