The Issues

  • FY 12 FINAL BUDGET COMPROMISE

    This year, the House of Delegates focused on addressing the State’s structural deficit, ensuring the long-term viability of the retiree benefit system and funding education programs to ensure a strong future for the State’s knowledge-based economy. Despite improving revenue projections following the recession, we took a conservative approach to budgeting for next year.

    Conservative Spending Plan

    • As a result of our work, the State’s structural deficit – projected to be $2 billion at the beginning of session – has been reduced by over 42% moving forward.
    • Leaves the State with over $730M in cash reserves, including the Rainy Day Fund. Maryland is one of only 4 states in the country that has not dipped into its Rainy Day Fund during the recession.
    • Eliminates over $6.5B in long-term retiree healthcare liability over the next 10 years

    Restores Funding to Education

    • Restores $58.5M in K-12 education spending, to bring per pupil funding back to FY11 levels. We worked to ensure that the restoration of this funding was fair and equitable – benefitting every county in the State. The State has committed a total of $5.8B to school systems across Maryland next year.
    • Provides funding to limit a tuition increase at universities to 3% and establishes a special grant program to cap community college tuition increases at 3%, to increase access to higher education for all Maryland residents.

    Supports Transportation System

    • Provides an additional $13M to counties and municipalities for road maintenance funding
    • Raises modest fees on certificate of title on new vehicle purchases and vanity tags to replace $50M to the Transportation Trust Fund. This action was taken instead of a gas tax (supported by the Chamber and business organizations), given the high price of gas right now. 
    • Requires any new transfer from the Transportation Trust Fund be repaid within 5 years, to protect the long-term sustainability of the State’s transportation system. While almost all of the General Funds have been repaid to the Transportation Trust Fund over the past 28 years, a robust transportation system is the key to attracting businesses to Maryland

    Maintains Commitment to State Employees

    • No furloughs for the first time in three years. State employees have absorbed over $500M in reductions to benefits and salaries, as a result of the global recession
    • One-time $750 bonus, which also has less of an impact to the State’s General Fund than instituting the COLA or merit increases, and rewards State employees who have each lost an average of $3,100 in pay over the last three years.
    • Ensures long-term sustainability of the State’s pension system, including preserving a defined benefit system and relieving some burden on retirees from the Governor’s proposal

    Invests in Economic Development to Jump Start the Economy

    • Preserves funding for business loan and loan guaranty programs, including MSBDFA, MIDFA and MEDAF. Last year, DBED financing programs created/ retained 10,000 jobs in Maryland.
    • Funds the Biotech Tax Credit, stem cell research programs and provides funding for Nanotechnology. Maryland was ranked 2nd by the US Chamber of Commerce and National Chamber Foundation based on growth and investment in STEM jobs and R&D investment.

    REFORMING THE RETIREE BENEFIT SYSTEM

    Pension costs are one of the biggest cost drivers in the budget, with an estimated overall State liability of $1.5 billion in General Funds for FY12.  The House made a commitment to (1) maintain a defined benefit pension system and (2) identify a way to relieve some of the burden on retirees for prescription costs from the Governor’s proposal, both while increasing the long-term viability and sustainability of the pension system.

    • Makes changes to vesting requirements
    - New employees will vest at 10 years instead of the current 5 years. The early retirement age for new employees is moved from 55 to 60 years of age. 17 states have greater than 5 years vesting requirement
    - New employees will have to be 65 years old with 10 years of employment, or meet the “Rule of 90”, meaning your age and years of service must add up to 90, in order to collect a benefit

    • Aligns Prescription Drug Benefits for Active & Retired Employees
    - Because of concern of drastically increased costs in the plan as initially introduced, the Appropriations Committee developed a prescription drug plan that is less onerous on retirees.
    - Retiree co-pays will be increased slightly to align with the cost to current employees, the out-of-pocket cap for single retirees will be increased from $700 to $1500, instead of $4550,and $2000 for a couple, instead of $9100, under the budget as introduced, and monthly premiums for retirees will increase slightly, on average $10/month.
    - This plan still requires Medicare-eligible retirees to enroll in the Medicare Part D benefit by 2020, and reduces almost half of the pension system’s unfunded liability.
    - Beginning in FY13, the State will reinvest savings from these reforms back into the retirement system to reduce the unfunded liability and achieve 80% funding of the system by FY23.

