Comprehensive Annual Financial Report 2014 MainePERS Maine Public Employees Retirement System For the Fiscal Year Ended June 30, 2014 MainePERS is a component unit of the State of Maine. Maine  Public  Employees  Re rement  System A  Component  Unit  of  the  State  of  Maine P.O.  Box  349,  Augusta,  Maine  04332-­‐0349 Comprehensive  Annual   Financial  Report For  the  fiscal  year  ended June  30,  2014 This report has been produced as required by 5 M.R.S.A. §17102 (10), which states that the Maine  Public  Employees  Re rement  System  must  publish  an  annual  report  showing  “the  fiscal   transac ons  of  the  re rement  system  for  the  fiscal  year  and  the  assets  and  liabili es  of  the  re rement   system  at  the  end  of  the  fiscal  year;  and  the  actuary’s  report  on  the  actuarial  valua on  of  the   financial  condi on  of  the  re rement  system  for  the  fiscal  year.” This  report  was  prepared  by  the  Financial,  Administra ve  and  Investment  staff  of  the  Maine   Public  Employees  Re rement  System.  Costs  for  producing  this  report  were  paid  from   the  opera ng  budget  of  the  Maine  Public  Employees  Re rement  System.  This  CAFR  is  printed   and  also  made  available  online.  We  respect  the  environment  by  prin ng  on  recycled   paper  and  using  soy-­‐based  inks—for  a  cleaner,  healthier  planet. Certificate of Achievement for Excellence in Financial Reporting Presented to Maine Public Employees Retirement System Eume Binder! CEO Public Pension Coordinating Council Recognition Award for Funding 2014 Presented to Maine Public Employees Retirement System In recognition of meeting professional standards for plan ?inding as set forth in the Public Pension Standards. Presented by the Public Pension Coordinating Council, a confederation of National Association of State Retirement Administrators (NASRA) National Conference on Public Employee Retirement Systems (NCPERS) National Council on Teacher Retirement (NCTR) ow Alan H. ?Hulda Pro gram Administator MainePERS  Comprehensive  Annual  Financial  Report For  the  fiscal  year  ended  June  30,  2014 TABLE OF CONTENTS PAGE INTRODUCTORY SECTION Letter of Transmittal ................................................................................................................................................... Board of Trustees, Management Staff, and Principal Professional Consultants ....................................................... Organization Chart by Function ................................................................................................................................. 2014 Legislative Update ............................................................................................................................................ FINANCIAL SECTION Independent Auditors’ Report ................................................................................................................................... Management’s Discussion and Analysis.................................................................................................................... Basic Financial Statements Statement of Fiduciary Net Position ................................................................................................................... Statement of Changes in Fiduciary Net Position ................................................................................................ Notes to Financial Statements ........................................................................................................................... Required Supplementary Information Schedule of Historical Pension Information - State Employee and Teacher Plan .............................................. Schedule of Historical Pension Information - PLD Consolidated Plan ............................................................... Schedule of Historical Pension Information - Schedule of Investment Returns ................................................. Schedule of Historical Pension Information - Group Life Insurance Plan ........................................................... Notes to Historical Pension Information ............................................................................................................. Additional Supplementary Information Schedule of Investment Expenses ..................................................................................................................... Schedule of Administrative Expenses ................................................................................................................ Schedule of Professional Fees ........................................................................................................................... INVESTMENT SECTION Investment Consultant’s Report................................................................................................................................. Investment Activity ..................................................................................................................................................... Investment Portfolio ................................................................................................................................................... Largest Holdings ........................................................................................................................................................ Performance: Actual Returns vs. Benchmark Returns .............................................................................................. Investment Expenses ................................................................................................................................................ Brokerage Commissions ........................................................................................................................................... Group Life Insurance Program Investment Activity ............................................................................................................................................... 6 12 13 14 18 20 26 28 30 49 51 53 54 55 57 61 62 64 65 66 70 72 74 75 76 ACTUARIAL SECTION   Actuary’s  Certification   ............................................................................................................................................... 78 Demographic Information Schedule of Active Member Valuation Data ....................................................................................................... 80   Schedule  of  Benefit  Recipients  Valuation  Data .................................................................................................. 81   Schedule  of  Retirees  and  Beneficiaries  Added  to  and  Removed  from  the  Rolls ............................................... 82 Accounting Information Schedule of Changes in Net Pension Liability ..................................................................................................... 83 Sensitivity of Net Pension Liability to Changes in Discount Rates ...................................................................... 84 Analysis of Financial Experience ......................................................................................................................... 85 Solvency Test....................................................................................................................................................... 86 Summary of Plan Provisions, Actuarial Assumptions and Methods State Employee and Teacher Program .............................................................................................................. 87 Consolidated Plan for Participating Local Districts............................................................................................. 97 Judicial Retirement Program .............................................................................................................................. 107 Legislative Retirement Program ......................................................................................................................... 114 Con nued  on  next  page TABLE OF CONTENTS (con nued) PAGE STATISTICAL SECTION Statistical Section Table of Contents ......................................................................................................................... Changes in Net Position (Last Ten Fiscal Years)     Defined  Benefit  Plan         ...................................................................................................................................... Group Life Insurance Plan .................................................................................................................................     Defined  Contribution  Plan .................................................................................................................................. Retiree Health Investment Trust ......................................................................................................................     Benefit  and  Refund  Deductions  from  Net  Position  by  Type  (Last  Ten  Fiscal  Years)     Defined  Benefit  Plan   ......................................................................................................................................... Group Life Insurance Plan .................................................................................................................................   Defined  Benefit  Plan  Retired  Members  by  Type  of  Benefit,  Last  Ten  Fiscal  Years  ...................................................   Defined  Benefit  Plan  Average  Benefit  Payments,  Last  Ten  Fiscal  Years...................................................................   Defined  Benefit  Plan  Retired  Members  by  Type  of  Benefit  and  Option ..................................................................... Employee Contribution Rates, Last Ten Fiscal Years ............................................................................................... Employer Contribution Rates, Last Ten Fiscal Years ................................................................................................ Principal Participating Employers, Current Year and Nine Years Ago ....................................................................... Participating Employers, Detailed Listing .................................................................................................................. 122 123 126 127 128 129 131 132 133 135 136 137 138 139 INTRODUCTORY SECTION ♦ INTRODUCTORY SECTION Sandra J. Matheson, Executive Director John C. Milazzo, General Counsel and Chief Deputy Executive Director BOARD OF TRUSTEES Peter M. Leslie, Chair Benedetto Viola, Vice Chair Shirrin L. Blaisdell Neria  R.  Douglass,  State  Treasurer,  ex-­officio Richard T. Metivier Brian H. Noyes Catherine R. Sullivan Kenneth L. Williams LETTER OF TRANSMITTAL December 19, 2014 In accordance with the requirements of 5 M.R.S.A. §17102, I am pleased to present the Comprehensive Annual Financial Report (“CAFR” or “Annual Report”) of the Maine Public Employees Retirement System (“MainePERS” or the “System”) for  the  fiscal  year  ended  June  30,  2014.    This  CAFR,  taken  as  a  whole,  provides  information  on  all  aspects  of  the  System.     It is written to conform to Governmental Accounting Standards Board (GASB) requirements. Management of the System takes  full  responsibility  for  the  accuracy,  completeness  and  fairness  of  the  representations  made  in  this  report. Baker,  Newman,  and  Noyes,  LLC,  Certified  Public  Accountants,  have  issued  an  unqualified  opinion  on  the  MainePERS’   financial  statements  for  the  year  ended  June  30,  2014.    The  independent  auditors’  report  is  located  at  the  front  of  the   financial  section. Management’s  discussion  and  analysis  (MD&A)  immediately  follows  the  independent  auditors’  report  and  provides  a   narrative  introduction,  overview  and  analysis  of  the  basic  financial  statements.    MD&A  complements  this  letter  of  transmittal   and should be read in conjunction with it. FUNDING  OF  SYSTEM  PROGRAMS The  System  administers  six  retirement  plans,  often  referred  to  as  “programs.”  In  addition,  the  System  operates  a  Group   Life  Insurance  Program  (GLI)  and  a  program  of  defined  contribution  retirement  plans  under  sections  401(a),  403(b)  and   457(b)  of  the  Internal  Revenue  Code,  collectively  referred  to  as  MaineSTART.    The  System  also  manages  the  Retiree   Health  Insurance  Post  Employment  Investment  Trust  on  behalf  of  the  State  of  Maine.    The  Trust  is  an  irrevocable  trust   established  for  the  purpose  of  accumulating  assets  to  provide  funding  for  the  State’s  liability  for  retiree  health  benefits. The   System’s   defined   benefit   retirement   plans,   or   programs,   are   the   dominant   element   in   its   financial   activities   and   position.    The  four  major  programs  are  the  State  and  Teacher’s  Retirement  Program,  the  Judicial  Program,  the  Legislative   Program  and  the  Participating  Local  District  Retirement  Program. The  System  also  administers  two  pay-­as-­you-­go  retirement  programs,  one  for  judges  who  retired  prior  to  the  establishment   of  the  Judicial  Retirement  Program  in  1984  and  the  other  for  former  governors  and  their  surviving  spouses.  The  programs   are  funded  each  biennium  by  a  direct  appropriation  from  the  Legislature  and,  in  the  case  of  the  active  governor,  by   employee contributions required by statute. The   basic   defined   benefit   retirement   plan   equation   provides   that,   over   the   long   term,   contributions   plus   investment   earnings  must  be  equal  to  benefits.    While  investment  market  performance  affects  plan  funding  requirements,  it  does   not  affect  benefits  owed  in  the  future. The   return   on   invested   contributions   has   historically   supplied   a   significant   amount   of   the   benefit   funding   resources   of  defined  benefit  plans.    In  periods  when  the  investment  markets  provide  lower  returns  than  expected,  the  resulting   funding shortfall has historically been made up by a combination of increased employer contributions and investment market  returns  in  other  periods  that  exceed  expectations.    For  this  reason,  the  performance  of  the  investment  markets   is  a  significant  factor  affecting  the  financial  activities  or  position  of  the  System,  and  the  effects  of  market  performance   flow  through  to  contributions  made  by  participating  employers.   As  with  all  actuarially-­funded  defined  benefit  plans,  the  System  uses  actuarial  methods  and  procedures  that  integrate   short-­term  market  behavior  with  the  long-­term  time  horizon  of  the  plan.    One  of  these  methods  is  “smoothing”  of  investment   results which moderates the volatility of employer contribution requirements. The  interplay  of  liabilities  (i.e.,  the  obligation  to  pay  benefits)  and  assets  (i.e.,  contributions  and  investment  earnings  on   contributions)  can  be  observed  in  changes  in  the  programs’  actuarial  funded  ratios  over  time.  The  funded  ratio  of  the  State   Employee  and  Teacher  Program  had  improved  steadily  and  consistently  since  the  mid-­1980s  until  2008.    High  negative   6 Maine  Public  Employees  Re rement  System ♦ INTRODUCTORY SECTION investment  returns  in  years  2008  and  2009  adversely  affected  the  funding  ratio.    Fiscal  years  2010  and  2011  experienced   strong  investment  returns,  and  in  combination  with  changes  to  Plan  provisions,  the  funding  ratio  improved.    Break-­even   returns  in  fiscal  year  2012,  combined  with  increased  deductions  for  benefits,  contributed  to  a  modest  decrease  in  the   funding  ratio  that  year.    Strong  investment  returns  in  fiscal  years  2013  and  2014  contributed  to  an  increase  in  funding   ratio  to  77.6  percent  and  81.3  percent,  respectively.    This  compares  to  a  funding  ratio  for  this  plan  at  June  30,  2012  of   76.9 percent. The  funded  ratio  of  the  Judicial  Program  has  in  recent  years  been  above  100  percent.    The  funded  ratio  as  of  June  30,   2012  was  107.3  percent,  and  as  of  June  30,  2013  it  was  97.5  percent.    In  fiscal  year  2014,  the  funded  ratio  of  the  plan   increased  to  101.6  percent.    This  increase  was  due  primarily  to  strong  investment  returns. The  funded  ratio  of  the  Legislative  Program  has  also  been  above  100  percent,  and  continues  to  be  this  year.    As  of   June  30,  2014,  the  funded  ratio  was  143.6  percent,  compared  to  142.2  percent  at  June  30,  2013  and  149.3  percent  at   June  30,  2012. The  funded  ratio  of  the  Participating  Local  Districts  (PLDs)  Program  including  consolidated  and  withdrawn  PLDs  was   91.2  percent  as  of  June  30,  2014.    This  compares  to  88.4  percent  as  of  June  30,  2013  and  88.8  percent  as  of  June  30,   2012. Information  regarding  overall  funding  progress  appears  in  the  MD&A  beginning  on  page  20.  More  information  on  the   funding  levels  of  all  of  the  System’s  retirement  programs  can  be  obtained  from  the  System. The   System’s   defined   contribution   plans,   collectively   called   MaineSTART,   had   66   participating   employers   with   914   participants  at  June  30,  2014.    This  program  provides  an  important  supplement  for  our  defined  benefit  participants  and  a   valuable  alternative  for  other  participants.    MaineSTART  offers  a  family  of  funds  from  Vanguard  designed  to  be  very  low   cost  and  easy  for  participants  to  manage.    The  investment  strategy  for  these  assets  is  determined  by  each  participant. The  Group  Life  Insurance  Program  is  funded  by  premiums  paid  by  its  participants  and  the  employers  of  those  participants,   and  by  investment  returns  on  the  Group  Life  Insurance  Program  assets.  The  investment  strategy  for  these  assets  is  a   similar  strategy  to  the  strategy  employed  for  the  defined  benefit  plan  assets.   The  Retiree  Health  Insurance  Post  Employment  Investment  Trust  is  funded  through  direct  appropriations  from  the  State   of Maine. INVESTMENTS The  focal  point  of  the  investment  policy  is  the  mix  of  investment  types  in  which  assets  are  invested  and  the  allocation   of  assets  among  asset  classes.    The  System’s  Board  of  Trustees  (Board)  is  responsible  for  establishing  the  policy  that   is  the  framework  for  investment  of  the  programs’  assets.    The  Board  employs  in-­house  investment  professionals  and   outside investment consultants to advise it on investment matters, including policy. The  defined  benefit  program  had  a  return  of  16.7%  while  the  group  life  insurance  program  had  a  return  of  18.6%  for   fiscal  year  2014.    Total  value  of  the  defined  benefit  portfolio  increased  to  $12.7  billion  at  June  30,  2014  from  $11.2   billion  at  June  30,  2013.    This  increase  in  the  total  value  of  the  portfolio  is  due  to  strong  equity  market  returns  over  the   prior year. The  current  asset  allocation  was  modified  in  December  2012  to  increase  investments  in  alternative  strategies  such  as   private equity, infrastructure, and hard assets. The  Board's  choice  of  asset  classes  reflects  its  assessment  of  expected  investment  return  and  the  nature,  level,  and   management  of  risk.  The  defined  benefit  plans  assets  perform  two  functions;;  they  collateralize  the  benefits  owed  to   participants,  and  they  provide  investment  earnings.    All  benefit  payments  must  eventually  be  funded  from  contributions   or from investment earnings. HIGHLIGHTS  OF  THE  PAST  YEAR   In  the  spring  of  2014,  we  began  planning  for  a  new  version  of  the  integrated  pension  benefits  information  and  operating   system  which  was  first  put  into  operation  in  fiscal  year  2012.    This  project  is  expected  to  take  several  years  to  complete   and  will  provide  for  more  robust  reporting  capabilities  as  well  as  the  introduction  of  a  member  self-­service  portal  for   active members and retirees. Maine  Public  Employees  Re rement  System 7 ♦ INTRODUCTORY SECTION ACKNOWLEDGEMENTS Once  again,  we  are  pleased  to  inform  you  that  for  the  tenth  consecutive  year,  the  System  was  awarded  the  Certificate   of  Achievement   for   Excellence   in   Financial   Reporting   by   the   Government   Finance   Officers  Association   (GFOA).     In   order  to  be  awarded  a  Certificate  of  Achievement,  a  governmental  unit  must  publish  an  easily  readable  and  efficiently   organized  Comprehensive  Annual  Financial  Report  (“CAFR”),  with  contents  that  meet  or  exceed  program  standards.  We   are  extremely  proud  that  we  are  recognized  for  handling  and  accounting  for  retirement  funds  in  a  manner  that  satisfies   generally  accepted  accounting  practices  and  all  applicable  legal  requirements.    We  fully  expect  to  be  in  compliance   with  all  of  the  Certificate  of  Achievement  Program  requirements  into  the  future.  This  2014  CAFR  will  also  be  submitted   to  the  GFOA. The  System,  through  its  management  staff,  is  responsible  for  establishing  and  maintaining  an  internal  control  structure   that  is  designed  to  provide  reasonable  assurance  that  assets  are  protected  from  theft,  fraud,  or  misuse  and  that  financial   recordkeeping  is  complete  and  accurate.    The  concept  of  reasonable  assurance  recognizes  that  the  cost  of  a  control   should  not  exceed  the  benefits  likely  to  be  derived  and  that  the  valuation  of  costs  and  benefits  requires  estimates  and   judgments   by   management.     Management   believes   that   the   existing   internal   controls   accomplish   these   objectives.     Management  is  also  responsible  for  the  completeness,  accuracy  and  fair  presentation  of  financial  information  and  for   all  disclosures.  This  responsibility  notably  encompasses  the  System’s  financial  statements  themselves,  including  the   amounts therein that, necessarily, are based on estimates and judgments. The  preparation  of  this  report  has  been  a  collaborative  effort  of  Executive  Management,  the  Accounting  and  Finance   Department,  the  Investment  Department  and  the  Communications  Department.    The  System  takes  responsibility  for  all   of  the  information  contained  in  the  report  and  confidently  presents  it  as  a  basis  for  the  many  decisions  of  the  Board  of   Trustees,  staff,  and  others  who  will  rely  on  it.   I  am  joined  in  transmitting  this  Comprehensive  Annual  Financial  Report  to  all  of  our  constituencies  by  the  System’s   Director of Finance. Respectfully submitted, Sandra  J.  Matheson   Executive  Director   8 Maine  Public  Employees  Re rement  System   Sherry  Tripp  Vandrell                       Director  of  Finance         ♦ INTRODUCTORY SECTION Appendix A to Letter of Transmittal OVERVIEW OF THE SYSTEM The  Maine  Public  Employees  Retirement  System  (MainePERS)  is  an  independent  public  agency  of  the  State  of  Maine  that  traces   its  history  to  1942.    By  the  authority  granted  to  it  by  the  Maine  Legislature,  the  System  administers  retirement  programs  that   cover  State  employees,  the  State's  public  school  teachers,  judges,  legislators,  and  employees  of  the  299  municipalities  and  other   public  entities,  called  "participating  local  districts"  (PLDs)  that  have  chosen  to  provide  retirement  plans  to  their  employees  through   MainePERS.    The  System  is  also  responsible  for  the  payment  of  retirement  and  survivors'  benefits  to  former  governors  and  their   surviving  spouses  and  to  judges  who  retired  prior  to  the  establishment  of  the  Judicial  Retirement  Program  in  1984.    In  addition,  the   System  administers  a  Group  Life  Insurance  Program  that  provides  or  makes  available  life  insurance  benefits  for  active  and  retired   System  members  and  for  the  employees  of  a  few  PLDs  for  whom  MainePERS  administers  only  the  Group  Life  Insurance  Program.     The  System  also  administers  defined  contribution  plans  for  some  PLD  employees. Board of Trustees Responsibility  for  the  operation  of  the  Maine  Public  Employees  Retirement  System  rests  with  the  System's  Board  of  Trustees,   which  is  comprised  of  eight  members.    State  law  specifies  the  Board's  composition.  Each  trustee  is  subject  to  the  legislative   confirmation  process.  Three  trustees  are  System  members,  one  of  whom  is  proposed  and  elected  by  the  Maine  Education   Association,  one  of  whom  is  proposed  and  elected  by  the  Maine  State  Employees  Association,  and  one  of  whom  is  a  PLD  member   appointed  by  the  governing  body  of  the  Maine  Municipal  Association.    Four  other  trustees  are  appointed  by  the  Governor.    Of   these,  one  must  be  selected  by  the  Governor  from  a  list  of  nominees  submitted  by  the  Maine  Retired  Teachers  Association  and   one  must  be  a  MainePERS  retiree  selected  from  a  list  of  nominees  submitted  by  State  and/or  PLD  retirees.    The  remaining  two   appointees  are  direct  gubernatorial  appointments,  both  of  whom  must  be  qualified  through  training  or  experience  in  investments,   accounting,  banking  or  insurance  or  as  actuaries.  All  appointed  trustees  are  required  to  have  "a  working  knowledge  of  retirement   policy  and  legal  issues  and  a  general  knowledge  and  understanding  of  banking,  finance,  and  investment  practices."  The  eighth   trustee  is  the  State  Treasurer,  who  serves  ex-­officio.    All  trustee  terms  are  three  years,  except  for  the  two-­year  term  of  the  State   Treasurer.    The  Board  annually  elects  its  chair  and  vice  chair  from  among  its  members.   The  MainePERS  Trustees  serve  as  Trustees  of  the  State  and  Teacher,  Judicial  and  Legislative  Retirement  Programs  as  well  as  for   the  PLD  Consolidated  Program  and  the  Retiree  Health  Insurance  Post-­Employment  Benefits  Investment  Trust. The  Board  contracts  for  the  services  of  an  actuary  to  prepare  annual  valuations  of  the  assets  and  liabilities  of  each  of  the   retirement  programs  administered  by  the  System.    The  actuary  also  provides  information  and  recommendations  as  to  sound  and   appropriate  actuarial  assumptions,  which  are  utilized,  together  with  valuation  information,  to  determine  the  programs'  funding   requirements.  The  System's  actuary  in  fiscal  years  2013  and  2014  was  Cheiron,  Inc.   The  Board's  management  of  MainePERS  investments  is  embodied  in  its  investment  policy.  The  policy  states  the  Board's  underlying   investment  objectives,  sets  out  the  investment  strategies  intended  to  realize  the  objectives,  and  establishes  guidelines  and  criteria   for  implementation  of  the  strategies.    The  Board  has  engaged  Strategic  Investment  Solutions,  Inc.  to  advise  it  on  the  investment   policy and the carrying out of the investment program. The  Board  is  the  final  administrative  decision  maker  in  matters  involving  the  rights,  credits,  and  benefits  of  members.    It  has   established  an  administrative  appeals  process  for  the  making  of  such  decisions;;  in  this  process  relevant  factual  information  and   legal  requirements  are  identified  and  analyzed  by  independent  Hearing  Officers  who  serve  under  contract.  In  decisions  on  disability   retirement appeals, statutorily established medical boards and individual medical advisors provide recommendations as to the medical  aspects  of  disability.  The  Board's  final  administrative  decisions  are  appealable  to  the  Maine  Superior  Court.   Administration The  Office  of  the  Executive  Director  has  administrative  responsibility  for  all  aspects  of  the  System  and  its  operations.    The   Executive  Director  oversees  all  actuarial  work  and  investments,  and  has  administrative  responsibility  for  the  internal  audit  function.   Actuarial  work  is  carried  out  with  the  assistance  of  an  actuary;;  investment  operations  are  carried  out  with  the  assistance  of  the   System's  Chief  Investment  Officer  and  staff,  one  or  more  investment  consultants,  investment  managers  and  other  appropriate   advisors.    In  addition,  the  Office  performs  the  executive  functions  of  the  System  and  has  day-­to-­day  responsibility  for  legal  and   legislative  matters,  appeals,  federal,  state,  and  local  governmental  relations,  planning,  organizational  development,  accounting  and   financial  reporting,  and  numerous  special  projects.   The  Department  of  Service  Programs  administers  the  service  and  disability  retirement  programs,  MaineSTART  defined  contribution   plans,  employer  programs,  survivor  benefit  and  group  life  insurance  programs.  The  Department  is  the  System's  primary  contact  for   members,  participating  employers,  and  benefit  recipients.   Maine  Public  Employees  Re rement  System 9 ♦ INTRODUCTORY SECTION Appendix A to Letter of Transmittal The  Department  of  Administration  is  responsible  for  most  administrative  and  support  functions,  including  information  technology   supports, communications, facilities, and human resources. The  System's  primary  responsibility  is  the  administration  of  defined  benefit  retirement  plans.  Retirement  and  related  benefits   provided by MainePERS include:   • service  retirement  benefits,  that  provide  retirement  income  to  qualified  members;;   •   disability  retirement  benefits,  that  provide  income  to  a  member  who  becomes  disabled  under  MainePERS  law  while  the     member  is  in  service  and  before  the  member  retires;;  and   • death  benefits  that  are  paid  to  a  member's  designated  beneficiaries.   Administration  of  these  programs  includes  financial  administration,  investments,  recordkeeping  of  members'  work  and   compensation  data,  and  provision  of  retirement-­related  services  to  members,  employers,  and  retirees.   The  System  also  administers  the  MaineSTART  defined  contribution  retirement  plans  that  are  established  under  sections  401(a),   403(b),  and  457(b)  of  the  Internal  Revenue  Code.  These  plans  are  presently  available  to  employees  of  those  employers  in  the  PLD   Consolidated Plan that have adopted one or more of the plans. The  System  itself  and  all  of  its  programs  are  established  by  and  operate  within  the  scope  of  Maine  statutes.  