THORNDIKE, Maine — Mount View High School Principal Lynda Letteney works hard for her paycheck, especially in a time when administrators like her in schools across Maine must constantly battle to balance their budgets.
Most days she logs between 12 and 14 hours on the job. It’s a lot of work for anyone — particularly for a retiree. Letteney, 61, officially retired from the same position almost a year ago and promptly was rehired by her school district.
“It’s strictly financial,” Letteney said recently of her decision to join more than 1,000 educators who have retired and then returned to work in the state’s school systems.
She and the others, including 56 school administrators, all get paid twice — once for the work they continue to do and once from the Maine Public Employees Retirement System, which administers their retirement benefits.
School professionals know that this can look a bit duplicitous and hard to comprehend in an era when most private companies no longer offer pensions. It might seem wrong to the legions of folks who are struggling to make ends meet after retirement.
But rehiring retirees is both legal and logical, they argue, and can benefit school districts as well as individual workers. If schools would be better served by hiring a person with plenty of experience, why not?
“I know people always say, ‘So-and-so’s double-dipping,’” said SAD 3 Superintendent Joseph Mattos, the head of Letteney’s school district. “Well, would you rather end up with someone who’s not doing the job, who can’t do the job? If you don’t deserve the job, you’re not going to get it. It’s not like these are backdoor deals.”
Symptom of underlying problems?
Scott Moody, chief economist with the Maine Heritage Policy Center, a conservative think tank, said he has significant concerns with the state’s pension system.
The center this week released a study which shows Maine’s pension and retiree health care systems for government employees together are underfunded by nearly $5.1 billion.
“The fundamental reason that double-dipping can occur is because the pension systems are so generous,” he said Wednesday. “The moral of the story is it’s completely unsustainable in its current form. We’re going to need to reform our pension system to make it sustainable.”
Moody said the “average Mainer” has a different understanding of the point of pensions.
“Pensions are designed so that when you retire, you can leave the work force,” he said. “The other issue is that the fine benefit system the state government workers are provided is simply not heard of now in the private sector.”
According to Sandy Matheson, executive director of the Maine Public Employees Retirement System, the state’s unfunded pension liability stood at $2.9 billion as of June 30, 2008, the date cited by the center’s study. Although the unfunded liability grew by about $1 billion by June 30, 2009, the next valuation is expected to show a significant decrease, she said.
A constitutional amendment passed in 1993 requires that the unfunded liability be fully paid for by 2028.
“Maine’s made steady progress in decreasing the size of its unfunded liability,” Matheson said.
But Moody suggested that more progress could be made with some major changes. The benefits for past and current employees legally can’t be changed, although future benefits could be. He argued that the state would be better served if it moved away from a defined-benefit system and toward a contributed-benefit system as has become more common in the private sector, where employees have the option to put money into personal 401(k) programs.
Although such private retirement plans have been riding the recession roller coaster, to the dismay or fear of many, Moody said, investors are “better off” because they can see what’s happening with their money.
“In a defined-benefit pension system, you don’t have any control,” he said.
But that’s hogwash, according to Christopher “Kit” St. John, executive director of the liberal-leaning Maine Center for Economic Policy.
Individual investors simply don’t have the buying power and know-how of an entity such as the state pension system, he said, adding that it is simply unfair to compare the retirement and benefit plan of state employees with those in the private sector. For one thing, state employees and teachers who take part in the state retirement plan are not entitled to receive Social Security benefits.
“As a whole, Social Security is more generous in many ways than the state pension system,” St. John said. “People who stay in state service until they draw retirement get an adequate — not terribly good — retirement benefit. Those who leave before retirement are the ones who lose out.”
Doing the math
That could have happened to David Beal, superintendent of RSU 37 in Washington County. Beal had been working as a school superintendent in northern Maine when a family situation intervened.
“I retired because I had to return home to take care of my aging mother,” he said.
That was 15 years ago, when Beal was about 50 and had been working as an educator for 26 years. When he retired, his monthly benefit was significantly smaller than benefits received by those who had worked much longer before retiring.
According to documents the Bangor Daily News received from the Maine Public Employees Retirement System through a Freedom of Information Act request, the 56 superintendents and principals who have retired and returned to work in state school districts receive monthly pension benefits that run a wide gamut, from about $1,600 a month to $6,400 per month. The amount of money depends on many factors, including how long the retiree worked in the system, how much money they had earned during their final working years and what benefit payment option they selected upon retirement.
It’s complicated, but the chance to work while receiving her pension has meant the world to Lynda Letteney, who said that her monthly benefit became fixed as soon as she retired.
“When I finally do stop working, I’m only going to get the state retirement,” she said. “You really have to do the math in several ways to see what’s best for you.”
For her, the numbers would work the best if she can continue her work as a principal until she’s 65 years old.
“But I’ve got to tell you, high school administration is very hard. It’s very draining,” she said. “I retired after 36 years. My first year, I didn’t know how people made it to five.”
Letteney now has a year-to-year contract with SAD 3, instead of the usual two-year version. Officials there said they were very happy to have her at the helm during a transitional time for Mount View. Last fall, students and faculty began using a brand-new $40 million school.
“It was for continuity,” said SAD 3 board chairman Glenn Couturier. “She seemed to be the best fit for the position.”
Mattos, the SAD 3 superintendent, said Letteney has done a “great job” during the transition and also has worked hard to improve the students’ learning climate.
“If she weren’t doing that, the transition period would be over,” he said. “When someone retires, you have to think: OK, why would I hire this person back? Does this person have a certain skill that I wouldn’t see on the marketplace?”
‘Nothing but a plus’
Dale Douglass, executive director of the nonprofit Maine School Management Association, said the retired superintendents who return to work do so for various reasons. Some return as interim superintendents to replace administrators who have died or left their positions. Others work as part-time superintendents to do paper-work for remote school districts which no longer operate schools.
“If you can find someone who understands and has experience with Maine school law and school funding, and has a background in educational policies — that type of experience is invaluable,” he said. “It’s a good economic investment. You’re buying people with knowledge, someone who is already trained and who has a track record that is verifiable.”
In some cases, the retired administrators can cost their cash-strapped districts a little less money because a portion of their health insurance benefit can be paid through the pension system.
Clifford McPhee, the former school board chairman of Baileyville, said he appreciated having to pay a little less for the benefits of Union 107 Superintendent Barry McLaughlin, who retired Jan. 1.
“That’s nothing but a plus for us,” he said.
“By hiring a retiree, generally, it does lessen the health insurance cost to the employer,” said Christine Gianopoulos of the Maine Public Employees Retirement System. “With a retired teacher, the state subsidizes a portion of the retiree health care cost.”
The Maine Public Employees Retirement System asks only that participants meet its requirements, she said, and is not involved in the question of whether or not retired workers should be allowed to return to their old jobs at their old wages.
“It causes people to raise their eyebrows,” she said. “It’s not anything that the retirement system gets into. The law says if you’ve retired and you’re what we consider normal retirement age, you’re fine. No problems.”