Confidential employee’s pension plan costs state ‘extra’ $3 million

By John Christie and Naomi Schalit, Senior reporters ©Maine Center for Public Interest Reporting
Posted March 02, 2011, at 8:28 p.m.

AUGUSTA, Maine — As state employees and teachers head into a second day of fighting the governor’s proposal to take almost 10 percent out of their paychecks to cover their pensions and pension debt, about 1,200 state employees known as “confidentials” have no such worry.

Those employees  — mostly in higher pay grades — will put only 3.65 percent of their pay into the retirement system if Gov. Paul LePage’s pension legislation is approved.

This would continue the longstanding gap between regular state employees and the confidentials that goes back to 1981.

Confidential employees are defined as state employees not eligible for collective bargaining because they are either in high-level, policymaking jobs or they are involved in union contract negotiations.

Examples of positions classified as confidential range from assistant director of nursing to budget analyst to civil engineer.

State employees and teachers testified Wednesday against LePage’s budget bill before the Legislature’s Appropriations Committee and more were expected to show up Thursday for the second day of the committee’s hearings.

The regular employees now pay 7.65 percent of their pay into the pension fund, and the state adds an additional 5.5 percent. Under LePage’s proposal, the 7.65 would go up to 9.65 percent and the state share would stay the same. The additional millions raised by the increase would help pay down the $4.3 billion pension debt.

The confidential employees currently pay 1.65 percent of their pay into the pension system. The state then adds the 5.5 percent it contributes for regular employees, plus an additional 6 percent. The result is that the total contribution to the system for the confidentials is the same as the total for regular employees:13.15 percent.

But almost all of the pension costs for confidentials is borne by the state.

Last year, the state paid about $3 million more than it would have paid if confidentials had contributed the same percentage as regular employees, according to calculations provided by the state finance department to the Maine Center for Public Interest Reporting.

The contribution difference means confidential employees take home a larger percentage of their paycheck.

A teacher, for example, who makes $35,000, pays $2,677 per year into the pension system. That will go up to $3,377 if the governor’s proposal is approved.

A confidential employee, such as a staff attorney, who makes $75,000, has to pay $1,237 per year for her pension. That would increase to $2,737.

State documents also showed that the number of confidential employees has been going up steadily over the last decade.

At the end of Gov. Angus King’s administration, in 2002, there were 1,149 confidential employees. By the end of Gov. John Baldacci’s eight years in office, the number had grown to 1,258, a 9.5 percent increase.

Sawin Millett, the state’s finance commissioner and a veteran legislator and finance official in the McKernan  administration, said the LePage administration is not considering making confidential employees pay the same as other other employees toward their pension and the pension debt.

He explained that in the early 1980s, confidential  employees were offered a 10.5 percent pay increase over two years, or to have the state contribute a higher amount to their pensions. They chose the latter.

“Realizing the history,” Millett said, “they obviously forgo, or forewent, raises at that time, which they still haven’t gotten. The fairness approach I think would be to say everybody gets a 2 percent bump on their share.”

Chris Quint, executive director of the Maine State Employees Association, said his members feel otherwise.

“They definitely think it’s a fairness issue,” he said. “All this talk of a shared sacrifice, then it should be shared sacrifice for all around.”

One of Quint’s union members, Jim Betts of Winthrop, a claims adjudicator at the state Bureau of Unemployment Compensation, said, “I’m paying as a taxpayer for this unfunded liability, just like every other citizen in the state of Maine; then, on top of it, they’re taxing me again as a state employee, by freezing my wages, increasing my health care costs and now, raising, by 2 percent, to pay back the loan of the McKernan years.”

Some members of the Appropriations Committee said the issue of how much the confidential employees pay toward their pensions and the pension debt could be revisited.

The Maine Center for Public Interest Reporting is a nonpartisan, nonprofit journalism organization based in Hallowell. E-mail: mainecenter@gmail.com. Web: pinetreewatchdog.com.

http://bangordailynews.com/2011/03/02/politics/pensions-the-next-budget-crisisconfidential-employee%e2%80%99s-pension-plan-costs-state-%e2%80%98extra%e2%80%99-3-million/ printed on July 24, 2014