Baileyville owes state retirement $700,000

Posted April 17, 2009, at 9:09 p.m.

BAILEYVILLE, Maine — The town learned recently that it owes more than $700,000 to the Maine State Public Employees Retirement System to cover the cost of employees who did not join the retirement plan, but now would like to.

But officials found a silver lining when they discovered they had a balance of more than $900,000 in the state fund.

They reviewed the plan at their council meeting Monday night.

In a letter to the town, Stephanie D. Fecteau, plan administrator for the state, stated, “I am writing to notify you of the balance due from the town of Baileyville. The amount due is the employer’s total liability for service purchased by town employees for the period during which they were not offered the opportunity to join the Retirement System. The town’s total cost to fully fund the past retirement service credit for these employees is $743,292.”

Interim Town Manager Dottie Johnson said at the meeting Monday night that the town got into trouble with the fund when a former town manager misled employees about their retirement opportunity.

“Employees of the town of Baileyville had an opportunity to join the Maine State Retirement System,” Johnson said. “Sometime in the 1970s some fancy town manager came along — I have no idea who — and convinced most of the employees that they should go to another retirement system.”

Then as new employees were hired, the town manager at the time told the employees they could not join the state retirement system. That information was wrong, Johnson said.

Now several employees want to get into the state system. For them to do that, the town must pay the $743,292 that would have been paid had they entered the system originally.

“The good news is that we have in the Maine State Retirement over $900,000 because when people took theirs out [when they quit working for the town], the town could not get their share back. So it has been sitting there gaining interest. We can’t get it for any other purpose. We can’t write and say, ‘Could you give it to us for economic development? Can you give it to us for anything?’ It can only stay in the Maine State Retirement,” she said.

In addition to the town’s obligation, Johnson said, several employees have had to take money out of their personal retirement accounts to put into the state system.

“Some of them are paying back as much as $80,000 to $100,000, taking it out of their other retirement and putting it back to the Maine State Retirement,” she said.

Police Chief Phil Harriman plans to join the state system. He said it was a better plan and not tied to the stock market like the existing retirement system that many of the employees belong to.

Other employees also plan to join, Johnson said. She did not say how many.

The council then voted to follow through on the Maine State Retirement plan.

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