The  operation  of  the   System's  defined  benefit  retirement  plans  is  also  governed  by  provisions  of  the  Maine  Constitution,  not  all  of  which  apply  to  all  of   the plans. Membership and Contributions State  employees  and  teachers  are  covered  under  the  Maine  Public  Employees  Retirement  System's  State  Employee  and  Teacher   Retirement  Program.    State  employees  are  required  by  law  to  become  members  of  MainePERS  when  hired.    There  is  an  exception   to  this  rule  for  elected  and  appointed  officials,  for  whom  membership  is  optional.  Public  school  teachers,  other  than  substitute   teachers,  for  whom  membership  is  also  optional,  must  also  become  members  of  MainePERS  when  hired.    PLD  employees   become  members  of  MainePERS  when  they  are  hired  if  their  employer  participates  as  a  PLD  in  MainePERS  at  that  time  and  if  they   meet  the  membership  eligibility  requirements  in  effect  when  they  are  hired.  For  some  PLD  employees,  membership  is  optional.   These  employees  include  those  employed  by  their  PLD  before  the  PLD  joined  MainePERS,  those  whose  employers  provide  Social   Security  under  a  federal  law,  elected  and  appointed  officials,  and  chief  administrative  officers. The  Legislative  Retirement  Program,  also  administered  by  MainePERS,  was  established  to  provide  a  retirement  program  for   those  serving  in  the  Maine  Legislature.    Except  as  provided  otherwise  by  statute,  membership  in  the  Maine  Legislative  Retirement   Program  is  mandatory  for  legislators  entering  service  on  or  after  December  3,  1986.   The  Judicial  Retirement  Program  was  established  to  provide  a  retirement  program  for  Maine's  judges.    Membership  in  the  Judicial   Retirement  Program  is  a  condition  of  employment  for  all  judges  serving  on  or  after  December  1,  1984. All members of the System contribute a percentage of their compensation to the System. Each employer also contributes to the System an amount for the normal costs of the programs that is a percentage of total wages paid to members who are employees of that employer. Prior  to  July  1,  2013  the  State  paid  the  normal  cost  employer  contributions  and  unfunded  actuarial  liability  contributions  on  behalf   of  all  State  employee  and  teacher  members.    As  of  July  1,  2013,  teacher  employers  began  paying  the  normal  cost  employer   contributions on behalf of those teacher members they employed while the state continued to pay toward the unfunded actuarial liability  associated  with  teacher  members.    The  employer  contribution  percentages  are  actuarially  determined  by  plan  and  vary  from   year to year. Employer  normal  cost  contributions,  along  with  current  member  contributions,  support  benefits  currently  being  earned  by  active   members.    The  State’s  unfunded  actuarial  accrued  liability  (UAAL)  contribution  is  a  payment  on  the  amortized  debt  that  represents   the  liability  for  benefits  in  excess  of  the  amount  supported  by  assets  of  the  System.    The  Maine  Constitution  requires  that  the  UAAL   be  fully  funded  in  not  more  than  31  years  from  July  1,  1997.    The  amortization  period  at  the  end  of  FY  2014  is  14  years,  requiring   full  payment  of  the  UAL  by  the  end  of  FY  2028. 10 Maine  Public  Employees  Re rement  System ♦ INTRODUCTORY SECTION Appendix A to Letter of Transmittal The  System  also  administers  pay-­as-­you-­go  retirement  programs  for  judges  who  retired  prior  to  the  establishment  of  the  Judicial   Retirement  Program  in  1984  and  former  governors  and  their  surviving  spouses.    The  programs  are  funded  each  biennium  by  a   direct  appropriation  from  the  Legislature  and,  in  the  case  of  the  active  governor,  by  employee  contributions  required  by  statute.   The  Group  Life  Insurance  Program  is  provided  or  made  available  to  all  State  employees,  public  school  teachers,  and  employees  of   those  PLDs  who  elect  to  offer  this  coverage  to  their  employees,  as  well  as  to  members  of  the  Legislative  and  Judicial  Retirement   Programs.    Basic  coverage  for  the  employee  is  equal  to  the  employee's  annual  base  compensation  rounded  up  to  the  next  $1,000;;   supplemental coverage for the employee and coverage for dependents are also available. Further details regarding program and plan provisions can be found elsewhere in this report in the actuarial valuation for each program. Financial Reporting Beginning  in  fiscal  year  2008,  the  System  began  drawing  the  funds  formerly  provided  by  the  State  of  Maine  to  support  its   operating  expenses  directly  from  the  trust  funds.    In  the  past,  the  State,  as  employer,  contributed  a  certain  amount  for  the  System’s   administrative  costs.    Total  operating  expenses  for  staff  and  all  other  costs  of  operations,  with  the  exception  of  certain  investment   related  expenses  required  by  law  to  be  paid  directly  from  investments,  are  allocated  among  the  System's  three  employer/employee   groups  (i.e.  State  employees  (including  for  this  purpose  judges  and  legislators),  teachers,  and  PLDs).  The  System's  administrative   budget  is  approved  annually  by  the  Board  of  Trustees,  and  is  reported  to  the  Legislature. The  System's  financial  statements  have  been  prepared  in  accordance  with  generally  accepted  accounting  principles  applied  on  a   consistent basis, in accordance with the standards and requirements of the Governmental Accounting Standards Board (GASB). The  financial  statements  are  presented  in  accordance  with  GASB  Statement  No.  67,  Financial  Reporting  for  Pension  Plans,  GASB   Statement  No.  34,  Basic  Financial  Statements  -­  Management's  Discussion  and  Analysis  for  State  and  Local  Governments,  and,   with  respect  to  the  Group  Life  Insurance  Program,  GASB  Statement  No.  43,  Financial  Reporting  for  Postemployment  Benefit  Plans   Other  Than  Pension  Plans.    Financial  information  presented  throughout  this  Report  is  consistent  with  the  financial  statements.    The   financial  statements  are  prepared  on  the  accrual  basis  of  accounting.   The  System  has  an  Internal  Audit  program,  staffed  by  one  internal  auditor.    This  program  focuses  on  a  plan  of  in-­depth  audits  of   internal  controls  in  all  of  the  departments  at  the  System.    The  internal  auditor  presents  audit  reports  to  both  management  and  the   Audit  Committee  of  the  Board  of  Trustees. The  independent  auditor,  Baker  Newman  Noyes  (BNN),  has  conducted  an  audit  of  the  financial  statements  in  accordance  with,  as   stated  in  its  audit  report,  generally  accepted  auditing  standards  and  including  those  tests  and  procedures  BNN  deemed  necessary   to  express  its  opinion  in  its  audit  report.   The  auditors  have  unrestricted  access  to  the  Board  and  the  Board's  Audit  Committee  to  discuss  the  audit  and  their  findings  with   respect  to  the  integrity  of  the  System's  financial  reporting  and  adequacy  of  the  System's  internal  controls. The  System  reports  three  defined  benefit  pension  plans  including  two  multiple-­employer  cost  sharing  plans  (the  State  Employee   and  Teacher  Plan  and  the  PLD  Consolidated  Plan)  and  an  agent  multiple  employer  plan  which  is  an  aggregation  of  single  employer   plans  of  those  PLDs  that  elected  not  to  join  the  consolidated  cost  sharing  plan.    The  Judicial  and  Legislative  Programs  are  included   with  the  State  Employee  and  Teacher  Plan  for  financial  reporting  purposes.    Separate  actuarial  valuations  are  performed  for  each   of  the  retirement  programs  that  the  System  administers;;  contributions,  inflows,  and  benefits  payments  are  separately  tracked  and   recorded,  and  separate  trust  fund  balances  are  attributed  to  each  such  program.    The  System  reports  the  Group  Life  Insurance   Program  and  the  MaineSTART  Defined  Contribution  plans  as  separate  plans.    The  System's  financial  statements,  notes  thereto   and required supplementary information are prepared accordingly. Maine  Public  Employees  Re rement  System 11 ♦ INTRODUCTORY SECTION BOARD OF TRUSTEES, MANAGEMENT STAFF, and PRINCIPAL PROFESSIONAL CONSULTANTS June 30, 2014 BOARD OF TRUSTEES   Peter  M.  Leslie,  Chair       Governor's  direct  appointee       Benede o  Viola,  Vice  Chair     Maine  State  Employees  Associa on  appointee  by  elec on         Shirrin  L.  Blaisdell       Governor’s  appointee,  from  recommenda ons  by  re red  employees   Neria  R.  Douglass       State  Treasurer,  ex-­‐officio       Richard  Me vier       Maine  Municipal  Associa on  appointee       Brian  H.  Noyes       Governor's  direct  appointee     Catherine  R.  Sullivan       Governor's  appointee  from  Maine  Educa on  Associa on  -­‐  Re red       Kenneth  L.  Williams       Maine  Educa on  Associa on  appointee  by  elec on                   SENIOR ADMINISTRATIVE STAFF   Sandra  J.  Matheson     Execu ve  Director     John  C.  Milazzo     General  Counsel  and  Chief  Deputy  Execu ve  Director   Andrew  H.  Sawyer,  CFA,  CAIA   Chief  Investment  Officer   Rebecca  A.  Grant       Deputy  Execu ve  Director   Sherry  Tripp  Vandrell     Director  of  Finance   Marlene  McMullen-­‐Pelsor     Manager,  Employer  and  Ancillary  Services   Kathy  J.  Morin   Manager,  Actuarial  and  Legisla ve  Affairs       PRINCIPAL PROFESSIONAL CONSULTANTS Actuary:         Cheiron,  Inc.   Investment  Consultant:     Strategic  Investment  Solu ons,  Inc.       Auditors:         Baker  Newman  &  Noyes,  LLC     Internal  Auditor:         John  F.  Fleming See  page  74  for  a  list  of  professional  investment  management  firms. 12 Maine  Public  Employees  Re rement  System                     April 2014 Investments Director of Finance Accounting and Finance Appeals Program Legal Services Chief Investment Officer Retirement Services Alternative Investments Oversight Council V3 Oversight Council IT Security Oversight Council Reception PLD Plan Administration Executive Support Survivor Services MePERS Communications Oversight Council Employer Services Manager, Employer & Ancillary Services Deputy Executive Director Executive Support Internal Auditor Information Technology Facilities Communications Human Resources Disability Services Legislative Affairs Document Center Associate General Counsel Manager, Actuarial & Deputy Executive Director Chief Deputy Executive Director and General Counsel Executive Director BOARD OF TRUSTEES Organizational Chart by Function ♦ INTRODUCTORY SECTION Maine  Public  Employees  Re rement  System 13 ♦ INTRODUCTORY SECTION 2014 Legislative Update LEGISLATION ENACTED IN THE SECOND REGULAR SESSION OF THE 126TH LEGISLATURE An  Act  to  Expand  the  Number  of  Qualified  Educators PL  2013,  c.  486  [L.D.  39] Effective Date: August 1, 2014 This  bill  amends  the  restoration  to  service  provisions  that  apply  to  “classroom-­based  employees”  who  have  reached  normal  retirement   age  and  who  retire  after  September  1,  2011.    The  bill  also  establishes  a  working  group  to  review  the  impact  that  the  restoration  to   service  provisions  enacted  in  2011  has  had  on  employers  and  to  report  out  the  group’s  findings  and  recommendations,  including  any   proposed  legislation,  no  later  than  January  8,  2015. An Act to Update Statutory Dates for the Government Evaluation Act Review of Agencies PL  2013,  c.  505  [L.D.  1800] Effective Date: August 1, 2014 This   bill   updates   the   date   on   which   various   agencies   are   reviewed   under   the   State   Government   Evaluation   Act.     As   enacted,   MainePERS  is  scheduled  for  its  next  review  in  2021. An Act to Increase the Base for the Cost-of-living Increase for Retired State Employees and Teachers PL  2013,  c.  578  [L.D.  232] Effective Date: April 29, 2014 This  bill  increases  the  base  for  the  calculation  of  the  one-­time,  noncumulative  cost-­of-­living  adjustment  payment  in  2014  from  $20,000   to  $30,000.    This  increase  applies  only  to  the  2014  one-­time  payment  and  does  not  change  the  $20,000  limitation  that  applies  to   cumulative  cost-­of-­living  adjustments. An Act to Correct Errors and Inconsistencies in the Laws of Maine PL  2013,  c.  588  [L.D.  1841] Effective  Date:    April  30,  2014 This  bill  was  introduced  to  correct  errors  and  inconsistencies  throughout  the  laws  of  Maine.    Included  in  this  bill  are  technical  changes   to  the  laws  that  govern  the  Participating  Local  District  Retirement  Program.    These  changes  were  requested  by  MainePERS. continued on next page 14 Maine  Public  Employees  Re rement  System ♦ INTRODUCTORY SECTION 2014 Legislative Update (continued) An Act to Implement Recommendations Contained in the State Government Evaluation Act Review of the Maine Public Employees Retirement System PL  2013,  c.  602  [L.D.  1806] Effective Date: August 1, 2014 This  bill  implements  the  recommendations  contained  in  the  State  Government  Evaluation  Act  review  of  MainePERS.    It  contains   three parts:   ▪   Part  A  clarifies  that  the  Board  may  combine  the  assets  of  the  State  Employee  and  Teacher  Retirement  Program  with           the  assets  of  other  programs  for  investment  purposes  but  that  those  assets  may  not  be  combined  for  benefit  purposes       or  for  administrative  expenses.    MainePERS  requested  that  this  language  be  enacted  into  law.   ▪   Part B adds emergency medical services persons to the categories of participating local district employees that can be included in a special plan, if a participating local district so elects.   ▪   Part  C  requires  the  MainePERS  Executive  Director  to  establish  a  task  force  to  make  recommendations  to  the  Board  on           an  environmental,  social  and  governance  (ESG)  policy.    The  task  force  must  report  the  recommendations  made  and       any  resulting  action  taken  by  the  Board  to  the  Legislature  by  January  15,  2015. An  Act  to  Review  the  Laws  Governing  Retirement  Benefits   for Certain State Employees P&S  2013,  c.  30  [L.D.  1175] Effective Date: August 1, 2014 This  bill  directs  MainePERS  to  determine  the  number  of  active  members  currently  in  the  1998  Special  Plan  who  also  have  covered   capacity  service  in  a  regular  plan  and  to  determine  the  cost  if  all  of  the  regular  plan  service  were  treated  as  service  under  the  1998   Special  Plan.    By  January  15,  2015,  the  System  is  required  to  report  that  information  to  the  Legislature,  along  with  any  implementing   legislation  necessary  to  allow  the  service  to  be  treated  under  the  1998  Special  Plan. Maine  Public  Employees  Re rement  System 15 ♦ INTRODUCTORY SECTION [This page intentionally left blank.] 16 Maine  Public  Employees  Re rement  System FINANCIAL SECTION ♦ FINANCIAL SECTION INDEPENDENT AUDITORS’ REPORT The Board of Trustees Maine Public Employees Retirement System Report on the Financial Statements We  have  audited  the  accompanying  financial  statements  of  Maine  Public  Employees  Retirement  Systen1  (the  System),  a  component   unit  of  the  State  of  Maine,  which  comprise  the  statement  of  fiduciary  net  position  as  of  June    30,  2014  and  related  statement  of   changes  in  fiduciary  net  position  for  the  year  then  ended,  and  the  related  notes  to  the  financial  statements  which  collectively  comprise   the  System's    basic  financial  statements. Management's Responsibility for the Financial Statements Management    is  responsible  for  the  preparation  and  fair  presentation  of  these  financial  statements    in  accordance    with  accounting   principles  generally  accepted  in  the  United  States  of  America;;  this  includes  the  design,  implementation,  and  maintenance  of  internal   control  relevant  to  the  preparation  and  fair  presentation  of  financial  statements  that  are  free  from  material  misstatement,  whether  due   to  fraud  or  error. Auditors' Responsibility Our  responsibility  is  to  express  an  opinion  on  these  financial  statements  based  on  our  audit.    We  conducted    our  audit  in  accordance   with  auditing  standards  generally  accepted  in  the  United  States  of  America.    Those  standards  require  that  we  plan  and  perform  the   audit  to  obtain  reasonable  assurance  about  whether  the  financial  statements  are  free  from  material  misstatement. An  audit  involves  performing  procedures  to  obtain  audit  evidence  about  the  amounts  and  disclosures  in  the  financial  statements.     The  procedures  selected  depend  on  the  auditors'  judgment,  including  the  assessment  of  the  risks  of  material  misstatement  of  the   financial  statements,  whether  due  to  fraud  or  error.    In  making  those  risk  assessments,  the  auditor  considers  internal  control  relevant   to  the  entity's    preparation  and  fair  presentation  of  the  financial  statements    in  order  to  design  audit  procedures  that  are  appropriate     in   the   circumstances,     but   not   for   the   purpose   of   expressing     an   opinion   on   the   effectiveness     of   the   entity's     internal   control.     Accordingly,    we  express  no  such  opinion.      An  audit    also  includes  evaluating  the  appropriateness    of  accounting    policies  used  and   the  reasonableness    of  significant  accounting  estimates  made  by  management,  as  well  as  evaluating  the  overall  presentation  of  the   financial  statements. We  believe  that  the  audit  evidence  we  have  obtained  is  sufficient  and  appropriate  to  provide  a  basis  for  our  audit  opinion. Opinion In  our  opinion,  the  financial  statements  referred  to  above  present  fairly,  in  all  material  respects,  the  net  position  of  the  System  as  of   June  30,  2014  and  changes  in  net  position  for  the  year  then  ended,  in  accordance  with  accounting    principles  generally  accepted  in   the  United  States  of  America. Emphasis of Matter As  discussed  in  note  2  to  the  financial  statements,  the  System  adopted  Government  Auditing  Standards  Board  (GASB)  Statement   No.  67,  Financial  Reporting  for  Pension  Plans  and  Amendment  ofGASB  Statement  No.  25,  for  the  year  ended  June  30,  2014.    Our   opinion  is  not  modified  with  respect  to  this  matter. 18 Maine  Public  Employees  Re rement  System ♦ FINANCIAL SECTION The Board of Trustees Maine Public Employees Retirement System Other Matters Required Supplementary Information Accounting  principles  generally  accepted  in  the  United  States  of  America  require  that  the  Management's  Discussion  and  Analysis   and  required  supplementary  information  as  listed  in  the  table  of  contents  be  presented  to  supplement    the  basic  financial    statements.     Such    information,    although    not    a    part    of  the    basic  financial    statements,    is    required    by  the  Governmental    Accounting    Standards   Board,  who  considers  it  to  be  an  essential  part  of  financial  reporting    for  placing  the  basic  financial  statements  in  an  appropriate   operational,  economic,  or  historical  context.  We  have  applied    certain  limited  procedures  to  the  required  supplementary  information   in   accordance   with   auditing   standards   generally     accepted   in   the   United     States     of  America,     which     consisted     of   inquiries     of   management    about    the  methods    of    preparing    the  information    and  comparing    the  information  for  consistency    with  management's   responses  to  our  inquiries,    the  basic  financial  statements,    and  other  knowledge  we  obtained  during  our  audit  of  the  basic  financial   statements.      We  do  not  express  an  opinion  or  provide  any  assurance  on  the  information  because  the  limited  procedures  do  not   provide  us  with  sufficient  evidence  to  express  an  opinion  or  provide  any  assurance. Supplementary Information Our  audit  was  conducted  for  the  purpose  of  forming  an  opinion  on  the  financial  statements  that  collectively    comprise  the  System's     basic  financial  statements.    The  accompanying    additional  supplementary    information  as  listed  in  the  table  of  contents  is  presented   for  purposes  of  additional  analysis  and  is  not  a  required  part  of  the  basic  financial    statements.  Such    information    is  the    responsibility     of  management    and  was  derived    from    and  relates  directly    to    the    underlying  accounting  and  other  records  used  to  prepare  the   basic  financial  statements.    The  information  has  been  subjected  to  the  auditing  procedures  applied  in  the  audit  of  the  basic  financial   statements   and   certain   additional     procedures,     including   comparing   and   reconciling   such   information   directly   to   the   underlying   accounting  and  other  records  used  to  prepare  the  basic  financial  statements  or  to  the  basic  financial  statements  themselves,  and   other  additional  procedures  in  accordance  with  auditing  standards  generally  accepted  in  the  United  States  of  America.    In  our  opinion,   the   additional   supplementary   information   is   fairly   stated   in   all   material   respects   in   relation   to   the   basic   financial   statements   as   a   whole. Report on Summarized Comparative Information We  have  previously  audited  the  System's    2013  financial  statements,  and  we  expressed  an  unmodified  audit  opinion  on  those  audited   financial   statements     in   our   report   dated   October   31,   2013.     In   our   opinion,   the   summarized     comparative   information   presented   herein  as  of  and  for  the  year  ended  June  30,  2013,  is  consistent,  in  all  material  respects,  with  the  audited  financial  statements  from   which  it  has  been  derived. Portland,  Maine   October  31,  2014 Limited  Liability  Company   Maine  Public  Employees  Re rement  System 19 ♦ FINANCIAL SECTION MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2014 Financial Report Introduction This  Management  Discussion  and  Analysis  (MD&A)  is  prepared  by  the  management  staff  of  the  Maine  Public  Employees   Retirement  System  (MainePERS  or  the  System)  for  the  purpose  of  providing  an  overview  of  the  System’s  financial  statements. Financial Reporting Structure The  System’s  financial  statements  are  prepared  on  an  accrual  basis  of  accounting  in  accordance  with  Governmental  Accounting   Standards  Board  (GASB)  pronouncements.    The  accrual  basis  of  accounting  requires  the  recognition  and  recording  of  financial   transactions  and  other  related  events  when  they  occur  and  not  just  in  conjunction  with  the  inflows  and  outflows  of  cash  and  other   resources. The  funds  managed  by  the  System  are  held  in  trust  and,  consistent  with  state  and  federal  law,  can  only  be  used  for  the  payment  of   pension  and  related  benefits  to  its  members  or,  in  the  case  of  the  Retiree  Health  Insurance  Trust  Fund,  for  the  payment  of  retiree   health  insurance  premiums  for  eligible  retirees  of  the  State  of  Maine.    The  System’s  Board  of  Trustees,  as  fiduciary,  establishes  the   System’s  investment  policies  and  oversees  their  overall  implementation.   The  System  has  historically  reported  as  an  agent  multiple  employer  pension  plan,  aggregating  the  financial  activity  of  all  defined   benefit  pension  plans  for  financial  reporting  purposes  in  its  basic  financial  statements.    Legislation  enacted  in  2014  provided   clarification  regarding  plan  structure  and  the  System  began  reporting  three  separate  plans  beginning  with  this  report.    These  plans   include  the  State  Employee  and  Teacher  Plan,  a  multiple-­employer  cost  sharing  plan  with  a  special  funding  situation;;  the  PLD   Consolidated  Plan,  a  multiple-­employer  cost  sharing  plan;;  and  the  PLD  Agent  Plan,  an  agent  multiple-­employer  plan. Basic Financial Statements The  Statement  of  Fiduciary  Net  Position  reports  the  balance  of  Net  Position  restricted  for  future  benefits  as  of  the  fiscal  year  end,   with  comparative  values  reported  as  of  the  previous  fiscal  year  end.    The  Statement  of  Changes  in  Fiduciary  Net  Position  reports   the  net  change  in  Net  Position  for  the  fiscal  year,  with  comparative  values  reported  for  the  previous  fiscal  year.    The  System  reports   the  State  Employee  and  Teacher  Retirement  Plan,  the  PLD  Consolidated  Plan,  the  PLD  Agent  Plan,  the  Defined  Contribution  (DC)   Plans,  the  Group  Life  Insurance  (GLI)  Plan,  the  MainePERS  OPEB  Trust  and  the  Retiree  Health  Insurance  Trust  as  separate  funds   and  in  separate  columns  in  the  financial  statements.    Condensed  versions  of  both  statements  are  included  in  the  following  section. The  Schedules  of  Changes  in  the  Plan’s  Net  Pension  Liability  and  Related  Ratios  (Required  Supplementary  Information)  presents   the  total  pension  liability  and  information  indicating  the  source  of  changes  in  the  liability  for  each  multiple-­employer  cost  sharing   defined  benefit  retirement  plan  administered  by  the  System.    In  addition,  the  Schedules  show  summary  information  regarding  each   Plan’s  net  position  for  the  years  presented.    The  Schedule  also  presents  each  Plan’s  net  pension  liability  as  a  percentage  of  the   covered  payroll  of  all  members. The  Schedules  of  Employers’  Contributions  (Required  Supplementary  Information)  presents  the  actuarially  determined   contributions  for  each  multiple-­employer  cost  sharing  plan  and  compares  them  to  actual  employer  contributions  for  the  period   presented.    It  also  provides  the  actual  contributions  as  a  percentage  of  covered  payroll  for  each  year. The  Schedule  of  Funding  Progress  for  the  Group  Life  Insurance  Plan  (Required  Supplementary  Information)  compares  the   actuarial  value  of  plan  assets  with  actuarial  liabilities,  as  of  actuarial  valuation  dates  over  a  period  of  six  years,  and  presents  the   unfunded  actuarial  accrued  liability  (UAAL).    The  Schedule  also  presents  the  actuarial  funded  ratio  and  the  UAAL  as  a  percentage   of  covered  payroll  of  all  participants. The  Schedule  of  Employers’  Contributions  for  the  Group  Life  Insurance  Plan  (Required  Supplementary  Information)  presents  the   annual  required  contributions  as  defined  by  GASB  for  all  employers  participating  in  MainePERS  group  life  insurance  plan  and   compares  them  to  actual  employer  contributions,  over  a  period  of  six  years.    It  also  provides  the  percentage  of  the  required  to   actual  contributions  for  each  year. Financial Highlights and Analysis The  Net  Position  of  the  System  increased  in  fiscal  year  2014  by  $1,605.8  million  (14%)  from  the  prior  year’s  Net  Position.    This   increase  was  due  primarily  to  a  significant  increase  in  Net  Income  from  investment  activities  during  fiscal  year  2014,  and  in   part  to  a  normal  increase  in  employer  contributions.    For  fiscal  year  2014,  Net  Income  from  investment  activities  was  $1,943.5   20 Maine  Public  Employees  Re rement  System ♦ FINANCIAL SECTION MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2014 Financial Report (continued) million.    By  comparison,  Net  Income  from  investment  activities  during  fiscal  year  2013  was  $1,191.9  million.    As  of  June  30,  2014,   approximately  32%  of  the  System’s  assets  were  invested  in  domestic  common  stocks,  26%  in  foreign  common  stocks,  24%  in   domestic  bonds,  7%  in  real  estate,  5%  in  other  strategies,  3%  in  infrastructure,  and  3%  in  private  equity,  either  with  direct  holdings   or  through  investment  in  common/collective  trusts. The  Net  Position  of  the  System  increased  in  fiscal  year  2013  by  $835.3  million  (8%)  from  the  prior  year’s  Net  Position.    This   increase  was  due  primarily  to  a  significant  increase  in  Net  Income  from  investment  activities  during  fiscal  year  2013.    For  fiscal  year   2013,  Net  Income  from  investment  activities  was  $1,191.9  million.    By  comparison,  Net  Income  from  investment  activities  during   fiscal  year  2012  was  $56.0  million.    As  of  June  30,  2013,  approximately  35%  of  the  System’s  assets  were  invested  in  domestic   common  stocks,  24%  in  foreign  common  stocks,  25%  in  domestic  bonds,  6%  in  real  estate,  5%  in  opportunistic  strategies,  3%  in   infrastructure,  and  2%  in  private  equity,  either  with  direct  holdings  or  through  investment  in  common/collective  trusts. The  following  are  the  Condensed  Comparative  Statements  of  Fiduciary  Net  Position  and  Condensed  Comparative  Statements  of   Changes  in  Fiduciary  Net  Position  for  the  System  for  the  fiscal  years  ended  June  30,  2014,  2013,  and  2012:   Maine  Public  Employees  Re rement  System 21 ♦ FINANCIAL SECTION MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2014 Financial Report (continued) Assets Investments  at  Fair  Value  increased  by  $1,611.2  million  (14%).    This  increase  in  Investments  at  Fair  Value  combined  with  a   decrease  of  $1,224  million  in  securities  lending  collateral,  contributed  to  an  increase  in  total  assets  of  $387.1  million  during  fiscal   year  2014.    The  System  records  the  cash  collateral  it  holds  due  to  its  securities  lending  activity  as  an  asset  and  corresponding   liability.    Securities  lending  activity  decreased  by  $1,224  million  (82%)  due  to  structural  changes  implemented  by  the  MainePERS   staff  regarding  acceptable  utilization  rates.    The  System’s  custodian  records  an  Investment  Purchase  or  Sale  Receivable  between   the  time  it  enters  into  a  trade  and  the  time  that  trade  is  settled.    There  were  no  major  trades  pending  at  fiscal  year  end. Comparatively,  Investments  at  Fair  Value  increased  in  fiscal  year  2013  by  $958.2  million  (9%).    