    • Employee Contributions –all employee pension contributions will increase from 5% to 7%. Current employees will retain the 1.8% multiplier. New employees will have a 1.5% multiplier.

    • Balancing Retirement Benefits Across All Systems
    - FY13, LEOPS will pay the same as State employees and teachers
    - The General Assembly Compensation Commission will review legislative pension proposals, and the Judicial Compensation Commission will review judicial pension proposals.
    - Increasing vesting requirements to 10 years for all systems (except judges, due to a statutory quirk)

    CAPITAL BUDGET
    The Capital Budget represents our hope for the State’s future. The choices that we make show our collective priorities: funding for new schools for the next generation of workers; funding for helicopter replacement to maintain the country’s best healthcare delivery system; funding for universities to leverage research advancements that could change the world; and projects that will immediately stimulate job creation. Next year’s capital budget is projected to create and maintain 15,000 construction jobs, for an industry that has suffered a 25% employment loss over the last 3 years.

    The FY12 capital budget:
    • Cuts our debt ceiling by $215M to $925M in new  general obligation bonds
    • Requests a comprehensive evaluation of the State’s entire debt program – including all types of bonds and capital leases backed by the State – and recommendation of a process for setting annual debt limits for all types of State debt

    Specifically, the capital budget next year funds:
    • $250M in school construction funding across the State
    • $198M in higher education facilities, including $60M at our community colleges
    • $267M for environmental projects, including nutrient removal technologies at the State’s 67 largest wastewater treatment plants
    • $39M for hospitals and health facilities across the State
    • Over $20M to continue the purchase of a new Medevac helicopter fleet

  • House Appropriations Committee Proposes Conservative Spending Plan that Invests in the Future

    Dateline: March 22, 2011

    On March 23, the House will begin debate on the FY12 budget plan. The Appropriations Committee had three main goals in balancing the budget this year in its work on the budget: (1) address the State’s structural deficit and viability of the retiree benefit system and (2) fund education programs to ensure a strong future for the State’s knowledge-based economy.

    Unlike the federal government, the State cannot deficit spend, so the State’s operating budget must be balanced each year.  The term “structural deficit” refers to when projected revenues do not meet planned spending in the outyears. For instance, in December 2007, revenues for FY12 were projected to be $17B and there was no significant structural deficit. However, as a result of the global recession, revenues for FY12 are projected at $15B, so the $2B gap is the structural deficit.

    This year, despite stabilizing revenues, the State faced a $2B structural deficit. The budget, as introduced, eliminated 35% of the structural deficit. The House improved on this by reducing the State’s structural deficit by over 40% and cuts ongoing spending by $800 million. Below are some highlights of the House budget plan:

    Conservative Spending Plan

    • Reduces $2B structural deficit by 40% by cutting ongoing spending by nearly $800M
    • Balances the budget without raising new taxes
    • Maintains a 5% Rainy Day Fund ($803M). Maryland continues as one of only 8 states in the country that has not tapped its Rainy Day Fund, during the global recession
    • Leaves $123M cash balance, in addition to the Rainy Day Fund, for a total of over $920M in cash reserves
    • General Fund spending is at about the same level of spending in FY09
    • Eliminates $7B in long-term retiree healthcare liability over the next 10 years

    Restores Funding to Education

    • Restores $58.5M in K-12 education spending, to bring per pupil funding back to FY11 levels. Every county in the State will also receive additional federal dollars through the Education Jobs funding or Race to the Top funds, or both.
    • Provides funding to limit a tuition increase to 3%

    Supports Transportation System

    • Provides an additional $13M to counties and municipalities for road maintenance funding
    • Raises modest fees on certificate of title on new vehicle purchases and vanity tags to replace $50M in the Transportation Trust Fund and allow
    • Requires any new transfer from the Transportation Trust Fund be repaid within 5 years, to protect the long-term sustainability of the State’s transportation system

