123rd MAINE LEGISLATURE
		LD 1223		LR 912(04)
	An Act To Provide a Uniform Retirement Plan for Corrections Officers and Mental Health Workers
	Fiscal Note for Bill as Amended by Committee Amendment "      "
	Committee: Labor
	Fiscal Note Required: Yes
Fiscal Note
Future biennium cost increase - General Fund Future biennium cost increase - Federal Expenditures Fund Future biennium cost increase - Other Special Revenue Funds
Fiscal Detail and Notes
	Adding mental health workers to the 1998 Special Plan and providing that all service for corrections and mental health workers is to be considered as service earned in the 1998 Special Plan, regardless of when that service was earned will increase the normal cost component of the employer retirement rate resulting in increased employer contributions to the Maine State Retirement System and will increase the unfunded liability of the Retirement System.
	Based on calculations performed by the System's actuary, the unfunded liability cost associated with the plan changes as of June 30, 2007 totals $31,040,512, of which $12,669,713 is attributable to Mental Health Workers and $18,370,799 is attributable to Corrections employees.  The additional normal cost dollars for Mental Health Workers as a result of the increase in the rate from 5.75% to 6.50% is estimated to be $155,000 for fiscal year 2008-09.  Because Correction employees already participate in the 1998 Special Plan, there is no increase in the normal cost for that group of employees.
	In order to reserve funds to meet the full actuarial costs of the provisions of this bill, including the normal cost rates for the 6 years following the effective date of the legislation, the bill creates the Corrections and Mental Health Workers Service Retirement Benefit Reserve and proposes to divert funds from the unappropriated surplus of the General Fund at the end of each fiscal year beginning in fiscal year 2008-09 that would otherwise be transferred to the Retirement Allowance Fund pursuant to 5 MRSA §1536, sub-§1(B).  The bill also states that the plan changes proposed in this bill do not become effective until full funding is available as certified by the Maine State Retirement System.
	The cost of this legislation, including the loss of savings as a result of diverting funds from the Retirement Allowance Fund that otherwise would be applied to the unfunded liability can not be determined at this time.  Information provided by the Maine State Retirement System indicates that the transfer of $13.1 million from the unappropriated surplus at the end of fiscal year 2004-05 resulted in cumulative savings of approximately $31.5 million over the 21 year amortization schedule.
	It is also unknown whether there will be sufficient funds available to transfer to the retirement benefit reserve to fully fund this provision by fiscal year 2013-14 or to fund the normal cost component on an annual basis.   The General Fund has had year-end surpluses over the past 5 consecutive fiscal years which allowed for a total of $63.7 million to be transferred to the Retirement Allowance Fund, with $17.5 million being transferred at the end of fiscal year 2005-06 and, as stated above, $13.1 million at the end of fiscal year 2004-05.  Although fiscal year 2006-07 ended with a General Fund surplus of $19.1 million,  no  funds were available for transfer to the Retirement Allowance Fund.  Public Law 2007, Chapter 1, Part L provided for the transfer of up to $82,000,000 from the unappropriated surplus of the General Fund to the Department of Health and Human Services, Medical Care - Payments to Providers account as the first priority after the transfers required pursuant to 5 MRSA §1507 and §1511 and before the transfers required pursuant to 5 MRSA, §1536.