This  increase  in  Investments  at   Fair  Value  combined  with  a  decrease  of  $119.9  million  in  cash  and  receivables  and  an  increase  of  $672.0  million  in  securities   lending  collateral,  contributed  to  an  increase  in  total  assets  of  $1,508.3  million  during  fiscal  year  2013.    The  System  records  the   cash  collateral  it  holds  due  to  its  securities  lending  activity  as  an  asset  and  corresponding  liability.    Securities  lending  activity   increased  by  $672.0  million  (83%)  due  to  higher  utilization  rates.    The  System’s  custodian  records  an  Investment  Purchase  or   Sale  Receivable  between  the  time  it  enters  into  a  trade  and  the  time  that  trade  is  settled.    The  receivable  for  outstanding  trades  at   June  30,  2013  was  approximately  $75  million  less  than  at  June  30,  2012,  since  there  were  no  major  trades  pending  at  fiscal  year   end. Please  refer  to  the  Investment  Section  for  more  information  on  the  System’s  investments. Liabilities The  System’s  custodian  records  an  Investment  Purchase  or  Sale  between  the  time  it  enters  into  a  trade  and  the  time  that  trade   is  settled.    At  June  30,  2014,  trades  outstanding  totaled  $.1  million.    The  System  records  the  cash  collateral  it  holds  due  to  its   securities  lending  activity  as  an  asset  and  corresponding  liability.    On  June  30,  2014,  total  loans  outstanding  in  the  securities   lending  program  were  $253.6  million. Trades  outstanding  at  June  30,  2013  totaled  $.2  million.    At  June  30,  2012  there  was  one  outstanding  trade  for  approximately   $75  million.    On  June  30,  2013  and  2012,  the  total  loans  outstanding  in  the  securities  lending  program  were  $1,449.9  million  and   $792.4  million,  respectively. Additions  to  Net  Position  Restricted  for  Benefits Additions  to  net  position  restricted  for  benefits  during  fiscal  year  2014  totaled  $2,454.3  million  compared  to  additions  of   $1,654.6  million  to  net  position  in  fiscal  year  2013.    This  was  largely  due  to  the  fact  that  investment  income  net  of  fees  and  other   deductions  increased  by  $751.6  million.    The  increase  in  investment  income  is  primarily  attributable  to  positive  returns  in  the  equity   markets.    US  equities  rose  nearly  25%  and  international  equities  were  up  22%,  while  fixed  income  rose  nearly  4%. Additions  to  net  position  restricted  for  benefits  during  fiscal  year  2013  totaled  $1,654.6  million  compared  to  additions  of   $506.5  million  to  net  position  in  fiscal  year  2012.    This  was  largely  due  to  the  fact  that  investment  income  net  of  fees  and  other   deductions  increased  by  $1,135.9  million.    The  increase  in  investment  income  is  primarily  attributable  to  positive  returns  in  the   equity  market.    US  equities  rose  nearly  22%  and  international  equities  were  up  14%,  while  fixed  income  fell  by  2%. Pension  Contributions The  State’s  contributions  on  behalf  of  State  employees  totaled  $109.6  million,  $86.4  million,  and  $87.3  million  for  fiscal  years   2014,  2013,  and  2012,  respectively.    The  State’s  contributions  on  behalf  of  teachers  totaled  $142.3  million,  $148.8  million,   and  $146.6  million,  for  fiscal  years  2014,  2013,  and  2012,  respectively.    The  State’s  contribution  on  behalf  of  judges  totaled   $915.2  thousand,  $811  thousand,  and  $810.7  thousand,  for  fiscal  years  2014,  2013,  and  2012,  respectively.    Based  on  the  funding   methodology  used  and  considering  the  funded  status  of  the  Maine  Legislative  Retirement  Plan,  no  employer  contribution  on  behalf   of  Legislative  employees  was  required  in  fiscal  years  2014,  2013  or  2012. The  balance  of  employer  contributions  reported  are  from  Participating  Local  District  (PLD)  employers.    For  PLDs  in  the   Consolidated  Plan,  the  range  of  employer  contributions  as  a  percent  of  earnable  compensation  in  fiscal  year  2014  was  3.4%  to   12.8%;;  for  fiscal  year  2013  the  range  was  2.8%  to  12.2%,  and  for  fiscal  year  2012  the  range  was  1.9%  to  8.3%.    The  Consolidated   Plan’s  funded  status  and  established  funding  approach  results  in  employers  of  the  Consolidated  Plan  currently  paying  less  than   what  the  true  normal  cost  would  otherwise  require.    The  employer  rates  are  being  incrementally  increased  over  time  to  a  point   where  true  normal  cost  will  be  collected. 22 Maine  Public  Employees  Re rement  System ♦ FINANCIAL SECTION MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2014 Financial Report (continued) Member  and  employer  data,  contribution  and  benefit  data  for  the  13  non-­consolidated  PLDs  are  specific  to  each  PLD  and  are   obtainable  from  the  System.   Deductions  From  Net  Position  Restricted  for  Benefits Total  deductions  from  net  position  restricted  for  benefits  during  fiscal  year  2014  increased  by  4%  ($29.1  million).    The  fiscal  year   2014  increase  was  due  to  an  increase  in  the  number  of  recipients  receiving  benefits,  as  well  as  the  increased  cost  of  benefits  paid   and  refunds  and  withdrawals  of  contributions.    Benefit  payments  in  fiscal  year  2014  exceeded  contributions  by  $295.1  million.     Contributions  totaled  $510.8  million,  and  benefit  payments  totaled  $805.9  million. Total  deductions  from  net  position  restricted  for  benefits  during  fiscal  year  2013  increased  by  4%  ($28.1  million).    The  fiscal  year   2013  increase  was  due  to  an  increase  in  the  number  of  recipients  receiving  benefits,  as  well  as  the  increased  cost  of  benefits  paid   and  refunds  and  withdrawals  of  contributions.    Benefit  payments  in  fiscal  year  2013  exceeded  contributions  by  $320.3  million.     Contributions  totaled  $462.7  million,  and  benefit  payments  totaled  $783  million. System Funding Status At  June  30,  2014,  the  State/Teacher  and  PLD  defined  benefit  plans  were  actuarially  funded  at  83.2%,  an  increase  from  the   actuarial  funding  level  of  79.6%  at  June  30,  2013.    As  illustrated  in  the  chart,  the  actuarial  funded  ratio  of  the  System  experienced   modest  incremental  increases  in  2005,  2006,  and  in  2007  to  a  high  of  79.7%.    This  level  remained  steady  for  2008,  followed  by  two   consecutive  significant  declines  in  2009  to  72.6%  and  in  2010  to  70.4%.    The  2009  decline  was  due  primarily  to  low  returns  in  the   investment  market  downturn.    In  2010,  investment  markets  and  returns  improved,  although  not  enough  to  offset  the  prior  years’   investment  declines.    Significant  improvement  in  investment  returns  in  2011,  combined  with  a  decrease  in  the  overall  unfunded   liabilities  of  the  plan  resulting  from  changes  in  assumptions  adopted  following  the  completion  of  an  experience  study  in  2011,   pushed  the  funding  level  to  a  high  of  80.2%  for  this  year.    Modest  investment  returns  combined  with  increased  deductions  from  the   plan  for  benefits,  contributed  to  the  decrease  in  2012.    The  increase  in  the  funded  ratio  for  2013  and  2014  is  attributable  to  strong   investment  returns  during  those  years.   Maine  Public  Employees  Re rement  System 23 ♦ FINANCIAL SECTION MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2014 Financial Report (continued) Investments The  assets  of  all  the  defined  benefit  retirement  plans  that  the  System  administers  are  commingled  for  investment  purposes.     Investments  of  the  Group  Life  Insurance  Plan  and  the  Retiree  Health  Insurance  Trust  are  invested  following  the  same  Target  Asset   Allocation  but  are  not  commingled  with  the  assets  of  the  defined  benefit  retirement  plans. Foreign Stocks: 20% Real Assets: 25% TARGET ASSET ALLOCATION Domestic Stocks: 20% Private Equity: 10% Fixed Income: 25% Essentially  all  of  the  assets  administered  by  the  System  in  its  investment  portfolio  are  currently  invested  in  seven  asset  classes:     publicly  traded  domestic  stocks,  publicly  traded  foreign  stocks,  cash  and  cash-­like  securities,  publicly  traded  domestic  bonds,   infrastructure,  private  equity,  and  real  estate.    Publicly  traded  derivative  securities  are  used  in  some  portfolios  to  emulate  one  or   more  of  the  seven  asset  classes.    The  investment  policy  established  by  the  System’s  Board  of  Trustees  in  2012  assigns  strategic   target  allocations  for  each  of  four  asset  categories.    These  targets  are  20%  for  domestic  stocks,  20%  for  foreign  stocks,  25%  for   fixed  income,  10%  for  private  equity,  and  25%  for  real  assets.    Real  assets  include  infrastructure  (10%),  real  estate  (10%),  and   hard  assets  (5%).    The  Board  of  Trustees  anticipates  it  may  take  three  to  five  years  to  fully  reach  the  new  asset  allocation  targets. All  of  the  assets  invested  by  the  System  are  in  portfolios  managed  by  professional  investment  management  firms.    These   managers  act  as  fiduciaries  and  invest  the  assets  assigned  to  them  in  accordance  with  the  Board’s  investment  policy  and  their   separate  contractual  arrangements.    At  June  30,  2014,  total  fair  value  of  assets  in  these  portfolios  (together  with  the  amounts   otherwise  managed)  was  $13.2  billion.    The  total  fair  value  of  assets  as  of  June  30,  2013  was  $11.6  billion.    The  investment  return   for  the  fiscal  year  ending  June  30,  2014  was  16.7%.    The  investment  return  for  the  fiscal  year  ending  June  30,  2013  was  11.1%.     Investment  returns  in  fiscal  year  2014  were  more  than  in  fiscal  year  2013,  and  were  driven  primarily  by  the  strong  performance  in   global  equity  markets.    Over  the  five,  ten  and  thirty  year  periods  ended  June  30,  2014,  the  average  annual  investment  return  for  the   total  fund  was  12.2%,  6.9%,  and  9.5%,  respectively. System Membership The  following  membership  counts  are  derived  from  actuarial  valuation  data:   24 Maine  Public  Employees  Re rement  System ♦ FINANCIAL SECTION MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2014 Financial Report (continued) The  number  of  active  State  employees  at  June  30,  2014  in  the  Regular  and  Special  plans  was  12,906,  a  decrease  of  322  from   June  30,  2013.    The  number  of  Teachers  at  June  30,  2014  was  26,763,  a  decrease  of  1,818  from  June  30,  2013.    Membership  for   judges  was  60,  the  same  as  the  previous  year.    Membership  for  Legislators  was  181,  a  decrease  of  1  from  June  30,  2013.    The   Consolidated  Plan  for  Participating  Local  Districts  (PLDs)  offers  11  retirement  plans.    Each  PLD  participating  in  the  Consolidated   Plan  chooses  the  plan  or  plans  under  which  its  employees  will  be  covered.    Total  active  membership  in  the  Consolidated  Plan  and   the  13  non-­consolidated  plans  at  June  30,  2014  was  10,872,  a  decrease  of  268  from  June  30,  2013. Group Life Insurance Plan The  following  summarized  data  is  derived  from  actuarial  valuation  data  for  the  Group  Life  Insurance  Plan: Defined  Contribution  Plans The  Section  401(a),  Section  457,  and  Section  403(b)  Plans  administered  by  the  System’s  Board  of  Trustees  are  defined   contribution  plans.    These  plans  are  available  as  supplemental  plans  to  the  basic  retirement  benefits  of  employees  of  PLDs   that  elect  to  participate  in  the  Defined  Contribution  Plans.    Contributions  may  be  made  to  the  Plans  subject  to  plan  and  Internal   Revenue  Code  limitations.    Investments  in  the  Defined  Contribution  Plans  are  individually  directed  and  controlled  by  plan   participants. Retiree Health Insurance Trust Fund The  Maine  State  Legislature  established  the  Retiree  Health  Insurance  Post  Employment  Investment  Trust  as  an  irrevocable  trust   for  the  sole  purpose  of  holding  and  investing  funds  appropriated  or  otherwise  provided  to  the  Fund  for  the  purpose  of  accumulating   assets  to  provide  funding  to  the  State’s  unfunded  liability  obligations  for  retiree  health  benefits.    The  Trustees  of  the  Maine  Public   Employees  Retirement  System  were  named  Trustees  of  the  Investment  Trust  Fund.    At  June  30,  2014,  the  fiduciary  net  position   held  in  trust  for  the  Fund  was  $189,832,853. Currently Known Facts, Decisions, or Conditions Legislation  passed  in  2011  froze  regular  COLAs  for  eligible  retirees  in  the  State  Employee,  Teacher,  Judicial,  and  Legislative  plans   for  a  period  of  three  years  beginning  in  2011.    The  same  legislation  provided  for  potential  non-­cumulative  cost-­of-­living  adjustments   (COLAs)  for  those  three  years  to  be  paid  in  2012,  2013,  and  2014  dependent  on  the  availability  of  budget  surpluses  in  each  prior   fiscal  year.    The  State  of  Maine  closed  its  fiscal  year  2014  with  a  budget  surplus  sufficient  to  cover  the  cost  of  the  third  and  final  of   these  payments  and  MainePERS  distributed  these  funds  to  eligible  retirees  in  September  2014. The  Maine  Legislature  enacted  Public  Law  390,  An  Act  to  Amend  the  Retirement  Laws  Pertaining  to  Participating  Local  Districts,   during  the  First  Regular  Session  of  the  126th  Legislature.    The  law  requires  changes  to  member  contribution  rates,  reduces  the   cap  for  cost  of  living  increases  from  4%  to  3%,  and  increases  the  normal  retirement  age  from  age  60  to  age  65  for  new  members,   among  other  things.    Additional  information  regarding  the  changes  and  effective  dates  can  be  found  on  the  System’s  website  at   www.mainepers.org. Requests for Information Questions  concerning  this  Management  Discussion  and  Analysis,  other  parts  of  the  System’s  financial  statements  or  the  System’s   financial  activities  should  be  directed  to  Maine  Public  Employees  Retirement  System,  Sherry  Tripp  Vandrell,  Director  of  Finance,  at   PO  Box  349,  Augusta,  Maine  04332  or  at  (207)  512-­3100  or  toll-­free  at  (800)  451-­9800.   Maine  Public  Employees  Re rement  System 25 ♦ FINANCIAL SECTION STATEMENT OF FIDUCIARY NET POSITION June 30, 2014 With Summarized Information as of June 30, 2013     State   Employee/   Teacher Plan Assets:   Cash  and  cash  equivalents  (note  3)     Investments  at  fair  value  (notes  3  and  4):     Debt  securities:       U.S.  Government  and  government  agencies         U.S.  and  foreign  corporate       Common  equity  securities       Preferred  equity  securities       Common/collective  trusts       Mutual  funds   Partnerships Total  investments   PLD Consolidated   Plan $   4,082,919   PLD Agent Plan   $   26,853,484   $   84,406                           –         –         3,212,369,203   –         5,835,822,798   214,829,656   1,110,315,401   –           –           744,129,753     –           1,398,177,722     49,764,248     257,199,180   –         –         11,304,271   –         20,536,159   755,982   3,907,181     10,373,337,058     2,449,270,903     36,503,593             Receivables: State and local agency contributions and     premiums  (notes  6  and  7)     Accrued  interest  and  dividends     Due  from  brokers  for  securities  sold               14,229,674   3,552,900   80,301       4,385,073   823,012   18,601       61,218 12,503 283         17,862,875     5,226,686     74,004     Collateral  on  loaned  securities  (note  5)   Capital  assets,  net  of  accumulated  depreciation           210,679,757   7,059,256     48,802,944   1,635,242     741,378 24,841         10,635,792,430     2,509,018,694     37,428,222                 5,011,783   431,708   7,053,632   6,666,147           1,160,955   100,003   1,633,940   1,544,181           17,636 1,519 24,822 23,458     210,679,757   48,802,944   741,378   229,843,027   53,242,023   808,813 Total  receivables   Total  assets   Liabilities:   Accounts  payable     Due  to  brokers  for  securities  purchased     Other  liabilities     Accrued  investment  management  fees   Obligations under securities lending activities     (note  5)   Total liabilities Fiduciary  net  position  -­  held  in  trust   See  accompanying  notes. 26 Maine  Public  Employees  Re rement  System   $   10,405,949,403   $   2,455,776,671   $   36,619,409 ♦ FINANCIAL SECTION STATEMENT OF FIDUCIARY NET POSITION June 30, 2014 With Summarized Information as of June 30, 2013 (continued)           Group  Life   Insurance     $   216,885       Defined   Contribution $   35,073       MainePERS   OPEB Trust $   –             Retiree  Health   Insurance Trust $       2014   Total 2013 Summarized (Restated, See  Note  2) –         $   31,272,767   $   31,108,267 –         –         3,967,803,227   –         7,575,173,962   265,349,886   1,371,421,762               2,378,810 977,545 3,828,278,697 1,959,830 6,707,944,366 238,333,341 788,653,709                           –           –           –           –           94,313,176     –           –         –           –           –           –           24,939,133     –           –         –           –           –           –           11,447,671     –           –         –           –           –           –           189,937,303     –           –                           94,313,176     24,939,133     11,447,671     189,937,303     13,179,748,837     11,568,526,298               631,432   –         –             61,063   –         –             –         –         –             –         –         –             19,368,460   4,388,415   99,185       18,830,950 4,931,834 229,771       631,432     61,063     –           –           23,856,060     23,992,555         –         –           –         –           –         –           –         –           260,224,079   8,719,339     1,484,238,413 8,930,108       95,161,493     25,035,269     11,447,671     189,937,303     13,503,821,082     13,116,795,641                   20,872     –           2,963,176     10,293           –         –         5,965   –                 –         –         771,595   834           –         –         90,030   14,420           6,211,246   533,230   12,543,160   8,259,333           5,236,391 209,337 11,547,554 5,315,831   –         –         –         –         260,224,079   1,484,238,413   2,994,341   5,965   772,429   104,450   287,771,048   1,506,547,526     $   92,167,152   $   25,029,304   $   10,675,242   $   189,832,853   $   13,216,050,034   $   11,610,248,115   Maine  Public  Employees  Re rement  System 27 ♦ FINANCIAL SECTION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION Year Ended June 30, 2014 With Summarized Information for the Year Ended June 30, 2013     State   Employee/   Teacher Plan Additions:   Investment  income:     From  investing  activities: Net appreciation in the fair         value  of  plan  investments         Interest         Dividends         Less:  investment  expenses       Net  income  from  investing  activities       From  securities  lending  activities:       Securities  lending  income         Securities  lending  expenses:         Borrower  rebates  refunded   Management fees Total securities lending expenses Net income from securities lending activities Total  net  investment  income   PLD Consolidated   Plan PLD Agent Plan           $           1,456,128,076   $   52,857     102,386,170     (33,279,424)     1,525,287,679     344,616,880   $   5,336,114 12,422     194 23,717,260     360,295 (7,727,068)     (122,321) 360,619,494     5,574,282     1,209,815     280,248     4,257           1,353,109   (379,919)   973,190 2,183,005         313,441   (88,006)   225,435 505,683         4,762 (1,337) 3,425 7,682     1,527,470,684     361,125,177               Contributions  and  premiums  (notes  6  and  7):   Members     State  and  local  agencies     Non-­employer  contributing  entities   Total contributions               121,700,845   163,856,225   142,303,104 427,860,174         33,210,510   32,706,160   –       65,916,670         1,955,330,858     427,041,847     6,343,946                 671,034,883   21,693,233   –         8,296,396 701,024,512           121,559,257   5,602,101   –         1,779,304 128,940,662   2,702,486   1,897,634   –         27,981   4,628,101     1,254,306,346     298,101,185     1,715,845   9,151,643,057   2,157,675,486   34,903,564 $   10,405,949,403   $   2,455,776,671   $   36,619,409 Total  additions   Deductions:   Benefits  paid,  net     Refunds  and  withdrawals     Claims  processing  expenses  (note  7)   Administrative expenses Total deductions     Net  increase  in  fiduciary  net  position   Fiduciary  net  position  –  held  in  trust, beginning of year Fiduciary  net  position  –  held  in  trust,  end  of  year   See  accompanying  notes. 28 Maine  Public  Employees  Re rement  System     5,581,964         94,136 667,846 –       761,982 ♦ FINANCIAL SECTION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION Year Ended June 30, 2014 With Summarized Information for the Year Ended June 30, 2013 (continued)           Group  Life   Insurance     Defined   Contribution     $   14,808,409   $   3,289,578         364     203         –           –           (44,990)     (79,473)         14,763,783     3,210,308       MainePERS   OPEB Trust     Retiree  Health   Insurance Trust $   1,805,962   $     –             –             (5,390)       1,800,572     29,617,797   –         –         (53,201)   29,564,596       2014   Total 2013 Summarized (Restated, See  Note  2) $           1,855,602,816   $   66,040     126,463,725     (41,311,867)     1,940,820,714     1,090,338,039 4,493,543 123,904,595 (31,372,622) 1,187,363,555       –           –           –           –           1,494,320     5,030,284             –         –       –       –               –         –       –       –               –         –       –       –               –         –       –       –               1,671,312   (469,262)   1,202,050 2,696,370         288,735 (797,734) (508,999) 4,521,285       14,763,783     3,210,308     1,800,572     29,564,596     1,943,517,084     1,191,884,840           4,708,184     7,950,385     –         12,658,569   3,505,423     109,515     –         3,614,938         –         6,108   –       6,108         –         –         –       –               163,219,098   205,296,239   142,303,104 510,818,441         160,779,494 153,066,339 148,833,840 462,679,673       27,422,352     6,825,246     1,806,680     29,564,596     2,454,335,525     1,654,564,513               10,273,054     –           835,215     318,626   11,426,895   –           2,032,458     –           112,015   2,144,473           278,933   –         –         –       278,933           –         –         –         90,030 90,030           805,848,613   31,225,426   835,215   10,624,352 848,533,606           782,972,911 24,669,562 701,421 10,958,749 819,302,643       15,995,457     4,680,773     1,527,747     29,474,566     1,605,801,919     835,261,870   76,171,695   20,348,531   9,147,495   160,358,287   11,610,248,115   10,774,986,245     $   92,167,152   $   25,029,304   $   10,675,242   $   189,832,853   $   13,216,050,034   $   11,610,248,115   Maine  Public  Employees  Re rement  System 29 ♦ FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 1. Overview  of  the  Maine  Public  Employees  Retirement  System  Benefit  Plans Background     The  Maine  Public  Employees  Retirement  System  (the  System),  which  is  a  component  unit  of  the  State  of  Maine,  is  the   administrator  of  a  public  employee  retirement  system  established  and  administered  under  the  Laws  of  the  State  of  Maine.     The  System  was  formerly  named  the  Maine  State  Retirement  System.    The  System  provides  pension,  disability,  and  death   benefits  to  its  members,  which  include  employees  of  the  State,  public  school  teachers  (as  defined  by  Maine  law)  and   employees  of  299  local  municipalities  and  other  public  entities  (Participating  Local  Districts,  or  PLDs)  in  Maine,  each  of  which   contracts  for  participation  in  the  System  under  provisions  of  the  relevant  statutes.     Individual  PLDs  are  permitted  by  law  to  withdraw  from  participation  in  the  System.    Withdrawal  precludes  the  PLD’s   nonmember  employees,  if  any,  and  its  employees  hired  subsequent  to  withdrawal  from  membership  in  the  System.     Depending  on  the  circumstances  and  requirements  of  the  PLD’s  participation  under  the  System,  a  withdrawn  PLD  has   continuing  funding  obligations  after  withdrawal  with  respect  to  its  employees  who  are  active  members  at  the  time  of   withdrawal  and  who  continue  to  be  members  thereafter,  to  its  terminated  vested  employee  members,  and  to  its  former   employee  members  who  are  retired  at  the  time  of  withdrawal. Board of Trustees     The  System’s  Board  of  Trustees  is  comprised  of  eight  members.    State  law  specifies  the  composition  of  the  Board,  whose   members  are  confirmed  by  the  Legislature.    Three  trustees  are  System  members,  one  of  whom  is  proposed  and  elected  by   the  Maine  Education  Association,  one  of  whom  is  proposed  and  elected  by  the  Maine  State  Employees  Association,  and  one   of  whom  is  a  PLD  member  appointed  by  the  governing  body  of  the  Maine  Municipal  Association.    Four  other  trustees  are   appointed  by  the  Governor.    Of  these,  one  must  be  selected  by  the  Governor  from  a  list  of  nominees  submitted  by  the  Maine   Retired Teachers Association and one must be a MainePERS retiree selected from a list of nominees submitted by State and/or  PLD  retirees.    The  remaining  two  appointees  are  direct  gubernatorial  appointments,  both  of  whom  must  be  qualified   through  training  or  experience  in  investments,  accounting,  banking  or  insurance  or  as  actuaries.    All  appointed  trustees  are   required  to  have  "a  working  knowledge  of  retirement  policy  and  legal  issues  and  a  general  knowledge  and  understanding   of  banking,  finance,  and  investment  practices."    The  eighth  trustee  is  the  State  Treasurer,  who  serves  ex-­officio.    All  trustee   terms  are  three  years,  except  for  the  two-­year  term  of  the  State  Treasurer.    The  Board  annually  elects  its  chair  and  vice  chair   from  among  its  members. Defined  Benefit  Plans Pension funds managed by the System are constitutionally restricted and held in trust for the payment of pension and related benefits.    The  System’s  Board  of  Trustees,  in  its  fiduciary  capacity,  establishes  the  System’s  investment  policies  and  oversees   their  overall  implementation.    The  System  administers  three  defined  benefit  pension  plans  including  the  State  Employee  and   Teacher  Plan,  including  members  of  the  Judicial,  Legislative,  and  Governor’s  Plans,  the  PLD  Consolidated  Plan,  and  the  PLD   Agent  Plan.    The  System  maintains  separate  reserves  and  accounts  and  performs  separate  actuarial  valuations  for  each   pension  plan.    Additional  information  regarding  each  plan  can  be  found  in  Note  6  of  this  report. Group  Life  Insurance  Plan     The  Group  Life  Insurance  Plan  was  established  by  the  State  Legislature  to  provide  group  life  insurance  benefits,  during  active   service  as  well  as  in  retirement,  to  State  employees,  Teachers,  members  of  the  Judiciary  and  the  Legislature,  as  well  as   Elected  and  Appointed  Officers  of  the  State,  that  are  eligible  for  membership  in  the  System.    Group  Life  Insurance  benefits   are  also  provided  to  the  employees  of  PLDs  that  elect  to  participate  in  the  Group  Life  Insurance  Plan.    Employees  are  eligible   for  coverage  under  the  Plan,  subject  to  their  membership  in  one  or  more  of  the  aforementioned  eligible  employment  classes   and  any  other  conditions  of  eligibility  that  the  Board  of  Trustees  of  the  System  may  prescribe  by  rule  or  decision.     Group  Life  Insurance  funds  managed  by  the  System  are  held  in  trust  for  the  payment  of  benefits  to  participants  and/or  their   beneficiaries.    The  System’s  Board  of  Trustees,  in  its  fiduciary  capacity,  establishes  the  System’s  investment  policies  and   oversees  their  overall  implementation.    The  System  maintains  separate  reserves  and  accounts  for  each  of  the  employment   classes  and  a  single  actuarial  valuation  for  the  plan  is  performed  that  provides  separate  data  for  each  of  the  five  classes. 30 Maine  Public  Employees  Re rement  System ♦ FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 continued     At  June  30,  2014,  the  Group  Life  Insurance  participant  counts  are  as  follows:     Actives   Retirees   Group  Life  Insurance  Participants   State Teachers Judges Legislators PLD Total   11,821     8,446  13,829     6,545   58     41   –           10   5,486     2,673   31,194   17,715   20,267  20,374   99   10   8,159   48,909 Defined  Contribution  Plans     The  Section  401(a),  Section  457  and  Section  403(b)  Plans  administered  by  the  System’s  Board  of  Trustees  are  defined   contribution  plans.    These  plans  are  available  as  supplemental  plans  to  the  basic  retirement  benefits  of  employees  of  PLDs   that  elect  to  participate  in  the  Defined  Contribution  Plans.    Contributions  may  be  made  to  the  Plans  by  plan  participants   subject  to  plan  and  Internal  Revenue  Code  limitations.    At  June  30,  2014,  participation  in  the  defined  contribution  plans  was   as  follows:     Employers   Participants   401(a)  Plan 457  Plan   10     76     55    508   403(b)  Plan   1  330   Investments  in  the  Defined  Contribution  Plans  are  individually  directed  and  controlled  by  plan  participants. MainePERS OPEB Trust The MainePERS OPEB Trust is an irrevocable trust established for the purpose of accumulating assets to provide funding for retiree  health  benefits  and  life  insurance  in  retirement  for  qualified  individuals  who  retire  from  the  Maine  Public  Employees   Retirement  System.    The  Trustees  of  the  Maine  Public  Employees  Retirement  System  were  named  Trustees  of  the   MainePERS  OPEB  Trust. Retiree  Health  Insurance  Trust  Fund     The  Maine  State  Legislature  established  the  Retiree  Health  Insurance  Post  Employment  Investment  Trust  as  an  irrevocable   trust  formed  solely  to  hold  and  invest  funds  appropriated  or  otherwise  provided  to  the  Fund  for  the  purpose  of  accumulating   assets  to  provide  funding  to  the  State’s  unfunded  liability  obligations  for  retiree  health  benefits.    