Making College Park More Like Detroit

This week Michigan filed a bankruptcy petition for Detroit, in part because that city could not support its defined benefit pension obligations.  Also this week, in a fit of irresponsibility, the College Park City Council voted 5-3 to change over to a defined benefit pension system for its employees.  College Park has up until now had a defined contribution system that could never bankrupt the city.  The Council majority (Monroe Dennis of the 2nd District; Robert Day and Stephanie Stullich of the 3rd; Marcus Afzali and Denise Mitchell of the 4th) have ensured that bankruptcy is now possible.

Defined contribution means the employer is responsible for a specified payment into the fund right now, this year.  Defined benefit means the city is responsible for a specified payment out of the fund when it comes due.  If the payment is due 20 years from now, a lot of employers find it tempting to skimp on their present contributions.  (See for example General Motors.)  Elected politicians may find the temptation irresistible -- don't raise taxes or cut services now, leave it to the sucker who has the job a couple decades later.

The defined benefit plan that Dennis, Day, Stullich, Afzali and Mitchell voted to join is the state of Maryland's, and the state has felt that temptation for years.  State employee pensions are, naturally, underfunded.  They have joined our municipal destiny to a chronically unstable system.

Fazlul Kabir and Patrick Wojahn of the 1st voted no, and the North College Park Citizens Association voted no.  The only member of the Council who has an economics background (Robert Catlin of the 2nd) also voted no.  More power to them, and may the citizens of College Park find the means to assist them in correcting this error.