SUMMARY OF FY27 RECOMMENDATIONS

A. SUMMARY OF AGENCY REQUESTS

Montgomery County Public Schools (MCPS): The MCPS workforce for FY27, as recommended by the Board of Education (BOE), is 25,489.6385 FTEs, or 84.0428 FTEs greater than the Board of Education adopted FY26 workforce of 25,405.5957 FTEs. In September 2024, MCPS began negotiations with the public schools' bargaining units, the Service Employees International Union (SEIU), the Montgomery County Education Association (MCEA), the Montgomery County Association of Administrators and Personnel (MCAAP), and the Montgomery County Business and Operations Administrators (MCBOA). The negotiated agreements became effective July 1, 2025. The Board's requested budget includes $189.9 million in funds to support year two of the two-year contracts. For more information on compensation and workforce changes, please see the Board of Education's FY27 Operating Budget Tentatively Adopted.

Montgomery College (MC): The College and its Board of Trustees adopted a same services framework that maintains affordability for students and addresses compensation and inflationary pressures. The FY27 Current Fund increase in personnel costs is roughly $12.1 million. For more information on compensation and workforce changes, please consult the Adopted FY27 Montgomery College Operating Budget Request, available on the College's website.

Maryland-National Capital Park and Planning Commission (M-NCPPC): The net impact on the M-NCPPC workforce for FY27, as recommended by the Montgomery County Planning Board, is an increase of 35.14 FTEs. The Commission's requested budget includes an increase in personnel costs of $8.3 million. The increase also includes retirement and group insurance adjustments, a compensation placeholder (to address collectively bargained compensation increases and pass-through costs), and a reclassification placeholder. For more information on compensation and workforce changes, please see the M-NCPPC FY27 Proposed Annual Budget.

Montgomery County Government (MCG): When looking at headcount, the net impact on the County government workforce for FY27, as recommended by the Executive, is an increase of 51 positions. This increase consists of 76 tax supported positions and a decrease of 25 non-tax supported positions.

The recommended budget contains an increase in total personnel costs of $64.0 million, or 3.9 percent. The increase in FY27 related only to FY27 compensation and benefits adjustments totaled $57.2 million, or 3.5 percent. The primary factors in these changes are:

The recommendations in the remainder of this section are for the County government and are based upon the bargained agreements with the United Food and Commercial Workers, Local 1994 (Municipal and County Government Employees Organization - MCGEO); the International Association of Fire Fighters (IAFF), Local 1664; the Fraternal Order of Police (FOP), Lodge 35; and the Montgomery County Volunteer Fire and Rescue Association (MCVFRA). Certain provisions of the agreements have been extended to unrepresented employees, as noted below.

B. COUNTY GOVERNMENT SALARY AND WAGES

General Wage Adjustment: The Executive recommends the following general wage adjustments (GWA) in FY27: 3 percent effective the first full pay period after July 1, 2026, for all employees in the Police bargaining unit and Police Leadership Service (PLS); 2.5 percent effective the first full pay period after July 1, 2026, for all employees in the Fire and Rescue bargaining unit and Fire and Rescue uniformed management; and 2.85 percent effective the first full pay period after July 1, 2026 for all employees in the Office, Professional, and Technical (OPT), and Service, Labor, and Trades (SLT) units, as well as all employees on the Transit Bus Operators and Transit Coordinators Salary Schedules, Deputy Sheriffs and Correctional Officers Uniform Salary Schedules, and all non-represented employees, including Management Leadership Service (MLS).

FY27 salary schedules can be found on the County's website at:
http://www.montgomerycountymd.gov/HR/compensation/Compensation.html.

(Note: FY27 salary schedules will be available after Council approval of the FY27 budget.)

Service Increments: The Executive recommends service increments of 3.5 percent for all eligible employees.

Longevity Increments: The Executive recommends longevity increments in FY27 for all eligible employees.

Performance-Based Pay: The Executive recommends $2.5 million in the Compensation Adjustment and Employee Benefits NDA to fund performance-based pay increases for MLS employees.

