Court: SAD 27 owes $46,560

Posted Nov. 06, 2009, at 9:47 p.m.
Last modified Jan. 30, 2011, at 11:38 a.m.

PORTLAND, Maine — The Maine Supreme Judicial Court on Thursday upheld a decision of the Maine Public Employees Retirement System that SAD 27 in the Fort Kent area is responsible for back retirement contributions totaling $46,560, plus interest, for six employees.

According to court documents, the case involves six district secretaries employed between 1973 and 1987 for whom SAD 27 failed to pay retirement contributions despite a state statute requiring the payments.

The district instead submitted those payments to the Social Security Administration.

The issue was brought to the employees retirement system in 2000 by three of the secretaries. It took two more years for SAD 27 to respond to requests for information.

In 2003 the school district paid $34,752 in back contributions and interest for the three employees while reserving the right to appeal the action.

“Eventually, the System identified three other secretaries for whom the District had similarly failed to make contributions and in December 2003 assessed the District an additional $46,560 in back contributions,” the court document says. “The District did not pay this amount and requested review of the assessment by the System’s Executive Director in January 2004.”

The director of the employees’ retirement system affirmed the decision to assess the back contributions for all six employees in 2007.

SAD 27 appealed that decision to the system’s board of trustees, which reaffirmed it in 2008.

“The plain language of the statute does not limit the District’s responsibility to merely collecting and withholding contributions,” the court document says. “The statute imposes an unequivocal duty on the District to deduct certain amounts from employee salaries and to forward that deduction to the System.”

Failure to do so threatens the integrity of the entire retirement system, an official with the state Attorney General’s Office said Friday afternoon.

“It is critical those payments are made so the retirement system can operate,” said Kate Simmons, spokeswoman for the attorney general. “We are very pleased with the Law Court’s decision and that the debt to the retirement system will be repaid.”

Simmons stressed that the retirement benefits of the six employees in question were never in danger.

SAD 27 Superintendent Patrick O’Neil was unavailable for comment Friday, and calls to the school district’s attorney, Jeffrey Piampiano, were not returned.

SAD 27 is made up of Fort Kent, St. Francis, St. John Plantation, Wallagrass, Eagle Lake, New Canada and Winterville. The court action occurred before SAD 27 joined with SAD 10 to form an Alternative Organizational Structure under the state’s school administration consolidation law.

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