    Maintains Commitment to State Employees

    • No furloughs for the first time in three years. State employees have absorbed over $500M in reductions to benefits and salaries, as a result of the global recession
    • One-time $750 bonus, which also has less of an impact to the State’s General Fund than instituting the COLA or merit increases, and rewards State employees who have each lost an average of $3,100 in pay over the last three years.
    • Ensures long-term sustainability of the State’s pension system, including preserving a defined benefit system and relieving some burden on retirees from the Governor’s proposal

    Invests in Economic Development to Jump Start the Economy

    • Preserves funding for business loan and loan guaranty programs, including MSBDFA, MIDFA and MEDAF. Last year, DBED financing programs created/ retained 10,000 jobs in Maryland.
    • Funds the Biotech Tax Credit, stem cell research programs and provides funding for Nanotechnology. Maryland was ranked 2nd by the US Chamber of Commerce and National Chamber Foundation based on growth and investment in STEM jobs and R&D investment.

     

  • STATE EDUCATION FORMULAS - Information as of February 22, 2011

    The Maryland Constitution requires the State to provide “a thorough and efficient system of free public schools.” State support accounts for approximately 45% of public school funding; local support accounts for approximately 48%; and federal support equals approximately 6%). A lawsuit during the 1990s led to passage of the Bridge to Excellence Act in 2002 (also known as “Thornton”), which created the new funding distribution system that was phased in from FY03 through FY08. State funding for K-12 education has increased over 80% since 2002.

    State public school funding has three funding prongs: foundation formula for general education needs; supplemental aid for students with special needs; and the GCEI formula to account for disparities in resource costs. Sixty seven percent of State support is general education funding and 28% of State support is targeted aid.

    Foundation Program
    The foundation program is the main driver of State supported education funding, and is determined by growth in full-time equivalent enrollment (the total number of K-12 students enrolled, as of September 30th),  and wealth (the sum of 40% of real property assessable base, 50% of personal property assessable base, and all net taxable income). 

    GCEI
    The Geographic Cost of Education Index is designed to compensate for regional differences in resource costs, like energy and cost of living. Thirteen counties currently receive GCEI funding cross the State at varying levels, totaling $127 million.

    Supplemental Aid
    Supplemental aid accounts for additional funding for at-risk students, primarily special education students, limited English proficiency and free and reduced lunch (a determination of poverty) populations
     
    Federal Funding
    Every county in the State receives some federal funding, based on formulas targeted to provide support for disadvantage and disabled students. Funding for Individuals with Disabilities Education Act and Title I programs for poorer students flows directly to local school boards.  In addition, the federal Race to the Top grant provides $250M in education funding over four years, beginning next fiscal year.

    Maintenance of Effort for Local Governments
    The General Assembly established an educational MOE requirement in 1984 to ensure that the cost of education is shared by State and local government. The MOE requires that if the State adds $1 more (based on per pupil funding), than a county cannot decrease the local contribution to education. Several bills have been introduced this year to consider changes to the maintenance of effort law, in light of the toll that the recession has taken on county government revenue collection.

    The investment in education has yielded national recognition as the best school system in the country for three straight years; an improved statewide graduation rate (87%) and an increase in the number of courses taught by highly qualified teachers (92%). However, nine school districts fall below the statewide graduation rate and three school districts do not meet the statewide average for highly qualified teachers.

    The FY12 budget proposal funds $6.4B in total education aid, including State and federal funds.

     

  • MARYLAND HEALTH EXCHANGE LEGISLATION - Information as of February 23, 2011

    Last week, the Health & Government Operations Committee heard testimony on legislation to comply with the federal Affordable Care Act (“ACA”), passed by Congress last year. As a part of the federal legislation, each State must establish an insurance exchange to implement federal health care reform. Three bills will be considered this year, aimed at improving health care access, quality and lowering costs:

    • Maryland Health Benefit Exchange Act of 2011(HB 166): This bill establishes a structure and framework to develop the insurance exchange required by the ACA. The exchange will provide individuals and small businesses one-stop shopping for affordable insurance options; help an estimated 180,000 low-income Marylanders access federal subsidies for coverage; support small business access to affordable coverage; and allow private insurers to offer competitive plans in a fair and transparent marketplace where consumers will be able to compare rates, benefits, and quality to find plans that best suit their needs.