C. COUNTY GOVERNMENT: EMPLOYEE BENEFITS

The following employee benefits are funded in the Executive's recommended budget through a combination of lump-sum or payroll-based contributions.

• FICA (Social Security & Medicare)
• Workers' Compensation
• Group Insurance
• Employees' Retirement System
• Retirement Savings Plan

FICA (Social Security and Medicare): Contributions are collected from County departments and agencies each payday based on actual payroll. Since contribution rates and salary maximums change at the start of the calendar year, figures used in the recommended fiscal year budget represent an average of the rates set for 2026 and projected changes for 2027. The employer rates of 6.2 percent for social security and 1.45 percent for Medicare are not expected to change.

Workers' Compensation: This is handled through the County's Risk Management program under the Department of Finance. Departments with significant non-tax revenues make annual contributions to the Liability and Property Coverage Self-Insurance Fund. A lump-sum contribution to the fund for insurance for the remaining County departments is made annually through the Risk Management (General Fund portion) Non-Departmental Account. Participating County agencies also make annual lump-sum contributions. Contributions for all members are set each year based on an actuarial valuation of exposures, and past and projected claims experience along with administrative expenses.

Group Insurance Benefits: The contributions for health insurance are based on an actuarially determined Countywide average fixed rate of $18,990 per position, and the contribution for life insurance is based on fixed rates per coverage amounts based on an employee's salary.

It is projected for the long-term that the annual cost of group insurance for the County, including active employees and retirees, could increase an average of approximately 8 percent annually between FY27 and FY32. Contribution rates during this period will be set based on various factors, including the fund balance in the Health Insurance Fund and claims cost experience.

Consolidated Retiree Health Benefits Trust: Beginning in FY08, the County implemented a plan to set aside funds for retiree health benefits, similar to the County's 50-year-old practice of pre-funding for retiree pension benefits. Due to exponential growth in expected retiree health costs, the County had determined the cost of funding these benefits, which were being paid out as the bills came due, would become unaffordable. Setting aside money now and investing it in a Trust Fund, which is invested in a similar manner as the pension fund, is a prudent and responsible approach that will result in significant savings over the long-term.

County agencies develop current estimates of the costs of health benefits for current and future retirees each year. These estimates, made by actuarial consultants, concluded that the County's total future cost of retiree health benefits if paid out today, and in today's dollars, is $1.5 billion as of the Fiscal Year End 2025 GASB 74 Report - approximately 17.3 percent of the total FY27 budget for all agencies.

The County's approach to address retiree health benefits funding has been to determine an amount which, if set aside on an annual basis and actively invested through a trust vehicle, will build up over time and provide sufficient funds to pay future retiree health benefits and any accrued interest on unfunded liability. This amount, known as an Actuarially Determined Contribution or "ADC", is estimated at $40.8 million. This amount normally consists of two pieces - the annual amount the County would usually pay out for health benefits for current retirees (the pay-as-you-go amount), plus the additional amount estimated to fund retirees' future health benefits (the pre-funding portion). The pay-as-you-go amount can be reasonably projected based on known facts about current retirees, and the pre-funding portion is estimated on an actuarial basis.

The County's policy has been to pay the full amount of ADC each year. In FY11, the County Council enacted Bill 17-11 which established the Consolidated Retiree Health Benefits Trust. The Bill amended existing law and provided a funding mechanism to pay for other post employment benefits (OPEB) for employees of MCPS and MC. In FY15, the County and all other agencies implemented the Medicare Part D Employer Group Waiver Program for Medicare eligible retirees/survivors effective January 1, 2015. This has reduced retiree drug insurance costs and the County's OPEB liability. The County achieved full pre-funding in FY15, consistent with Council resolution No. 16-555. In December 2023, the County Council passed Resolution No. 20-337, establishing an updated OPEB funding policy. In FY26, in accordance with this funding policy, $13.5 million has been utilized to pay for a portion of the County's retiree health insurance claims. The prefunding contributions were budgeted at $58 million for the MCPS Consolidated Trust. No prefunding amount was required for Montgomery County Government or the MC Consolidated Trust.

