An Act To Amend the Laws Pertaining to the Maine Public Employees Retirement System
Maine Legislature, Session 127, LD 1021
Committee: Appropriations and Financial Affairs
Sponsors: ROTUNDO
Amends: 2 MRSA §1-A, 5 MRSA §17054, 5 MRSA §17054-A, 5 MRSA §17102, 5 MRSA §17103, 5 MRSA §17152, 5 MRSA §17451, 5 MRSA §18201, 5 MRSA §18252, 5 MRSA §18253, 5 MRSA §18806

Legislative Document 
No. 1021 
H.P. 704 
House of Representatives, March 19, 2015 
An Act To Amend the Laws Pertaining to the Maine Public 
Employees Retirement System 
Reference to the Committee on Appropriations and Financial Affairs suggested and ordered 
printed. 
ROBERT B. HUNT 
Clerk 
Presented by Representative ROTUNDO of Lewiston. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  2 MRSA §1-A, sub-§1, ¶D, as enacted by PL 1985, c. 801, §§1 and 7, is 
amended to read: 
D.    Whatever adjustments are made under Title 5, sections section 17806 and 18407 
shall must be applied to payments made under this section. 
Sec. 2.  5 MRSA §17054, sub-§3, as amended by PL 2011, c. 606, §9, is further 
amended to read: 
3.  Recovery of overpayments by the retirement system.  Any amounts due the 
retirement system as the result of overpayment or erroneous payment of benefits, an 
excess refund of contributions or overpayment or erroneous payment of life insurance 
benefits may be recovered from an individual's contributions, any benefits or life 
insurance benefits payable under this Part to the individual or the beneficiary of the 
individual or any combination of contributions and benefits.  If the overpayment or 
excess refund of contributions resulted from a mistake of or incorrect information 
provided by an employee of the retirement system, or a mistake of the retiree or the 
recipient of the benefit or life insurance benefit, a penalty or interest may not be assessed 
by the retirement system.  In all cases of recovery of overpayments through the reduction 
of a retirement benefit, whether with or without the assessment of interest by the 
retirement system, the recovery practices must be reasonable and consider the personal 
economic stability of the retiree in the establishment of the recovery schedule.  The 
executive director may also take action to recover those amounts due from any amounts 
payable to the individual by any other state agency or by an action in a court of 
competent jurisdiction.  Whenever the executive director makes a decision to recover any 
amounts under this subsection, that decision is subject to appeal under section 17451. 
Employers are responsible for enrolling employees in the correct retirement plan.  The 
retirement system shall provide training, education and information to assist employers in 
the correct enrollment of employees.  If an employee is enrolled in the incorrect 
retirement plan by the employer through no fault of the employee, the employee may not 
lose any retirement benefits.  The State is not responsible for the employer contribution 
when the employer is a school district, municipality or county and those contributions and 
assessed interest, if applicable, must be paid to the retirement system by the school 
district, municipality or county;. 
In the event of a dispute as to the proper enrollment of an employee in the correct 
retirement plan, the board shall make the final and determining decision; 
Sec. 3.  5 MRSA §17054-A, as enacted by PL 2009, c. 474, §12, is amended to 
read: 
§17054-A.  Responsibilities of employers and the retirement system 
Employers are responsible for providing procedures by which employees for whom 
membership in the retirement system is optional make a membership election, for 
maintaining all records relevant to the election process and an individual employee's 
election and for informing the retirement system as to employee elections in accordance 
with procedures established by the executive director.  The retirement system is 
responsible to ensure for ensuring that its records accurately reflect the information 
provided by the employer.  With respect to matters related to participation and 
membership in the retirement system other than those specified in this section, the 
retirement system and the board retain responsibility and authority according to 
applicable retirement system law and rules as to the employer and the employees to 
whom this Part applies, including the authority to make final administrative decisions.  
The retirement system has the authority and responsibility to require payment by the 
employer of any funding due the retirement system resulting from the employer's failure, 
as determined in the sole discretion of the board, to fulfill the employer's responsibilities 
with respect to its employees and their enrollment in and benefits under the retirement 
system. 
Sec. 4.  5 MRSA §17102, sub-§7, as amended by PL 2007, c. 240, Pt. U, §5, is 
repealed and the following enacted in its place: 
7.  Expenses.  All administrative costs and expenses attributable to the administrative 
operating budget of the retirement system must be charged against the assets of the 
applicable fund. 
Sec. 5.  5 MRSA §17103, sub-§6, as amended by PL 2009, c. 322, §2, is further 
amended to read: 
6.  Rights, credits and privileges; decisions.  The board shall in all cases make the 
final and determining administrative decision in all matters affecting the rights, credits 
and privileges of all members, and of all employees who may become eligible to become 
members, of all programs of the retirement system whether in participating local districts 
or in the state service.  The board is responsible for making decisions that are necessary 
to ensure the qualification of the retirement system under the Internal Revenue Code and 
other applicable federal laws. 
Whenever the board finds that, because of an error or omission on the part of the 
employer of a member or retired member, a member or retired member is required to 
make a payment or payments to the retirement system, the board may waive payment of 
all or part of the amount due from the member or retired member.  In these instances of 
recovery of overpayments from members of the retirement system, the retirement system 
is governed by section 17054, subsection 3. 
Sec. 6.  5 MRSA §17103, sub-§11, ¶C, as amended by PL 1993, c. 410, Pt. L, 
§19, is repealed. 
Sec. 7.  5 MRSA §17103, sub-§14, as enacted by PL 1993, c. 410, Pt. L, §22, is 
repealed. 
