Retiree health fund tapped to MCPS budget, avoiding income tax hike

MONTGOMERY COUNTY, Md. - An income tax increase is off the table in Montgomery County after council leaders joined with public school officials to announce they’ve figured out a solution that would fund virtually all the school system’s budget needs without raising income tax. 

By the numbers:

An earlier proposal called for an increase in the local income tax rate — from 3.2% to 3.3%. For someone earning $100,000, that’s about $100 more a year — or roughly $2 a week.

County Executive Marc Elrich said the money was needed for Montgomery County Public Schools.

But on Tuesday, members of the county council and Montgomery County school officials — who faced public ire over the tax hike — announced they’ve come up with a way to fund MCPS’s $3.65 billion budget request without raising income taxes.

Schools will be allowed to draw down funds from a retiree health benefit trust...

https://www.fox5dc.com/news/retiree-health-fund-tapped-mcps-budget-avoiding-income-tax-hike

Fordham Institute: Many [@mcps @mocoboe] expenditures are expensive giveaways to the unions, giveaways that are completely unrelated to serving students or improving outcomes.

A reform agenda for Montgomery County: Investing in effective teachers in the system’s high-poverty schools

...It’s true that school districts need to be careful not to steal resources from central support staff that add value to student learning. Curriculum and instruction staff in particular can be essential to making sure teachers have the professional support they need to be effective.

Still, it sure seems like there are a lot of highly-paid administrators in MCPS’s central office that may not actually be necessary, many of them former principals. Encouraging some of these folks to retire would be a good start and could save a few million dollars a year.

The real money, though, is in employee benefits—a whopping 23 percent of MCPS’s total budget , an astounding $765 million every year. Now let me be clear: Teachers, administrators, and other staff deserve fair and competitive health insurance, retirement, and other benefits. But what MCPS provides—to existing employees, but especially to retirees—goes far, far beyond that. Many expenditures are expensive giveaways to the unions, giveaways that are completely unrelated to serving students or improving outcomes.

What do I have in mind?

• The district’s supplemental pension program, which costs employees just .5 percent of their salaries but into which MCPS plows almost $80 million per year, for a generous pension on top of what the state provides.  
• The district’s retiree healthcare insurance benefit, which costs MCPS over $30 million annually, even though retirees could gain coverage via other jobs, Obamacare, and/or Medicare.  
• Its policy of paying 25-35 percent of the value of employees’ unused sick leave when they retire, which costs more than $8 million per year.

(These figures come from the district, given to me after I filed a Freedom of Information Act request. You can see the MCPS documents here and here.)

Add them up and these questionable uses of taxpayer funds sum to around $120 million every year...

https://fordhaminstitute.org/national/commentary/reform-agenda-montgomery-county-investing-effective-teachers-systems-high

REQUEST FOR PROPOSAL ("RFP") for Custodian Bank Services for MCPS Retirement System Trust. As of 10/31/2021, the MCPS Retirement System Trust had assets of approximately $2.4 billion.

On behalf of the Board of Education of Montgomery County, Maryland, Montgomery County Public Schools (MCPS) is seeking proposals from qualified master trustee/custodian providers in five different capacities: custody services (stand-alone); benefit payment management (stand-alone); custody services and benefit payment management; custody services and portfolio analytics; lastly, custody services, benefit payment management, and portfolio analytics. The respondents will be evaluated in each capacity separately, with a final determination made after the proposals are received and evaluated. The contract is anticipated to begin in July 2022. MCPS currently utilizes BNY Mellon as master custodian provider for custody services and Aetna Life Insurance Company for benefit payment management.

NEPC, LLC (NEPC) has been retained by MCPS to assist in the process of conducting an evaluation of qualified applicants (Firms, and each a Firm). Representatives from NEPC may contact responders that submit proposals in relation to this Request for Proposal (RFP).

As of October 31, 2021, the MCPS Retirement System Trust (Trust) had assets of approximately $2.4 billion.

RFP inquiries and submissions are due by the deadlines above.  Inquiries must be directed to procurement at Angela_S_Mcintosh-Davis@mcpsmd.org.  Proposals submitted will require a two-step process. Firms must submit one original and one electronic version on a flash drive, and one redacted copy of the full proposal must be sent by mail, courier, or hand-delivery.  Firms will also be required to submit proposals via InHub (www.theinhub.com) to NEPC.  See 7.0 Mandatory Submissions in the RFP for full detail.  Proposals are to be received, as well as submitted via InHub, no later than 2:00 p.m. eastern on February 28, 2022. 

To request access to the online RFP submission platform, please fill out the Request Access form (right).  Additional details, including a copy of the RFP can be found on the MCPS website.

 https://www.erfp.us/inhub-mcps-custodian-rfp/