March 28, 2024
BANGOR DAILY NEWS (BANGOR, MAINE

Teacher pension plan likely to be hot topic > King hopes to force school spending cuts

AUGUSTA — A plan to reduce the state’s contribution to teacher pensions would force school districts to cut overall spending, according to Gov. Angus King.

Since the 1940s, local school districts have had their share of teacher pension payments paid for by the state. King says it’s time for a change.

His proposal to lower the state’s contributions to the same level the state pays for its own employees has sparked promises of a fight when the Legislature gets down to work in January.

“This will make for a lively, lively legislative session,” predicted Dale Douglass of the Maine School Management Association, which represents school boards and superintendents.

King says school districts aren’t doing enough to cut overall spending, so the state must force them to crack down in the face of rising pension costs.

Educators argue it would be dangerous to shift the burden to local schools. They say dismantling a time-honored system would force underfunded school systems to make risky cuts, or seek even more money from local taxpayers.

King’s plan, which would take effect in July 1998, would save the state $4.8 million a year.

State pension contributions are based on a percentage of payroll, but the amounts differ for teachers and state workers. The state contributes 17.95 percent of payroll to the state-employee pension program and 20.88 percent of payroll to the teacher pension program, according to Kay Evans of the Maine State Retirement System, which runs the plans.

If King’s plan is adopted, school districts would have to do one of two things: absorb the loss by trimming other costs, or seek higher property taxes to boost revenues.

Cutting pensions is not an option because they are set by state law.

Administration officials said local school districts have the power to curb costly early retirement incentives for teachers.

State contributions to teacher pensions jumped more than 6 percent this year, from $127.4 million in fiscal year 1996 to $135.6 million in fiscal 1997, which ends next June 30, according to the state budget office.

King’s two-year budget seeks more money for teachers’ pensions — $152 million for fiscal 1998 and $156.7 million in fiscal 1999. The $156.7 million request assumes the Legislature will agree to cut $4.8 million from the total that year.

If lawmakers balk at that cut, state spending for teachers’ pensions would hit $161.5 million in fiscal 1999.

In his recently unveiled budget, King wants to increase general state aid to local schools by 1 percent the first year of the biennium and 2 percent the second year.

A 1 percent increase is about $5.4 million, prompting educators to complain that a $4.8 million cut in pension payments would negate much of the increase in general school aid.

“The underlying assumption is that there is some room for efficiencies” within school districts, said Commissioner Janet Waldron, King’s finance chief.

By delaying the cut until the second year of the budget, which is 18 months away, school districts would have ample time to prepare for the change, Waldron said.

House Majority Leader Carol Kontos, D-Windham, said the proposed $4.8 million state cut raises the specter of higher local property taxes at a time when lawmakers face “the hue and cry of the voters to provide more property-tax relief.”


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