Wednesday, April 16, 2014
AUGUSTA -- The state will need to pay $287 million more to the retirement system in the next two-year cycle than it did in the current state budget, according to updated numbers released Thursday.
A day earlier, Sandy Matheson, executive director of the Maine Public Employees Retirement System, estimated the 2012 payment at $480 million in a meeting with the Kennebec Journal and Morning Sentinel staff.
On Thursday, she revised the number downward, saying contribution calculations completed in time for the system's board meeting show an estimated contribution of $448 million in 2012. She also released an estimate of $468 million in 2013, for a total of $916 million over the state's upcoming two-year budget cycle.
That compares to a biennial cost of $629 million for the current state budget -- or an increase of $287 million.
The state payment is a combination of the employer contribution to the plan and the state's unfunded actuarial liability, a debt created in the 1970s and 1980s. The debt was caused by understating the cost of benefits, overstating future funding, enhancing benefits without paying for them, and deferring payments, according to a study released in March by the Maine Unified Retirement Plan Task Force.
A state constitutional amendment requires the state to pay off all the debt by 2028. The recent downturn in the stock market caused losses in the fund of nearly 19 percent in fiscal year 2009, and a gain of 11 percent thus far in 2010, according to the retirement system.
Susan Cover -- 620-7015