This story was updated at 9:10 a.m. 1/19 to correct the percentage and amount the district would pay.
PORTLAND – A proposal to shift half of Maine’s contribution to teacher retirement costs from the state to local school districts would disproportionately affect wealthier communities.
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Seventy-one school districts would end up paying 100 percent of what the state had been paying toward the retirement costs of their public school teachers. Other districts would pay a portion of those costs, either more or less than 50 percent, depending on the value of the town’s property.
The state would calculate a municipality’s ability to pay using a formula based on its mill rate, the amount of tax paid per dollar of assessed property value.
The retirement funding change was part of Gov. Paul LePage’s biennial budget announced earlier this week.
Democrats quickly criticized the shift, particularly in light of LePage’s recent curtailment order, which cuts nearly $13 million from state aid to local schools, and a proposed $200 million decrease in state aid to communities through suspending municipal revenue sharing for two years.
All public school teachers, including ed techs, are included in the pension system under state law, according to C.J. Betit, a pension specialist at the Maine Education Association, which represents teachers. School districts already pay some retirement costs for non-education staff who are ineligible for a state pension. The districts also pay Social Security for these employees.
Among the southern Maine school districts that will have to pay 100 percent of the costs are Kittery, Acton, York and Chebeague Island, according to data from the Department of Education.
The Department of Education has not released the exact cost to each municipality or school unit. That information is being calculated, according to spokesman David Connerty-Marin.
There was disagreement Friday over how much Portland would have to pay. At a Friday morning meeting with the Portland state legislative delegation, Portland Schools Chief Financial Officer Mike Wilson said that last year the state had paid $7.9 million toward teacher retirement.
Under the proposed changes, he said, Portland schools would pay about 80 percent of that, or $6.4 million, with the state contributing $1.5 million.
“Splitting 50-50 would be much better than that,” Wilson said.
But Connerty-Marin said Portland’s total figure was $1.3 million, and that the district would have to pay about 50 percent of that, or about $650,000.
“It’s a more equitable distribution. The state is (now) paying 100 percent of all districts’ (retirement costs) regardless of their wealth,” he said.
School board representatives did not know which figure for Portland’s cost was accurate.
School Board Finance Chairman Justin Costa said that whatever the figure, “it’s a significant funding hit” to the city.
“What the governor is implying is that we can simply increase the local property tax rate,” to meet the new financial obligations, Costa said. “That’s not so easy.”
The Legislature is expected to vote in mid-February on the curtailment and at the end of May on the biennial budget containing the retirement changes.
Portland Mayor Mike Brennan described the budget numbers as “grim at best.”
The retirement shift, he said, is actually “a relatively small proposal compared to all the other things the governor has put on the table.”
Brennan said the delegation should focus on fighting the curtailment cuts because they will determine the baseline for funding going forward.
“So many of the governor’s proposals are probably never going to see the light of day,” Brennan said, referring to the retirement shift. “We’re not going to chase after proposals that are poorly conceived and are unlikely to get much traction.”
The $28.9 million in retirement costs represents the amount the state will pay next fiscal year toward current teachers’ retirement, which equals 2.65 percent of teachers’ total salaries. Teachers pay 7.65 percent of their salary toward retirement.
State and local teacher retirement costs in Maine will total $201 million for the 2014-15 fiscal year.
Besides the $28.9 million, this includes unfunded liability of $142 million to be paid out to retirees, as well as $27 million for health insurance and $3.4 million for life insurance.
The state will continue to pay the full costs of life and health insurance for retirees and the unfunded liability.
— Staff Writer Randy Billiings contributed to this report.
Staff Writer Noel K. Gallagher can be contacted at 791-6387 or at:
ngallagher@pressherald.com
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