MCPS officials flag $160 million benefits deficit and pension shift as long‑term budget risks
Summary
Superintendent and staff told the board the employee benefits plan faces about a $160 million hole and said a recent state pension cost shift and optimistic lapse/turnover assumptions increase risk, warning that closing the gap likely requires sustained multi‑year investments and possible contract renegotiations.
Montgomery County Public Schools officials told the Board Thursday that the district faces multi‑year fiscal pressure from employee benefits and pension shifts, estimating the benefits plan deficit at about $160 million.
Presenters said nearly 90% of the district budget supports staff and that 78% of the requested FY2027 increase relates to salary and benefits. The recommendation includes $189 million for negotiated salary and step increases and proposes a $40 million contribution to stabilize the employee benefits plan.
Officials also highlighted a $20 million local impact tied to a state pension shift and said the budget continues to assume $70 million in lapse and turnover savings — a figure they acknowledged may be optimistic. Superintendent Dr. Taylor said closing the benefits gap will require a more substantial, sustained investment and might demand changes to benefit design or contribution rates negotiated with associations.
Board members pressed for operational changes that could reduce reliance on lapse/turnover assumptions without harming core school functions. Dr. Taylor said options include identifying additional revenue or making disciplined reductions elsewhere; he warned the district is ‘‘dangerously close’’ to budgeting too tightly and that improved fund‑balance targets would provide more cushion.
