The Last State Employees

We may be the last State employees to have a real pension system.
The Cliff bill passed but at the last possible second this ticking bomb of an amendment was added.
The amendment to the Cliff bill is a poorly disguised attempt to destroy both the pension system and the health care system that our members have fought for over the years.
If passed as written it will immediately create a two-tier system where new employees will have no interest in protecting the pensions and benefits of existing employees. Since over sixty five percent of State employees are eligible to retire in the next five years the change could come very quickly leaving a Union without union and with members fighting over the same pot of money and not for the common good. This is a severely edited version of the amendment with my own translations added. I would like to thank the MSEA-SEIU website for posting the link to the amendment as soon as it was available.
Design of unified pension and benefit plan for all state employees and teachers who are first employed with the State after December 31, 2009.
The system would “design…..a...pension and benefit plan,….to apply to all state employees and teachers who are first hired after December 31, 2009 with no prior creditable service.
B. “State employee” includes:
(2) Judges entitled to retirement benefits under Title 4, chapter 27 or 29;
(3) Members of the State Police; and
(4) Legislators entitled to retirement benefits…
Then the favorite political target, our health care.
Health plan.
All…members of the plan and their dependents must be entitled to membership in the health plan.
B. Every active member of the plan and the spouse and dependents of each such member may continue coverage under the health plan in retirement if criteria for eligibility are met as prescribed in Title 5, section 285, subsection 1-A. The task force may recommend changes in eligibility criteria.
Each retired member must be entitled to 3% of the premium for each year of ….service up to a maximum of 90% (Please note the death of fully paid health care in retirement) For a covered spouse or dependent, the subsidy is 1.5% of the premium for each year of the member’s creditable service up to a maximum of 45% of the premium. Here is the carrot “We will pay up to 45% of dependent health care”, yet there is no mention of paying any more for current employees and here is the start of a split.
3. Pension plan. The task force shall design the pension plan component of the plan in accordance with this subsection.
A. Every member of the plan must contribute to both Social Security and Medicare, and the employer of each member must contribute the employer’s share of Social Security and Medicare. This translates to paying for Medicare at a cost of hundreds of dollars a month more than the cost to current retirees.
Each active member of the plan must be entitled to a supplemental defined benefit pension calculated as a percentage of base compensation for each year of service. Base compensation equals the income received in the 5th highest calendar year of service. Here is where they drop your pension again by not paying the average of your three highest years, The fifth highest year. Where is the incentive for an employee to continue to try to improve themselves in the last five years? Benefits are vested after 6 years. Then they go back to increasing the time to become vested.
Normal pension benefits commence after 30 years of service or at 62 years of age, whichever occurs first. I can’t believe this would stay in. Hire on at eighteen and retire at forty eight? Never happen.
D. A member who separates from service before normal retirement may:
(1) If the member has at least 6 years of service in the plan, leave the member’s contributions and interest on account in the plan until the member retires at 62 years of age, with those benefits adjusted each year by an amount equal to the Consumer Price Index, up to an annual maximum of 3.5%; Read the fine print again: This would drop the maximum retirement COLA one half percent.
E. The actuarial cost of retiree health insurance and supplemental defined pension benefits, when combined, may not exceed 6% of aggregate payroll for all members. The cost of the plan must be divided equally between the member and the member’s employer. In between the lines is says “We will then start cutting funding for current employee’s health care in order to fund this plan.”
Sec. B-2. Report. The task force shall submit a report…….by December 10, 2008. After receipt and review of the report, the joint standing committee may report out a bill to the First Regular Session of the 124th Legislature.’


The State’s summary follows my own take on this. The State is set on a course to destroy the current pension system and replace it with Social Security, a system that may not be there for the retirees in the future. They are doing it to cut benefits and to set Union members against each other. The new Pension system will depend on our State government accurately forecasting the economy for thirty years into the future and asks all new employees to trust their figures. The same department that forecast a twenty five million dollar return from unused gift cards and has make serious over estimates of revenue for years. Yeah, I’m ready to trust them. How about you?


SUMMARY
This amendment directs the Maine Public Employees Retirement System, the Commissioner of Administrative and Financial Services and the State Employee Health Commission, within their existing resources, to design a unified pension and benefit plan to apply to all state employees and teachers that are first hired after December 31, 2009. Under this unified pension and benefit plan:
1. In order to enhance portability of benefits and eliminate the issues associated with the government pension offset and the windfall elimination provision of the federal Social Security Act, every state employee and teacher subject to the plan will be covered under Social Security;
2. All new employees will be members of a common health plan with benefits that are identical to those paid for in accordance with current law and collective bargaining contracts;
3. In addition to Medicare and Social Security, each member will be entitled to a supplemental defined pension and retiree health benefit;
4. The present actuarial cost of retiree benefits under the plan will be limited to 6% of payroll to be divided equally between the employee and the employer;
5. Continuing health coverage will be offered to retirees and their dependents;
6. A retired member may receive a subsidy of up to 90% of the cost for the retiree’s own insurance and up to 45% of the cost of a spouse or dependent. The level of subsidy will be graduated to reflect length of service;
7. The future cost of retiree health benefits will be paid into an existing dedicated revenue account by assessing the current payroll of active members a percentage that is divided equally between the member and the member’s employer;
8. Each member’s supplemental defined pension will be calculated as a percentage of base year compensation times years of service. The percentage, rounded to the nearest tenth, will be calculated based on funding available after deducting the cost of the retiree health benefit from the 6% total benefit cost; and
9. A vested member may retire after 30 years of service or at 62 years of age, whichever occurs first. A member who retires early may recover 1.5% of the member’s own contribution plus 6% interest if benefits are withdrawn as cash.
The amendment directs the Maine Public Employees Retirement System, the Commissioner of Administrative and Financial Services and the State Employee Health Commission to submit their report on the design of the unified pension and benefit plan, together with proposed implementing legislation, to the joint standing committee of the Legislature having jurisdiction over labor matters no later than December 10, 2008 and authorizes the committee to report out a bill to the First Regular Session of the 124th Legislature.

Remember to get involved and to stay involved. Take the bargaining survey and make your opinion heard. So far our health care is at the top of the list of concerns.

What else is bothering you? Do you like getting less than the Federal rate for mileage costs when gas is nearly four dollars a gallon?

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