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Forest Heights council presses staff for cost analysis on joining Maryland pension system
Summary
Council members pressed for detailed cost scenarios before deciding whether to authorize participation in the Maryland State Retirement and Pension System; a state representative explained the required employee vote thresholds and how preliminary actuarial valuations are produced.
Council members sought more financial detail and timetable before acting on proposals that would enroll town employees in the Maryland State Retirement and Pension System.
Anne Gothard, representing the state retirement system, answered council questions during the town administrator’s report and explained the process: the system’s preliminary actuarial valuation typically assumes all employees enroll; the council must pass enabling resolutions and then 60% of employees must vote in a separate employee election to join. Gothard said a final valuation and any employer liability would be calculated after employees complete enrollment.
Council members repeatedly asked how the town would pay employer contributions. Council president Noble and others asked staff for a multi-year cost scenario (five years was suggested) so the finance committee could evaluate budget options. The mayor said money had been put aside in FY27 planning to begin covering costs if the council moved forward, but staff agreed to provide more detailed analysis.
Gothard answered specific technical questions: there is no automatic 20-year commitment tied to entering the plan; withdrawal is possible but incurs a liability determined at the time of withdrawal; the state system is a defined-benefit plan (members earn pension credit under the stated formula) and uses diversified managers to manage investment risk. She also said state law allows transfers from one defined-benefit plan to another and that the town’s resolution could account for prior Forest Heights service for eligible employees.
Next steps: council members directed staff to produce a cost-analysis and budgeting plan for the pension proposal and to provide it to the finance committee for review prior to any vote on Resolution 21-26 or the related pickup resolution.