    • Health Insurance Reforms (HB 170): This bill aligns Maryland law with the consumer protections in the ACA, including the provisions that bar exclusions from insurance based on pre-existing conditions and lifetime limits on benefits, requirements that insurance companies cover certain preventive services like mammograms and flu shots, and the provision that allows young adults to stay on their parents’ policies until age 26. Currently, Maryland law allows children to remain on their parents’ policy up to age 25.

    • Health Quality and Cost Council (HB 165): This legislation will establish the Council in law and expand the state’s successful effort to bring public agencies and the private sector together to improve the quality and reduce the cost of health care in Maryland.

    During the 2007 special session, the General Assembly enacted a new law that expanded Medicaid eligibility for parents with a dependent child to 116% of poverty (approximately $25,000 for a family of four last year). The legislation also established a Small Employer Health Benefit Plan program, for employers with 2 to 9 employees that have not had a benefit plan for at least 12 months.

    In FY08, 650,000 Marylanders were on the Medicaid rolls. The Medicaid population is projected to increase to 970,000 next fiscal year (FY12). According to the Department of Legislative Services, one third of the increase since FY08 is due to the expansion, the remaining increase is because of the global recession.

    The Republican Caucus is laying the groundwork for an attack on this legislation, as a part of a national movement against federal healthcare reform. It is important to remember that, in Maryland, federal and state healthcare laws will make it possible for 94% of Marylanders to afford health insurance over the next 10 years. Based on the 2007 legislation, there have been 53,000 claims for hospital care that has averted $69 million in costs to the State’s hospital system in 2009 alone.

    The HGO Committee will be working on these bills in the coming weeks and will brief the Caucus prior to any legislation coming to the floor of the House.

  • Governor Proposes Pension Reform

    As a part of his FY12 budget proposal, Governor O’Malley has recommended a number of structural reforms to the State’s pension system, which supports State employees, local teachers and librarians, community college employees, judicial employees, State police and correctional officers. In 2010, the General Assembly created the Public Employees’ and Retirees’ Benefit Sustainability Commission to review and make recommendations on the long term health of the State’s pension and benefits system. The Governor’s proposal is based in part on the recommendations of this Commission.

     

    The State’s pension system is currently funded at 64.1% – 30th in the nation. Prior to the economic recession, the system was funded at 78.6%. Teacher pension costs are one of the biggest cost drivers in the budget - estimated to grow an additional $81M in FY12 - bringing overall State liability to $1 billion for FY12.

     

    There are three factors driving underfunding of the pension system: the 2006 pension enhancement, which was unanimously passed by the legislature in 2006 and signed by Governor Ehrlich, making retroactive enhancements for state employees/teachers; steady increases in the teacher salary base at the local level, partially funded by the State’s Thornton program; and declines in the retirement system assets because of the global recession.  The retirement system experienced a loss of $4 billion from October 2007 to June 2008. 

     

    The Governor’s proposal has no impact on current retirees’ pension benefits and no impact on pension benefits already earned by teachers or employees currently in the system.

     

    The Governor has proposed to make changes to the pension system beginning on July 1, 2011 and for all future years. These include:

    ·         Current employees/teachers

    o        A one-time choice between:

    §         Continuing to pay 5% of salary towards retirement but receive a lower benefit multiplier of 1.5% – or –

    §         Increasing the salary contribution to 7% and keeping the 1.8% benefit multiplier

    o        Move from $5/$25 co-pays to $10/$40 co-pays for prescription drugs and increase out-of-pocket cap from $700 to $1,000 for an individual. Maryland is one of only 11 states with an out-of-pocket cap on drug costs.

    ·         New Employees/Teachers hired after July 1

    o        Pay 7% of salary towards retirement with a 1.5% benefit multiplier

    o        Vest at 10 years instead of the current 5 years

    o        Increase the early retirement age from 55 to 60 years of age

    o        Cap retiree COLAs at 3% for new hires, which may be reduced to 1% per year in the future, if investment goals of the pension system aren’t met. Currently, retirees’ COLA is based on COLAs earned by current employees.

    ·         Retirees

    o        Transition retirees to the federal Medicare Part D drug program in 2020

    o        Establish a State-run prescription drug program similar to Medicare Part D that includes coverage in the donut hole from 2012 to 2020. State will subsidize 75% of retiree drug costs after a $310 deductible.