The actuarial valuation used for the FY27 budget resulted in an ADC that was $34.5 million less than the pay-as-you-go amount. The FY27 budget assumes the utilization of this $34.5 million for payment of a portion of the County's retiree health insurance claims. A detailed breakdown of FY27 recommended contributions to the Consolidated Retiree Health Benefit Trust for County government tax supported agencies, participating agencies, MCPS, and MC is displayed in the table above. In FY26, the County Council approved an additional $25 million in both FY25 and FY26 to be provided to MCPS, for a total of $52.2 million in each year, for the payment of retiree health insurance claims in FY25 and FY26. The County Executive is recommending that the Retiree Health Benefits Trust provide $27.2 million to MCPS for the payment of retiree health insurance claims in FY27.

Retirement Benefits: Montgomery County Government maintains a system of retirement pay and benefits for its employees which is intended to provide income during their retirement years. The Employees' Retirement System, which currently provides benefits to approximately 7,013 retirees and survivors, is administered by the Montgomery County Investment Boards (MCIB). Administration of the County's retirement plans, including member services, financial reporting, and compliance, is conducted by the Retirement Administration Division of the Department of Finance. Retirement plan design changes occurring through the collective bargaining process and by other means are coordinated with MCIB in consultation with the Office of Human Resources, the County's actuaries, the Department of Finance, and the Office of Management and Budget.

Retirement Plans: Montgomery County Government maintains three retirement plans for its employees: a defined benefit pension plan, a defined contribution plan, and a deferred compensation plan for its employees and participating agencies.

1. The Employees' Retirement System (ERS), a defined benefit pension plan, was established through legislation in 1965 and is described in the Montgomery County Code, Section 33. As of June 30, 2025, there were 7,013 retirees and survivors and 7,125 active members, including 3,752 in the Guaranteed Retirement Income Plan (GRIP). Retirement plan design changes occurring through the collective bargaining process and by other means are coordinated by the MCIB staff, in consultation with the County's actuaries, the Office of Human Resources, the Department of Finance, and the Office of Management and Budget.
   
   The ERS consists of four plans including a Mandatory Integrated Retirement Plan, an Optional Non-Integrated Retirement Plan, an Optional Integrated Plan, and a Guaranteed Retirement Income Plan. The GRIP is a Cash Balance Plan that began in FY10 as a result of negotiations between Montgomery County and United Food and Commercial Workers Local 1994 MCGEO. Eligibility to participate has been passed through to non-represented employees and participants of participating agencies. All full-time and part-time non-public safety employees hired before January 1, 2009 who enrolled in the RSP were eligible to make a one-time irrevocable election to transfer to the GRIP by June 1, 2009. Eligible employees hired after January 1, 2009 have the option to participate in either the RSP or the GRIP. As with the RSP, the County and employee each make contributions at a set percentage of pay. The salient feature of the GRIP is that the plan provides guaranteed annual earnings of 7.25%, credited monthly.

2. The Retirement Savings Plan (RSP), a defined contribution plan, was established for all new OPT/SLT (non-public safety) and non-represented employees hired on or after October 1, 1994. Eligible employees hired after January 1, 2009 have the option to participate in either the RSP or the GRIP. Eligible employees in the ERS are allowed to transfer to the Retirement Savings Plan. Both regular full-time and part-time employees can participate. Under this plan, the County and employee each make contributions at a set percentage of pay. These monies are deposited into employee accounts and invested based on each employee's selection of an investment vehicle(s) established by the Board of Investment Trustees.

3. The Montgomery County Deferred Compensation Plan (DCP) was established by the County to make a deferred compensation plan available pursuant to Section 457 of the Internal Revenue Code. Employee contributions are made on a voluntary basis with the monies deposited into employee accounts and invested based on each employee's selection of an investment vehicle(s) established by the Board of Investment Trustees. In FY05, the County established the Montgomery County Union Employees Deferred Compensation Plan for employees covered by a collective bargaining agreement. This Plan is administered by the three unions representing Montgomery County employees.

