February 22, 2013

State's teacher retirement cost shift would hammer six area districts' budgets

Augusta, Hallowell-based RSU 2, Farmington-based RSU 9, Oakland-based RSU 18, Fairfield-based RSU 49 and Skowhegan-based RSU 54 all face costs exceeding $300,000

By Susan McMillan smcmillan@centralmaine.com
Staff Writer

AUGUSTA — The Maine Department of Education on Friday released preliminary state subsidy figures, including specifics about teacher retirement costs that districts would be expected to pay under Gov. Paul LePage’s proposed budget.

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Paul LePage

Portland Press Herald file photo by Gabe Souza

RETIREMENT COSTS

Gov. Paul LePage’s proposed budget shifts $28.9 million in teacher retirement contributions to school districts, to be partially offset by a $14.5 million in General Purpose Aid for schools. Below are figures released by the Maine Department of Education on Friday estimating the 2013-14 retirement costs for local school districts.

RSU 2 (Dresden, Farmingdale, Hallowell, Monmouth, Richmond): $339,151

RSU 9 (Chesterville, Farmington, Industry, New Sharon, New Vineyard, Starks, Temple, Vienna, Weld, Wilton): $324,150

RSU 11 (Gardiner, West Gardiner, Pittston, Randolph): $298,276

RSU 12 (Alna, Chelsea, Palermo, Somerville, Westport Island, Whitefield, Windsor, Wiscasset): $285,056

RSU 18 (Belgrade, China, Oakland, Rome, Sidney): $403,962

RSU 38 (Manchester, Mount Vernon, Readfield, Wayne): $206,870

Augusta: $360,877

Fayette: $8,706

Vassalboro: $67,503

Winthrop: $117,360

One of the school districts that would take a hit is Regional School Unit 2 in Hallowell, which already is receiving about $334,000 less in state funding this year than last. Next year, it could experience an additional loss of $600,000, consisting of a $273,961 reduction in state subsidy and $339,151 in additional pension contributions.

Superintendent Virgel Hammonds said a funding cut of that magnitude would be “devastating.”

“The big sticker shock is that retirement cost shift,” Hammonds said Friday. “I’m still hopeful, in discussion with our legislators, that perhaps that might be pulled from being a local expectation.”

LePage has proposed shifting $28.9 million in pension contributions from the state onto Maine public schools, then offsetting half of the cost with a $14.5 million increase in General Purpose Aid to schools.

The offset that each district receives is based on property valuation. About 75 districts with the most property wealth — mostly along the coast, and about a third of which operate no schools — will receive no offset. 

In the Augusta area, that applies only to the Fayette School Department, which would be responsible for $8,706 in pension contributions.

It’s not clear how much of an offset each district is receiving, because the Maine Department of Education did not separate that figure from the projected state aid for districts.

Teachers pay 7.65 percent of their salaries into the state pension fund, and the state picks up 2.65 percent for costs related to current school employees. That 2.65 percent makes up the $28.9 million that would be shifted to local school districts.

The education department estimated the cost for each district by multiplying eligible salaries by 2.65 percent.

Six central Maine districts have estimated pension costs greater than $300,000: Augusta School Department, $360,877; Hallowell-based RSU 2, $330,098; Farmington-based RSU 9, $324,150; Oakland-based RSU 18, $403,962; Fairfield-based RSU 49: $315,403 and Skowhegan-based RSU 54: $393,645.

The pension cost for Portland Public Schools, the state’s largest district, is $1.37 million. 

The figures released Friday show $842.7 million in General Purpose Aid going to schools next year. That’s up from the $825.7 million Maine schools are set to receive this year following the approval by the Legislature this week of a supplemental budget including a $12.6 million curtailment.

The funding figures for next year don’t include an additional $9 million in the budget to distribute to schools in support of state initiatives such as the transition to a proficiency-based diploma and new teacher evaluation systems.

Among 230 school units in Maine, all but 72 are projected to have less state funding to work with next year once the retirement contributions are subtracted from their state aid.

For about half of central Maine school districts, the estimated subsidy for next year is less than they received last year.  

Deputy Education Commissioner Jim Rier said the estimates are preliminary and could change depending on the outcome of debate about the state budget. 

If the Legislature decides, for example, not to require school districts to pay retirement costs, General Purpose Aid would have to be decreased by $14.5 million so the state can use that money to make the pension contributions, Rier said, plus an additional $14.5 million to help balance the state’s budget.

The information gives local officials at least some idea of what to expect as they start to build their own school budgets. 

Sue Lambert, director of business and finance for Fairfield-based Regional School Unit 49, said it’s still hard to plan, given all that could change. RSU 49 would be one of the budget’s biggest beneficiaries, as it is projected to get a total $469,626 increase in funding.

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