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Legislative Update March 23, 2015

As of 3/20/15 the House of the Maryland General Assembly passed the $40.7 billion budget with an overwhelming 129 - 10 bi-partisan vote.  This followed a vote in the Senate Budget and Tax Committee that advanced the budget with unanimous approval.  The full Senate will now be taking action with expectations of strong support.

While MRSPA supports the funding of education and the 2% salary increase for state employees, we are in agreement with state Comptroller Peter Franchot that this should not be at the expense of the promised pension contributions and the catchup funding for past deficiencies to that fund.  Pension funding is a process that must be addressed in 20-30 year horizons.  The General Assembly passed pension reforms in 2011 that cut benefits for future retirees while increasing the time of service and pension contributions by active employees from 5 to 7% of income.  Additional changes in recent sessions further cut the promised state contribution and supplemental funding.        

To improve the funding level of the retirement fund it is essential that a plan be followed. In addition to full actuarial funding, the supplemental contribution must be made to ensure sustaining a strong pension fund.  Fortunately, recent investment returns have been impressive and the pension fund would have realized a significant improvement if the required actuarial funding had been made as designed in the past.  If a market correction as severe as the "tech wreck" of the early 2000s or the 2008 crash should occur, then severe pressure will again be placed on the fund to make the promised benefit payments to retirees.

Last fall's election demonstrated the reluctance to raise taxes to address funding of state programs.  The Governor and General Assembly have a difficult challenge in passing a balanced budget.  MRSPA's position is that pension funding should not be discretionary.  Pension systems are designed and intended to provide promised benefits to retirees that have worked and contributed, in addition to the state's promised contribution.  The General Assembly should honor past commitments and promises and correct their past underfunding decisions.

It is not likely the General Assembly will alter the bill that is currently in the final stages of passing.  However, we need to keep this message in front of our elected representatives and let them know the impact of their decisions.  Retirement security is a comprehensive process that all parties must work to ensure.  Current employees and retirees have done their share. Now the General Assembly must step up.

Bill Brown

MRSPA Legislative Chair


Would you like to make a tax deductable donation to the MRSPA Scholarship fund? Please click here to visit our Community Foundation of Frederick County Scholarship page.



Helping You Bridge from Career to Retirement

The Maryland Retired School Personnel Association (MRSPA) is a nonprofit organization of retired school personnel, founded in 1945, whose purpose is to promote the professional, social and economic welfare of its members; to promote involvement and participation of retirees in service to their communities and to promote the continuous improvement of education in the schools of Maryland.

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