A Maryland state-appointed commission studying pension reform urged the state to move half of teacher pension costs onto the counties.

In an 86-page report released Friday evening, the commission called the recommendation "good, common-sense policy."

"State-paid pensions for local employees is unsustainable," the report reads. "The commission suggests that the cost shift begin in 2012 in recognition of the fiscal challenges the state is facing and the hole that will be left in the budget when the $228.1 million in federal stimulus funds being used to support teacher pensions costs is no longer available."

Maryland is one of only three states that pays entirely for teacher pension costs.

Gov. Martin O'Malley has said he won't support the shift until structural reforms to the pension system are implemented. Unions representing state workers and teachers are wildly opposed to the idea, saying it would push away quality teachers.

Other reforms included in the final report:

  • The state should provide state workers and teachers with a menu of options for future benefits to include: at least one option that protects all accrued benefits and cuts back on future benefits, and one option allowing members to retain their current benefits structure in exchange for a higher contribution rate.
  • Reduce employee and retiree health benefits costs by 10 percent by cutting back on state premium subsidies and reducing the share the state covers for medical services and prescription drugs.
  • Increase the vesting requirement from five to 10 years for new and nonvested state workers.
  • Increase retirement age to 62 years old — up from 60 years old — with at least 10 years of services for new and nonvested teacher.
  • State workers must earn 15 years of service credit — up from five years — to qualify for retiree health benefits.
  • State workers must retire directly from the state to qualify for retiree health benefits.
  • State workers must earn 25 years of credit — up from 16 — to earn the maximum premium subsidy provided to retirees.