The  Trustees  of  the  Maine   Public  Employees  Retirement  System  were  named  Trustees  of  the  Investment  Trust  Fund. 2. Summary  of  Significant  Accounting  Policies Basis of Accounting     The  System’s  financial  statements  are  prepared  using  the  accrual  basis  of  accounting. Adoption  of  GASB  Statement  No.  67     The  System  adopted  GASB  Statement  No.  67,  Financial  Reporting  for  Pension  Plans  –  an  Amendment  of  GASB  Statement   No.  25  for  the  year  ended  June  30,  2014.    This  statement  required  changes  to  the  content  of  pension  plans’  financial   statements  and  footnotes,  as  well  as  required  supplemental  information.    The  footnotes  now  provide  more  information  about   investments.    The  required  supplemental  information  now  provides  more  detail  about  the  changes  in  net  pension  liability  and   investment  rates  of  return.    The  Statement  also  prescribes  certain  methods  of  computing  net  pension  liability.   Maine  Public  Employees  Re rement  System 31 ♦ FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013     In  addition,  the  System  began  presenting  the  MainePERS  OPEB  Trust  as  a  separate  trust  fund  in  the  financial  statements.     Prior  to  adopting  Statement  No.  67,  the  fund  had  been  combined  with  the  Group  Life  Insurance  Plan  and  the  net  position  was   previously  shown  as  “other  liabilities”  to  reflect  that  the  MainePERS  OPEB  Trust  assets  were  not  available  to  participants   in  the  Group  Life  Insurance  Plans.    The  effect  of  this  change  was  to  reduce  liabilities  at  June  30,  2013  by  $9,147,495  and   increase  fiduciary  net  position  by  the  same  amount. Comparative  Summarized  Information     The  financial  statements  include  certain  prior-­year  summarized  comparative  information  in  total  but  not  by  fund.    Such   information  does  not  include  sufficient  detail  to  constitute  a  presentation  in  conformity  with  generally  accepted  accounting   principles.    Accordingly,  such  information  should  be  read  in  conjunction  with  the  System’s  financial  statements  for  the  year   ended  June  30,  2013,  from  which  the  summarized  information  was  derived.    Liabilities  and  net  position  have  been  restated   for  the  adoption  of  Statement  No.  67,  as  described  above. Reclassification     Certain  2013  amounts  have  been  reclassified  to  conform  to  the  2014  financial  statement  presentation. Use of Estimates     The  preparation  of  financial  statements  in  conformity  with  accounting  principles  generally  accepted  in  the  United  States  of   America  requires  management  to  make  significant  estimates  and  assumptions.    These  estimates  affect  the  reported  amounts   of  net  position  restricted  for  benefits  at  the  date  of  the  financial  statements,  the  actuarial  information  included  in  the  required   supplementary  information  as  of  the  actuarial  information  date,  the  changes  in  net  position  during  the  reporting  period  and,   when  applicable,  the  disclosure  of  contingent  assets  and  liabilities  at  the  date  of  the  financial  statements.    Actual  results  could   differ  from  those  estimates. Revenue Recognition     Pension  contributions  and  group  life  insurance  premiums,  as  well  as  contributions  to  the  Retiree  Health  Insurance  Trust,  are   recognized  as  additions  in  the  period  when  they  become  due  pursuant  to  formal  commitments  or  statutory  or  contractual   requirements.    Contributions  to  Defined  Contribution  Plans  are  recognized  in  the  period  they  are  contributed.     Net  investment  income  includes  net  appreciation  or  depreciation  in  the  fair  value  of  investments,  interest  and  dividend   income,  foreign  currency  transaction  gains  and  losses,  and  securities  lending  income,  less  investment  expenses,  which   include  investment  management  and  custodial  fees  and  all  other  significant  investment  related  costs.    Investment  income  is   recognized  when  earned  and  investment  expenses  are  recorded  when  incurred. Benefits  and  Refunds     Pension  and  group  life  insurance  benefits  and  contributions  and  premium  refunds  to  the  System’s  members  and  beneficiaries   are  recognized  as  deductions  when  due  and  payable  in  accordance  with  the  terms  of  the  statutes.    In  addition,  an  estimate   is  made  for  group  life  insurance  death  benefits  incurred  before  year  end  but  not  reported  to  the  System  until  after  year  end.     These  are  reflected  as  other  liabilities.    Distributions  from  Defined  Contribution  Plans  and  the  Retiree  Health  Insurance  Trust   are  recognized  in  the  period  the  disbursement  is  made. Investments     Investments  are  reported  at  fair  value.    Debt  and  equity  securities  that  are  traded  on  recognized  exchanges  are  valued   at  the  last  sales  price  and  the  current  exchange  rates  on  the  reporting  date.    Other  regularly  traded  securities,  including   derivatives,  are  valued  by  the  System’s  custodians  through  a  variety  of  external  sources.    Investments  that  do  not  have  an   established  market  are  reported  at  estimated  fair  value.    The  fair  value  of  shares  in  common  collective  trusts  is  based  on   unit  values  reported  by  the  funds.    The  fair  value  of  other  investments,  including  private  market  partnerships,  is  based  on   third-­party  appraisals  and  valuations  provided  by  the  sponsor  of  the  partnerships.    Management  reviews  and  approves  all   such  appraisals  and  valuations  prepared  by  other  parties.    Investment  purchases  and  sales  are  recorded  as  of  their  trade   date.    Proceeds  related  to  securities  sold  not  yet  purchased  are  carried  as  a  liability  and  are  adjusted  to  the  fair  value  of  the   securities. 32 Maine  Public  Employees  Re rement  System ♦ FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 continued     Assets  of  the  defined  benefit  pension  plans  are  pooled  for  investment  purposes  and  are  allocated  to  each  plan  based  on  each   plan’s  net  fiduciary  position,  as  are  investment  expenses  and  administrative  expenses.    Assets  of  the  Group  Life  Insurance   Plan  are  invested  separately  from  the  assets  of  the  defined  benefit  pension  plans. Due  to/from  Brokers     Amounts  due  to/from  brokers  for  securities  purchased  or  sold  consist  of  trades  not  yet  settled. Cash  and  Cash  Equivalents     The  System  considers  all  highly  liquid  debt  instruments  that  have  a  maturity  of  90  days  or  less  when  purchased  to  be  cash   equivalents. Administrative Expenses     The  cost  of  administering  the  Plans  is  financed  primarily  by  investment  income,  with  a  small  percentage  of  contributions  from   select  employers. Capital  Assets     All  capital  assets  with  a  unit  cost  of  $5,000  or  greater  are  capitalized  and  reported  in  the  accompanying  financial  statements.     Purchased  assets  are  valued  at  cost  where  historical  records  exist.    Where  necessary,  for  real  estate,  estimates  of  original   cost  are  derived  from  historical  real  estate  appraisals,  historical  real  estate  tax  valuation  records,  and  relevant  accounting   information  derived  from  the  records.     Capital  asset  costs  include  the  purchase  price  or  construction  cost,  plus  those  costs  necessary  to  place  the  asset  in  its   intended  location  and  condition  for  use.         Depreciation  is  calculated  using  the  straight-­line  method  with  estimated  useful  lives  of  3  to  40  years. Risks  and  Uncertainties     The  System  makes  investments  in  accordance  with  the  Board  of  Trustees’  investment  policy  in  a  combination  of  equities,   fixed  income  securities,  infrastructure,  private  equity,  real  estate,  derivative  financial  instruments,  other  investment  securities   and  mutual  funds  and  common/collective  trusts  holding  such  investments.    The  investment  policy  specifically  prohibits   investment  managers  from  using  derivative  financial  instruments  to  introduce  leverage  without  specific  prior  approval  by  the   Board.    Investment  securities  and  securities  underlying  certain  investments  are  exposed  to  various  risks,  such  as  interest  rate   risk,  market  risk,  custodial  credit  risk  and  credit  risk.    Investments  in  the  Defined  Contribution  Plans  are  individually  directed   and  controlled  by  plan  participants.    Due  to  the  level  of  risk  associated  with  certain  investment  securities  and  the  level  of   uncertainty  related  to  changes  in  the  value  of  investment  securities,  changes  in  the  values  of  investment  securities  are  likely   to occur in the near term and it is at least possible that such changes could materially affect the amounts reported in the statement  of  fiduciary  net  position  and  the  statement  of  changes  in  fiduciary  net  position.         Employers’  contributions  to  the  Defined  Benefit  Plans  are  established  by  an  actuarial  valuation  on  the  basis  of  actuarial   assumptions  related  to  economic  indicators  (e.g.,  interest  rates,  inflation  rates),  and  member  and  retiree  compensation   and  demographics.    By  law,  the  assumptions  are  adopted  by  the  Board  of  Trustees  based  on  recommendation  of  the   System’s  actuary.    The  System  is  also  required  by  Maine  law  to  perform  an  actuarial  experience  study  whenever  the  Board   of  Trustees,  on  recommendation  of  its  actuary,  determines  such  a  study  to  be  necessary  for  actuarial  soundness  or  prudent   administration. New  Accounting  Pronouncements     The  following  paragraphs  describe  the  status  of  new  pronouncements  other  than  GASB  Statement  No.  67.     The  System  adopted  GASB  Statement  No.  65,  Items  Previously  Reported  as  Assets  and  Liabilities  for  the  year  ended   June  30,  2014.    This  Statement  establishes  accounting  and  financial  reporting  standards  that  reclassify,  as  deferred   outflows  of  resources  or  deferred  inflows  of  resources,  certain  items  that  were  previously  reported  as  assets  and  liabilities     Maine  Public  Employees  Re rement  System 33 ♦ FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 continued and  recognizes,  as  outflows  of  resources  or  inflows  of  resources,  certain  items  that  were  previously  reported  as  assets  and   liabilities.    This  Statement  also  provides  other  financial  reporting  guidance  related  to  the  impact  of  the  financial  statement   elements  deferred  outflows  of  resources  and  deferred  inflows  of  resources,  such  as  changes  in  determination  of  the  major   fund  calculations  and  limiting  the  use  of  the  term  deferred  in  financial  statement  presentations.    Adoption  of  Statement  No.  65   had  no  effect  on  the  System’s  financial  statements.     In  June  2012,  GASB  issued  Statement  No.  68  (Statement  68),  Accounting  and  Financial  Reporting  for  Pensions.    Statement   68  replaces  the  requirements  of  Statement  No.  27,  Accounting  for  Pension  by  State  and  Local  Government  Employers   and  Statement  No.  50,  Pension  Disclosures,  as  they  relate  to  governments  that  provide  pensions  through  pension  plans   administered  as  trust  or  similar  arrangements  that  meet  certain  criteria.    Statement  68  requires  governments  providing   defined  benefit  pensions  to  recognize  their  long-­term  obligation  for  pension  benefits  as  a  liability  for  the  first  time,  and  to  more   comprehensively  and  comparably  measure  the  annual  cost  of  pension  benefits.    The  Statement  also  enhances  accountability   and  transparency  through  revised  and  new  note  disclosures  and  required  supplementary  information.    The  provisions  of  this   Statement  are  effective  for  financial  statements  for  fiscal  years  beginning  after  June  15,  2014.    The  System  expects  liabilities   to  increase  by  approximately  $3.5  million  upon  adoption.     In  January  2013,  GASB  issued  Statement  No.  69,  Government  Combinations  and  Disposals  of  Government  Operations.     This  statement  establishes  accounting  and  financial  reporting  standards  related  to  government  combinations  or  disposals  of   government  operations.    The  provisions  of  this  Statement  are  effective  for  financial  statements  for  fiscal  years  beginning  after   December  15,  2013.    Adoption  of  Statement  No.  69  had  no  impact  on  the  System’s  financial  statements.     The  System  adopted  GASB  Statement  No.  70,  Accounting  and  Financial  Reporting  for  Nonexchange  Financial  Guarantees   for  the  year  ended  June  30,  2014.    This  statement  requires  governments  that  extend  nonexchange  financial  guarantees   to  recognize  a  liability  when  it  is  more  likely  than  not  that  the  government  will  have  to  make  a  payment  on  that  guarantee.     In  addition,  the  statement  requires  a  government  that  issued  an  obligation  that  is  guaranteed  in  a  nonexchange  financial   guarantee  to  report  the  obligation  until  legally  released  as  an  obligor.    Adoption  of  Statement  No.  70  had  no  impact  on  the   System’s  financial  statements.     In  November  2013,  GASB  issued  Statement  No.  71,  Pension  Transition  for  Contributions  Made  Subsequent  to  the   Measurement  Date  an  amendment  of  GASB  Statement  No.  68.    This  statement  requires  that,  at  transition,  a  government   recognize  a  beginning  deferred  outflow  of  resources  for  its  pension  contributions,  if  any,  made  subsequent  to  the   measurement  date  of  the  beginning  net  pension  liability  being  reported  under  GASB  Statement  No.  68.    The  System  is   currently  evaluating  the  impact  this  guidance  will  have  on  its  financial  statements. 3. Cash and Investments The Board of Trustees is responsible for identifying the System’s investment objective and establishing an investment policy to  meet  that  objective.    The  Board  relies  on  staff  and  consultants  with  appropriate  expertise  to  establish  investment  policy,   monitor  compliance  with  policy,  and  determine  whether  the  investment  objective  has  been  met.    The  Board  established  the   strategic  asset  allocation  as  part  of  its  overall  investment  policy.    The  policy  identifies  the  following  investment  classes  and   targets:    US  equities  (20%),  non-­US  equities  (20%),  private  equity  (10%),  fixed  income  (25%),  and  real  assets  (25%).    Within   real  assets,  the  allocation  is  further  defined  to  include:  real  estate  (10%),  infrastructure  (10%),  and  hard  assets  (5%).    The   investment  policy  was  revised  in  November  2013  to  refine  the  rebalancing  process.     Custodial  credit  risk  is  the  risk  that  in  the  event  of  a  financial  institution  failure,  the  System’s  deposits  may  not  be  returned   to  it.    The  System  has  no  formal  policy  for  custodial  credit  risk.    Cash  and  cash-­like  securities  are  held  at  two  institutions:   Bangor  Savings  Bank  and  JP  Morgan.    Cash  balances  at  Bangor  Savings  Bank  are  insured  by  the  Federal  Deposit  Insurance   Corporation  (FDIC)  up  to  $250,000.    Bangor  Savings  Bank  mitigates  custodial  credit  risk  through  use  of  securities  repurchase   arrangements.     Cash  equivalents  at  JP  Morgan  are  invested  in  the  JP  Morgan  Prime  Money  Market  Fund.    The  JP  Morgan  Prime  Money   Market  fund  is  composed  of  short  term  debt  securities  held  in  a  collective  fund  for  the  benefit  of  the  System  and  other   investors.    All  securities  purchased  in  the  Prime  Money  Market  must  either  be  payable  on  demand  or  have  a  maturity  not   34 Maine  Public  Employees  Re rement  System ♦ FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 continued exceeding  eighteen  months  from  the  time  of  purchase.    The  System’s  aggregate  custodial  credit  risk  exposure  for  cash  and   investments  at  June  30  is  summarized  in  the  table  below:   Exposed  to  Custodial  Credit  Risk   (uninsured  and  uncollateralized)   Not  Exposed  to  Custodial  Credit  Risk   Total  Fair  Value   2014 2013     $   393,417     13,210,628,187 $   368,923   11,599,265,642   $   13,211,021,604   $   11,599,634,565     Amounts  are  not  exposed  to  custodial  credit  risk  (a)  because  the  underlying  investments  are  registered  in  the  name  of  the   System  and  held  by  the  System’s  custodian  or  (b)  because  their  existence  is  not  evidenced  by  securities  that  exist  in  physical   or  book  entry  form.     These  amounts  are  disclosed  in  the  financial  statements  at  June  30  as  follows:       $   31,272,767     13,179,748,837 $   31,108,267   11,568,526,298 Total  Fair  Value     $   13,211,021,604   $   11,599,634,565   Credit  risk  is  the  risk  an  issuer  or  other  counterparty  to  an  investment  will  not  fulfill  its  obligations  to  the  System.    The   following  table  summarizes  the  System’s  aggregate  fixed  income  portfolio  credit  ratings  for  the  fiscal  years  ended  June  30,   2014: 2013   $   2,281,107,617       56,500,000       123,408,101       304,785,141       278,191,144       23,000,000       –           597,618 $   2,194,191,599   –         113,393,287   324,870,050   263,312,721   5,915,592   287,800   3,644,156     $  3,067,589,621(1)   $   2,905,615,205(2)                                                                                Total  credit  risk  debt       (2)       2014                                                                                  AAA                                                                                    AA+                                                                                    AA                                                                                    A                                                                                    BBB                                                                                    BB+                                                                                    BB   Not rated (1)   2013 Cash  and  Cash  Equivalents   Investments Quality Rating   2014   Includes  direct  investments  in  debt  securities  held  by  the  System  as  well  as  debt  securities  underlying     investments  in  common  collective  trusts  and  mutual  funds.    In  2014,  the  amount  included  from  common     collective  trusts  is  $2,988,089,621;;  the  amount  included  from  mutual  funds  is  $79,500,000.   Includes  direct  investments  in  debt  securities  held  by  the  System  as  well  as  debt  securities  underlying     investments  in  common  collective  trusts  and  mutual  funds.    In  2013,  the  amount  included  from  common     collective  trusts  is  $2,878,004,923;;  the  amount  included  from  mutual  funds  is  $24,253,937.   Individual  investments  that  constitute  5%  or  more  of  total  investments  are  as  follows:                                        Pooled  fixed  income  funds:                                                                  BlackRock  0-­5  Year  TIPS                                                                    BlackRock  MSCI  ACWI  Ex  US       $   1,115,126,128   3,316,107,683   Maine  Public  Employees  Re rement  System 35 ♦ FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 continued     Concentration  of  credit  risk  is  the  risk  of  loss  that  may  be  attributed  to  the  magnitude  of  investment  in  a  single  issue.    The   System’s  investment  policy  places  no  limit  on  the  amount  the  System  may  invest  in  any  one  issuer.    The  impact  of  credit   risk  on  the  System’s  portfolio  has  been  mitigated  since  active  management  has  been  eliminated.    The  resulting  credit  risk  is   consistent  with  the  Barclays  Capital  Aggregate  Index.     Interest  rate  risk  is  the  risk  that  changes  in  interest  rates  will  adversely  affect  the  fair  value  of  an  investment.    The  System  has   no  formal  investment  policy  related  to  managing  interest  rate  risk.    All  of  the  System’s  fixed  income  portfolios  are  managed   in  accordance  with  contractual  guidelines.    These  guidelines  specify  a  level  of  tracking  error.    The  investment  manager   has  the  responsibility  of  determining  the  amount  of  interest  rate  risk  that  is  compatible  with  the  specified  tracking  error.    In   addition,  contractual  guidelines  generally  specify  a  range  of  effective  duration  for  the  portfolio.    Duration  is  widely  used  in   the  management  of  fixed  income  portfolios  as  a  measure  of  a  debt  investment’s  exposure  to  fair  value  changes  arising  from   changing  interest  rates.    The  System’s  interest  rate  risk  is  closely  aligned  with  the  Barclays  Capital  Aggregate  Index.    The   following  table  details  the  System’s  interest  rate  risk  for  its  debt  investments  at  June  30,  2014,  using  the  segmented  time   distribution  method.     Investment Type Maturities  as  of  June  30,  2014   Less  than   1  to  6   6  to  10      1  Year     Years  Years       Fair   Value 10+ Years   Common/   Collective Trusts (1)   Mutual  Funds  (1)   $   2,988,089,621     79,500,000 $   222,612,676     11,600,000 $   2,069,252,063     56,500,000 $   422,814,682     11,400,000 $   273,410,200   –       Total       $   3,067,589,621   $   234,212,676   $   2,125,752,063   $   434,214,682   $   273,410,200  Maturities  are  based  on  the  weighted  average  maturities  of  underlying  investments  in  the  common/collective  trusts     and  mutual  funds. (1)     Foreign  currency  risk  is  the  risk  that  changes  in  exchange  rates  will  adversely  impact  the  recorded  fair  value  of  an  investment.     The  System  does  not  have  a  formal  investment  policy  limiting  the  amount  of  foreign  currency  exposure  of  its  investments.     The  System’s  currency  exposures  reside  primarily  in  the  System’s  international  equity  investments.    The  System  may  or  may   not  hedge  a  portfolio’s  foreign  currency  exposure  with  currency  forward  contracts  depending  on  their  views  of  the  currency   relative  to  the  dollar.    All  of  the  System’s  portfolios  are  managed  in  accordance  with  contractual  guidelines.    These  guidelines   specify  a  level  of  tracking  error.    The  investment  manager  has  the  responsibility  of  determining  the  amount  of  foreign  currency   risk  that  is  compatible  with  the  specified  tracking  error.    Furthermore,  the  System  has  nearly  eliminated  all  direct  exposure  to   foreign  currency  by  using  index  funds  which  means  the  System  owns  units  of  dollar  denominated  commingled  funds  rather   than  conducting  transactions  directly  in  foreign  currency.    The  System  is  still  indirectly  exposed  to  all  the  foreign  currencies   within  the  index.    The  System’s  direct  exposure  to  foreign  currency  risk  in  U.S.  dollars  as  of  June  30,  2014  is  highlighted  in   the  table  below: Currency                                                                    Canadian  Dollar                                                                    Swiss  Franc     Euro Cash         Total       Equity Total   833    382,347     10,238   –           –           62,044,038   833   382,347   62,054,276  393,418   62,044,038   62,437,456   The  System  has  entered  into  contracts  to  invest  up  to  approximately  $2.9  billion  into  common  collective  trusts  and   partnerships  with  a  focus  on  private  equity,  infrastructure,  opportunistic  and  real  estate  investment  strategies.    As  of  June  30,   2014,  approximately  $1.4  billion  has  been  invested;;  the  remaining  commitment  is  approximately  $1.5  billion. 36 Maine  Public  Employees  Re rement  System ♦ FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 continued     For  the  year  ended  June  30,  2014,  the  annual  money-­weighted  rate  of  return  on  all  pension  plan  investments,  net  of  pension   plan  investment  expense,  was  16.7%    The  money-­weighted  rate  of  return  expresses  investment  performance,  net  of   investment  expense,  adjusted  for  the  changing  amounts  actually  invested,  based  on  monthly  calculations. 4. Derivative Securities     Derivative  financial  instruments  are  financial  contracts  whose  value  depends  on  the  value  of  one  or  more  underlying  assets,   reference  rates  or  financial  indices.    They  include  futures,  forwards,  options,  and  swap  contracts.    In  addition,  some  traditional   securities  can  have  derivative-­like  characteristics,  e.g.,  asset-­backed  securities,  including  collateralized  mortgage  obligations   (CMOs),  which  are  sensitive  to  changes  in  interest  rates  and  to  prepayments.     The  System  may  be  a  party,  both  directly  and  indirectly,  to  various  derivative  financial  investments  that  are  used  in  the  normal   course  of  investing  to  enhance  expected  returns  on  investments,  to  manage  the  risk  of  exposure  to  changes  in  value  of   investments  due  to  fluctuations  in  market  conditions,  and  to  gain  passive  exposure  to  markets.    In  addition  to  normal  market   risks  these  investments  may  involve,  to  varying  degrees,  elements  of  interest  rate  risk,  credit  risk,  leverage  risk,  counterparty   risk,  and  custodial  credit  risk.     Interest  rate  risk  is  the  risk  that  fixed  income  securities  and  derivatives  will  decline  in  value  because  of  changes  in  interest   rates.     Credit  risk  is  the  risk  that  an  issuer  or  guarantor  of  a  fixed  income  security  or  derivative  is  unable  or  unwilling  to  make  timely   principal  payments  and/or  interest  payments.     Leverage  risk  may  be  created  with  derivatives.    Financial  leverage  generally  involves  borrowing  and  then  reinvesting  the   proceeds  with  the  hope  of  earning  a  higher  rate  of  return  than  the  borrowing  costs.    With  derivative  instruments  economic   leverage  may  be  effectively  created  without  any  explicit  borrowing.    Leveraged  investments  may  be  more  volatile  than  if  an   investment  had  not  been  leveraged.    Leveraging  tends  to  exaggerate  the  effect  of  any  increase  or  decrease  in  the  value  of   an  underlying  investment.    In  a  leveraged  transaction  an  amount  more  than  the  initial  investment  may  be  lost.    The  System’s   investment  policy  requires  specific  Board  approval  of  any  investment  strategy  that  involves  the  use  of  direct  financial   leverage.     Counterparty  risk  is  the  risk  that  the  counterparty  to  a  derivative  transaction  is  unwilling  or  unable  to  deliver  on  their   obligations  to  the  System.     The  System  manages  interest  rate  risk,  leverage  risk,  and  counterparty  risk  on  a  manager  by  manager  basis  by  establishing   guidelines  with  each  manager.    The  manager  is  customarily  allowed  to  invest  within  these  predetermined  guidelines.     Custodial  credit  risk  is  the  risk  that  in  the  event  of  a  financial  institution  failure,  the  System’s  investments  may  not  be  returned   to  it.    Derivative  securities  are  exposed  to  custodial  credit  risk  if  the  securities  are  uninsured,  are  not  registered  in  the  name   of  the  System,  and  are  held  by  either  the  counterparty  or  the  counterparty’s  trust  department  or  agent  but  not  in  the  System’s   name.     The  System’s  investments  in  derivative  securities  only  have  nominal  exposure  to  custodial  credit  risk.    Credit  risk  is  managed,   in  the  case  of  exchange-­traded  derivatives,  by  the  execution  of  trades  through  a  clearinghouse  and,  in  the  case  of  over-­the-­ counter  transactions,  by  managers’  due  diligence  assessment  and  approval  of  counterparties.    Market  risk  arises  due  to   adverse  changes  in  market  price  or  to  interest  rate  or  foreign  exchange  rate  fluctuations  that  may  result  in  a  decrease  in  the   market  value  of  a  financial  investment  and/or  increase  its  funding  cost.    Market  risk  is  managed  by  imposing  strict  limits  as  to   the  types,  amounts  and  degree  of  risk  that  investment  managers  may  undertake.    These  limits  are  approved  by  the  Board  of   Trustees  and  are  monitored  by  the  Chief  Investment  Officer,  and  the  risk  positions  of  the  investment  managers  are  reviewed   on  a  periodic  basis  to  monitor  compliance  with  the  limits.     Foreign  currency  forward  contracts  may  be  used  to  hedge  against  the  currency  risk  in  the  System’s  foreign  equity  and  fixed   income  security  portfolios.    A  foreign  currency  forward  contract  is  an  agreement  to  buy  or  sell  a  specific  amount  of  a  foreign   currency  at  a  specified  delivery  or  maturity  date  for  an  agreed  upon  price.    The  contracts  are  valued  at  forward  exchange   rates,  and  the  changes  in  value  of  open  contracts  are  recognized  in  the  statement  of  changes  in  fiduciary  net  position.    The   unrealized  gain  or  loss  on  forward  currency  contracts  represents  the  difference  between  the  value  of  the  original  contracts   and  the  closing  value  of  such  contracts  and  is  included  in  the  statement  of  changes  in  fiduciary  net  position.   Maine  Public  Employees  Re rement  System 37 ♦ FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 continued     The  System’s  fixed  income  managers  may  invest  in  CMOs  and  Asset-­Backed  Securities  to  improve  the  yield  or  adjust  the   duration  of  the  fixed  income  portfolio.    As  of  June  30,  2014  and  2013,  the  System  held  no  CMO  and  Asset-­Backed  Securities.     The  System’s  managers  may  also  invest  in  swaps.    Interest  rate  swaps  are  used  to  adjust  interest  rate  and  yield  curve   exposures  and  substitute  for  physical  securities.    Long  swap  positions  increase  exposure  to  long  term  rates;;  short  positions   decrease  exposure.    Credit  default  swaps  are  used  to  manage  credit  exposure.    Purchased  credit  default  swaps  decrease   credit  exposure,  while  written  credit  default  swaps  increase  exposure.    Total  return  swaps  are  a  means  to  gain  exposure  to  an   index.     