With the appointment of Robert A.G. Monks as chairman of the Commission to Study the Maine State Retirement System, the panel should be able to get down to business on a long-term and growing problem in Augusta. The state’s retirement fund is one of the weakest in the nation, and this examination away from the pressure of budget deadlines is its best chance for fair resolution.
Late last June, just hours before a budget vote and with the state still millions of dollars short of projected revenues, the governor proposed significant changes to the retirement system to make up the budget shortfall. Gov. John McKernan’s proposals had not come from out of the blue, but they did come too late for serious discussion. His reamortization plan for the system alone deserved more time than the last-minute consideration the entire package received.
This isn’t the first try for Mr. Monks to repair the retirement system. He led a panel in 1988 that took a crack at it, but the problems since then have grown considerably. The retirement system is underfunded by $2 billion, and the increased penalties and age requirements passed by the Legislature this summer just won’t fix it.
The panel will start with an important question: Should Maine change from a state-run pension system, which currently reimburses its teachers, legislators and state and municipal workers at rates higher than Social Security, to a system of employee contributions and Social Security?
Teachers and state workers have accrued benefits that many in private industry don’t receive because public sector salaries were so low compared with the employees’ qualifications. The panel must ask itself whether that condition still exists, and how the state can balance what is fair remuneration with what it can afford.
Tough questions, but better asked now than during the final hours of the legislative session.