CONCEPT DRAFT

SUMMARY

This bill is a concept draft pursuant to Joint Rule 208.

This bill would require local school administrative units to pay the employer portion of the costs of teacher retirement and teacher retiree health insurance. Those costs would be counted as local operating costs for purposes of the school funding formula. Units would be reimbursed by the State for these costs, to the same extent they are reimbursed for teacher salaries and other operating costs. Currently, the State pays the employer portion of teacher retirement costs and pays 35% of the cost of retiree health insurance. The retiree pays the remaining cost of health insurance.

The Maine State Retirement System would continue to determine the normal cost of retirement benefits for teachers, and the local school administrative units would contribute the employer portion of the normal cost to the retirement plan. The State would continue to make payments to amortize the unfunded actuarial liability of the teacher retirement plan.

The local school administrative unit would pay the employer portion of retiree health insurance, currently set at 35% and rising to 40% later in 2003. In addition to paying the current cost for retirees, the units would contribute an actuarially determined amount into a reserve fund to pay the cost of future health insurance benefits for members who are not yet retired. The unfunded liability created by past service of currently active members would be determined and amortized over a reasonable period, and the liability created by service rendered after the effective date of the bill would be paid each year into the reserve fund.