The Board of Investment Trustees manages the assets of the ERS through its investment managers in accordance with the Board's asset allocation strategy. The Board also administers the investment program for the Retirement Savings Plan and the Montgomery County Deferred Compensation Plan. The Montgomery County Union Employees Deferred Compensation Plan is administered by the three unions representing Montgomery County employees. The Board currently consists of 13 trustees, including: the Chief Labor Relations Officer, Director of Finance, and Director of Management and Budget; the County Council Executive Director; one member recommended by each employee organization; one active employee not represented by an employee organization; one retired employee; two members of the public recommended by the County Council; and two members of the general public.

Change in Retirement System Membership: The number of active non-public safety in the ERS decreased by 37 and the number of public safety employees decreased by 11, for a combined total active enrollment of 3,373 in FY26. GRIP membership increased by 492 employees to 3,752 in FY26. The RSP saw an increase of 17 active employees enrolled, for a total FY26 enrollment of 3,338. Funds for the County's contribution to the ERS for each member employee are included in the appropriate Montgomery County Government departmental budget or agency budget. The County uses multiple contribution rates designating the percentage of payroll for the various employee groups to determine the retirement contribution.

County contributions are determined using actuarially sound assumptions to assure the financial health of the fund. Factors that affect the County's contributions include the impact of compensation adjustments, changes in the size of the workforce, investment returns, and collectively bargained benefit changes. The ERS contribution rates reflect projections of revenues and expenses to the fund. Revenues include County and member contributions which are set at fixed percentages of salaries and investment income, which is driven by both earnings in the various financial markets and the size of the fund balance invested.

Expenses of the fund include pension payments, which are affected by mandated cost-of-living increases and changes in the number of retirees and survivors, administrative and operational expenses of the fund managers and financial consultants, and charges for services provided by the MCIB staff as well as staff from Finance and Human Resources.

COLLECTIVE BARGAINING

Fire and Rescue Bargaining Unit: The current agreement became effective July 1, 2024, and expires on June 30, 2026. The negotiated agreement becomes effective July 1, 2026, and expires on June 30, 2027. The agreement's salient economic terms include:

• General Wage Adjustment. A 2.5 percent GWA will be paid in July 2026.
• Service Increments. A service increment of 3.5 percent will be paid in FY27 up to the maximum base salary for the grade for eligible unit members.
• Longevity step increases. Longevity step increases will be paid in FY27 to eligible employees; effective July 2026, the third longevity step will be adjusted to be awarded after completion of 22 years of service, changed from after 24 years of service. Bargaining unit members who have completed 22 or more years of service prior to July 1, 2026 will be placed on the new third longevity step effective July 12, 2026.
• Fire and Explosive Investigations Unit Differential.
  • An increase of 3.2 percent of the Fire Fighter III, Step H base pay for all bargaining unit members assigned to the Fire Investigative Unit who are also Law Enforcement Officer Certified.
  • A new differential of 3.2 percent of the Fire Fighter III, Step H base pay for all bargaining unit members assigned to the Fire Investigative Unit who are Non-Law Enforcement Officer Certified.
  • A new differential of $8 per hour for all bargaining unit members assigned to the Fire Investigative Unit who are also certified and current as a Field Training Officer.

• Prevailing Rights - Physical Exams. A sufficient number of appointments will be available for each bargaining unit employee to participate in a National Fire Protection Association (NFPA) physical exam while on duty.
• Prevailing Rights - Vaccines. An addition to regularly scheduled physicals to include annual pulmonary function testing and blood and serum testing to determine per-and polyfluoroalkyl substance (PFAS) levels.
• Reimbursement for Multi-Cancer Early Detection Blood Screening. A reimbursement for bargaining unit members of up to $800 once every 36 months for multi-cancer early detection blood testing.

