SOUTH PORTLAND – I have listened with great interest as Gov. Paul LePage and Maine Treasurer Bruce Poliquin have whipped up anxiety about the alleged “crisis” facing the Maine Public Employees Retirement System.

This newspaper described the measures proposed by Gov. LePage as “reasonable” and implied that those who oppose them are being unreasonable. I respectfully disagree on both counts.

As a pension lawyer from South Portland who has spent the last 24 years building and protecting the retirement system, first as a member of the so-called Monks Commission in 1987, and then as a member of the Retirement System Board of Trustees from 1988 to 2008, and chair of that board from 1993 to 2007, I feel compelled to respond to some of the erroneous information being bandied about over the past few weeks.

First, Maine does not have a pension funding “crisis.” Second, it is not necessary to substantially reduce participant and retiree benefits to address the problem that does exist. The state is dealing with a problem that has existed for 40 to 50 years, and which has been responsibly addressed by Republican, independent and Democratic governors alike over the last 20 years. In 1987, the system was only 26 percent funded (assets of approximately $1 billion with liabilities of over $4 billion). Now, the system is over 70 percent funded. The UAL liability today is far less than it was in l987 in inflation-adjusted dollars.

The current cash flow problem is man-made (inadvertently created by the drafters of a 1995 Constitutional amendment which introduced the 2028 target date for “fully funding” the plan and the 10-year amortization requirement for “experience losses” such as those encountered when the 2008 recession drastically reduced everyone’s investment portfolio, including the state’s).

Some have alleged that Maine teachers and state employees are overpaid and have too-rich benefits. I respectfully submit that this is also incorrect. When their compensation and benefits are compared to the private sector on an education-adjusted basis, they are below private sector salaries and benefits. In fact, Maine state employees with a college degree tend to earn 15 percent less than their private sector counterparts, a fact which the governor himself bemoaned as he tried to fill his cabinet.

It is critical to remember that Maine teachers and state employees receive their Maine pension instead of Social Security. Thus, their benefits need to be compared to the total retirement benefits that private sector employees receive from both Social Security and their 401(k) plans.

This clearly shows that the Maine public employee retirement benefits are in line with or lower than total private sector benefits. The average state employee or teacher gets a mere $18,500 a year in retirement benefits. That comes to just $1,542 per month.

The governor’s budget proposes to increase participant retirement contributions and substantially decrease retirement benefits. Participants contribute 7.65 percent of their salary to their retirement compared to 6.2 percent by private sector employees who contribute to Social Security.

Teachers and state employees are currently paying 58 percent of the current “normal” cost of benefits, whereas employees in the private sector only pay 50 percent of their Social Security benefits. The governor’s proposal would have them paying 71 percent of the normal cost, an astronomical amount compared to their private sector counterparts.

Finally, the state is currently paying only 5.5 percent of employee compensation toward retirement benefits. In the private sector, employers pay 6.2 percent to Social Security, plus a 401(k) contribution from 3 to 6 percent, for totals from 9.2 percent to 12.2 percent of an employee’s salary.

Thus, private sector employers make retirement contributions that are 50 to 100 percent higher than Maine pays its teachers and state employees. The governor’s proposal would decrease the state’s contribution to 3.9 percent, which is substantially below the private sector contribution norm. Even employees at fast-food restaurants receive a 6.2 percent contribution to Social Security.

If this disparity is increased, it could have a serious negative impact on the ability of the state to attract and retain top quality employees in the future.

The sky is not falling, so we should not allow the alarmist rhetoric that has been used by some to cloud our decisions.

While the problems facing the Maine retirement system are serious, they have been dealt with responsibly by previous governors and legislatures and a sound plan has been implemented and is working.

The current rhetoric is simply a distortion of the facts.

– Special to the Press Herald