The  System  may  also  hold  investments  in  futures  and  options,  which  are  used  to  manage  various  risks  within  the  portfolio.    A   financial  futures  contract  is  an  agreement  between  two  parties  to  buy  or  sell  units  of  a  particular  index  or  a  certain  amount  of   a  security  at  a  set  price  on  a  future  date.    The  System  may  purchase  and  sell  financial  futures  contracts  to  hedge  against  the   effect  of  changes  in  the  values  of  securities  it  owns  or  expects  to  purchase.     Upon  entering  into  such  a  contract,  the  System  is  required  to  pledge  to  the  broker  an  amount  of  cash  or  securities  equal   to  a  certain  percentage  of  the  contract  amount  (initial  margin  deposit).    Pursuant  to  the  contract,  the  System  agrees  to   receive  from,  or  pay  to,  the  broker  an  amount  of  cash  equal  to  the  daily  fluctuation  in  value  of  the  contract.    Such  receipts   or  payments  are  known  as  “variation  margin”  and  are  recorded  by  the  custodial  bank  on  behalf  of  the  System  as  unrealized   gains  or  losses.    When  the  contract  is  closed,  the  custodial  bank  on  behalf  of  the  System  records  a  realized  gain  or  loss   equal  to  the  difference  between  the  value  of  the  contract  at  the  time  it  was  opened  and  the  value  at  the  time  it  was  closed.     The  potential  risk  to  the  System  is  that  the  change  in  value  of  futures  contracts  primarily  corresponds  to  the  value  of  the   underlying  instruments,  which  may  not  correspond  to  the  change  in  value  of  the  hedged  instruments.    In  addition,  there  is  a   risk  the  System  may  not  be  able  to  close  out  its  futures  positions  due  to  an  illiquid  secondary  market  or  the  potential  inability   of  a  counterparty  to  meet  the  terms  of  a  contract.     In  addition  to  the  derivative  financial  instruments  directly  held,  the  System  may  have  indirect  exposure  to  risk  through  its   ownership  interests  in  commingled  investment  funds,  which  use,  hold  or  write  derivative  financial  instruments.    There  also   may  be  indirect  exposure  in  the  securities  lending  programs  in  which  the  System  participates,  in  which  some  collateral   pools  may  include  derivatives  (note  5).    Where  derivatives  are  held  in  those  funds/pools,  risks  and  risk  management  are  as   described  above.     The  following  table  details  the  System’s  aggregate  derivative  investments  at  June  30.    All  changes  in  fair  value  are  reported  in   net  appreciation  (depreciation)  in  fair  value  of  plan  investments  in  2014  and  2013.       2014   Change   in  Fair  Value            Investment  derivatives:              Futures:            Equity  Index  Futures  Contracts           $   304,630   2013   Change   in  Fair  Value          Investment  derivatives:                Futures:              Equity  Index  Futures  Contracts   $   (1,664,470)   Fair  Value   at  June  30,  2014 Classification Amount Investments   $   95,310   Fair  Value   at  June  30,  2013 Classification Amount Investments   June  30,  2014 Notional Amount $   75,920,310 June  30,  2013 Notional Amount $   (209,320)   $   50,268,960 5. Securities Lending     The  System  has  entered  into  agreements  with  its  master  custodian  to  lend  to  broker-­dealers  and  other  entities  any  type   of  security  held  in  the  System’s  portfolio  and  held  with  the  master  custodian.    Securities  are  loaned  against  collateral  that   may  include  cash,  U.S.  government  securities  and  irrevocable  letters  of  credit.    U.S.  securities  are  loaned  against  collateral   generally  valued  at  102%  of  the  market  value  of  the  securities  plus  any  accrued  interest.    Non-­U.S.  securities  are  loaned   against  collateral  valued  at  105%  of  the  market  value  of  the  securities  plus  any  accrued  interest. 38 Maine  Public  Employees  Re rement  System ♦ FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 continued     Noncash  collateral  cannot  be  pledged  or  sold  unless  the  borrower  defaults.     All  securities  loans  can  be  terminated  on  demand  by  either  the  lender  or  the  borrower.    The  average  term  of  the  System’s   loans  was  approximately  110  days  and  68  days  as  of  June  30,  2014  and  2013,  respectively.     Cash  collateral  is  invested  in  a  short-­term  investment  account  which  had  an  interest  sensitivity  of  29  and  39  days  as  of   June  30,  2014  and  2013,  respectively.    Cash  collateral  may  also  be  invested  separately  in  “term  loans,”  in  which  case  the   investments  match  the  loan  term.    These  loans  can  be  terminated  on  demand  by  either  lender  or  borrower.     During  fiscal  years  2014  and  2013,  there  were  no  violations  of  legal  or  contractual  provisions,  and  no  borrower  or  lending   agent  default  losses  identified  to  the  System  by  the  securities  lending  agent.    Securities  lending  earnings  are  credited  to  the   System  on  approximately  the  fifteenth  day  of  the  following  month.     Custodial  credit  risk  is  the  risk  that  the  System’s  securities  are  not  returned  due  to  the  insolvency  of  a  borrower  and  the   master  custodian  has  failed  to  live  up  to  its  contractual  responsibilities  relating  to  the  lending  of  those  securities.    The  master   custodian’s  responsibilities  include  performing  appropriate  borrower  and  collateral  investment  credit  analyses,  demanding   adequate  types  and  levels  of  collateral,  and  complying  with  applicable  Department  of  Labor  and  Federal  Financial  Institutions   Examination  Council  regulations  concerning  securities  lending.    At  June  30,  2014  and  2013,  all  of  the  collateral  for  securities   lending  is  subject  to  custodial  credit  risk.     Because  of  the  program’s  collateralization  of  loans,  generally  at  102%  (or  more),  plus  accrued  interest  for  fixed  income   securities,  the  System  believes  that  there  is  no  credit  risk  as  defined  in  GASB  Statement  No.  28  and  GASB  Statement   No.  40. Some of the System’s assets are held in common/collective trusts and are subject to similar agreements arranged by those trusts.    The  income  from  those  arrangements  and  the  associated  collateral  are  not  included  in  the  securities  lending  amounts   reported.     Aggregate  securities  on  loan  by  asset  class: 2014                                    Domestic  equity   $   253,639,212   $   1,449,946,454                                Aggregate  securities  lending  collateral:                                Short-­term  investment  collateral  pool                                    Noncash  collateral  (debt  and  equity  securities,  at  fair  value)   $   253,859,313     6,364,766 $   1,481,518,780   2,719,633                              Total  collateral   $   260,224,079   $   1,484,238,413                              Collateral  ratio     2013   102.6%   102.4% 6. Defined  Benefit  Plan State Employee and Teacher Plan     The  State  Employee  and  Teacher  Plan  administered  by  MainePERS  is  a  multiple-­employer  cost  sharing  plan  with  a  special   funding  situation.    As  of  June  30,  2014  there  were  229  employers,  including  the  State  of  Maine,  participating  in  the  plan.    The   State  of  Maine  is  also  a  non-­employer  contributing  entity  in  that  the  State  pays  the  unfunded  actuarial  liability  on  behalf  of   teachers,  while  school  districts  contribute  the  normal  cost,  calculated  actuarially,  for  their  teacher  members.    Also  included  in   the  State  Employee  and  Teacher  Plan  are  judges,  legislators,  and  the  current  and  past  governors  of  the  State  of  Maine.   Maine  Public  Employees  Re rement  System 39 ♦ FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 continued     Plan  membership  counts  for  the  State  Employee  and  Teacher  Plan  at  June  30  are  as  follows: State Employee and Teacher Plan Membership                              Current  participants:                                  Vested  and  non-­vested                              Terminated  participants:                                  Vested                              Retirees  and  beneficiaries  receiving  benefits   2014 2013     39,910     42,051       7,571     32,611   6,921   31,844   80,092   80,816 Participating  Local  District  (PLD)  Consolidated  Plan     The  PLD  Consolidated  Plan  is  a  multiple-­employer  cost  sharing  plan.    Eligible  employers  (districts)  are  defined  in  Maine                                               statute.    As  of  June  30,  2014  there  were  286  employers  participating  in  the  plan.     Plan  membership  counts  for  the  PLD  Consolidated  Plan  at  June  30  are  as  follows: PLD  Consolidated  Plan  Membership                              Current  participants:                                  Vested  and  non-­vested                              Terminated  participants:                                  Vested                              Retirees  and  beneficiaries  receiving  benefits   2014 2013     10,848     11,112       2,071     8,333   2,017   8,122   21,252   21,251 PLD  Agent  Plan     The  PLD  Agent  Plan  is  an  agent  multiple-­employer  plan  for  financial  reporting  purposes.    This  plan  is  an  aggregation  of  single   employer  plans  that  were  open  when  the  PLD  Consolidated  Plan  began.    Under  the  legislation  that  created  the  consolidated   plan,  single  employers  could  either  join  the  consolidated  plan  whereby  the  single  employer  plan  would  be  closed,  or  they   could  opt  to  not  join  the  plan  and  continue  to  maintain  their  single  employer  plan  as  a  closed  plan  until  there  were  no  further   liabilities  for  pension,  at  which  time  the  single  employer  plan  would  be  closed.    As  of  June  30,  2014  there  were  13  employers   in  the  plan.     Plan  membership  counts  for  the  PLD  Agent  Plan  at  June  30  are  as  follows: PLD  Agent  Plan  Membership                                              Current  participants:                                                      Vested  and  non-­vested                                              Terminated  participants:                                              Vested                                              Retirees  and  beneficiaries  receiving  benefits   2014 24   2013       28       14     191   13   196   229   237 Benefits     Benefit  terms  are  established  in  Maine  statute;;  in  the  case  of  the  PLD  Consolidated  Plan,  an  advisory  group,  also  established   by  statute,  reviews  the  terms  of  the  plan  and  periodically  makes  recommendations  to  the  Legislature  to  amend  the  terms.     The  System’s  retirement  programs  provide  defined  retirement  benefits  based  on  members’  average  final  compensation   and  service  credit  earned  as  of  retirement.    Vesting  (i.e.,  eligibility  for  benefits  upon  reaching  qualification)  occurs  upon  the   40 Maine  Public  Employees  Re rement  System ♦ FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 continued earning  of  five  years  of  service  credit  (effective  October  1,  1999,  the  prior  ten  year  requirement  was  reduced  by  legislative   action  to  five  years  for  State  employees  and  teachers;;  separate  legislation  enacted  the  same  reduced  requirement  for  judges,   legislators,  and  employees  of  PLDs).    In  some  cases,  vesting  occurs  on  the  earning  of  one  year  of  service  credit  immediately   preceding  retirement  at  or  after  normal  retirement  age.    Normal  retirement  age  for  State  employees  and  teachers,  judges  and   legislative  members  is  age  60,  62  or  65.    The  normal  retirement  age  is  determined  by  whether  a  member  had  met  certain   creditable  service  requirements  on  specific  dates,  as  established  by  statute.    For  PLD  members,  normal  retirement  age  is  60.     The  monthly  benefit  of  members  who  retire  before  normal  retirement  age  by  virtue  of  having  at  least  25  years  of  service  credit   is  reduced  by  a  statutorily  prescribed  factor  for  each  year  of  age  that  a  member  is  below  her/his  normal  retirement  age  at   retirement.    The  System  also  provides  disability  and  death  benefits  which  are  established  by  statute  for  State  employee  and   teacher  members  and  by  contract  with  other  participating  employers  under  applicable  statutory  provisions.     Upon  termination  of  membership,  members’  accumulated  employee  contributions  are  refundable  with  interest,  credited  in   accordance  with  statute.    Withdrawal  of  accumulated  contributions  results  in  forfeiture  of  all  benefits  and  membership  rights.     The  annual  rate  of  interest  credited  to  members’  accounts  is  set  by  the  System’s  Board  of  Trustees  and  is  currently  5.0%. Funding  Policy     The  Maine  Constitution,  Maine  statutes  and  the  System’s  funding  policy  provide  for  periodic  employer  contributions  in   addition  to  the  normal  cost  contributions  for  the  State  Employee  and  Teacher  Program.    These  are  actuarially  determined   amounts  that,  based  on  certain  actuarial  assumptions  are  sufficient  to  fully  fund,  on  an  actuarial  basis,  the  State  Employee   and  Teacher  Retirement  Program  by  the  year  2028  (Unfunded  Actuarial  Accrued  Liability  (UAAL)  payments).    Level   percentage  of  payroll  employer  contribution  rates  are  determined  using  the  entry  age  normal  actuarial  funding  method.     The  System  also  uses  the  level  percentage  of  payroll  method  to  amortize  the  unfunded  liability  of  the  State  Employee  and   Teacher  Retirement  Program.    For  participating  employers  in  the  PLD  Agent  Plan,  the  level  percentage  of  payroll  method  is   also  used. Net  Pension  Liability  –  State  Employee  and  Teacher  Plan  Employers       The  components  of  the  net  pension  liability  of  the  State  of  Maine  and  participating  teacher  employers,  stated  in  millions  of   dollars  as  of  June  30,  2014,  was  as  follows:     Total  pension  liability  (TPL)   Plan  fiduciary  net  position       $   12,382.2   10,405.9   Net  pension  liability  (NPL)     $   1,976.3   Plan  fiduciary  net  position  as  a  percentage  of  the  total  pension  liability                                                      84.04% Net  Pension  Liability  –  PLD  Consolidated  Plan  Employers       The  components  of  the  net  pension  liability  of  the  PLD  Consolidated  Plan  participating  employers,  stated  in  millions  of  dollars   as  of  June  30,  2014,  was  as  follows:     Total  pension  liability  (TPL)   Plan  fiduciary  net  position       $   2,609.7   2,455.8   Net  pension  liability  (NPL)     $     Plan  fiduciary  net  position  as  a  percentage  of  the  total  pension  liability                                                        94.10% 153.9 Actuarial valuations of ongoing plans involve estimates of the values of reported amounts and assumptions about the probability  of  occurrence  of  events  far  into  the  future.    Assumptions  in  an  actuarial  valuation  typically  include  projections   concerning  future  employment,  mortality,  and  inflation.    Actuarially  determined  contributions  are  subject  to  continual  periodic   revision  as  actual  results  are  compared  to  past  expectations  and  new  estimates  are  made  concerning  the  future.    The   Schedules  of  Changes  in  Net  Pension  Liabilities  and  Related  Ratios,  presented  as  Required  Supplementary  Information   immediately  following  the  Notes  to  Financial  Statements,  present  multi-­year  trend  information  about  whether  the  fiduciary  net   position  of  the  plan  is  increasing  or  decreasing  over  time  relative  to  the  total  pension  liability  of  the  plan.   Maine  Public  Employees  Re rement  System 41 ♦ FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 continued Actuarial Methods and Assumptions     Projections  of  benefits  for  financial  reporting  purposes  are  based  on  the  provisions  of  the  plan  in  effect  at  the  time  of  each   valuation  and  the  historical  pattern  of  sharing  of  costs  between  the  employer  and  plan  members.    Actuarial  methods  and   assumptions  include  techniques  that  are  designed  to  reduce  short-­term  volatility  in  actuarial  accrued  liabilities  and  the   actuarial  value  of  assets,  consistent  with  the  long-­term  perspective  of  the  funding  methodologies.     The  actuarial  method  employed  sets  the  actuarial  value  equal  to  the  expected  value  plus  one-­third  of  the  difference  between   the  actual  market  value  of  assets  and  the  expected  value  of  assets.    The  expected  value  of  assets  takes  the  prior  year’s   actuarial  value  of  assets  and  adjusts  it  for  contributions,  benefit  payments,  and  expected  interest  earnings  at  the  assumed   rate  for  each  plan.     Costs  are  developed  using  the  entry  age  normal  cost  method  (based  on  a  level  percentage  of  covered  payroll).     The  net  pension  liability  of  the  State  Employee  and  Teacher  Program  is  amortized  on  a  level  percentage  of  payroll  on   a  closed  basis.    The  remaining  amortization  period  as  of  June  30,  2014  was  14.7  years.    The  net  pension  liability  of  the   Judicial  and  Legislative  Plans  is  amortized  on  an  open  basis  over  a  period  of  ten  years.    The  net  pension  liability  of  the  PLD   Consolidated  Plan  is  amortized  on  an  open  basis  over  a  period  of  fifteen  years.     The  total  pension  liability  was  determined  by  an  actuarial  valuation  as  of  June  30,  2014,  using  the  following  actuarial   assumptions,  applied  to  all  periods  included  in  the  measurement  period.    These  same  assumptions  were  used  in  the  actuarial   valuation  as  of  June  30,  2013,  except  as  noted. Investment Rate of Return – State Employee and Teacher Plan  -­  7.125%  per  annum,  compounded  annually;;   7.25%  was  used  in  the  valuation  for  the  year  ended  June  30,  2013.   Investment Rate of Return – PLD Plans  -­  7.25%  per  annum,  compounded  annually. Inflation  Rate  –  3.5%     Salary  Increases,  Merit  and  Inflation – State employees,  3.50%  to  10.5%  per  year;;  Teachers,  3.50%  to  13.5%  per     year;;  Judicial  plan,  3.5%  per  year;;  Legislative  plan,  3.5%  per  year;;  Consolidated  plan  for  PLDs,  3.5%  to  9.5%  per     year.         Mortality Rates  –  For  active  State  employee  members  and  non-­disabled  retirees  of  the  State  employees,  participating     local  districts,  legislator  and  judicial  plans,  the  RP2000  Tables  projected  forward  to  2015  using  Scale  AA  are  used;;     for  active  members  and  non-­disabled  retirees  of  the  teachers  plan,  the  ages  are  set  back  two  years;;  for  all  recipients     of  disability  benefits,  the  Revenue  Ruling  96-­7  Disabled  Mortality  Table  for  Males  and  Females  is  used.   Cost  of  Living  Benefit  Increases  –  2.55%  per  annum  for  the  State  Employee  and  Teacher  Plan;;  for  the  PLD  Plans,     3.12%  per  annum  is  used.     The  actuarial  assumptions  used  in  the  June  30,  2014  and  June  30,  2013  valuations  were  based  on  the  results  of  an  actuarial   experience  study  for  the  period  of  July  1,  2005  to  June  30,  2010.     The  long-­term  expected  rate  of  return  on  pension  plan  investments  was  determined  using  a  building-­block  method  in  which   best-­estimate  ranges  of  expected  future  real  rates  of  return  (expected  returns,  net  of  pension  plan  investment  expense  and   inflation)  are  developed  for  each  major  class  of  assets.    These  ranges  are  combined  to  produce  the  long-­term  expected   rate  of  return  by  weighting  the  expected  future  real  rates  of  return  by  the  target  asset  allocation  percentage  and  by  adding   42 Maine  Public  Employees  Re rement  System ♦ FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 continued expected  inflation.    Best  estimates  of  arithmetic  real  rates  of  return  for  each  major  asset  class  included  in  the  pension  plan’s   target  asset  allocation  as  of  June  30,  2014  are  summarized  in  the  following  table:         Asset  Class Long-­Term  Expected Real Rate of Return   US  equities                                                                                                            5.2% Non-­US  equities   5.5 Private  equity   7.6 Real assets  Real  estate   3.7  Infrastructure   4.0  Hard  assets   4.8 Fixed  income   0.0 Discount Rate     The  discount  rate  used  to  measure  the  total  pension  liability  was  7.125%  for  the  State  Employee  and  Teacher  Plan,   including  the  Legislative  and  Judicial  Plans  and  7.25%  for  the  PLD  Plans.    The  projection  of  cash  flows  used  to  determine   the  discount  rate  assumed  that  plan  member  contributions  will  be  made  at  the  current  contribution  rate  and  that  employer   and  non-­employer  entity  contributions  will  be  made  at  contractually  required  rates,  actuarially  determined.    Based  on  these   assumptions,  the  pension  plan’s  fiduciary  net  position  was  projected  to  be  available  to  make  all  projected  future  benefit   payments  to  current  plan  members.    Therefore,  the  long-­term  expected  rate  of  return  on  pension  plan  investments  was   applied  to  all  periods  of  projected  benefit  payments  to  determine  the  total  pension  liability. Sensitivity of the net pension liability to changes in the discount rate     The  following  presents  the  net  pension  liability  for  the  State  Employee  and  Teacher  Plan  calculated  using  the  discount  rate  of   7.125%  as  well  as  what  the  net  pension  liability  would  be  if  it  were  calculated  using  a  discount  rate  of  one  percentage  point   lower  (6.125%)  or  one  percentage  point  higher  (8.125%)  than  the  current  rate:                          Net  Pension  Liability:                      State  Employee  and  Teacher  Plan     1%   Decrease (6.125%)     $   3,462,633,631   Current   Rate (7.125%)   $   1,976,298,759   1% Increase (8.125%) $   727,616,650   The  following  presents  the  net  pension  liability  for  the  PLD  Consolidated  Plan  calculated  using  the  discount  rate  of  7.25%   as  well  as  what  the  net  pension  liability  would  be  if  it  were  calculated  using  a  discount  rate  of  one  percentage  point  lower   (6.25%)  or  one  percentage  point  higher  (8.25%)  than  the  current  rate:                        Net  Pension  Liability:                      PLD  Consolidated  Plan   1%   Decrease (6.25%)     $   480,063,871   Current   Rate (7.25%)   1% Increase (8.25%) $   153,881,174   $   (118,767,041) Contributions     Retirement  benefits  are  funded  by  contributions  from  members  and  employers  and  by  earnings  from  investments.    Disability   and  death  benefits  are  funded  by  employer  normal  cost  contributions  and  by  investment  earnings.    Member  and  employer   normal  cost  contributions  are  each  a  percentage  of  applicable  member  compensation.    Member  contribution  rates  are  defined   by  law  or  Board  rule  and  depend  on  the  terms  of  the  plan  under  which  a  member  is  covered.    Employers’  contributions  are   determined  by  actuarial  valuations.   Maine  Public  Employees  Re rement  System 43 ♦ FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 continued     Included  in  the  State  and  Local  Agency  Contributions  reported  in  the  statement  of  changes  in  fiduciary  net  position  are   contributions  received  from  the  State  of  Maine  on  behalf  of  state  employees,  judges,  and  teachers  in  the  total  amount  of   $252.8  million  and  $236  million  for  the  years  ended  June  30,  2014  and  2013,  respectively.    There  were  no  contributions  due   from  the  State  of  Maine  on  behalf  of  legislators  in  2014  or  2013.    Also  included  are  contributions  from  the  State  of  Maine  to   fund  a  one-­time,  non-­cumulative  COLA  payment  for  eligible  state  employees,  judges,  legislators,  and  teachers.    The  total   amount  of  this  contribution  was  $7  million  and  $12.1  million  for  the  years  ended  June  30,  2014  and  2013,  respectively.     Retirement  contribution  rates  for  all  employee  members  are  set  by  law.    Employer  normal  cost  retirement  contribution  rates   as  applied  to  State  employee  members’  and  teacher  members’  compensation  are  the  actuarially  determined  rates.    The   UAAL  rate  as  applied  to  State  employee  members’  compensation  is  first  established  through  the  annual  valuation  process  as   an  amount  that  will  meet  the  required  unfunded  actuarial  accrued  liability  payment  amount;;  it  is  then  adjusted  in  the  State’s   budget  process  to  take  into  account  differences  in  salary  growth  projections  of  the  State  Budget  Office.    This  adjusted  rate,   expressed  as  a  percentage  of  payroll,  is  the  actual  rate  paid  by  the  State  as  payment  of  the  required  UAAL  payment  amount   for  State  employees.    For  teachers,  the  actuarially  determined  UAAL  amount  is  paid  in  twelve  equal  monthly  installments.     PLD  employer  contribution  rates  are  the  actuarially  determined  rates.    The  rates  in  effect  in  2014  and  2013  are  as  follows:     Contribution  Rates(1)  (effective  July  1  through  June  30  of  each  fiscal  year) 2014 2013   State: Employees(2)   Employer(2)   Teachers:   Employees     Employer     Non-­employer  entity     Participating  local  districts: Employees(2)   Employers(2)                  7.65  –  8.65%                                  7.65  –  8.65% 13.25  –  40.43% 11.98  –  39.36%      7.65%            2.65%        13.03%                         7.65% 0.00% 13.85% 3.0  –  8.0%                                             3.0  –  8.0% 3.4  –  12.8  %     2.8  –    12.2% Employer  Contribution  Rates  include  normal  cost  and  UAAL  required  payment,  expressed  as  a  percentage  of       payroll. (1)   Employer  and  Employee  retirement  contribution  rates  vary  depending  on  specific  terms  of  plan  benefits  for           certain  classes  of  employees  or,  in  the  case  of  PLDs,  on  benefit  plan  options  selected  by  a  particular  PLD.             The  contributions  of  withdrawn  entities  that  do  not  have  active  employees  but  continue  to  have  other  liabilities            are  set  in  dollar  amounts,  not  as  rates. (2)   7. Group Life Insurance Plan Plan Description     Group  Life  Insurance  Plan  coverage  is  available  to  eligible  participants  and  includes  Basic  insurance  which  consists  of   life  insurance  and  accidental  death  and  dismemberment  insurance  in  the  amount  equal  to  the  participant’s  annual  base   compensation  rounded  up  to  the  next  $1,000.    Additional  Supplemental  insurance  coverage  is  available  to  those  participants   who  elect  Basic  coverage.    Participants  may  also  elect  to  insure  the  life  of  a  dependent  not  otherwise  insured  under  the  Basic   and  Supplemental  insurance  provisions  of  the  plan.     The  Group  Life  Insurance  Plan  provides  Basic  group  life  insurance  benefits,  during  retirement,  to  retirees  who  participated   in  the  group  life  insurance  plan  prior  to  retirement  for  a  minimum  of  10  years  (the  10-­year  participation  requirement  does  not   apply  to  recipients  of  disability  retirement  benefits).    The  level  of  coverage  in  retirement  is  initially  set  to  an  amount  equal  to   the  retiree’s  average  final  compensation.    The  initial  amount  of  Basic  life  is  then  subsequently  reduced  at  the  rate  of  15%   per  year  to  the  greater  of  40%  of  the  initial  amount  or  $2,500.    Eligible  employment  classes  include  retirees  who  were  State   44 Maine  Public  Employees  Re rement  System ♦ FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 continued employees,  Teachers,  and  members  of  the  Judiciary  and  the  Legislature.    Group  Life  Insurance  benefits  are  also  provided  to   the  retired  employees  of  PLDs  in  the  retirement  program  and  those  that  elect  to  participate  only  in  the  Group  Life  Insurance   Plan.    At  June  30,  2014,  the  employees  of  the  State  of  Maine,  the  Judiciary,  the  Legislature,  as  well  as  228  school  districts,   and  163  PLDs  were  participating  in  the  Group  Life  Insurance  Plan. Funding  Policy     Premium  rates  are  those  determined  by  the  System’s  Board  of  Trustees  to  be  actuarially  sufficient  to  pay  anticipated  claims.     For  state  employee,  legislative  and  judicial  employment  classes,  the  premiums  for  retiree  life  insurance  coverage  are   factored  into  the  premiums  paid  for  Basic  coverage  while  participants  are  active  members.    Premiums  for  basic  life  insurance   coverage  for  retired  teachers  are  paid  by  the  State  of  Maine  as  the  total  dollar  amount  of  each  year’s  annual  required   contribution.    Employers  of  retired  PLD  employees  are  required  to  remit  a  premium  of  $0.46  per  $1,000  of  coverage  per   month  during  the  post-­employment  retired  period. Annual  Required  Contribution       The  annual  required  contributions  and  contributions  made  for  all  employment  classes  are  as  follows:                              Year   Ended Annual Required   Contribution Annual   Contribution                          2014                            2013                            2012   $   9,018,298     8,955,065     10,900,000   $   7,950,385     7,138,693     7,005,992   Percentage of  Annual Cost  Contributed 88.2% 79.7 64.3 Funded  Status  and  Funding  Progress     The  funded  status  of  the  plan,  stated  in  millions  of  dollars,  as  of  June  30,  2014  was  as  follows:         Actuarial  accrued  liability  (AAL)   Actuarial value of plan assets $     186.7 92.1 Unfunded  actuarial  accrued  liability  (UAAL)   $   Funded  ratio  (actuarial  value  of  plan  assets/AAL)   Covered  payroll  (active  plan  members)   UAAL  as  a  percentage  of  covered  payroll     49.3% $  1,481.3   6.4% 94.6 Actuarial valuations of ongoing plans involve estimates of the values of reported amounts and assumptions about the probability  of  occurrence  of  events  far  into  the  future.    Assumptions  in  an  actuarial  valuation  typically  include  projections   concerning  future  employment,  mortality,  and  inflation.    