MAEP & Retirement

The good news is that funding for the Mississippi Adequate Education Program (MAEP) will increase by $19.38-million for the 2012-2013 school year (Fiscal Year 2013).

The bad news is that school districts will have to cover a $23-million increase in the employer’s share of the annual cost of the state retirement system. Therefore, schools will have about $3.6-million less than they have this year for classroom expenditures other than retirement – things like hiring more teachers or adding back programs that were eliminated in recent years due to budget cuts.

So, how is retirement related to classroom expenditures?
By far the biggest “classroom” expenditure, and the one for which most of the MAEP is used, is for teacher salaries and benefits – including the employer’s (school district’s) portion of the retirement cost. In 1999, the Legislature passed HB 472 which increased retirement benefits for teachers and other state employees. In order to cover the cost of the improved benefits, both the employer’s (school district’s) and the employee’s (teacher’s) contributions to the retirement system have increased over the last several years. The school district’s share is paid using MAEP funds (as are teachers’ salaries). Teachers pay their share out of their own paychecks; that share increased from 7.25% to the current rate of 9% in 2010.

Statewide, the increase in the employer’s share of the annual retirement cost for school district employees comes to about $23-million, but the increase in MAEP funding for Fiscal Year 2013 is only $19.4-million. Because payment of the retirement increase is mandatory, schools will have $3.6-million less next year than they did this year to spend on things other than the retirement benefit.

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