April 2, 2013- Legislative Budget, Retired Teachers and State Employee Health Insurance & Bond Debt Service

Additional Materials and Responses to Committee Questions from Previous Hearings

Maine Center on Deafness- March 26, 2013

Finance Authority of Maine- March 28, 2013

Commissioner Millett- April 1, 2013

 Legislature’s Budget, Retired Teachers and State Employee’s Health Insurance, & Bond Debt Service

Today, the Appropriations Committee reviewed the Governor’s Biennial Budget relating to:

The Legislature including:

  • The Law and Legislative Reference Library,
  • The State House and Capitol Park Commission,
  • The Commission on Interstate Cooperation,
  • The Office of Program Evaluation and Government Accountability [OPEGA],
  • The State House Preservation & Maintenance Reserve Fund
  • The Retired State Employee and Teachers’ Health Insurance Program,
  • Teacher Retirement
  • Teacher Group Life Insurance
  • General Fund Bond Debt Service

Major Issues

Teacher Retirement.   The Governor proposes to require school districts to be the Employer for local school districts and responsible for paying the “normal cost” of teacher retirement.   In 2014, the Governor proposes that local school districts pay one-half [$14.5 million] the normal cost of teacher retirement, and beginning in 2015, school districts would pay the total cost estimated at $29.9 million.   Thereafter the normal cost would continue to increase.

  • The Governor’s Budget shifts the source of teacher retirement funding from the State’s broad- based sources of revenues [income and sales taxes] as well as discretionary taxes [lottery, liquor, & cigarettes], to the most regressive tax source – the property tax.

Retired Teachers Health Insurance.   The State currently pays 45% of retired teachers’ health insurance.   The issue involves the unfunded actuarial liability.   The unfunded liability is substantial, and GASBE 45 requires the states to cover the unfunded liability and to show progress in amortizing the unfunded liability.

Debt Service – Treasury.     The Governor’s budget provides enough debt service to issue all remaining bonds prior to the November 2012 public referendum.   The intent is to issue $40 million of authorized but unissued bonds in June of 2013.    Beginning in June 2014, the Bonds authorized by the public in November 2012 would be issued in June 2014.

State Employee Health Insurance. Has been flat-funded  now for three years.

Appropriations Public Hearing

Budget documents for the AFA portion of the Governor’s budget may be found here.

Governors and certain Judges Retirement

Commissioner Millett presented testimony in support of the two initiatives on these topics.

State Employee Health Insurance

Acting Assistant Commissioner Terry Brann presented testimony in support of the Governor’s budget.

Retired Teacher’s Health Insurance and Retirement

Commissioner of Education, Steve Bowen presented testimony in support of the Governor’s plans to shift the costs for teacher retirement to local districts.

Public Testimony

Members of the public testified in opposition to the Governor’s proposals.

Public Testimony- April 2, 2013

Schedule

Wednesday, April 3 Appropriations will be joined by the Health and Human Services committee for a public hearing on issues related to:

  • Substance Abuse
  • Adult Mental Health
  • Medical Payments to Providers
  • Departmental Administration

The full schedule may be found here.

Audio and more

Please feel free to join the committee as they do their work. You may also listen online using the following link: http://www.maine.gov/legis/ofpr/appropriations_committee/audio/index.htm

You also may watch broadcasts of these and other committee hearings on the Maine Capitol Connection pilot channel through Maine Public Broadcasting.  You may watch over the air or through your cable provider as well as online here: http://www.mpbn.net/News/MaineCapitolConnection.aspx

Thank you and please let me know if you have questions.

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