Sec. 8.  5 MRSA §17152, sub-§2, as corrected by RR 2013, c. 2, §6, is amended 
to read: 
2.  Retirement Allowance Fund. The Retirement Allowance Fund; and. 
Sec. 9.  5 MRSA §17152, sub-§3, as corrected by RR 2013, c. 2, §6, is repealed. 
Sec. 10.  5 MRSA c. 421, sub-c. 4, art. 4, as amended, is repealed. 
Sec. 11.  5 MRSA §17451, sub-§1, ¶E is enacted to read: 
E.  The board shall make all decisions necessary to determine applicable state law in 
a manner that does not jeopardize the qualification status of the retirement system 
under the Internal Revenue Code and other applicable federal laws. 
Sec. 12.  5 MRSA §18201, sub-§3-A, as enacted by PL 1997, c. 709, §1, is 
amended to read: 
3-A.  Compliance with federal law.  The local district is responsible for compliance 
with 26 Code of Federal Regulations, Part 31, with Section 401 of the United States 
Internal Revenue Code and with other relevant federal law and rules with respect to its 
employees, including employees to whom section sections 18252 and 18252-A applies 
apply.  The board shall make a final determination regarding whether an employee is 
eligible to participate in the Participating Local District Retirement Program. 
Sec. 13.  5 MRSA §18252, first ¶, as amended by PL 2011, c. 449, §14, is further 
amended to read: 
A person who is or would be covered by the United States Social Security Act as a 
result of employment by a participating local district with Social Security coverage may 
elect to be a member in the Participating Local District Retirement Program.  A person 
must make an election at the time of initial hire or on the date of first eligibility to 
participate, whichever occurs earlier, whether to be a member of the program.  Once an 
election is made under this section, the election is irrevocable with respect to all 
subsequent employment with the same employer when membership in the program is not 
mandatory.  The retirement system and the board have responsibility and authority for 
participation and membership issues or disputes according to applicable retirement 
system law and rules relative to the participating local districts and their employees to 
whom this section applies, including the authority to make final administrative decisions. 
Sec. 14.  5 MRSA §18253, sub-§1, ¶D, as amended by PL 1995, c. 363, §1 and 
PL 2007, c. 58, §3, is further amended to read: 
D.  For the purposes of this subsection, an employee of the Maine Public Employees 
Retirement System who is a member on January 1, 1994 is considered to be 
reemployed with a new employer.  If an employee returns to state service during the 
period that begins on July 1, 1995 and ends 180 days after the date upon which the 
initial collective bargaining agreement between the Maine Public Employees 
Retirement System and the collective bargaining agent that represents the employees 
of the system becomes effective, all funds transferred to the account of the Maine 
Public Employees Retirement System as the new employer on behalf of the employee 
from the State's account must be returned to the State's account.  For the purpose of 
service, breaks in service and benefit accruals, the employee must be treated as if the 
employee had remained in state service throughout the period in question.  For 
purposes of this paragraph, "becomes effective" means that the collective bargaining 
agreement has been signed and ratified by both parties and approved by the 
Legislature as provided by section 17103, subsection 14. 
Sec. 15.  5 MRSA §18806, sub-§1, as amended by PL 2007, c. 491, §253, is 
further amended to read: 
1.  Districts with employees covered by the Social Security Act.  A participating 
local district with employees covered by the United States Social Security Act may 
provide service retirement benefits for employees not covered by a special plan that equal 
1% of the member's average final compensation multiplied by the number of years of 
membership service.  Members The board shall establish by rule the rate at which 
members covered by this benefit shall contribute to the Participating Local District 
Retirement Program at the rate of 3% of earnable compensation. 
SUMMARY 
This bill does the following: 
1.  It clarifies that cost-of-living adjustments for benefit recipients from the 
Governor's Retirement Fund are the same as those paid to benefit recipients from the 
State Employee and Teacher Retirement Program; 
2.  It clarifies the authority and responsibilities of the Board of Trustees of the Maine 
Public Employees Retirement System with respect to eligibility and membership issues 
that arise in the context of the Participating Local District Retirement Program.  In 
Kennebec County v. Maine Public Employees Retirement System, 2014 ME 26 
(February 20, 2014), the Law Court held that the retirement system did not have the 
statutory authority to make final administrative decisions with respect to enrollment 
election matters, when the local employer's employees were not members of the Maine 
Public Employees Retirement System.  This bill provides explicit statutory authority for 
the retirement system and the board to continue to make such determinations, as they had 
prior to the court's decision.  Consistent adherence to federal law is required to ensure that 
the retirement plan of the Maine Public Employees Retirement System remains a 
qualified governmental retirement plan entitled to favorable tax treatment under the 
United States Internal Revenue Code of 1986, as amended; 
3.  It codifies language enacted in Public Law 2007, chapter 240, Part U, section 8 to 
make clear that administrative costs and expenses attributable to the administrative 
operating budget of the Maine Public Employees Retirement System are charged against 
the assets of applicable funds; 
4.  It repeals obsolete language pertaining to information included in the retirement 
system's annual report to the Legislature; 
5.  It removes the requirement that the Legislature approve collective bargaining 
agreements between the retirement system and its employees; 
6.  It amends and repeals existing laws to reflect that the retirement system no longer 
administers a distinct expense fund, since all administrative expenses are paid out of 
applicable fund assets; and 
7.  It makes the manner in which the member contribution rate is established for 
specific members of the Participating Local District Retirement Program consistent with 
how member contribution rates are established for all other members of the program.