    Overall, the proposed changes to the retiree health plan will reduce the State’s unfunded retiree health liability, currently almost half of the pension system’s unfunded liability, by $7 billion. Maryland’s retiree health liability ranks 13th highest in the country, and is only 1% funded.  Beginning in FY13, the State will reinvest savings from these reforms back into the retirement system to reduce the unfunded liability by more than $1 billion over the next 6 years and achieve 80% funding of the system by FY23.  

  • General Government
    • State Personnel System Update - For the past 5 legislative sessions Delegate Clagett has sponsored legislation that provided for reducing the number of “at-will” special appointments in the State personnel system.  As a result of this work,  he was appointed by Speaker Michael Busch to serve on a special committee that investigated state personnel abuses during the previous administration.   This special committee sponsored the State Employee’s Rights and Protections Act of 2007. 

       

      In the 2009 session, he sponsored HB 735 with Speaker Pro Tem Adrienne Jones and Personnel Committee Chair Bill Bronrott that repeals the automatic at-will status of a number of groups of employees throughout State government.  HB 735 implemented many of the recommendations of a Department of Legislative Services’ report that was required to be prepared under the State Employee’s Rights and Protections Act of 2007. 

      The bill repeals the Joint Committee on Fair Practices and establishes in its place the Joint Committee on Fair Practices and State Personnel Oversight.  The new joint committee has oversight of employment policies and personnel systems in the Executive Branch of State government, matters of equal employment opportunity policies and practices in State government, and certain procurement practices.  Delegate Clagett is a member of this committee.  

      The bill requires department secretaries and agency heads to evaluate all skilled and professional positions considered special appointments to determine whether these positions should continue to be considered special appointments.   A report on this evaluation is due January 1, 2012.

      The bill also requires the Department of Budget and Management to submit a report every four years to the Governor and Presiding Officers of the General Assembly on the total number of individuals employed with the State with regard to political affiliation, belief, or opinion.

    • Lawmakers Reduce Funding Requests for Local Projects
    • Giddyup - Deadbeat Parents
    • Extending Child Sexual Abuse Deadline
    • Comptroller Backs Child Support Proposal
    • Three Bills in Two Days
    • Fix It!
    • Received certificate of appreciation from the Maryland Municipal League
    • Recipient of Maryland Municipal League 2008 Legislator Awards
    • Sponsored Legislation that provides for more oversight of public utilities by Public Service Commission
    • Sponsored HB 813 that limits the types of positions that may be classified as special appointments in the State Personnel Management System thereby significantly reducing the number of political appointees in the State of Maryland
    • Lobbied for and received $1,000,000 capital funding for improvements to Grove Stadium
    • Sponsored HB 522 repealing limitations and exceptions for members of the State Retirement and Pension System receiving credit for military service credit
    • Sponsored HB 411 which adds abandoned property delivered to the State Comptroller under Title 17 of the Commercial Law Article to provisions of law requiring the State Comptroller to withhold the amount of specified child support arrearages from payments due to obligors and to forward the amount withheld to the Child Support Enforcement Administration.
    • Received Legislator of the Year Award from Maryland Classified Employees Association in 2008.
  • Public Safety

    • Medevac Update - Another focus of Delegate Clagett's legislative service is the Medevac System.   This system was put in place by the Maryland General Assembly to transport trauma patients via helicopter to a trauma center with a goal of providing emergency treatment within the first hour of injury, also known as the “golden hour.”   Maryland’s Medevac system remains unique in the nation, in that a single emergency medical services system incorporates all components necessary to respond to emergency care needs.  (DLS, Report of the House Emergency Medical Services System Workgroup, March, 2009) 

       

      Del. Clagett was contacted by some Maryland State Police (MSP) helicopter pilots after he was elected to his first term in office.  These pilots were concerned about the maintenance of the helicopters, the turnover of personnel within the Medevac system, and the age of the existing fleet of helicopters.   Del. Clagett had several meetings with the General Assembly leadership and administration staff in an effort to resolve these issues.  As a result, a legislative audit was conducted and report was made to the Joint Legislative Audit Committee of which he is a member on August 14, 2008. 

