BANGOR, Maine — Two years after local school districts were forced to shoulder some of Maine’s teacher retirement costs, a Legislative committee recommended on Monday that the state pick up those expenses once again.
On Monday, the Legislature’s Committee on Education and Cultural Affairs held a work session on LD 60, An Act to Ensure Proper Funding for Teacher Retirement. The bill, proposed by Rep. Walter Kumiega, D-Deer Isle, would repeal the law passed in 2013 that required school administrative units and private schools to pay for a portion of teacher retirements.
The committee voted 8-5 to send an “ought to pass” recommendation on to the full Legislature.
Municipal organizations and local school districts have argued that the shifting of costs to school units spurred hikes in property taxes. State officials have argued that schools should be responsible for retirement costs, just as they’re responsible for teacher payroll.
In 2013, the state shifted about $29 million in teacher retirement costs from its coffers to the school districts that employ those teachers. Before that, the state picked up 100 percent of the $201 million cost. In return, the state offered school districts about $14.5 million in additional funds, divvied up through the state’s funding formula, over the next two years to pay for the shift, but that left it up to the school districts to come up with $14.5 million collectively in their budgets.
“These are local educational costs and should remain local school unit costs just like salaries and other benefits, continuing these costs to be recognized as part of Essential Programs and Services and subsidized in the same manner as other prekindergarten to grade 12 educational costs,” said Suzan Beaudoin, director of school finance and operations for the Maine Department of Education, in her testimony to the committee opposing the LD 60.
The shift has drawn widespread opposition from school districts, municipalities and organizations that represent them. The Maine School Management Association, Maine Municipal Association, Maine Principals’ Association, Maine Education Association, Mayors’ Coalition and some lawmakers submitted testimony calling on the 127th Legislature to reverse the decision of the 126th.
“Before [the] shift, the practice of the state paying the full employer share of teacher retirement costs had worked well for generations,” said Emmanuel Caulk, superintendent of Portland schools. He said retirement costs at his school range from $1.3 million to $1.5 million per year.
“To meet these new costs for teacher retirement, struggling school districts are forced to potentially cut essential staff and programs, harming education and/or ask more of local property taxpayers,” Caulk said.
School districts say their costs are going up as a result of the shift. In the current year, school units are paying “normal” costs of retirement, about 2.65 percent of total teacher payroll, amounting to the $29 million figure, according to Rep. Paul Stearns, R-Guilford. For 2016, that will jump to 3.36 percent, or an estimated $37.3 million, because of changes to the normal cost calculation in the Maine Public Employees Retirement System prompted by “new standards introduced by the Government Accounting and Standards Board (GASB) for calculating the net pension liability and other pension related numbers,” according to the state.
Bangor Superintendent Betsy Webb said her district’s retirement costs are projected to jump from about $620,000 in 2015 to $840,000 in the next fiscal year.
“Teacher retirements were never intended to be a part of Essential Programs and Services,” she said, expressing her support for the bill.
In the coming weeks, the Legislature will decide whether to approve the bill and put the costs of retirement back in the hands of the state. In order to do that, the state would need to find $37.3 million to fund the costs that school districts would have covered in fiscal year 2016. Kumiega acknowledged that could be a difficult task, to find that money in a budget season where many interests are grappling for extremely limited funding. If approved, the Legislature would, once again, cover 100 percent of the costs of teacher retirements.
Still, Monday’s vote “sends a message to the Appropriations Committee that this is an important thing to the [education committee] membership,” he said.
“This sends a positive message to folks at the local level that says any time the state runs into fiscal difficulty it won’t automatically be balancing the budget on the backs of property taxpayers and already-strained local budgets,” Kumiega said in his testimony to the education committee.
Follow Nick McCrea on Twitter at @nmccrea213.