April 07, 2020

State pension plan focus of hearing> Employees, teachers seek protections, changes

AUGUSTA — State employees and schoolteachers showed up en masse at the State House on Tuesday for a public hearing on proposed laws to protect and expand their government-managed pension plan.

The Maine State Retirement System was altered in 1991 and 1993 by the Legislature as part of a larger effort to help close what was then a $1.2 billion state budget deficit. As represented by their different unions, state employees and teachers have since been seeking to have their pension plan protected from future tampering, as well as to reverse some of the changes that squeezed $200 million out of the system five years ago.

“It’s a good system if you would just leave it alone,” said retired Portland High School teacher Mervin Rowe, arousing the applause of the more than 100 people who gathered before the Labor Committee in a State House hearing room.

Rowe joined others speaking in favor of the five different laws before the committee. While no one stood to speak in opposition to the bills, administrators from the Maine State Retirement System did appear to help tally the cost of reversing changes made under former Gov. John McKernan. Kay Evans, executive director of the retirement system, said protecting the system from future tampering is costless as far as budgeting is concerned but that the total price tag for at least two of the bills being heard is $269 million annually.

In addition to adding $269 million to the retirement system’s $2.6 billion deficit, the bills also would require that public-sector employers increase the contribution they make to the pension plan by more than 1 percent of the salaries they pay.

“One of the things that struck me is that people seem to have different sets of expectations of the bills,” Evans said of the people speaking in favor of the proposals Tuesday. Evans said she is neither for nor against any of the bills, only seeking to point out the differnt costs associated with proposed changes.

Two of the five bills deal with protecting the system from the Legislature’s tampering, one through a constitutional amendment and the other simply through a bill. The other three bills specifically reverse changes made in 1993. Those laws are:

— LD 1954, sponsored by Sen. Sharon Treat, D-Gardiner, liberalizes the formula for calculating the average salary that is the basis for a retiree’s pension check.

— LD 1955, sponsored by Sen. Mary Cathcart, D-Orono, restores the normal retirement age to 60 from 62.

— LD 2121, sponsored by Rep. Donald Berry, R-Belmont, reduces the contribution employees make to the pension plan from 7.75 percent of their salary to 6.5 percent.

While cost considerations loom large over the fate of the bills, speakers before the committee noted that with the state now running a budget surplus as opposed to chronic deficits, it is an appropriate time to right a former wrong.

“If there ever was a time for the state to do this it is now,” said Cleo Ouellette, a retired teacher from Madawaska.

Ouellete and others said the state balanced the budget on the backs of its employees and teachers, so now with a surplus it is time to give some back.

Gov. Angus King and members of the Legislature have acknowledged the notion of applying part of the state’s estimated $25 million budget surplus to the retirement system. However, those proposals have dealt specifically with covering some part of the system’s $2.6 billion deficit.

The public hearing Tuesday was the first before the Labor Committee. The committee has scheduled a work session for Feb. 10 to discuss the bills further.

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