Actuarially  determined  contribution  requirements  are  subject  to   continual  periodic  revision  as  actual  results  are  compared  to  past  expectations  and  new  estimates  are  made  concerning   the  future.    The  Schedules  of  Funding  Progress,  presented  as  Required  Supplementary  Information  immediately  following   the  Notes  to  Financial  Statements,  present  multi-­year  trend  information  about  whether  the  actuarial  value  of  plan  assets  is   increasing  or  decreasing  over  time  relative  to  the  actuarial  accrued  liabilities  for  benefits. Actuarial Methods and Assumptions     Projections  of  benefits  for  financial  reporting  purposes  are  based  on  the  provisions  of  the  plan  in  effect  at  the  time  of  each   valuation  and  the  historical  pattern  of  sharing  of  premium  costs  between  the  employer  and  plan  members.    Actuarial  methods   and  assumptions  include  techniques  that  are  designed  to  reduce  short-­term  volatility  in  actuarial  accrued  liabilities  and  the   actuarial  value  of  assets,  consistent  with  the  long-­term  perspective  of  the  funding  methodologies.   Maine  Public  Employees  Re rement  System 45 ♦ FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 continued     Costs  are  developed  using  the  individual  entry  age  normal  cost  method.     Significant  actuarial  assumptions  employed  by  the  actuary  for  funding  purposes  as  of  June  30,  2014  and  June  30,  2013  are   as  follows: Investment Rate of Return – State Employee and Teacher Plan  –  7.125%  per  annum,  compounded  annually;;  7.25%   was  used  in  the  valuation  for  the  year  ended  June  30,  2013. Investment Rate of Return – PLD Plans –  7.25%  per  annum,  compounded  annually. Salary  Increases,  Merit  and  Inflation  –  State  employees,  3.5%  to  10.5%  per  year;;  Teachers,  3.5%  to  13.5%  per  year;;   Consolidated  Plan  for  PLDs,  3.5%  to  9.5%  per  year;;  Legislative  and  Judicial,  3.5%  per  year. Mortality Rates  –  For  active  State  employee  members  and  non-­disabled  retirees  of  the  State  employees,  participating   local  districts,  legislator  and  judicial  plans,  the  RP2000  Tables  projected  forward  to  2015  using  Scale  AA  are  used;;  for   active  members  and  non-­disabled  retirees  of  the  teachers’  plan,  the  ages  are  set  back  two  years;;  for  all  recipients  of   disability  benefits,  the  RPA  1994  Tables  for  pre-­1995  disabilities  are  used.     The  unfunded  actuarial  accrued  liability  is  being  amortized  as  a  level  percentage  of  payroll  over  a  30-­year  period  on  a  closed   basis.         As  of  June  30,  2014,  there  were  23  years  (PLDs  over  16  years)  remaining  in  the  amortization  schedule. Premiums     The  basic  life  benefits  for  participants  are  funded  by  the  State,  school  districts,  participating  local  districts  and  individuals.     Participants  pay  additional  premiums  for  Supplemental  and  Dependent  insurance  based  upon  the  coverage  selected.     The  statutes  require  the  System’s  Board  of  Trustees  to  establish  on  a  regular  basis  the  premium  rates  for  participants  in   the  Group  Life  Insurance  Plan.    The  premium  rates  are  determined  to  be  actuarially  sufficient  to  pay  anticipated  claims  and   cover  administrative  costs.    The  State  remits  premiums  at  a  single  rate  that  supports  basic  coverage  for  active  and  retired   state  employees  (including  Judicial  and  Legislative  employees).    This  rate  is  $.63  per  month  for  every  $1,000  of  coverage.     The  State  remits  premiums  for  retired  teachers  at  a  rate  of  $.33  per  month  for  every  $1,000  of  coverage.    As  per  individual   collective  bargaining  agreements  between  employers  and  employees,  individual  school  districts  or  teachers  themselves   pay  premiums  at  the  rate  of  $.11  per  month  for  every  $1,000  of  coverage  while  active,  and  employees  of  participating  local   districts  or  the  district  itself  pay  premiums  of  $.46  per  month  for  every  $1,000  in  coverage  for  employees  while  active  and   retired.    Employees’  premiums  are  usually  deducted  from  employees’  compensation  and  remitted  to  the  System.     Included  in  the  State  and  Local  Agencies  Premiums  in  the  statement  of  changes  in  fiduciary  net  position  are  group  life   insurance  premiums  received  from  the  State  of  Maine  on  behalf  of  active  and  retired  state  employees,  retired  teachers,   judges,  and  legislators  in  the  total  amount  of  $7.6  and  $6.9  million,  respectively,  for  the  years  ended  June  30,  2014  and  2013. Benefits     Upon  service  retirement,  only  basic  life  insurance  in  an  amount  equal  to  the  retiree’s  average  final  compensation  will  continue   at no cost to the participant as long as the retiree participated in the group life insurance plan prior to retirement for a minimum  of  10  years.     If  a  participant  becomes  eligible  for  disability  retirement,  the  amount  of  Basic  insurance  in  force  at  the  time  of  such  retirement   will  be  continued  until  normal  retirement  age,  after  which  the  amount  will  be  reduced  at  the  same  rate  as  for  a  service  retiree.     The  10-­year  participation  requirement  does  not  apply  to  recipients  of  disability  retirement  benefits.     Under  the  Accidental  Death  and  Dismemberment  provisions  of  the  plan,  no  legal  action  can  be  brought  to  recover  under   any  benefit  after  3  years  from  the  deadline  for  filing  claims.    The  deadline  for  filing  claims  under  the  Accidental  Death  and   Dismemberment  provisions  of  the  plan  is  90  days  after  the  date  of  the  loss  giving  rise  to  the  claim. 46 Maine  Public  Employees  Re rement  System ♦ FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 continued     All  benefits  are  processed  and  paid  by  a  third-­party  administrator  (TPA).    The  fees  incurred  for  services  performed  by  the   TPA  totaled  $835,215  and  $701,421  for  the  years  ended  June  30,  2014  and  2013,  respectively,  and  are  listed  as  claims   processing  expenses  in  the  basic  financial  statements. 8. Defined  Contribution  Plans     The  Defined  Contribution  Plans  are  funded  by  participants  through  voluntary  deferrals  of  compensation  into  the  plan,  within   the  limits  of  plan  provisions,  and  by  employer  contributions  made  into  the  Plan  on  behalf  of  employees.    The  recognition  of   deferred  compensation,  employer  contributions,  and  earnings  on  the  accounts  are  not  recognized  by  Plan  participants  for   income  tax  purposes  until  actually  paid  to  the  participant  or  beneficiary. 9. MainePERS OPEB Trust The MainePERS OPEB Trust is an irrevocable trust established for the purpose of accumulating assets to provide funding for  retiree  health  benefits  and  life  insurance  in  retirement  for  qualified  individuals  who  are  employees  of  the  System  and  who   retire  from  the  Maine  Public  Employees  Retirement  System.    Contributions  are  made  to  the  Trust  on  an  annual  basis  in  an   amount  equal  to  the  actuarially  determined  contribution  amount. 10. Retiree Health Investment Trust Fund     The  Maine  State  Legislature  established  the  Retiree  Health  Insurance  Post  Employment  Investment  Trust  as  an  irrevocable   trust  for  the  sole  purpose  of  holding  and  investing  funds  appropriated  or  otherwise  provided  to  the  Fund  for  the  purpose  of   accumulating  assets  to  provide  funding  to  the  State’s  unfunded  liability  obligations  for  retiree  health  benefits.    The  Trustees   of  the  Maine  Public  Employees  Retirement  System  were  named  Trustees  of  the  Investment  Trust  Fund.    The  effective  date  of   the  establishment  of  the  Fund  was  July  1,  2007.    The  assets  in  the  Investment  Trust  Fund  are  unrelated  to  and  not  available   to  pay  benefits  for  any  plan  administered  by  the  System.    Additionally,  the  State  of  Maine  is  obligated  to  comply  with  reporting   requirements  under  GASB  Statement  No.  43,  Financial  Reporting  for  Postemployment  Benefit  Plans  Other  Than  Pension   Plans,  and  GASB  Statement  No.  45,  Accounting  and  Financial  Reporting  by  Employers  for  Postemployment  Benefits  Other   Than  Pensions. 11. Statutory and Constitutional Requirements     An  amendment  to  the  Maine  constitution  approved  in  November  1995  requires  the  State  to  fund  the  unfunded  actuarial   liabilities  of  the  State  Employee  and  Teacher  Retirement  Program  existing  on  June  30,  1996,  over  a  period  not  to  exceed   31  years  beginning  July  1,  1997,  and  not  later  than  June  30,  2028.    The  amendment  prohibits  the  creation  of  new  unfunded   liabilities  in  that  Program  except  those  arising  from  experience  losses,  which  must  be  funded  over  a  period  of  not  more  than   ten  years.    In  addition,  the  amendment  requires  the  use  of  actuarially  sound  current  cost  accounting,  reinforcing  existing   statutory  requirements. 12. System’s  Employee  Benefits Defined  Benefit  Plan     The  System,  as  the  employer  of  its  staff,  is  a  participating  employer  (i.e.,  a  PLD)  in  the  Consolidated  Plan  for  Participating   Local  Districts  administered  by  the  System.    As  such,  System  employees  are  required  by  statute  to  contribute  6.5%  of  their   annual  covered  salaries.    The  System  is  required  to  contribute  at  the  contribution  rate  established  by  the  Board  of  Trustees   under  the  actuarial  valuation  of  the  Consolidated  Plan.    The  contribution  rate  was  6.5%  of  annual  covered  payroll  for  2014,   5.3%  of  annual  covered  payroll  for  2013,  and  4.4%  of  annual  covered  payroll  for  2012.    The  employer  contributions  on  behalf   of  its  employees,  equal  to  the  required  contribution,  were  $369,870,  $275,355  and  $248,525  for  2014,  2013  and  2012,   respectively.    The  actuarial  assumptions  used  in  the  Consolidated  Plan  valuation  are  described  in  the  actuarial  assumptions   and  methods  footnote  to  the  required  supplementary  information. Group  Life  Insurance  Plan     The  System,  as  the  employer  of  its  staff,  is  a  participating  employer  (i.e.,  a  PLD)  in  the  Group  Life  Insurance  plan   administered  by  the  System.    The  System  pays  the  premiums  for  Basic  only  coverage  for  all  active  employees.    Employees     Maine  Public  Employees  Re rement  System 47 ♦ FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 continued who  elect  additional  coverage  under  the  Supplemental  and/or  Dependent  provisions  have  the  additional  required  premiums   withheld  from  their  pay  in  order  to  fund  such  coverage.     The  System  was  required  to  pay  premiums  for  Basic  coverage  at  the  rate  of  $0.46  per  $1,000  of  coverage  for  the  2014,   2013,  and  2012  fiscal  years.    The  total  premiums  the  System  paid  on  behalf  of  its  active  employees,  equal  to  the  required   contributions,  were  $29,530,  $27,491,  and  $25,975  for  2014,  2013,  and  2012,  respectively. Other  Post-­Employment  Benefits     The  System  provides  Other  Post-­Employment  Benefits  to  its  retirees  in  the  form  of  health  insurance  coverage  and  group  life   insurance  coverage.    The  System’s  annual  other  post-­employment  benefits  (OPEB)  costs  are  actuarially  determined  based   on  the  parameters  of  the  Governmental  Accounting  Standards  Board  Statement  No.  45.     The  total  contributions  for  retiree  health  insurance  coverage,  equal  to  the  required  contributions,  were  $0,  $109,377,  and   $109,482,  for  2014,  2013,  and  2012,  respectively.    The  other  post-­employment  benefits  liability  for  this  plan  is  immaterial   and  the  Plan’s  assets  exceed  its  actuarial  liability  at  June  30,  2014  and  2013.    The  actuarial  liability  is  calculated  using   assumptions  similar  to  those  used  for  the  System’s  defined  benefit  plan.     The  total  contributions  for  retiree  group  life  insurance  coverage,  equal  to  the  required  contributions,  were  $6,108,  $6,105,  and   $6,888,  for  2014,  2013,  and  2012,  respectively.    The  other  post-­employment  benefits  liability  for  this  plan  is  immaterial. 13. Litigation     The  System’s  Board  of  Trustees  were  named  as  defendants  in  a  lawsuit  filed  in  the  United  States  District  Court  for  the  District   of  Maine  in  February  2012  by  groups  representing  retired  State  and  teacher  employees.    The  Plaintiffs  allege  that  certain   legislation  enacted  by  the  Maine  State  Legislature  which  changed  existing  law  by  reducing  cost  of  living  adjustments  for   retirees  is  unconstitutional.    The  United  States  District  Court  dismissed  the  claim  in  June  2013.    The  Plaintiffs  filed  a  timely   appeal  of  the  dismissal  to  the  First  Circuit  Court  of  Appeals  and  oral  argument  was  heard  on  March  4,  2014.    On  June  27,   2014  the  First  Circuit  issued  its  opinion  affirming  the  District  Court’s  grant  of  summary  judgment  in  favor  of  MainePERS.    The   Plaintiffs’  sole  remedy  was  to  file  a  petition  for  a  writ  of  certiorari  to  the  United  States  Supreme  Court,  essentially  appealing   the  decision  of  the  First  Circuit.    The  deadline  for  filing  the  writ  was  September  26,  2014  and  no  petition  was  filed.    Therefore,   the  grant  of  summary  judgment  in  favor  of  MainePERS  stands.    Consequently,  the  System  will  experience  no  liability  as  a   consequence  of  this  litigation. 14. Risk Management     The  system  carries  insurance  to  cover  its  exposure  to  various  risks  of  loss.    There  were  no  uninsured  losses  during  the  last   three  years. 48 Maine  Public  Employees  Re rement  System ♦ FINANCIAL SECTION REQUIRED SUPPLEMENTAL SCHEDULES SCHEDULE OF HISTORICAL PENSION INFORMATION STATE EMPLOYEE AND TEACHER PLAN June 30, 2014 (UNAUDITED) SCHEDULE  OF  CHANGES  IN  THE  PLAN’S  NET  PENSION  LIABILITY  AND  RELATED  RATIOS Last  Ten  Fiscal  Years  * Total pension liability Service  cost   Interest     Changes  of  benefit  terms   Differences  between  expected  and  actual  experience   Changes  of  assumptions   Benefit  payments,  including  refunds  of  member  contributions                   Net  change  in  total  pension  liability   Total  pension  liability,  beginning         492,327,337   11,889,897,281 Total  pension  liability,  ending  (a)     $   12,382,224,618 Plan  fiduciary  net  position Contributions  –  member   Contributions  –  employer   Contributions  –  non-­employer  contributing  entities   Net  investment  income   Benefit  payments,  including  refunds  of  member  contributions   Administrative  expenses   Other             $                   Net  change  in  fiduciary  net  position   Plan  fiduciary  net  position,  beginning           Plan  fiduciary  net  position,  ending  (b)     $   10,405,949,403 Plan’s  net  pension  liability,  ending  (a)-­(b)     $   Plan  fiduciary  net  pension  as  a  percentage  of  the  total  pension  liability                                                          84.04% Covered  employee  payroll     Plan  net  pension  liability  as  a  percentage  of  covered-­employee  payroll                                                      117.21% $             $   188,306,945 846,513,834 –       (18,065,650) 168,162,506 (692,590,298) 121,700,845 163,856,225 142,303,104 1,527,470,684 (692,728,116) (8,296,396) –       1,254,306,346 9,151,643,057 1,976,275,215 1,686,134,478 See  notes  to  historical  pension  information. See  accompanying  independent  auditors’  report. *  Retroactive  information  is  not  required  to  be  presented.    This  information  will  be  presented  each  year  until  10  years  of  such      information  is  available.   Maine  Public  Employees  Re rement  System 49 50 June 30, 2014 (UNAUDITED) SCHEDULE OF HISTORICAL PENSION INFORMATION STATE EMPLOYEE AND TEACHER PLAN REQUIRED SUPPLEMENTAL SCHEDULES FINANCIAL SECTION Maine  Public  Employees  Re rement  System ♦ ♦ FINANCIAL SECTION REQUIRED SUPPLEMENTAL SCHEDULES SCHEDULE OF HISTORICAL PENSION INFORMATION PLD CONSOLIDATED PLAN June 30, 2014 (UNAUDITED) SCHEDULE  OF  CHANGES  IN  THE  PLAN’S  NET  PENSION  LIABILITY  AND  RELATED  RATIOS Last  Ten  Fiscal  Years  * Total pension liability Service  cost   Interest     Changes  of  benefit  terms   Differences  between  expected  and  actual  experience   Changes  of  assumptions   Benefit  payments,  including  refunds  of  member  contributions                   Net  change  in  total  pension  liability   Total  pension  liability,  beginning         143,723,101   2,465,934,744 Total  pension  liability,  ending  (a)     $   2,609,657,845 Plan  fiduciary  net  position Contributions  –  member   Contributions  –  employer   Net  investment  income   Benefit  payments,  including  refunds  of  member  contributions   Administrative expenses         $               Net  change  in  fiduciary  net  position   Plan  fiduciary  net  position,  beginning         298,101,185   2,157,675,486 Plan  fiduciary  net  position,  ending  (b)     $   2,455,776,671 Plan’s  net  pension  liability,  ending  (a)-­(b)     $   $             Plan  fiduciary  net  pension  as  a  percentage  of  the  total  pension  liability   Covered  employee  payroll   33,210,510 32,706,160 361,125,177 (127,161,358) (1,779,304) 153,881,174                                                94.10%   Plan  net  pension  liability  as  a  percentage  of  covered-­employee  payroll   72,651,025 178,293,576 –       19,939,857 –       (127,161,357) $   460,029,637                                                                33.45% See  notes  to  historical  pension  information. See  accompanying  independent  auditors’  report. *   Retroactive  information  is  not  required  to  be  presented.    This  information  will  be  presented  each  year  until  10  years  of   such  information  is  available.   Maine  Public  Employees  Re rement  System 51 52 SCHEDULE OF EMPLOYER CONTRIBUTIONS Last Ten Fiscal Years June 30, 2014 (UNAUDITED) SCHEDULE OF HISTORICAL PENSION INFORMATION PLD CONSOLIDATED PLAN REQUIRED SUPPLEMENTAL SCHEDULES FINANCIAL SECTION Maine  Public  Employees  Re rement  System ♦ ♦ FINANCIAL SECTION REQUIRED SUPPLEMENTAL SCHEDULES SCHEDULE OF HISTORICAL PENSION INFORMATION ALL DEFINED BENEFIT PLANS June 30, 2014 (UNAUDITED) SCHEDULE OF INVESTMENT RETURNS Last Ten Fiscal Years * Annual  money-­weighted  rate  of  return,  net  of  investment  expenses     16.66% See  notes  to  historical  pension  information. See  accompanying  independent  auditors’  report. *   Retroactive  information  is  not  required  to  be  presented.    This  information  will  be  presented  each  year  until  10  years  of  such   information  is  available.   Maine  Public  Employees  Re rement  System 53 ♦ FINANCIAL SECTION REQUIRED SUPPLEMENTAL SCHEDULE SCHEDULE OF HISTORICAL PENSION INFORMATION GROUP LIFE INSURANCE PLAN June 30, 2014 (UNAUDITED) SCHEDULE OF FUNDING PROGRESS Dollars in Millions           Actuarial     Valuation   Date June  30,  2014   June  30,  2013   June  30,  2012   June  30,  2011   June  30,  2010   June  30,  2009     (a)   Actuarial   Value  of   Assets             (b)   Actuarial   Accrued   Liability  (AAL)   Entry Age $   92.1     76.2     66.4     63.6     50.8   43.5     (b-­a)   Unfunded   AAL   (UAAL)   $  186.7    180.9    173.9    167.4   150.9  139.8   $   94.6    104.7    107.5    103.8   100.1     96.3                   (a/b)   Funded   Ratio   (c)   Annual   Covered   Payroll 49.3%   42.1   38.2   38.0   33.7   31.1   $   1,481.3     1,481.2     1,431.2     1,546.1     1,519.5     1,494.0   See  notes  to  historical  pension  information. See  accompanying  independent  auditors’  report. SCHEDULE OF EMPLOYERS’ CONTRIBUTIONS                 Year  Ended:   2014   2013   2012   2011   2010   2009               Annual Required   Contribution Annual   Contribution $   9,018,298     8,955,065     10,900,000     8,200,000     7,900,000     6,500,000   $   7,950,385     7,138,693     7,005,992     6,836,808     6,825,209     6,812,155   See  notes  to  historical  pension  information. See  accompanying  independent  auditors’  report. 54 Maine  Public  Employees  Re rement  System Percentage Contributed 88.2% 79.7 64.3 83.4 86.4 104.8 ((b-­a)/c) UAAL  as a  Percentage of  Covered Payroll             6.4% 7.1 7.5 6.7 6.6 6.4 ♦ FINANCIAL SECTION NOTES TO HISTORICAL PENSION INFORMATION June 30, 2014 (UNAUDITED) 1. Basis of Presentation     For  reporting  purposes,  the  historical  pension  information  includes  combined  amounts  for  all  participating  entities  in  the   State  Employee  and  Teacher  Plan,  including  state  employees,  teachers,  judicial  and  legislative  employees.    The  schedule  of   investment  returns  applies  to  the  State  Employee  and  Teacher  Plan  as  well  as  the  PLD  Consolidated  Plan  as  investments  of   these  plans  are  commingled. 2. Actuarial Methods and Assumptions – State, Teacher, Judicial, Legislative, and PLD Valuations     The  information  in  the  historical  pension  information  was  determined  as  part  of  the  actuarial  valuations  at  the  dates  indicated.     Additional  information  as  of  the  latest  actuarial  valuation  date,  June  30,  2014,  is  as  follows: Actuarial  Cost  Method     The  Entry  Age  Normal  actuarial  funding  method  is  used  to  determine  costs.    Under  this  funding  method,  the  total  employer   contribution  rate  consists  of  two  elements,  the  normal  cost  rate  and  the  unfunded  actuarial  liability  (UAL)  rate.     The  individual  entry  age  normal  method  is  used  to  determine  liabilities.    Under  the  individual  entry  age  normal  method,  a   normal  cost  rate  is  calculated  for  each  employee.    This  rate  is  determined  by  taking  the  value,  as  of  age  at  entry  into  the  plan,   of  the  member’s  projected  future  benefits,  and  dividing  it  by  the  value,  also  as  of  the  member’s  entry  age,  of  his  expected   future  salary.    The  normal  cost  for  each  employee  is  the  product  of  his  pay  and  his  normal  cost  rate.    The  normal  cost  for  the   group  is  the  sum  of  the  normal  costs  for  all  members.     Experience  gains  and  losses,  i.e.,  decreases  or  increases  in  liabilities  and/or  in  assets  when  actual  experience  differs  from   the  actuarial  assumptions,  affect  the  unfunded  actuarial  accrued  liability. Asset  Valuation  Method     The  actuarial  valuation  employs  a  technique  for  determining  the  actuarial  value  of  assets  which  dampens  the  swing  in  the   market  value.    The  specific  technique  adopted  in  this  valuation  recognizes  in  a  given  year  one-­third  of  the  investment  return   that  is  different  from  the  actuarial  assumption  for  investment  return. Amortization     The  net  pension  liability  of  the  State  Employee  and  Teacher  Retirement  Program  is  amortized  on  a  level  percentage  of   payroll  over  the  amortization  period  then  in  effect  under  statutory  and  constitutional  requirements  (note  11  to  the  Financial   Statements).    The  net  pension  liabilities  of  the  Judicial  Retirement  Program  and  the  Legislative  Retirement  Program  are   amortized  on  a  level  percentage  of  payroll  over  open  ten  year  periods.     The  Initial  Unpooled  Unfunded  Actuarial  Liabilities  (IUUALs)  of  PLDs  are  amortized  over  periods  established  for  each  PLD   separately.    There  were  no  additional,  or  excess,  contributions  in  fiscal  year  2014  to  payoff  individual  IUUALs.    The  total  net   pension  liability  of  the  PLD  Consolidated  Plan  is  amortized  on  an  open  basis  over  a  period  of  fifteen  years.     Significant  actuarial  assumptions  employed  by  the  actuary  for  funding  purposes  as  of  June  30,  2014  are  as  follows:     Investment  Return  –  For  the  State  Employee  and  Teacher  Plans,  7.125%  per  annum,  compounded  annually;;  for  the   PLD  Plans,  7.25%  per  annum,  compounded  annually.     Inflation  Rate  –  3.5%         Salary  Increases,  Merit  and  Inflation  –  State  employees,  3.50%  to  10.5%  per  year;;  Teachers,  3.50%  to  13.5%  per  year;;   Judicial  plan,  3.5%  per  year;;  Legislative  plan,  3.5%  per  year;;  Consolidated  plan  for  PLDs,  3.5%  to  9.5%  per  year.       Mortality  Rates  –  For  active  State  employee  members  and  non-­disabled  retirees  of  the  State  employees,  participating   local  districts,  legislator  and  judicial  plans,  the  RP2000  Tables  projected  forward  to  2015  using  Scale  AA  are  used;;  for     Maine  Public  Employees  Re rement  System 55 FINANCIAL SECTION ♦ NOTES TO HISTORICAL PENSION INFORMATION continued June 30, 2014 (UNAUDITED) active  members  and  non-­disabled  retirees  of  the  teachers’  plan,  the  ages  are  set  back  two  years;;  for  all  recipients  of   disability  benefits,  the  Revenue  Ruling  96-­7  Disabled  Mortality  Table  for  Males  and  Females  is  used.     Cost  of  Living  Benefit  Increases  –  2.55%  per  annum  for  State  employees,  teachers,  judges,  legislators;;  for  the   participating  local  districts,  3.12%  per  annum  is  used. 3. Actuarial Methods and Assumptions – Group Life Insurance Plan     Many  of  the  assumptions  used  to  determine  the  actuarial  liability  in  this  plan  are  the  same  as  for  the  pension  plan.     The  information  in  the  historical  group  life  information  was  determined  as  part  of  the  actuarial  valuations  at  the  dates   indicated.    Additional  information  as  of  the  latest  actuarial  valuation  date,  June  30,  2014,  is  as  follows: Actuarial  Cost  Method     The  individual  entry  age  normal  method  is  used  to  determine  liabilities.    Under  the  individual  entry  age  normal  method,  a   normal  cost  rate  is  calculated  for  each  employee.    This  rate  is  determined  by  taking  the  value,  as  of  age  at  entry  into  the  plan,   of  the  member’s  projected  future  benefits,  and  dividing  it  by  the  value,  also  as  of  the  member’s  entry  age,  of  his  expected   future  salary.    The  normal  cost  for  each  employee  is  the  product  of  his  pay  and  his  normal  cost  rate.    The  normal  cost  for  the   group  is  the  sum  of  the  normal  costs  for  all  members.     The  actuarial  accrued  liability  is  defined  as  the  present  value  of  future  benefits  less  the  present  value  of  future  normal  costs.     The unfunded actuarial accrued liability is the total of the actuarial liability for all members less the actuarial value of the System’s  assets.     Experience  gains  and  losses,  i.e.,  decreases  or  increases  in  liabilities  and/or  in  assets  when  actual  experience  differs  from   the  actuarial  assumptions,  affect  the  unfunded  actuarial  accrued  liability. Asset  Valuation  Method     Asset  amounts  are  taken  as  reported  to  the  actuaries  by  the  System  without  audit  or  change,  except  that  State  assets  are   allocated  to  State,  Judges  and  Legislators  based  on  total  actuarial  liability. Amortization     The  unfunded  actuarial  accrued  liability  is  being  amortized  as  a  level  percentage  of  pay  over  a  30-­year  period  on  a  closed   basis.    As  of  June  30,  2014,  there  were  23  years  (PLDs  over  16  years)  remaining  in  the  amortization  schedule.     Significant  actuarial  assumptions  employed  by  the  actuary  for  funding  purposes  as  of  June  30,  2014  are  as  follows: 56     Investment  Return  –  7.25%  per  annum,  compounded  annually     Salary  Increases  –  State  employees,  3.5%  to  10.5%  per  year;;  Teachers,  3.5%  to  13.5%  per  year;;  Consolidated  Plan  for   PLDs,  3.5%  to  9.5%  per  year;;  Legislative  and  Judicial,  3.5%  per  year.     Mortality  Rates  –  For  active  State  employee  members  and  non-­disabled  retirees  of  the  State  employees,  participating   local  districts,  legislator  and  judicial  plans,  the  RP2000  Tables  projected  forward  to  2015  using  Scale  AA  are  used;;  for   active  members  and  non-­disabled  retirees  of  the  teachers’  plan,  the  ages  are  set  back  two  years;;  for  all  recipients  of   disability  benefits,  the  RPA  1994  Tables  for  pre-­1995  disabilities  are  used.     