April 29, 2011

The Maine State Employees Association and the Maine Education Association, which represents 15,000 workers, have come up with a compromise to Gov. LePage’s proposed budget cuts to the state’s retirement system. The union’s modifications to the LePage proposal total $213 million in savings for the upcoming two-year cycle and a $1.2 billion reduction in the long-term unfunded liability.

“Even though teachers, firefighters, snow plow drivers and child protective workers did not cause the unfunded actuarial liability, we are here today to put forward our solution to help bridge the current recession and cover the increased costs to the State of Maine which were generated by the 2008 market declines,” said Chris Quint, executive director of MSEA.

They are willing to freeze cost-of-living increases for one year, reduce the cap on future increases from 4 percent to 3 percent and require workers to reach their normal retirement age—either 60 or 62— to receive the state contribution toward their health insurance before they reach age 65.

Facts about these public servants:

• State workers and teachers do not receive Social Security benefits because they get a pension from the state.

• State workers and teachers have been contributing 7.65 percent of their paychecks toward their retirement for years.

• Their contributions to the retirement system make up 58 percent of the current cost of their retirement.

• Their average pension is $19,000 per year.

• A labor market survey commissioned by the Maine Department of Administrative and Financial Services, during the Baldacci administration, proves that teachers and state workers earn lower wages than their private sector counterparts for comparable work.

• The contributions that Maine’s public workers have been making and continue to make to the retirement system, coupled with the strong stewardship of the Maine Public Employees Retirement System, have created a system that is well-managed and in sound fiscal health.

There is no “crisis” here. In fact, while the retirement system, as did most retirement systems in our nation, experienced financial losses in 2008 due to declines in financial markets, the retirement system has since recovered and is strong,” said Quint.

The union proposal would put the state on a path to pay off short and long-term debt by 2028, which is required by the state constitution.