       

      The Audit raised issues regarding maintenance of the aircraft and MSP moved swiftly to address those issues.   Unfortunately, in September, 2008 there was a tragic accident involving a MSP helicopter resulting in loss of life.   In response to the Audit, the accident, and the State’s plan to replace the aging fleet, a workgroup was formed in January, 2009 during the legislative session.   A report entitled “Report of the House Emergency Medical Services System Workgroup”  was issued in March 2009 to the Public Safety and Administration Subcommittee.  Del. Clagett is Chairman of this committee. 

       

      The Maryland General Assembly is committed to providing this world recognized emergency medical service to our citizens.   As a member of the Capital Budget Subcommittee, Del. Clagett supported the issuance of $52.5 million of general obligation bond funds that are intended to fund the purchase of three helicopters during fiscal 2010. 

    • Governor O’Malley signed HB 1495 following the 2009 legislative session. This is legislation Delegate Clagett sponsored at the request of the Maryland State Police (MSP).  MSP needs to offer retirees reemployment for highly skilled positions because of the low number of qualified applicants seeking employment for these positions.  HB 1495 exempts certain Maryland State Police (MSP) who have retired and have been rehired by the MSP from a reduction in their retirement allowance, provides a disability benefit to a reemployed retiree who is incapacitated while reemployed, and a death benefit to the families of a reemployed MSP officer who is killed while reemployed.
    • Clagett Proposal Trims Budget by $100M
    • Maryland Senate Passes Ban on Texting While Driving
    • Widow Requests Tougher Law for Reckless Driving
    • Fixing Medevac
    • Bill Targets Reckless Driving in Work Zones
    • Clagett Takes Over Public Safety and Admin Budget
    • Legislating Elder Care
    • Sponsored HB 410 which prohibits a parent or other person with permanent or temporary care or custody or responsibility for the supervision of a minor from recklessly acting or failing to act in a manner that creates a substantial risk to the minor of death, of permanent or protracted serious disfigurement, or of permanent or protracted serious loss or impairment of the function of a bodily member or organ; establishing the crime of child endangerment; providing penalties for a violation of the Act.
    • Testified and voted for Frederick County America Red Cross Bond Bills totaling $600,000 of matching State funds
    • Sponsored Legislation that prohibits newly licensed drivers from having passengers other than family members in their vehicle
    • Sponsored HB 556 to increase the membership of the State Emergency Medical Services Board by increasing the number of members who are from the public at large and by adding one member who is a helicopter pilot employed by the Department of State Police within the Aviation Division
  • Transportation
    • Serving on Joint Legislative Commission on Interstate Transportation
    • Moved Forward Two Local Transportation Projects:
      • East Street Extension
      • MD26/Rt 15 Northbound Ramp
  • Environment
    • Clothesline Controversy
    • Let Your Laundry Fly Free
    • Represents House of Delegates on Advisory Committee on the Management and Protection of the State's Water Resources
    • Is only Frederick County Delegate to receive 95% lifetime rating from Maryland League of Conversation Voters
    • Assisted Frederick and Catoctin Soil Conservation Districts in securing matching state funding of $300,000 for an agriculture and education complex
    • Sponsored HB 521 to require specified specialty fertilizer to be marked with specified words "No Phosphorous Fertilizer" in a specified manner; prohibiting a person from using, selling, manufacturing, or distributing for use or sale in the State a specified specialty fertilizer on or after April 1, 2009
    • Sponsored HB 1192 to increase from 5 to 10 years the time period after which a specified development rights and responsibilities agreement will be void under specified circumstances; and providing that a specified local jurisdiction may not enforce specified laws, rules, regulations, or policies governing the use, density, or intensity of specified real property that is subject to development rights and responsibilities agreements unless specified circumstances exist.
  • Education
    • Is only Frederick County Delegate to receive "A" from Maryland State Teachers Association for Voting Record on Public Education
    • Sponsored HB 172 - Enacted Legislation that provides for Military and their dependents to pay in-state tuition at public institutions of higher education
    • Sponsored Legislation to increase funding for public school construction
    • Received Legislator of the Year Award from Maryland Classified Employees Association in 2008.