Cost  of  Living  Benefit  Increases  –  N/A     Participation  Percent  for  Future  Retirees  –  100%  of  those  currently  enrolled     Conversion  Charges  –  Apply  to  the  cost  of  active  group  life  insurance  not  retiree  group  life  insurance     Form  of  Benefit  Payment  –  Lump  Sum Maine  Public  Employees  Re rement  System                               Infrastructure:   Alinda  Infrastructure     ArcLight  V     Brookfield  Infrastructure  II     Carlyle  Infrastructure     Cube  Infrastructure     First  Reserve  Energy  Infrastructure     GIP  II     Global  Infrastructure     KKR  Infrastructure     Meridiam   Other  investments:   Grantham,  Mayo,  Van  Oterloo  (GMO)     PIMCO     Windham  Capital   288,260   40,458   445,033   239,675     2,291,056     4,991     1,649,130     509,000     679,075     1,106,121     238,228     485,399     521,215     985,790     800,915     188,424     401,007   $             State   Employee   and  Teacher   Plan Consultants:   Cliffwater  Infrastructure     Cliffwater  –  Private  Equity     ORG  –  Real  Estate     Strategic  Investment  Solutions  –     General           531,955     1,159     382,907     118,183     157,673     256,827     55,314     112,704     121,020     228,888     185,962     43,750     93,109     66,930   $   9,394     103,331     55,650     PLD   Consolidated   Plan                             $       8,421   18   6,061   1,871   2,496   4,066   876   1,784   1,916   3,623   2,944   693   1,474   1,060   149   1,636   881     PLD  Pre-­   Consolidated   Plan                             $       –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –           Group  Life   Insurance   Plan SUPPLEMENTARY INFORMATION SCHEDULE OF INVESTMENT EXPENSES For the Year Ended June 30, 2014                             $       –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         Defined   Contri-­   bution   Plans                             $       –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –             MainePERS   OPEB Trust                             $       –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         Retiree Health Insurance Trust  2,831,432   6,168  2,038,098   629,054   839,244  1,367,014   294,418   599,887   644,151  1,218,301   989,821   232,867   495,590   356,250 $   50,001   550,000   296,206 Total ♦ FINANCIAL SECTION   Maine  Public  Employees  Re rement  System 57 58                                   Domestic  equity:   Blackrock  Extended  Equity     Blackrock  DJ  Total  Stock  Market   International  equity:   Blackrock  ACWIEX_US   Fixed  income:   Blackrock  Custom  Fixed  Income     Blackrock  US  Debt  Index  Fund  B   Private  equity:   ABRY  ASF  II     ABRY  ASF  III     ABRY  Partners  VII     ABRY  Senior  Equity  IV     Advent  GPE  VII     Affinity  Asia  Pacific  IV     Berkshire  VIII     Blackstone  Capital  Partners  VI     Carlyle  Asia  Partners  III     Carlyle  Asia  Partners  IV     Charterhouse  IX     Charterhouse  VIII         Maine  Public  Employees  Re rement  System                               311,889   40,458   136,190   100,011   394,608   879,072   241,312   246,181   74,949   834,228   66,150   74,574   236,411   –         749,114   $   –           1,343,929   State   Employee   and  Teacher   Plan                               $     72,417   9,394   31,622   23,221   91,623   204,110   56,030   57,160   17,402   193,697   15,359   17,315   54,892   –         173,935   –         312,044     PLD   Consolidated   Plan                               $     1,146   149   501   368   1,450   3,231   887   905   275   3,066   243   274   869   –         2,753   –         4,940     PLD  Pre-­   Consolidated   Plan                         –         –         –         –         –         –         –         –         –         –         –         –           –           11,608     6,705   $   4,144     –         Group   Life   Insurance   Plan SUPPLEMENTARY INFORMATION SCHEDULE OF INVESTMENT EXPENSES For the Year Ended June 30, 2014 (continued)                               $     –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         Defined   Contri-­   bution   Plans 785   517   –                                 –         –         –         –         –         –         –         –         –         –         –         –           –           1,416     $         MainePERS   OPEB Trust                         –         –         –         –         –         –         –         –         –         –         –         –           –           24,406     13,068   $   8,457     –         Retiree Health Insurance Trust 292,172 37,430 946,360   385,452   50,001   168,313   123,600   487,681   1,086,413   298,229   304,246   92,626   1,030,991   81,752   92,163       $   13,118   1,660,913 Total FINANCIAL SECTION ♦ Private  equity  (continued):   CVC  Capital  VI     Encap  Energy  IX     Encap  Energy  VIII     GTCR  X     Hellman  &  Friedman  PE     HIG  Bayside  III  Europe     HIG  Bayside  PE     HIG  Capital  Europe  II     HIG  Capital  V     HIG  Buyouts  II     Kelso  VIII     KKR  North  America     KKR  Special  Situations     Oaktree     Onex  Partners  III     Riverside  Capital  Appreciation  VI     Shoreview  Capital  III     Summit  GE  VIII     Summit  VC  III     TCV  VIII     Thomas  Bravo  XI     Water  Street  Healthcare  III     Wayzata  OPP  III                                                       $   472,772     364,118     124,657     363,052     356,747     485,491     445,105     300,598     181,368     (70,800)     36,362     237,307     537,734     208,280     78,056     1,485,496     38,965     223,433     152,393     217,220     31,198     356,155     333,645   State   Employee   and  Teacher   Plan $                                               109,772   84,544   28,944   84,296   82,832   112,725   103,348   69,795   42,111   (16,439)   8,443   55,100   124,855   48,360   18,124   344,914   9,047   51,878   35,384   50,436   7,244   82,695   77,468     PLD   Consolidated   Plan $                                               1,738   1,338   458   1,334   1,311   1,784   1,636   1,105   667   (260)   134   872   1,976   766   287   5,460   143   821   560   798   115   1,309   1,226     PLD  Pre-­   Consolidated   Plan $                                               –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         Group   Life   Insurance   Plan SUPPLEMENTARY INFORMATION SCHEDULE OF INVESTMENT EXPENSES For the Year Ended June 30, 2014 (continued) $                                               –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         Defined   Contri-­   bution   Plans $                                               –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –             MainePERS   OPEB Trust $                                               –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         –         Retiree Health Insurance Trust $   584,282   450,000   154,059   448,682   440,890   600,000   550,089   371,498   224,146   (87,499)   44,939   293,279   664,565   257,406   96,467   1,835,870   48,155   276,132   188,337   268,454   38,557   440,159   412,339 Total ♦ FINANCIAL SECTION   Maine  Public  Employees  Re rement  System 59 60                                   Real  estate:   Blackrock  US  Real  Estate     Securities  Fund  B     BREP  VII     H/2  Credit  Partners     Harrison  Street  Real  Estate     High  Street  IV     KKR  REPA  I     JP  Morgan     Mesa  West  Core     PMIT     Principal     Prudential     Smart  Markets     Walton  Street  RE  VII     Westbrook  IX   Other  investment  expenses   In-­house  investment  management   Total  investment  expenses         Maine  Public  Employees  Re rement  System 715,912   $   33,279,424     2,168,868   $   –           910,295     675,088     515,378     584,339     207,118     1,344,072     265,533     164,999     629,244     789,330     262,931     196,476     287,636   State   Employee   and  Teacher   Plan 503,584 166,224   –         211,359   156,747   119,664   135,676   48,090   312,077   61,653   38,311   146,103   183,273   61,049   45,619   66,786   $   7,727,068       $                               PLD   Consolidated   Plan 7,972 2,634   –         3,346   2,481   1,894   2,148   761   4,940   976   606   2,313   2,901   966   722   1,057   $   122,321       $                               PLD  Pre-­   Consolidated   Plan –         $   44,990     18,877   $   3,656     –           –           –           –           –           –           –           –           –           –           –           –           –         Group   Life   Insurance   Plan SUPPLEMENTARY INFORMATION SCHEDULE OF INVESTMENT EXPENSES For the Year Ended June 30, 2014 (continued) –         –         –         –         –         –         –         –         –         –         –         –         –         –         –       $   79,473       79,473   $                             Defined   Contri-­   bution   Plans –         463   –         –         –         –         –         –         –         –         –         –         –         –         –         $   5,390     2,209   $                                 MainePERS   OPEB Trust –       –         $   53,201       $   7,270     –           –           –           –           –           –           –           –           –           –           –           –           –         Retiree Health Insurance Trust 964,243 $   41,311,867   2,701,510   $   11,389   1,125,000   834,316   636,936   722,163   255,969   1,661,089   328,162   203,916   777,660   975,504   324,946   242,817   355,479 Total FINANCIAL SECTION ♦ Total  administrative  expenses   Total miscellaneous             582,634   330,841   29,827   38,224   22,978   225,355 $   8,296,396     1,229,859             $   4,629,396     1,366,670     315,313     545,404     209,754   Personal  services   Professional  services   Communications   Computer  support  and  system  development   Office  rent  and  building  operations   Miscellaneous:   Computer  maintenance  and  supplies     Depreciation     Office  equipment  and  supplies     Professional  development     Medical  records  and  exams   Miscellaneous operating expenses           State   Employee   and  Teacher   Plan       263,765 124,956   70,954   6,397   8,198   4,928   48,332 992,853   293,106   67,624   116,971   44,985   $   1,779,304                 $             PLD   Consolidated   Plan $   27,981     4,150   1,965     1,116     101     129     77     762 $   15,613     4,609     1,063     1,839     707     PLD  Pre-­   Consolidated   Plan Group   Life   Insurance   Plan $   318,626     47,233   22,376     12,706     1,146     1,468     882     8,655 $   177,794     52,487     12,110     20,946     8,056   SUPPLEMENTARY INFORMATION SCHEDULE OF ADMINISTRATIVE EXPENSES For the Year Ended June 30, 2014 (continued) 7,867   4,467   403   516   310   3,043 $   112,015     16,606             $   62,504     18,452     4,257     7,364     2,832   Defined   Contri-­   bution   Plans $   90,030     13,345   6,323     3,590     324     415     249     2,444 $   50,237     14,831     3,422     5,919     2,276   Retiree Health Insurance Trust 746,121 423,674 38,198 48,950 29,424 288,591 $   10,624,352   1,574,958             $   5,928,397   1,750,155   403,789   698,443   268,610 Total ♦ FINANCIAL SECTION   Maine  Public  Employees  Re rement  System 61 ♦ FINANCIAL SECTION SUPPLEMENTARY INFORMATION SCHEDULE OF PROFESSIONAL FEES For the Year Ended June 30, 2014 Professional  services:   Audit       Actuarial  services     Legal  services     Medical  consulting   Other services $         129,359  344,932  205,257  137,915  932,692 Total  professional  services                                                                                                                                              $          1,750,155 62 Maine  Public  Employees  Re rement  System INVESTMENT SECTION ♦ INVESTMENT SECTION Board of Trustees Maine Public Employees Retirement System 46 State House Station Augusta, ME 04333-0046 November 6, 2014 RE: 2014 Annual MainePERS Plan Verification Ladies and Gentlemen of the Board: As independent investment advisor to the Board of Trustees of the Maine Public Employees Retirement System (MainePERS), we comment on the reporting of MainePERS’ investment results, MainePERS’ investment policy and the Board’s oversight of System investments. Investment  Results   Investment results are calculated independently by MainePERS’ custodian, and reviewed by Strategic Investment Solutions for reasonableness. It is our understanding that all measurements and comparisons have been made using standard performance evaluation methods, time-weighted rates of return and assets reported at fair value, consistent with industry standards. MainePERS’ investment results, as presented in this report, fairly represent, in our opinion, the investment performance of MainePERS’ assets. Investment  Policy   MainePERS’ assets are managed under well-articulated policies, which, in our opinion, are appropriate to the circumstances of MainePERS. Investment policy is progressive, yet prudent. The policies ensure diversification and exhibit attention to risk control generally. Throughout the year, the Board, Executive Director, and staff have taken appropriate measures to ensure that investments have conformed with the Board’s policies. Prudent  Oversight   While delegating day-to-day investment management responsibility to its staff, the Board retains the responsibility to monitor all aspects of investment. In our opinion, the Board has established and executed an appropriately comprehensive process for overseeing the management of assets. Through regular reviews by the Board, quarterly performance appraisals by an independent firm, and the day-today oversight activities of the staff, the Board has achieved a high degree of awareness and critical oversight of MainePERS’ investments. Sincerely, John P. Meier, CFA Managing Director 333 BUSH STREET, SUITE 2000, SAN FRANCISCO, CALIFORNIA, 94104 64 Maine  Public  Employees  Re rement  System 415.362.3484 ♦ INVESTMENT SECTION INVESTMENT ACTIVITY The  table  and  graph  below  summarize  the  defined  benefit  portfolio  activity  for  the  ten  years  ended  June  30,  2014.    During  this   period,  assets  grew  by  $4.7  billion  from  $8.0  billion  to  $12.7  billion.    Substantially  all  of  this  increase  is  attributable  to  net  investment   gains.      In  the  year  ended  June  30,  2014,  benefit  payments  exceeded  contributions,  and  this  is  expected  to  continue  in  the  future. The  rates  of  return  displayed  in  the  table  are  time  weighted  rates  of  return.    The  table  displays  the  net  invested  assets  of  the   investment  portfolio.    Securities  lending  liabilities  are  netted  against  securities  lending  collateral.    Certain  assets,  such  as  cash  in   the  System’s  operating  bank  accounts  are  not  considered  part  of  the  investment  portfolio,  and  are  therefore  not  included  in  the   table or graph. SUMMARY OF INVESTMENT ACTIVITY FY Ended June 30 Opening Market Value ($ millions) Closing Market Value ($ millions) Rate of Return 2014 $11,264 $12,732 16.7% 2013 $10,470 $11,264 11.1% 2012 $10,739 $10,470 0.6% 2011 $8,934 $10,739 22.4% 2010 $8,291 $8,934 11.1% 2009 $10,538 $8,291 -18.8% 2008 $11,031 $10,538 -3.1% 2007 $9,559 $11,031 16.2% 2006 $8,921 $9,559 7.5% 2005 $8,021 $8,921 11.8% Annualized 10-year period 6.9% Cumulative 10-year period 94.9% Maine  Public  Employees  Re rement  System 65 ♦ INVESTMENT SECTION SUMMARY OF INVESTMENT ACTIVITY (continued) Cumula ve  Investment  Gains Cumula ve  Net  Contribu ons INVESTMENT PORTFOLIO The  graph  above  illustrates  the  importance  of  investment  returns  to  the  financing  of  the  System’s  benefit  plans.    In  this  section,  the   investment  strategy  MainePERS  has  adopted  to  optimize  the  financial  health  of  the  plans  is  reviewed. The  System  invests  essentially  all  of  the  plan  assets  in  seven  major  asset  classes:  publicly  traded  domestic  stocks,  publicly   traded  foreign  stocks,  cash  and  cash-­like  securities,  publicly  traded  domestic  bonds,  infrastructure,  private  equity,  and  real   estate.  MainePERS  may  use  derivative  positions  to  emulate  these  asset  classes.  The  table  and  pie  charts  on  the  following  page   display  the  actual  allocations  at  June  30,  2014.    MainePERS  assigns  target  allocations  for  each  asset  class,  with  minor  variations   permitted  between  actual  allocations  and  the  targets.    The  current  strategic  targets  are  20%  for  domestic  stocks,  20%  for  foreign   stocks,  35%  for  alternatives  and  25%  for  fixed  income. The  Board  of  Trustees  is  of  the  view  that  a  prudent  investment  strategy  for  these  plan  assets  involves  accepting  some  level   of  investment  risk.    The  Board  allocates  60%  to  80%  of  assets  to  equities  and  equity  like  securities  and  is  of  the  view  that  this   provides  a  prudent  compromise  between  low  risk  and  high  return  for  the  plans. 66 Maine  Public  Employees  Re rement  System ♦ INVESTMENT SECTION STRATEGIC ASSET ALLOCATION US Stocks Foreign Stocks Fixed Income Real Estate Infrastructure Other Private Equity Hard Assets Cash Total Actual  Allocation 31.8% 26.1% 23.5% 7.3% 3.3% 5.0% 2.9% 0.0% 0.2% 100.0% Target  Allocation 20.0% 20.0% 25.0% 10.0% 10.0% 0.0% 10.0% 5.0% 0.0% 100.0% Actual Allocation at June 30, 2014 Strategic Target Allocation Maine  Public  Employees  Re rement  System 67 INVESTMENT SECTION ♦ The  System’s  Investment  Policy  has  long-­term,  strategic  asset  class  targets  and  requires  the  investment  team  to  rebalance  the   portfolio  to  these  targets  as  needed.    In  2012,  the  System  changed  its  target  allocation  to  20%  domestic  publicly  traded  stocks,   20%  international  publicly  traded  stocks,  25%  fixed  income  investments,  and  35%  alternative  investments.    Alternative  investments   include  private  equity,  infrastructure,  real  estate,  and  hard  assets.      While  the  Board  has  approved  the  new  Asset  Allocation  targets,   it  will  take  several  years  to  implement  and  fully  fund  the  alternatives  allocation. Because  most  of  its  benefit  payments  are  not  due  for  several  decades  into  the  future,  the  System  has  concluded  it  is  prudent  to   invest  a  substantial  portion  of  its  assets  in  equities  and  other  return-­seeking  investments.  For  the  past  ten  years,  the  System  has   invested  between  60%  and  70%  of  its  assets  in  equities.  Over  sufficiently  long  periods,  equities  have  been  shown  to  outperform   bonds.  The  System  expects  this  relationship  to  hold  in  the  future. Essentially  all  of  the  assets  of  the  System’s  plans  are  in  portfolios  managed  by  professional  investment  management  firms.  These   managers  act  as  fiduciaries  and  invest  the  assets  assigned  to  them  in  accordance  with  the  System’s  investment  policies  and  the   individual agreements between MainePERS and the investment managers. Approximately  80%  of  assets  were  invested  in  passively  managed  index  funds  and  separate  accounts  at  June  30,  2014.  The  Board   of  Trustees  views  index  funds  as  a  cost-­effective  way  of  investing  in  most  of  the  world’s  capital  markets.  However,  the  System  does   make  use  of  actively  managed  portfolios  where  it  has  identified  managers  who  are  thought  to  be  able  to  add  value  over  an  index   fund,  net  of  all  costs.    At  June  30,  2013,  approximately  85%  of  assets  were  invested  in  passively  managed  index  funds. The  System  uses  a  single  firm  to  manage  all  of  its  passive  investments.    This  enables  the  System  to  obtain  attractive  fees  and  also   provides  other  cost  savings  on  certain  kinds  of  transactions.  Since  passively  managed  portfolios  have  a  low  risk  of  significantly   underperforming  their  benchmarks,  the  Board,  the  investment  staff,  and  the  System’s  investment  consultant  find  this  concentration   of  assets  to  be  appropriate. In  fiscal  year  2013,  the  System  conducted  a  thorough  review  of  its  strategic  asset  allocation.    This  type  of  review  is  typically   conducted  every  three  years  with  the  assistance  of  the  System’s  actuary  and  the  general  investment  consultant. 68 Maine  Public  Employees  Re rement  System ♦ INVESTMENT SECTION BENEFIT PLANS - INVESTMENT PORTFOLIO at 06/30/2014 millions of dollars Passive Equity          BlackRock  (Domestic)          BlackRock  (International) Total Passive Equity $ 31.8% 26.0% 57.8% $ $ 4,045 3,316 7,361 $ $ 2,988 2,988 $ Passive Fixed Income          BlackRock  Custom  Index  Fund Total Passive Fixed Income Real Estate          Blackstone  RE  Partners  VII          Harrison  Street          H/2  Credit  Partners          High  Street  IV          JP  Morgan  Strategic  Property  Fund KKR REPA I          Mesa  West  Core          Principal  US  Property  Fund Prima Advisors Mortgage Fund Prudential PRISA Fund Smart Markets          Walton  Street  VII          Westbrook  IX Total Real Estate Private Equity          ABRY  Advanced  Securities  Fund  II          ABRY  Advanced  Securities  Fund  III          ABRY  Senior  Equity  IV ABRY VII Advent International          Affinity  Asia  Pacific  IV Berkshire VIII          Blackstone  Cap  VI Carlyle Asia Partners Fund III Carlyle Asia Partners Fund IV CVC Capital Partner VI EnCap Energy Capital Fund VIII EnCap Energy Capital Fund VIII Co-Invest          EnCap  Energy  Capital  Fund  IX GTCR          Hellman  &  Friedman          HIG  Bayside  Loan  Opportunity  II          HIG  Bayside  Loan  Opportunity  III  (Europe)          HIG  Buyouts  II          HIG  Capital  Partners  V          HIG  Capital  Partners  II  (Europe)          KKR  North  America  XI          KKR  Special  Situations Oaktree Opportunity Fund VIII          Riverside  Capital  Appreciation  VI Shoreview Capital III Summit GE VIII Summit VC III TCV III Thoma Bravo          Water  Street  Healthcare          Wayzata          MainePERS  Secondary  Fund Total Private Equity $ 34% 24% 59% 23.5% 23.5% $ $ 2,878 2,878 26% 26% 63 87 92 9 186 12 64 84 85 127 102 19 5 933 0.5% 0.7% 0.7% 0.1% 1.5% 0.1% 0.5% 0.7% 0.7% 1.0% 0.8% 0.1% 0.0% 7.3% $ 45 80 87 0% 1% 1% 168 1% 78 84 116 1% 1% 1% $ 5 661 0% 6% 0.3% 0.1% 0.4% 0.2% 0.3% 0.4% 0.2% 0.3% 0.3% 0.5% 0.2% 3.3% $ 31 0% 25 0% $ 44 9 54 26 42 50 31 44 33 64 25 421 $ 35 42 26 52 29 40 20 299 0% 0% 0% 0% 0% 0% 0% 3% 2.6% 2.4% 5.0% $ $ 330 311 641 $ 296 264 560 3% 2% 5% 0.1% 0.0% 0.0% 0.1% 0.1% 0.0% 0.0% 0.1% 0.1% 0.0% 0.0% 0.2% 0.1% 0.0% 0.2% 0.2% 0.1% 0.1% 0.0% 0.0% 0.0% 0.2% 0.4% 0.2% 0.0% 0.0% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.2% 2.9% $ 10 0% 2 7 7 0% 0% 0% 4 8 11 0% 0% 0% 15 9 2 22 8 11 3 3 0% 0% 0% 0% 0% 0% 0% 0% 3 25 30 0% 0% 0% 3 4 0% 0% $ 13 0 3 9 15 2 5 16 12 6 0 22 13 5 29 19 15 9 4 0 0 30 46 25 6 4 13 8 3 1 2 3 23 364 2 2 25 216 0% 0% 0% 2% 23 0.2% 51 0% 23 0.2% 51 0% $ $ $ Cash          Liquidity  Account Total Cash % of assets 3,879 2,717 6,596 $ Infrastructure          Alinda  Infrastructure  Fund  II          ArcLight  Co-­Invest          ArcLight  Energy  Partners  V          Brookfield  II          Carlyle  Infrastructure  Fund          Cube  Infrastructure  Fund First Reserve Energy          Global  Infrastructure  Partners  Fund          Global  Infrastructure  Partners  Fund  II          KKR  Infrastructure          Meridiam  Infrastructure Total Infrastructure Other Strategies Grantham, Mayo, Van Oterloo          Windham  Capital % of assets at 06/30/2013 millions of dollars $ $ $ Maine  Public  Employees  Re rement  System 69 ♦ INVESTMENT SECTION LARGEST  HOLDINGS at  June  30,  2014 Top 10 Direct Common Stock Holdings Apple Market Value $ % of Assets 102,214,172 0.80% Exxon  Mobil 78,945,806 0.62% Google 59,862,049 0.47% Microsoft 57,239,463 0.45% Johnson  &  Johnson 53,926,379 0.42% General  Electric 48,081,284 0.38% Wells  Fargo 45,873,264 0.36% Chevron 45,301,764 0.36% Berkshire  Hathaway 41,519,020 0.33% JP  Morgan  Chase 39,664,686 0.31% Some  of  the  System’s  index  fund  investments  are  made  through  commingled  funds,  with  MainePERS  owning  units  in  the  funds,   and  having  beneficial,  rather  than  direct  ownership  of  the  securities.    The  largest  holdings  list  reports  direct  holdings  held  outside  of   the  commingled  funds.  For  a  complete  list  of  the  System's  holdings,  please  contact  MainePERS. SECURITIES  LENDING MainePERS  earns  additional  income  on  its  investment  portfolio  by  lending  its  securities.  The  System  pays  its  custodian  for   managing  the  securities  lending  program.  Information  regarding  the  results  of  the  securities  lending  program  for  the  current  and   prior  fiscal  years  may  be  found  in  the  Financial  Section  starting  on  page  18. Several  of  the  collective  trusts  through  which  the  System  holds  interests  in  commingled  funds  also  lend  securities.  Because  these   trusts  are  legal  entities  separate  from  MainePERS,  their  lending  activities  are  not  reflected  in  the  securities  lending  results  reported   in  the  financial  statements.    The  System  shares  in  the  income  and  the  risks  of  the  securities  lending  activity  in  the  commingled   funds,  and  the  income  is  included  in  the  total  income  and  return  figures  in  this  Investment  Section  and  the  Financial  Statements. 70 Maine  Public  Employees  Re rement  System ♦ INVESTMENT SECTION INVESTMENT PERFORMANCE The  table  on  the  following  pages  displays  the  rates  of  return  on  the  System’s  investment  portfolio  over  the  last  ten  fiscal  years,   and  for  the  three,  five,  and  ten-­year  periods  ended  June  30,  2014.    Because  the  System’s  investment  strategy  has  changed  very   little  from  year  to  year,  these  results  are  determined  almost  entirely  by  the  behavior  of  the  capital  markets.    Negative  returns  for  the   fiscal  years  ended  June  30,  2008,  and  2009  were  the  result  of  declines  in  domestic  and  foreign  stock  markets,  partially  offset  by   gains  in  the  domestic  bond  market. Over  the  ten-­year  period,  the  annualized  rate  of  return  on  the  System’s  assets  was  6.9%.  MainePERS  experienced  eight  years  of   positive  returns  and  two  years  of  negative  returns.    These  results  are  consistent  with  the  long-­term  risk/return  strategy  that  forms   the  basis  of  the  System’s  policies.  At  6.9%,  the  ten-­year  return  has  underperformed  relative  to  the  7.125%  and  7.25%  investment   return  assumptions  utilized  in  the  actuarial  process. Because  the  Board  of  Trustees  rarely  changes  its  asset  class  allocation  targets,  most  of  the  System’s  investment  return  is   determined  by  the  choice  of  targets,  i.e.,  by  the  System’s  choice  of  investment  strategy  and,  as  mentioned  above,  the  behavior   of  the  capital  markets  in  general.    A  small  portion  of  the  investment  return  is  determined  by  how  well  the  investment  managers   perform  their  assignments.  To  measure  this,  the  Board  compares  the  return  on  each  manager’s  portfolio  to  an  appropriate   benchmark.    Over  the  ten  years  ended  June  30,  2014,  the  return  on  the  System’s  actual  total  portfolio  approximated  the  return  on   its  total  performance  benchmark.    Positive  relative  performance  in  five  of  the  ten  years  was  offset  by  negative  performance  in  five   of  the  ten  years.    In  terms  of  asset  classes,  negative  relative  performance  in  domestic  and  international  equities  over  the  ten  years   was  offset  by  positive  or  equal  relative  performance  in  other  categories. The  total  return  figures  in  the  table  on  pages  72  and  73  are  net  of  all  expenses  that  can  be  directly  attributed  to  the  investment   program  (see  Expenses,  page  74).    The  table  reports  time  weighted  rates  of  return  and  all  figures  for  periods  greater  than  one  year   are annualized. Maine  Public  Employees  Re rement  System 71 ♦ INVESTMENT SECTION PERFORMANCE: ACTUAL RETURNS VS. BENCHMARK RETURNS (All returns are time weighted) Notes: 1.  Excess  Return  is  Actual  Return  minus  Benchmark  Return.                 2.  The  asset  class  of  General  Fixed  Income  was  closed  in  the  1st  quarter  of  2007  and  re-­opened  in  the  4th  quarter  of  2008.   3.  Fixed  Income  includes  TIPS  as  of  7/31/04. 4.  The  Real  Estate  Return  for  the  year  ending  06/30/05  is  attributable  to  REIT's  only.           5.  Total  Fund  Benchmark:  A  combination  of  the  the  benchmarks  for  the  five  major  asset  classes  using  the  target  asset  class     weights. 6.  Domestic  Equity  Benchmark:  Dow  Jones  US  Total  Stock  Market  Index.   TABLE CONTINUED ON NEXT PAGE 72 Maine  Public  Employees  Re rement  System     ♦ INVESTMENT SECTION PERFORMANCE: ACTUAL RETURNS VS. BENCHMARK RETURNS (All returns are time weighted) Notes (continued): 7.  Foreign  Equity  Benchmark:  Morgan  Stanley  Capital  International  All  Country  World  Ex-­U.S.  Free,  since  Jan.  1,  1998     8.  General  Fixed  Income  Benchmark:  Barclays  Capital  Aggregate  Bond  Index  less  Governments  plus  TIPS,  since  Oct  2008     9.  Real  Estate  Benchmark:    A  combination  of  DJ  Wilshire  Real  Estate  Securities  Index  and  National  Council  of  Real  Estate          Investment  Fiduciaries  Property  Index  since  July  1,  2005         10.  Infrastructure  Benchmark:  Consumer  Price  Index  +  5%         11.  Private  Equity  Benchmark:  Dow  Jones  US  Total  Stock  Market  Index  +  3%         12.  Infrastructure  and  Private  Equity  returns  are  not  meaningful  at  this  stage  of  the  program. TABLE CONTINUED FROM PREVIOUS PAGE Maine  Public  Employees  Re rement  System 73 ♦ INVESTMENT SECTION INVESTMENT  MANAGEMENT  EXPENSES INVESTMENT  EXPENSES Detail for year ended 6/30/2014 The  adjacent  table  displays  investment  management   expenses  directly  attributable  to  the  investment  program   and  paid  directly  by  the  System.    Examples  of  directly   attributable  expenses  include  fees  paid  to  investment   managers  and  compensation  and  expenses  of  the   System’s  own  investment  professionals.    Examples   of  expenses  not  directly  attributable  to  the  investment   program  and  therefore  not  included  in  expenses  include   office  space  expense  and  time  spent  on  investment   matters  by  staff  other  than  full-­time  investment   professionals.    Other  expenses  not  paid  directly  by   the  System  include  the  expenses  of  securities  lending   programs  conducted  by  managers  of  the  commingled   funds. Where  the  table  displays  an  expense  as  a  percentage  of   assets,  the  percentage  is  calculated  with  respect  to  the   assets  associated  with  the  particular  expense  item.  For   example,  Prudential  Real  Estate  Fund’s  $1.0  million  of   management  fees  in  2014  was  approximately  0.90%  of   the  average  assets  managed  by  Principal. The  increase  of  expenses  in  2014  can  be  attributed   to  continued  funding  of  the  Alternatives  Programs  and   adding  internal  investment  professionals. 