PENSIONS: THE NEXT BUDGET CRISIS

A multi-art series examining the causes and effects of the state’s pension debt; possible solutions; and other aspects.

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Pension changes demand a third less of state budget

pension-costs-now-and-then

Editor's note: This is part 6 of an occasional series on the effects of the state’s pension costs. The series began last July.  

The year is 2020, just nine years from now, and the state is facing one of its worst budget crisis in years. A new governor and legislature are grappling with the inescapable fact that before they can spend a penny on schools, roads or welfare, they have to pay a $760 million bill -- almost all of it debt from the past. The bill has come from the Maine pension system. Continue Reading →

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State’s confidential employees’ pension plan costs state ‘extra’ $3 million

PENSIONS: THE NEXT BUDGET CRISIS

Editor’s note: This is the fifth part in a multi-part series about the state’s debt to teachers and state employees for their pensions. AUGUSTA — As state employees and teachers head into a second day of fighting the governor’s proposal to take almost 10 percent out of their paychecks to cover their pensions and pension debt, about 1,200 state employees known as “confidentials” have no such worry. Those employees — mostly in higher pay grades — will put only 3.65 percent of their pay into the retirement system if Gov. Paul LePage’s pension legislation is approved. This would continue the longstanding gap that goes back to 1981 between regular state employees and the confidentials. Confidential employees are defined as state employees not eligible for collective bargaining because they are either in high-level, policymaking jobs or they are involved in union contract negotiations. Continue Reading →

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Governor’s race: pension ‘time bomb’ missing in action from candidates’ platforms

Editor's note: This is the fourth part in a multi-part series. A widely-respected think tank calls the $4.2 billion that taxpayers owe to Maine's retirement system a "ticking time bomb" that should dominate any discussion of the state's finances. The assessment by the nonpartisan Envision Maine is echoed by experts in state finances. Robert A. G. Monks, the Cape Elizabeth resident who chaired two definitive studies of the retirement system, said the next governor will have to perform "triage" on the state's competing needs and "dilute drastically" many programs to offset the pension expense. Yet, most of the candidates for governor -- one of whom will have to solve the problem -- have treated it as a side issue, at best. Continue Reading →

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Voters locked up pension ‘cookie jar;’ now jar needs more money

Pension commitment is locked up in here

Pensions: The next budget crisis: Part 3

Editor’s note: This is the third part in a multi-part series to be published between now and November about the state’s debt to teachers and state employees for their pensions and retiree health care. In 1995, fed up with the state failure’s to adequately fund its pension system, critics came up with the ultimate solution. They proposed not only making it against the law not to fund the pensions -- but against Maine’s law of the land: the state constitution. Groups representing the employees and teachers, backed by Democratic supporters, came up a plan that ultimately became Article IX, section 18A-18B of the Maine Constitution. On June 23, 1995, Rep. John Tuttle, D-Sanford, rose from the floor of the House and explained in layman’s terms what the proposed amendment would do:

“The Legislature is constantly saying that they are no longer going to balance the budget with gimmicks ....” he said. Continue Reading →

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‘Someone else’s liability’ behind $4 billion pension debt

State house reflected in Cross office building

Pensions: The next budget crisis: Part 2

Editor’s note: This is the second part in a multi-part series to be published between now and November about the state’s debt to teachers and state employees for their pensions and retiree health care. How does a state of only 1.3 million people end up $4.4 billion behind in its payments for just one state program? It doesn’t pay its bills on time, makes promises without knowing the costs, loses money in the stock market and ignores repeated warnings that the debt is getting worse by the year. The official name of the debt is the unfunded actuarial liability, and the program is the pension for Maine state employees and public school teachers. The $4.4 billion represents $3,385 in debt for every man, woman and child in the state. Continue Reading →

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Looming bill for pensions will command larger share of taxes paid to state

Pension system director Sandy Matheson reported yesterday (July 27) to the legislature's Appropriations and Labor Committees at the Maine Statehouse. Photo by John Christie

PENSIONS: THE NEXT BUDGET CRISIS
Editor’s note: This is the first part in a multi-part series to be published between now and November about the state’s debt to teachers and state employees for their pensions and retiree health care. Within a few years, the state’s ability pay for its daily operations and invest in its future will be threatened by an obscure budget item that doesn’t pave a road, aid the needy, imprison a criminal or help a Maine kid pay for college. That line in the state budget pays for the pensions for state employee and public school teachers. It’s already eating up one of every 10 taxpayer dollars -- and it’s going to get much worse in just a few years. Using data provided by state agencies, a Maine Center for Public Interest Reporting analysis shows within five to six years pension costs could be 20 percent of the budget -- twice, for example, what the state gives to higher education, a system with 14 campuses, 50,000 students and almost 6,000 employees. Continue Reading →

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