Pension cost shift worries Cape Elizabeth school officials

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CAPE ELIZABETH — School Board members are urging legislators to resist Gov. Paul Lepage’s proposal to shift 50 percent of teacher retirement costs to local districts.

Board members say the move would place a new and significant burden on schools already reeling from large state curtailments. 

On Monday, the board, along with members of the Town Council, met with state Sen. Rebecca Millett, D-Cape Elizabeth, chairwoman of the Education and Cultural Affairs Committee, and talked about the potential impacts of the pension shift on local districts.

Board Chairman John Christie said the education committee has been focused on on the supplemental budget, which deals with the most recent curtailments, and that it’s difficult to tell what the shift will look like before lawmakers dive into the biennial budget.

“I don’t think it’s likely (the teacher pension shift) will pass unchanged, but its too early to predict how the Legislature will react to it,” Christie said. “The state’s funds have to come from somewhere. So you can react to one proposal or another, but there aren’t unlimited options for where it comes from.”

Christie said they don’t know exactly what the impact will be if the state were to shift teacher pension funds to local districts, because the state hasn’t been clear about how it would pay its share. But, he said, the impact will be statewide.

“I don’t think it’s the kind of issue that will only concern southern Maine,” he said. “I suspect every community is giving it serious thought. It would be a new cost that would have to be borne by every school district in the state.”

Superintendent of Schools Meredith Nadeau said retirement costs are estimated to be about $1.8 million in Cape, according to the most recent audit. Any substantial share of that cost, on top of the 10 percent revenue loss from curtailments, would be a difficult burden to carry, she said.

“It means we’re starting out our budget planning receiving $200,000 less, adding to other challenges like reductions in Medicaid and other school funds,” Nadeau said. “It’s shrinking numbers overall. It’s not a great scenario that’s for sure.”

She said the shift would not only put a strain on schools, but poses a question of local control of tax dollars.

“One of the challenges local communities have is that they’ve never been involved in negotiating those pensions and it seems fundamentally unfair to shift that burden on to them,” Nadeau said. “It conflicts with the notion of more local control coming from Augusta.” 

Millett said it’s too early to tell if this shift will become a reality, noting that legislators won’t address the biennial budget until mid-February.

Another issue board members discussed with Millett was the governor’s plan to flat-fund education.

Christie said the proposal for flat funding is really a cut. Under the governor’s plan, he said, schools would be funded at the curtailment level, which means starting out at a $197,000 revenue loss in Cape Elizabeth, or about 10 percent of the entire state subsidy.

School Department officials said last week that the curtailments would be weathered using  contingency funds and savings in health-care and fuel costs.

Millett said the education committee recently finished the budget deliberation and doesn’t anticipate any further cuts to education.

“The education committee voted with serious reservations to accept the curtailments,” she said, adding that the budget now heads to the Appropriations Committee, which ultimately has authority to determine what’s in the budget.

“I have communicated very strongly and we’re hoping there are not further cuts put to public schools,” she said. “I’d be surprised if that were to happen, but never say never.”

The School Department is not expecting any other major revenue losses, Christie said, but is concerned about the governor’s proposal to cease municipal revenue sharing because it could put a higher burden on property taxpayers.

In wealthier communities, such as Cape Elizabeth, Falmouth and Yarmouth, he said, this typically is more expensive because of higher property values.

Christie said although many affluent people live in these communities, it creates inequities, especially for the elderly.

“The problem with property tax is that it has nothing to do with a person’s ability to pay,” Christie said. “We have folks who may have lived in a house a long time and are on a fixed income, an income that’s not changing, but their property taxes are going up.”

Will Graff can be reached at 781-3661 ext. 123 or Follow Will on Twitter: @W_C_Graff.