128th MAINE LEGISLATURE
		LD 726		LR 879(02)
	An Act To Restore Full Cost-of-living Increases for All Maine State Retirees
	Fiscal Note for Bill as Amended by Committee Amendment " "
	Committee: Appropriations and Financial Affairs
	Fiscal Note Required: Yes
Fiscal Note
Current biennium cost increase - Local School Administrative Units
			FY 2017-18	FY 2018-19	Projections  FY 2019-20	Projections  FY 2020-21
Net Cost (Savings)
	General Fund		$799,456,110	$5,668,000	$5,668,000	$5,668,000
Appropriations/Allocations
	General Fund		$799,456,110	$5,668,000	$5,668,000	$5,668,000
Fiscal Detail and Notes
	Current law requires a cost-of-living adjustment (COLA) equal to the Consumer Price Index (CPI) each fiscal year, up to a maximum of 3%, be applied to the first $20,000, also indexed to the CPI, of pension benefits received by retired state employees, teachers, judges and legislators.  This legislation requires that the COLA be applied to the full benefit received by the retiree.  This will increase both the normal cost and unfunded actuarial liability of the Maine Public Employees Retirement System (MainePERS).  Pursuant to the Constitution of Maine, Article IX, Section 18-A, unfunded liabilities may not be created except those that result from experience losses.  Therefore, any unfunded liability created by the provisions in this legislation must be funded immediately.
	Based on estimates provided by the MainePERS, applying the COLA to the full benefit received by a retiree will increase required employer contributions during the current biennium by a total of $802,060,000 in fiscal year 2017-18 and $8,260,000 in fiscal year 2018-19.  Of that amount, $2,603,890 and $2,592,000 in fiscal years 2017-18 and 2018-19, respectively, will be borne by local school administrative units for their share of the normal cost of teacher retirement.
	This bill includes a one-time General Fund appropriation of $550,000,000 in fiscal year 2017-18 to the Teacher Retirement program within the Department of Education for the increased costs to the unfunded actuarial liability of the teacher retirement portion of the State Employee and Teacher plan.  This bill also includes General Fund appropriations of $2,696,110 in fiscal year 2017-18 and $2,808,000 in fiscal year 2018-19 to the General Purpose Aid for Local Schools program for the State's share of the normal cost of teacher retirement.
	This bill includes General Fund appropriations of $246,760,000 in fiscal year 2017-18 and $2,860,000 in fiscal year 2018-19 to the Retirement Allowance Fund within the Maine State Retirement System for the increased costs this provision is anticipated to have on the normal cost and unfunded actuarial liability of the State employee portion of the State Employee and Teacher plan and the Judicial Retirement plan.
	This provision is not expected to result in increased costs to the Legislative Plan due to the actual benefits paid to retired legislators being well below the current $20,000 cap.