MCGEO Bargaining Unit: The current agreement became effective July 1, 2023, and expires on June 30, 2026. The negotiated agreement becomes effective on July 1, 2026, and expires on June 30, 2029. The agreement's salient economic terms for FY27 include:

• General Wage Adjustment. A 2.85 percent GWA will be paid in July 2026.
• Service Increments. A service increment of 3.5 percent will be paid in FY27 up to the maximum base salary for the grade for eligible unit members.
• Longevity Step Increases. Longevity step increases will be paid in FY27 to eligible employees; effective July 2026.
• Employee Retirement System.
  • Changes the summary description for Groups E and JK to Normal Retirement from 25 years of service by age 46 to 25 years of credited service at any age.
  • Provides a one-time irrevocable opportunity to purchase credited service years at the full actuarial cost, plus a 7.5 percent risk share, for specified Emergency Communication Center employees in Groups E and JK.

• Non-Public Safety Retirement Plans - Contributions.
  • An increase to employer contributions from 8 percent to 9 percent of employees' regular earnings; effective January 1, 2027. This contribution level applies to both the Retirement Savings Plan and Guaranteed Retirement Income Plan.
  • Bargaining unit members hired before July 1, 2015, who previously elected or defaulted to RSP before GRIP became the default in 2015, will have a one-time irrevocable option to switch to GRIP; effective July 1, 2026.

• Guaranteed Retirement Income Plan. An addition to the optional Life Annuity of an annual post-retirement Cost-of-Living Adjustment.

• Retiree Health Benefits for Part-Time Crossing Guards and School Health Services. Provides retiree health benefit eligibility to certain part-time School Health and Crossing Guard employees hired before July 1, 2023.
• Training Pay Differential. Adds journey-level employees in the Department of General Services who complete mentorship training and mentor others in the apprenticeship program to current training pay differential eligibility.
• Tuition Assistance. Adds "professional certification" and "accredited trade schools" to tuition assistance eligibility. Increases the tuition assistance funds made available each fiscal year to bargaining unit members to $150,000.
• Tool Allowance. An increase to the annual tool allowances for Mechanic Autobody from $785 to $1,100 and Apprentice Mechanic from $665 to $850.
• Safety Apparel/Equipment. Uniform Shoe Alternative Reimbursement.
  • An increase to the shoe allowance for the purchase of safety shoes for differing units from $150 to up to $250.
  • An increase to the reimbursement for purchasing departmentally approved alternatives from $110 to $150.
  • Public Safety Shoe Reimbursement for Sheriff's Office and Department of Correction and Rehabilitation uniformed bargaining unit members who must wear a uniform shoe/boot due to their job of $175 for safety shoes.

• Sheriff's Office Adjustments.
  • The time allowed for Canine Handlers for care and maintenance of canines will increase from 0.5 to 1 hour per day.
  • Deputy Sheriff Uniform salary schedule adjustment.

• Department of Health and Human Services Adjustments.
  • Funding will be provided to purchase shirts and jackets for bargaining unit members to be worn when scheduled as a member of the Mobile Crisis Outreach Team.
  • An increase to the yearly stipend for case-carrying Child Welfare Services bargaining unit employees from $3,250 to $3,500.
  • A new differential of $8 per hour for bargaining unit employees while assigned to Progress Place.
  • An increase to the yearly stipend for Therapists, Behavioral Health Associate Counselors, Behavioral Health Technicians, and Community Service Aides hired as Peer Support Specialists assigned to the Crisis Center from $1,500 to $3,500.

• Department of Police Adjustments. A new attendance incentive program for Public Safety Emergency Communication Specialist (PSECS) II, III, IV, and Senior PSECS bargaining unit members.
• Department of Correction and Rehabilitation Adjustments.
  • An increase to the differential for nurses identified as the medical charge nurse from $2.75 to $3.50 per hour.
  • An increase in the yearly stipend for bargaining unit members assigned to the Emergency Response Team from $1,800 to $2,500.
  • An increase in the yearly stipend for bargaining unit members assigned as a Critical Incident Support Member from $1,200 to $1,600.
  • Correctional Officer Uniform salary schedule adjustment.

