Lawmakers say Maine school districts – and their taxpayers – would benefit from a bill that would undo a budgeting change enacted by former Gov. Paul LePage that shifted tens of millions in annual teacher retirement costs from the state to the districts.
Speaking in support of his bill to have the state assume the full cost of teachers’ retirement, Rep. Michael Brennan, D-Portland, said, “There’s never been a clear policy decision articulated why local municipalities should pay this. It’s simply a cost shift.” 2014 Press Herald photo by John Patriquin
“This may be one of the most direct forms of property tax relief we may see this session,” said Rep. Michael Brennan, D-Portland, who is sponsoring one of two bills to shift the costs back to the state and presented it in a public hearing before the Legislature’s Education and Cultural Affairs Committee on Thursday.
Those costs, known as normal teacher retirement costs, were traditionally paid 100 percent by the state, but the LePage administration shifted half of the costs to school districts in the 2013 two-year state budget.
Since then, districts have paid out $228 million, with the cost to districts statewide rising from $29 million in 2014 to $47 million in 2019, a 62 percent increase, according to the Maine School Management Association. It projects the retirement costs will rise another $101 million in the next two-year budget cycle.
The retirement costs are distributed through the state funding formula that takes into account property values and a community’s ability to pay. That means that wealthier communities that are called “low receivers” of state funding pay more and poorer communities pay less or none of the costs.
Since school spending accounts for half of the typical municipal budget – which is funded largely with property taxes – shifting teacher retirement costs onto school districts pushes property tax rates higher while reducing pressure on the state budget. Conversely, if the bill heard Thursday becomes law, pressure on the property tax would be reduced but more money would be needed in the state budget, which is funded largely with sales and income taxes.
In Portland, local taxpayers have paid $11.3 million in teacher retirement costs since the shift. Retirement costs currently account for $2.4 million of Portland’s $110 million budget.
Brennan was Portland’s mayor the first year the budgeting change hit the district and recalled how the $1.5 million in retirement costs came in the same budget cycle that the city lost $2 million revenue sharing and had flat education funding.
“It was an enormous shift in one year,” he said. “There’s never been a clear policy decision articulated why local municipalities should pay this. It’s simply a cost shift.”
Teachers’ retirement is based on the number of years they work and the average of their top three years’ pay, multiplied by 2 percent. So a teacher who taught for 25 years, and had an average top salary of $55,000 would get $27,500 annually in retirement.
A second bill that also would shift these costs back to the state is L.D. 55, sponsored by Rep. Paul Stearns, R-Guilford. The bills are supported by the state unions representing the teachers and by school officials.
Both bills will be considered by the committee in a work session on Feb. 28.
No one spoke Thursday in opposition to the measures, but when similar bills were proposed under the LePage administration, Maine Department of Education officials argued that the cost for retirements should be part of a school districts’ responsibility, just as teacher salaries and benefits are a local cost.
Noel K. Gallagher can be contacted at 791-6387 or at:
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