June 4, 2014

1. June 4, 2014

2. Agenda • Performance Based Compensation for Teachers • Legislation: Teacher Retirees Returning to Work • PLD Plan Changes • COLAs: PLD and Teacher Retirees • Employer Reporting • GLI Insurance Only Employees • Teacher Retirements: Dates Matter • Other

3. Teachers – Performance Based Pay

4. Performance Based Pay Considerations • Is it earnable compensation? • Distinguishing Bonus versus Services Rendered • MainePERS is glad to make a determination • How should it be reported: • To ensure creditable service is granted accurately? • So that the amount is known to be earnable by MainePERS? • When/How is it paid? Lump Sum? Throughout the year?

5. Performance Based Pay Considerations • Performance pay does not earn creditable service. • It is not known at the beginning of the school year the amount of performance pay that will be earned. • For contract positions creditable service is granted by prorating earnings against the Full Time Equivalent (FTE). • Stipend positions grant a flat rate of service.

6. Scenario One: • Ex. Sally the science Teacher • Base Pay $30,000 • Performance Pay: up to $5,000 • $30,000 is reported as the FTE. • Earns $32,500 under Teacher Y0101 code. • MainePERS cannot place the member on the contract scale and will need to contact the employer to determine additional money is earnable.

7. Scenario Two: • Ex. Sally the science Teacher • Base Pay $30,000 • Performance Pay: up to $5,000 • Sally is a 2/3 Teacher. FTE is $30,000. Earns $20,000 in salary and $5,000 performance pay. All earnings are reported as standard teacher earnings. This results in overstated service.

8. Scenario Three: • Ex. Sally the science Teacher • Base Pay $30,000 • Performance Pay: up to $5,000 • FTE is reported as $35,000. Sally works full year and earns $30,000. • Only meets half the bench marks and gets $2,500 performance pay. • Service is understated.

9. Scenario Four: • Ex. Sally the science Teacher • Base Pay $30,000 • Performance Pay: up to $5,000 • Performance Pay is reported as a stipend Sally works half time and earns $15,000. She earns $2,500 in performance pay reported as a stipend. Service is overstated.

10. What are your thoughts? MainePERS wants to hear your ideas! Currently, we are leaving reporting decisions to the employers. We are evaluating the various methods to identify best practices. Continue to report as you see fit. Make certain MainePERS has current Collective Bargaining Agreements including any performance pay language.

11. Teacher Retirees Returning to Work

12. Current Law • For members who retire after September 1, 2011 and are Normal Retirement Age • Must wait at least 30 days from termination before retuning to work • Are limited to five years of restored service • Are limited to earning 75% of the rate of compensation established for the position

13. Act to Expand Number of Qualified Educators • New provisions begins August 1, 2014. • New law is not administered by MainePERS • New restrictions are employment not retirement focused • Only applies to members after retirement • Employers are responsible for interpreting and administering

14. Who is effected? • Only applies to those who retired after September 1, 2011 AND • Have reached Normal Retirement Age AND • Are returning as a “Classroom Based Employee.”

15. What isa Classroom BasedEmployee? • “… ‘classroom-based employee’ means a teacher whose principal function is to introduce new learning to students in the classroom or to provide support in the classroom during the introduction of new learning to students.” • Positions must be MainePERS Teacher plan eligible. For example Ed Tech I is not included. • Employer’s responsibility to determine what qualifies as classroom based. • Department of Education? • Consistency internally and with peers.

16. PLD Plan Changes Contribution Rate Increases for Employees & Employers Cost of Living Adjustments Normal Retirement Age for members new to PLD Consolidated Plan on/after 7/1/2014 is 65 Reduction for early retirement for those with Normal Retirement Age of 65 is 6% per year

17. COLA – For PLD & Teacher Retirees

18. Cost of Living Adjustments --PLD • 2014 Regular (Cumulative) COLA • Based on member’s full current benefit • Maximum increase 3% & based on CPI-U • Eligible after six months of retirement • Granted in September 2014 • Exact rate/amount to be determined in August • Different than State/Teacher plan COLA Rules

19. Cost of Living Adjustments--Teacher • 2013 COLA One-Time Payment • New Base for calculating $30,000 • Up to 1.8% dependent on 2013’s CPI-U • Maximum Amount of $540 • 2014 Regular (Cumulative) COLA resumes • Base $20,000 • Up to 3% dependent on 2014’s CPI-U • Indexing resumes • An eligible retiree may receive both payments • Available funding for one-time COLA yet to be determined

20. Break Time

21. Employer Reporting • Employer Statements – how are they working? • “Unconsolidating” Employers • Employer Rates – where are they found? • PLD – Rate Changes for both EmployersandEmployees

22. GLI Insurance Only Employees • Retirement under Social Security • Paid premiums through date of termination • 10 years of participation • Begin receiving a benefit within 31 days of termination Retirement under another “qualified plan”. • Paid premiums through date of termination • 10 years of participation • Have attained age 60 or have 25 years of service under the qualified plan • Receive a benefit from the plan within 31 days of termination of employment

23. Teacher Retirements & Terminations – Dates Matter

24. Next ERWG Meeting October 22,Wednesday 1:30-3:30 @ MainePERS