• Department of Recreation Adjustments. Seasonal employees working in Aquatics will be eligible to receive Holiday Premium Pay when scheduled to work on certain designated County holidays.

Police Bargaining Unit: The current agreement became effective July 1, 2025, and expires on June 30, 2027. The agreement's salient economic terms for FY27 include:

• General Wage Adjustment. A 3 percent GWA will be paid in July 2026.
• Service Increments. A service increment of 3.5 percent will be paid in FY27 up to the maximum base salary for the grade for eligible unit members.
• Longevity step increases. Longevity step increases will be paid in FY27 to eligible employees; effective July 2026.

Volunteer Fire and Rescue Bargaining Unit: The current agreement became effective on July 1, 2023, and expires on June 30, 2026. The negotiated agreement becomes effective on July 1, 2026, and expires on June 30, 2029. The agreement's salient economic terms for FY27 include:

• Nominal Fee. A nominal fee increase will be paid in FY27. The nominal fee for eligible volunteers in July 2026 remains $650 and increases to $1,500, depending on level of service.
• Association Funding. Funding for the Association will increase by $8,705 (2.5 percent) from the FY26 funding level of $348,191 on July 1, 2026.
• Length of Service Award Program (LOSAP).
  • Increases the LOSAP monthly award payment for certain volunteers to $13.01 per month for life for each year of service of an active volunteer over 25 years (up to 40 years, or $195.15 per month) with a maximum total benefit of $454.35 per month; effective July 1, 2026.
  • Raises the ceiling on the maximum benefits to $524.88 for certain volunteers; retroactive to July 1, 2025.
  • Updates the list of collateral duties and positions eligible to earn points.
  • Qualifies the spouse of a volunteer who suffered a service-connected service death regardless of years of service for maximum LOSAP benefit of $250 per month payable until death or remarriage.
  • Provides that any volunteer injured in the line of duty in MCFRS who is partially or fully disabled due to the injury and can no longer participate in service receive 30 LOSAP points annually during the length of the disability until death. Upon members death, surviving spouse shall collect 50 percent of benefits until death or remarriage, retroactive to July 1, 2025.
  • Increases the death benefit from $5,000 to $10,000; retroactive to July 1, 2025.

• Training. Adds a new Public Safety Training Academy course in 2026, offered on a night and weekend schedule, that is equivalent to the International Association of Fire Fighters Fireground Survival Course.
• Fire Rescue Occupational Medical Section.
  • Adds guidelines regarding physical exam timeliness and availability.
  • A reimbursement of up to $350 once every 36 months for ultrasound testing that includes, but is not limited to, echocardiogram, carotid doppler, abdominal aortic aneurysm, thyroid abdominal bladder, testicular, or pelvic screenings.

• Reimbursement for Multi-Cancer Early Detection Blood Screening. A reimbursement of up to $800 once every 10 years for multi-cancer early detection blood testing.

WORKFORCE ANALYSIS

Basis: Workforce analysis has been performed on changes to tax supported and non-tax supported full-time equivalent (FTE) positions in the Executive's Recommended FY27 Operating Budget for Montgomery County Government.

Overall changes are calculated in comparison to the Approved Personnel Complement for FY26, which began on July 1, 2025. Changes shown reflect the addition of grant-funded positions, abolishments and creations to implement approved job-sharing agreements, and other miscellaneous changes. Changes recommended by the County Executive for FY27 are in three categories: current year position changes due to supplemental appropriations or other actions, new fiscal year position changes scheduled to take effect July 1, 2026, and technical changes.

Summary: The recommended budget includes funding for 10,600 full-time positions, a net increase of 78 from the approved FY26 Personnel Complement of 10,522 full-time positions. Funding for 873 part-time positions is also included, a net decrease of 27 positions from the approved FY26 Personnel Complement of 900 positions. The net impact on FTEs is an increase of 33.20 to 11,324.27.

Detailed below are the significant net changes in the number of positions in the FY27 Recommended Operating Budget.