74 Total  for   FY  ended  June  30 $ Millions %  of   Total Assets 2014 41.1 0.32% 2013 31.4 0.28% 2012 24.3 0.23% 2011 19.7 0.18% 2010 22.0 0.25% 2009 23.1 0.28% 2008 34.6 0.19% 2007 19.7 0.33% 2006 18.8 0.20% 2005 15.3 0.17% Maine  Public  Employees  Re rement  System Investment  management  fees Passive  Equity          BlackRock  (Domestic)          BlackRock  (International) Passive  Fixed  Income          BlackRock  Custom  Index  Fund Dollar Expense 41,311,867 1,660,913 925,802 292,172 Real Estate          Blackstone  Real  Estate  Partners  VII          Harrison  Real  Estate          H/2  Credit  Partners          High  Street  Real  Estate  IV          JP  Morgan  Strategic  Property  Fund KKR REPA I          Mesa  West  Core Prima Advisors Mortgage Fund          Principal  US  Property  Fund Prudential PRISA Fund Smart Markets          Walton  Real  Estate  VII          Westbrook  IX 1,125,000 636,936 834,316 722,163 1,661,089 255,969 328,162 203,916 777,660 975,504 324,946 242,817 355,479 Infrastructure          Alinda  Infrastructure  Fund  II          ArcLight  V          Brookfield  II          Carlyle  Infrastructure          Cube  Infrastructure  Fund First Reserve Energy          Global  Infrastructure  Partners  I          Global  Infrastructure  Partners  II          KKR  Infrastructure          Meridiam  Infrastructure 629,054 839,244 1,367,014 294,418 599,887 644,151 989,821 1,218,301 232,867 495,590 Private  Equity          ABRY  Advanced  Securities  Fund  II          ABRY  Advanced  Securities  Fund  III          ABRY  Senior  Equity  IV ABRY VII Advent International          Affinity  Asia  IV Berkshire VIII          Blackstone  Capital  Partners  Fund Carlyle Asia Partners Fund III Carlyle Asia Partners Fund IV CVC Capital VI EnCap Energy Capital Fund VIII          EnCap  Energy  Capital  Fund  IX GTCR          Hellman  &  Friedman          HIG  Bayside  Loan  Opportunity  Fund  II          HIG  Bayside  Loan  Opportunity  III  (Europe)          HIG  Buyouts          HIG  Capital  Europe  II          HIG  Capital  V          KKR  North  America  XI          KKR  Special  Situations Oaktree Opportunity Fund VIII          Riverside  Capital  Appreciation  VI Shoreview III Summit GE VIII Summit VC III TCV VIII          Thoma  Bravo  XI          Water  Street  Healthcare          Wayzata          MainePERS  Secondary  Fund 385,452 50,001 123,600 168,313 487,681 1,086,413 298,229 304,246 92,626 1,030,991 584,282 154,059 450,000 448,682 440,890 550,089 600,000 175,000 371,498 224,146 293,279 664,565 257,406 1,835,870 48,155 276,132 188,337 268,454 38,557 440,159 412,339 315,321 Opportunistic  Strategies Grantham, Mayo, Van Oterloo          Pacific  Investment  Management  Company          Windham  Capital 2,831,432 6,168 2,038,098 Consultants          Cliffwater  -­  Private  Equity          Cliffwater  -­  Infrastructure ORG - Real Estate          Strategic  Investment  Solutions  -­  General 550,000 50,001 296,206 356,250          Other  Investment  Expenses          In  House  Expenses          DC  Investment  Expenses          Retiree  Health  Insurance  Trust  Expenses          Group  Life  Insurance  Expenses MainePERS OPEB 622,271 2,680,424 79,473 53,201 44,990 5,390 ♦ INVESTMENT SECTION BROKERAGE COMMISSIONS Year  Ended  June  30,  2014 Broker Commissions Wallabach $ Total Shares (Millions) Commissions (Cents per Share) 0.019% 4.3 0.010 25,038 438.8 0.006% 2.2 0.009 Morgan Stanley 7,107 162.4 0.004% 3.5 0.050 Deutsche  Bank 6,259 106.7 0.006% 2.6 0.041 Merrill  Lynch 5,008 140.4 0.004% 3.3 0.067 Citigroup 3,635 74.7 0.005% 1.5 0.040 Bank  of  New  York/Goldman 3,418 73.6 0.005% 1.4 0.040 Barclays 3,156 55.3 0.006% 1.2 0.038 Instinet 1,439 8.7 0.017% 0.6 0.040 909 8.7 0.010% 0.6 0.061 1.2 0.025% 0.0 0.010 1,293.9 0.008% 21.2 0.021 Credit Suisse First Boston Other Total $ Cost of Trade (%) 223.5 UBS 43,494 Amount Traded (Millions) 302 $ 99,767 $ Commissions  reported  above  are  those  paid  directly  by  MainePERS.  The  table  does  not  include  other  transaction  costs  the  System   may  incur,  nor  does  it  include  brokerage  commissions  incurred  indirectly  through  investments  in  commingled  funds.  Brokerage   commissions  and  other  transaction  costs  are  excluded  from  the  expense  table  on  page  72.    Those  commissions  and  expenses  are   accounted  for  in  the  net  income  and  total  return  figures  reported  elsewhere  in  this  report. Selection  of  brokers  is  at  the  discretion  of  the  System’s  investment  managers,  subject  to  their  fiduciary  obligations.    MainePERS   does  not  have  any  directed  brokerage  programs,  commission  recapture  programs,  or  similar  arrangements.    Some  of  the  System’s   managers  have  soft  dollar  arrangements  with  brokers,  in  which  the  broker  agrees  to  provide  additional  services  to  the  manager   beyond  trade  execution.    In  addition  some  of  the  System’s  managers  employ  placement  agents  to  market  their  funds.  MainePERS   does  not  pay  placement  agent  fees  and  requires  managers  that  do  use  placement  agents  to  disclose  the  identity  of  said  parties   and  the  method  and  amount  of  payment. Maine  Public  Employees  Re rement  System 75 ♦ INVESTMENT SECTION GROUP LIFE INSURANCE PROGRAM The  Group  Life  Insurance  program  is  supported  by  premiums  paid  by  its  participants  and  by  reserves.  Substantially  all  the  reserves   are  maintained  in  an  investment  portfolio,  for  which  the  summary  results  are  displayed  below.    (Certain  assets,  such  as  the  cash  in   the  operating  bank  account,  are  not  considered  part  of  the  investment  portfolio.)  Over  this  period,  the  increase  in  portfolio  value  is   attributable  to  positive  investment  return  and  positive  cash  flow. SUMMARY OF INVESTMENT ACTIVITY FY Ended June 30 Opening Fair Market Value Closing Fair Market Value Actual Return Benchmark Return 2014 78.3 94.3 18.6% # 18.3% # 0.3% 2013 68.1 78.3 13.4% # 13.1% # 0.3% 2012 66.4 68.1 0.6% # 0.5% # 0.1% 2011 58.0 66.4 24.5% # 24.4% # 0.1% 2010 50.2 58.0 15.1% # 15.1% # 0.1% 2009 53.0 50.2 -18.8% # -19.0% # 0.2% 2008 52.3 53.0 -3.1% # -1.9% # -1.2% 2007 44.3 52.3 16.2% # 16.3% # -0.1% 2006 42.9 44.3 3.1% # 3.9% # -0.8% 2005 41.8 42.9 2.7% # 2.1% # 0.6% 2004 41.5 41.8 0.7% # 0.5% # 0.2% 2003 39.3 41.5 5.5% # 4.9% # 0.6% 2002 36.6 39.3 7.5% # 7.0% # 0.5% 2001 34.4 36.6 9.5% # 9.3% # 0.2% 3 yrs ended 2014 10.6% 10.4% 0.2% 5 yrs ended 2014 14.1% 14.0% 0.2% 10 yrs ended 2014 6.5% 6.6% -0.1% Performance In  fiscal  year  2009,  the  Group  Life  Insurance  assets  were  separated  from  the  defined  benefit  plan  assets  while  maintaining  the   same  type  of  investment  strategy.    Up  until  this  change,  beginning  in  November  2005,  the  assets  had  been  combined  with  those  of   the  other  plans  in  the  general  investment  portfolio.    Prior  to  November  2005,  the  assets  had  been  invested  in  either  a  medium  term,   investment  grade  fixed  income  portfolio  or  similar  commingled  funds.  While  the  assets  were  invested  in  a  mutual  fund,  they  were   not  available  for  the  System’s  own  securities  lending  program.  Any  securities  lending  undertaken  by  the  mutual  fund  is  not  covered   in  this  report,  although  any  results  are  reflected  in  the  total  return  or  gain/loss  figures. Over  the  ten-­year  period  ended  June  30,  2014,  the  actual  return  on  the  portfolio  was  essentially  equivalent  to  the  return  of   the  performance  benchmark.    A  portion  of  investment  return  is  determined  by  how  well  the  investment  manager  performs  its   assignment.  To  measure  this,  MainePERS  compares  the  returns  on  the  actual  portfolio  to  an  appropriate  benchmark. The  fees  paid  by  the  portfolio  are  consistent  with  those  detailed  in  the  fees  and  expenses  tables  of  the  previous  section.  For   the  period  of  time  the  portfolio  was  invested  in  a  mutual  fund,  fees  were  consistent  with  other  holders  of  the  institutional  class  of   shares,  as  detailed  in  the  fund’s  prospectus. 76 Maine  Public  Employees  Re rement  System ACTUARIAL SECTION ♦ ACTUARIAL VALUATION JUNE 30, 2014 October 31, 2014 Board of Trustees Maine Public Employees Retirement System #46 State House Station Augusta, Maine 04333-0046 Dear Members of the Board: At your request, we have conducted our annual actuarial valuation of each of the funded pension programs administered by the Board of the Maine Public Employees Retirement System as of June 30, 2014. The purpose of this report is to present the annual actuarial valuation results for the various Programs. This report is for the use of the Public Employees Retirement Board and its auditors  in  preparing  financial  reports  in  accordance  with  applicable  law  and  accounting  requirements.  Any  other  user  of  this  report   is  not  an  intended  user  and  is  considered  a  third  party.  This  valuation  report  is  not  intended  to  benefit  any  third  party,  and  Cheiron   assumes no duty or liability to any such party. Funding Objective The funding objective of the Programs administered by the System is to establish contribution rates that, over time, will remain level as a percent of payroll. In order to achieve this, we developed a contribution rate that will provide for current cost (i.e., normal cost expressed  as  a  level  percent  of  payroll)  plus  a  level  percent  of  payroll  amortization  of  the  unfunded  liability  over  a  specified  period.   To  our  knowledge,  the  State  has  consistently  funded  the  full  amounts  required  based  on  the  actuarial  valuations  and  specific   statutory provisions. Assumptions and Methods The actuarial assumptions and methods used in these valuations have been recommended by the actuary, and adopted by the Board of Trustees, based on the actuary’s most recent review of each Program’s experience. We believe that all the costs, liabilities, rates of interest, and other factors for the System have been determined on the basis of actuarial assumptions and methods which are individually reasonable (taking into account the experience of the Programs administered by the System and reasonable expectations) and which, in the aggregate, offer our best estimate of anticipated experience affecting the Programs. Nevertheless, the emerging costs will vary from those presented in this report to the extent that actual experience differs from that projected by the actuarial assumptions. The calculations in the following exhibits have been made on a basis consistent with our understanding of the System’s funding requirements and goals. The Group Life Insurance numbers disclosed in the Financial Section were produced in accordance with the requirements of Governmental Accounting Standards Board (GASB) Statement No. 43. Determinations for purposes other than  meeting  these  requirements  may  be  significantly  different  from  the  results  contained  in  this  report.  Accordingly,  additional   determinations may be needed for other purposes. Reliance on Others In preparing our report, we relied on information (some oral and some written) supplied by the Maine Public Employees Retirement System.  This  information  includes,  but  is  not  limited  to,  the  plan  provisions,  employee  data,  and  financial  information.  We   performed an informal examination of the obvious characteristics of the data for reasonableness and consistency in accordance with Actuarial Standard of Practice No. 23. Page 1 of 2 78 Maine  Public  Employees  Re rement  System ♦ ACTUARIAL VALUATION JUNE 30, 2014 We performed a limited review of the data used directly in our analysis for reasonableness and consistency and have not found material defects in the data. If there are material defects in the data, it is possible that they would be uncovered by a detailed, systematic review and comparison of the data to search for data values that are questionable. Such a review was beyond the scope of our assignment. Determination of Discount Rate We  have  not  performed  a  formal  cash  flow  projection  as  described  under  Paragraph  41  of  GASB  Statement  No.  67.  However,   Paragraph  43  allows  for  alternative  methods  to  confirm  the  sufficiency  of  the  Net  Position  if  the  evaluations  “can  be  made  with   sufficient  reliability  without  a  separate  projection  of  cash  flows  into  and  out  of  the  pension  plan…”  In  our  professional  judgment,   adherence  to  the  actuarial  funding  policy  described  above  will  result  in  the  pension  plan’s  projected  fiduciary  net  position  being   greater  than  or  equal  to  the  benefit  payments  projected  for  each  future  period.. Supporting Schedules The  figures  disclosed  in  the  Required  Supplemental  Schedules  to  the  Financial  Section  were  provided  by  Cheiron.  In  addition,  we   were responsible for all of the schedules to be found in this Actuarial Section. Numbers reported for previous years were developed by the prior actuary and are reported per their valuation reports. Certification We  believe  that  the  State's  pension  plans  are  adequately  and  appropriately  financed,  in  that  the  contributions  are  determined  and   funded on a level cost as a percentage of payroll basis using reasonable actuarial methods and assumptions. To the best of our knowledge, this report and its contents have been prepared in accordance with generally recognized and accepted  actuarial  principles  and  practices  that  are  consistent  with  the  Code  of  Professional  Conduct  and  applicable  Actuarial   Standards  of  Practice  set  out  by  the  Actuarial  Standards  Board.  Furthermore,  as  credentialed  actuaries,  we  meet  the  Qualification   Standards of the American Academy of Actuaries to render the opinion contained in this report. This report does not address any contractual  or  legal  issues.  We  are  not  attorneys  and  our  firm  does  not  provide  any  legal  services  or  advice. Sincerely, Cheiron Gene Kalwarski, FSA, EA Fiona E. Liston, FSA, EA Principal  Consulting  Actuary                                                                                                                              Principal  Consulting  Actuary       Page 2 of 2 Maine  Public  Employees  Re rement  System 79 ♦ ACTUARIAL VALUATION JUNE 30, 2014 SECTION I DEMOGRAPHIC INFORMATION Schedule of Active Member Valuation Data Valuation Date June 30, Number of Active Members Annual Salaries of Active Members* Average Annual Pay Percentage Increase in Average Pay State Employee and Teacher Program 2014 2013 2012 2011 2010 2009 2008 39,669 41,809 39,360 38,759 39,884 40,486 41,561   $          1,702,310,338                  1,662,390,557                1,718,449,172     1,643,389,735     1,672,252,868     1,669,885,710     1,619,705,846 $ 42,913 39,762 43,660 42,400 41,928 41,246 38,972 7.92% (8.93%) 2.97% 1.13% 1.65% 5.84% 3.63%   $   42,207            41,255 44,080     40,985     38,307     39,154     37,722 2.79% (6.41%) 7.55% 6.99% (2.16%) 3.80% 5.58%      1,213,514 1,428,984 1,415,305 1,561,053 1,758,909 1,974,113 2,089,427   $   50,563                51,035       50,547     50,357     40,905     45,910     41,789 (0.92%) 0.97% 0.38% 23.11% (10.90%) 9.86% (0.56%)   $   6,688,159                              6,742,444           6,790,274     6,790,233     6,956,364     6,718,453 6,461,343 $ 111,469            112,374       115,089     115,089     117,904     117,868     109,514 (0.81%) (2.36%) 0.00% (2.39%) 0.03% 7.63% (0.61%)   $   2,517,431                                2,534,740 2,424,480     2,395,694 2,384,083     2,326,786     2,254,173 $ 13,908                13,927       13,854 13,848 14,024     13,528 13,260 (0.14%) 0.53% 0.04% (1.25%) 3.67% 2.02% 4.75%     Consolidated Plan for Participating Local Districts 2014 2013 2012 2011 2010 2009 2008 10,848 11,112 10,772 10,614 10,331 9,719 9,562        $                460,029,637                      458,424,764           474,828,262     435,012,940     395,747,663     380,541,135 360,693,816 Withdrawn Participating Local Districts 2014 2013 2012 2011 2010 2009 2008 24 28 28 31 43 43 50   $                             Judicial Retirement System 2014 2013 2012 2011 2010 2009 2008 60 60 59 59 59 57 59 Legislative Retirement Program* 2014 2013 2012 2011 2010 2009 2008 181 182 175 173 170 172 170 * Legislative salaries in even-numbered valuation years have been increased to approximate a full session amount because data was based on previous, odd numbered year, data. 80 Maine  Public  Employees  Re rement  System ♦ ACTUARIAL VALUATION JUNE 30, 2014 SECTION I DEMOGRAPHIC INFORMATION (continued) Schedule  of  Benefit  Recipients  Valuation  Data Valuation Date June 30, Total Number of Benefit  Recipients at Year End Annual Payments to Benefit  Recipients Average Annual  Benefit Percentage Increase in Average  Benefit State Employee and Teacher Program 2014 2013 2012 2011 2010 2009 2008 32,391 31,624 30,485 28,900 28,248 27,544 26,821   $   658,595,271                    637,482,081 614,303,923     569,141,838     547,042,219     525,718,969     485,529,823 $ 20,333                    20,158             20,151 19,693 19,366     19,087 18,103 0.87% 0.03% 2.32% 1.69% 1.46% 5.43% 4.21% Consolidated Plan for Participating Local Districts 2014 2013 2012 2011 2010 2009 2008 8,333 8,122 7,520 7,409 7,172 7,021 6,939   $   123,149,154                    116,539,396 110,230,682 102,681,024     96,787,246 93,249,060     87,059,562   $                           14,778 14,349 14,658 13,859 13,495 13,281 12,546 2.99% (2.11%) 5.77% 2.70% 1.61% 5.86% 4.94% 14,201 13,294 13,224 12,365 11,897 11,008 10,460 6.82% 0.53% 6.95% 3.93% 8.08% 5.24% 6.68% Withdrawn Participating Local Districts 2014 2013 2012 2011 2010 2009 2008 191 196 199 201 198 214 252   $   2,712,331                            2,605,703             2,631,584     2,485,447     2,355,639     2,355,639     2,636,025 $         Judicial Retirement Program 2014 2013 2012 2011 2010 2009 2008 67 65 63 62 56 53 50   $   3,250,749                            3,258,916 3,129,136 3,099,334     2,794,145     2,603,792     2,484,586   $   48,519                    50,137 49,669 49,989     49,895 49,128 49,692 (3.23%) 0.94% (0.64%) 0.19% 1.56% (1.13%) 0.84% Legislative Retirement Program 2014 2013 2012 2011 2010 2009 2008 153 155 141 145 131 130 120   $                 284,588 281,433 264,716 268,980 239,823 229,960 205,417 $                         1,860 1,816 1,877 1,855 1,831 1,769 1,712 2.42% (3.25%) 1.19% 1.31% 3.50%  3.32% 10.94% Maine  Public  Employees  Re rement  System 81 ♦ ACTUARIAL VALUATION JUNE 30, 2014 SECTION I DEMOGRAPHIC INFORMATION (continued) Schedule  of  Retirees  and  Beneficiaries  Added  to  and  Removed  from  the  Rolls Added to Rolls Year Ended June 30, Annual Allowance No. On Rolls at Year End Removed from Rolls Annual Allowance No. Annual Allowance No. State Employee and Teacher Program 2014 2013 2012 2011 2010 2009 2008 1,668 1,995 2,402 1,515 1,659 1,645 1,462  $   36,572,188          37,073,840       58,170,235     35,608,087     36,147,606     53,170,359     42,000,560 901        856    817 863   955 912 942  $   15,458,998        13,895,682       13,008,150     13,508,468     14,824,356 12,981,213 13,334,208   32,391 31,624          30,485 28,900 28,248 27,544 26,821  $   658,595,271            637,482,081 614,303,923     569,141,838     547,042,219     525,718,969     485,529,823 Participating Local Districts (Consolidated and non-Consolidated Plans) 2014 2013 2012 2011 2010 2009 2008 522 881 425 516 422 326 366  $   9,978,396              9,563,286       10,710,058     8,796,407 6,462,161 8,821,806     7,295,589         316 300 316 276 287 287 295 $ 3,262,010            3,280,453 3,014,263     2,862,417     2,834,379 2,912,694 2,239,222   $                   8,524 8,318 7,719 7,610 7,370 7,235 7,196  $   125,861,485            119,145,099 112,862,266     105,166,471 99,232,481     95,604,699     89,695,587 67                        65 63 62 56 53 50  $   3,250,749                    3,258,916 3,129,136 3,099,334     2,794,145     2,603,792     2,484,586 153                    155 141 145 131 130 120  $   Judicial Retirement Program 2014 2013 2012 2011 2010 2009 2008   6 3 3 6 3 5 8    $                         254,033 148,384 142,235 305,189 190,353  266,650 394,227 4 1 2 0 0 2 1             262,201 18,604 112,433 0 0 147,444 71,836 7 4 6 4 4 8 6  $     7,779                          8,035 13,289     7,538     5,396 9,642     3,501         Legislative Retirement Program 2014 2013 2012 2011 2010 2009 2008 82     5 18 2 18 5 18 9 $ 10,934                        24,752         9,025     36,695     15,259      34,185 28,388   Maine  Public  Employees  Re rement  System       284,588 281,433 264,716 268,980 239,823 229,960 205,417 Net Pension Liability/(Asset) – end of year Plan Fiduciary Net Position – beginning of year Plan Fiduciary Net Position – end of year   Contributions  –  Employer   Contributions  –  Member Net Investment Income   Benefit  payments,  including  refunds Administrative Expenses Net  Change  in  Plan  Fiduciary  Net  Position Plan Fiduciary Net Position Total Pension Liability – beginning of year Total Pension Liability – end of year   Service  Cost Interest   Change  in  benefit  terms Difference between expected and actual experience   Change  in  assumptions   Benefit  payments,  including  refunds Net change in Total Pension Liability Total Pension Liability  $    $    $   $                $   $  $                $    $   1,982,542,856 9,091,347,964 10,337,615,927 304,328,386 121,033,152 1,517,426,988 (689,053,212) (7,467,351) 1,246,267,963 11,830,649,882 12,320,158,783 186,376,756 842,229,062 0 (17,694,278) 167,650,573 (689,053,212) 489,508,901 State Employee & Teacher Program  $    $   $            $    $    $        $        $   157,008,539 2,192,579,050 2,492,396,080 33,374,006 33,304,646 366,707,141 (131,761,477) (1,807,286) 299,817,030 2,505,669,823 $ 2,649,404,619 72,802,833 181,018,066 0 21,675,374 0 (131,761,477) 143,734,796 Consolidated Plan for PLD & Withdrawn Schedule of Change in Net Pension Liability as of June 30, 2014   $     $     $     $   $       $     $     $         $       (2,629,258) 50,574,604 57,189,900 932,223 528,192 8,416,042 (3,219,480) (41,681) 6,615,296 52,374,785 54,560,642 1,530,119 3,773,959 0 (324,891) 426,150 (3,219,480) 2,185,857 Judicial Retirement Program $   $   $         $     $         $     $             $     $         (3,614,839) 9,679,959 11,120,032 3,857 139,501 1,622,296 (317,606) (7,975) 1,440,073 6,872,614 7,505,193 400,072 510,813 0 (46,483) 85,783 (317,606) 632,579 Legislative Retirement Program ♦ ACTUARIAL VALUATION JUNE 30, 2014 SECTION II ACCOUNTING INFORMATION Maine  Public  Employees  Re rement  System 83 84 Maine  Public  Employees  Re rement  System 8.125%   1%  Increase  $             1%  Decrease   Current  Discount  Rate   1%  Increase 738,715,359 1,982,542,856 3,463,277,129 7.125%   Current  Discount  Rate Net Pension Liability 6.125%   1%  Decrease Discount Rate State Employee & Teacher Program          $   (278,189,312) 157,008,539 332,811,788 8.25% 7.25% 6.25% Consolidated Plan for PLD & Withdrawn $ (6,810,102) (2,629,258) 2,168,262 8.125% 7.125% 6.125% Judicial Retirement Program Sensitivity of Net Pension Liability to Changes in Discount Rate as of June 30, 2014       $   (4,288,607) (3,614,839) (2,811,760) 8.125% 7.125% 6.125% Legislative Retirement Program ACTUARIAL VALUATION JUNE 30, 2014 ♦ SECTION II ACCOUNTING INFORMATION (continued) Composite  Gain  (or  Loss)  During  Year $ 489,564,839 (167,650,573)     Non-Recurring Items 17,694,276   $                      657,215,412   Combined  Liability  Experience 639,521,136 Gain (or Loss) During Year from Financial Experience      $       Investment Income Type of Activity State Employee & Teacher Program $  $     $ 90,322,476 0 90,322,476 (19,939,857) 110,262,333 Consolidated Plan for PLD   $        $   2,382,717 (426,150) 2,808,867 324,891   $                            2,483,976 Judicial Retirement Program ANALYSIS OF FINANCIAL EXPERIENCE Gain and Loss in Accrued Liability During Year Resulting from Differences Between Assumed Experience and Actual Experience For Year Ended June 30, 2014 $    $    $   436,433 (85,783) 522,216 46,483 475,733 Legislative Retirement Program ♦ ACTUARIAL VALUATION JUNE 30, 2014 SECTION II ACCOUNTING INFORMATION (continued) Maine  Public  Employees  Re rement  System 85 86 (1) Active Member Contributions        $   2,315,075,905            2,290,505,939     2,271,164,594 2,229,984,968     2,117,903,830     2,002,784,768     1,898,148,565            $                         7,572,038,285 7,251,821,900 6,656,860,191 6,453,384,730 6,856,828,427 6,622,143,609 6,209,005,616 (2) Retirees Vested Terms, Beneficiaries                                $   Maine  Public  Employees  Re rement  System        $   423,097,001                412,347,408     398,895,449     379,478,840     352,496,429     324,627,396     300,245,422                            $   9,466,378 9,464,604 9,379,428 9,028,737 8,510,723 7,980,202 7,481,505 2014 2013 2012 2011 2010 2009 2008        $   2,464,847                          2,363,217 2,321,819 2,228,233 2,099,683     2,005,895     1,892,250 Legislative Retirement Program 2014 2013 2012 2011 2010 2009 2008 Judicial Retirement Program 2014 2013 2012 2011 2010 2009 2008                      $                                $                          $   5,073,388                      5,022,522 3,895,976 4,002,993 3,680,940 3,636,651 3,237,876 28,785,537                  26,716,806 24,731,810 24,690,578 26,915,670 25,570,008 24,943,576 1,493,728,396        1,408,353,946 1,289,996,376 1,202,315,483 1,110,451,355 1,065,541,546 1,019,812,922                             $              $                                  $   (33,042)                        (427,342) 25,844 (506,033) 292,741 (142,737) 474,879 16,308,727                    16,619,525 12,229,440 14,148,981 17,723,306 16,993,110 15,209,371 732,579,221 684,893,241 716,816,415 685,780,199 659,894,751 642,568,466 633,570,676 2,433,044,593          2,455,677,235 2,625,281,496 2,598,295,489 3,642,411,748 3,696,290,955 3,560,878,330 (3) Active Members (Employer Financed Portion) Consolidated Plan for Participating Local Districts & Withdrawn 2014 2013 2012 2011 2010 2009 2008 State Employee and Teacher Program Valuation Date June 30, Reported Assets          $   10,775,701                        9,771,955 9,322,419 9,040,180     8,634,635     8,717,885 9,099,133          $   55,419,017                    51,055,251     49,735,004     49,324,784     47,677,635     48,478,344     50,418,942        $   2,415,219,122          2,213,416,717     2,136,653,347     2,119,465,931     2,045,337,000     2,083,711,056     2,201,652,592        $   10,017,512,006          9,177,749,627     8,880,730,120     8,736,885,121     8,313,459,810     8,325,951,236     8,631,557,629 SOLVENCY TEST Aggregate Accrued Liabilities For 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% (1) 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 95% 99% 100% 90%  95% 100%                                                 9,798%          538% 2,013% 555% 875% 2,155% 836% 105%          89% 128% 110% 69% 88% 118% 68%          57% 62% 78% 88% 108% 139% 5%            0% 0% 2% 0% 0% 15% Portion of Accrued Liabilities  Covered by Reported Assets (2) (3) ACTUARIAL VALUATION JUNE 30, 2014 ♦ SECTION II ACCOUNTING INFORMATION (continued) ♦ ACTUARIAL VALUATION JUNE 30, 2014 STATE EMPLOYEE AND TEACHER PROGRAM SUMMARY OF PROGRAM AND PLAN PROVISIONS State Employee and Teacher Program 1. Membership: Membership  is  a  condition  of  employment  for  state  employees  and  teachers,  and  optional  for  elected  and  appointed  officials. Membership ceases on the earlier of withdrawal of contributions, retirement, or death. 2. Member Contributions: Except  as  otherwise  described  below,  members  are  required  to  contribute  7.65%  of  earnable  compensation. Contribution Requirements for Special State Employee Groups State  police  and  inland  fisheries  and  wildlife  officers  employed  before  9/1/84  –  8.65%  of  earnable  compensation  for  20  years;;   7.65%  thereafter. Forest  rangers  and  state  prison  employees  employed  before  9/1/84  –  8.65%  of  earnable  compensation  until  eligible  for   retirement;;  7.65%  thereafter. 1998 Special Plan employees which include state prison employees, airplane pilots, forest rangers, defense, veterans and emergency  management  firefighters  employed  at  Bangor  International  Airport,  corrections  employees,  Baxter  State  Park   Authority  rangers,  fire  marshals,  investigators  and  inspectors,  oil  and  hazardous  materials  emergency  response  workers  and   capitol  security  officers  –  8.65%  of  earnable  compensation  for  25  years;;  7.65%  thereafter. State  police  employed  on  or  after  9/16/84  and  special  agent  investigators  hired  before  6/21/82  –  8.65%  of  earnable   compensation  for  25  years;;  7.65%  thereafter. Inland  fisheries  and  wildlife  officers  and  marine  resources  officers  employed  on  or  after  9/1/84  –  8.65%  of  earnable   compensation  for  25  years;;  7.65%  thereafter. 3. Average Final Compensation: For  purposes  of  determining  benefits  payable,  average  final  compensation  is  the  average  annual  rate  of  earnable   compensation for the three years of creditable service (not necessarily consecutive) which produce the highest such average. For  compensation  paid  on  or  after  July  1,  1993,  increases  in  earnable  compensation  of  greater  than  5%  per  year  or  10%   over  the  highest  three  years  are  not  included  in  calculating  average  final  compensation  unless  the  employer  pays  the  cost  of   including such compensation. Earnable compensation does not include sick and vacation pay for those members who had less than ten years of service at July 1, 1993. For members for whom sick and vacation pay is includible in earnable compensation, these payments are included in applying the caps described above. 4. Creditable Service: Creditable  service  includes  service  while  a  member,  certain  service  prior  to  the  establishment  of  the  Program,  purchased   military  service  credit,  other  purchased  service  credit,  and  service  while  receiving  disability  benefits  under  the  Program. 5.     Service  Retirement  Benefits: A. Regular Plan (State Employees and Teachers) i. Provisions for Members with at Least Ten Years of Creditable Service on July 1, 1993 Normal Retirement Age: 60 Maine  Public  Employees  Re rement  System 87 ♦ ACTUARIAL VALUATION JUNE 30, 2014 STATE EMPLOYEE AND TEACHER PROGRAM SUMMARY OF PROGRAM AND PLAN PROVISIONS (continued) Eligibility  for  Members  in  Active  Service  and  Inactive  Members:  25  years  of  creditable  service. Eligibility Alternative for Members in Active Service: At least one year of creditable service immediately before retirement and at least normal retirement age. Eligibility for Members not in Active Service at Retirement, and not in Active Service on or After October 1, 1999: At least ten years of creditable service and at least normal retirement age. Eligibility for Members not in Active Service at Retirement, but in Active Service on or After October 1, 1999: At least five  years  of  creditable  service  and  at  least  normal  retirement  age.   Benefit:  1/50  of  average  final  compensation  multiplied  by  years  of  membership  service  and  up  to  25  years  of  prior   service,  reduced  by  approximately  2¼%  for  each  year  retirement  age  is  less  than  age  60. Form of Payment: Life annuity. ii. Provisions for Members with Less Than Ten Years of Creditable Service on July 1, 1993 Normal Retirement Age: 62 Eligibility  for  Members  in  Active  Service  and  Inactive  Members:  25  years  of  creditable  service. Eligibility Alternative for Members in Active Service: At least one year of creditable service immediately before retirement age and at least normal retirement age. Eligibility for Members not in Active Service at Retirement, and not in Active Service on or After October 1, 1999: At least ten years of creditable service and at least normal retirement age. Eligibility for Members not in Active Service at Retirement, but in Active Service on or After October 1, 1999: At least five  years  of  creditable  service  and  at  least  normal  retirement  age. Benefit:  1/50  of  average  final  compensation  multiplied  by  years  of  membership  service  and  up  to  25  years  of  prior   service,  reduced  by  6%  for  each  year  retirement  age  is  less  than  age  62. Form of Payment: Life annuity. iii. Provisions for Members with Less Than Five Years of Creditable Service on July 1, 2011 Normal  Retirement  Age:  65 Eligibility  for  Members  in  Active  Service  and  Inactive  Members:  25  years  of  creditable  service. Eligibility Alternative for Members in Active Service: At least one year of creditable service immediately before retirement age and at least normal retirement age. Eligibility for Members not in Active Service at Retirement, and not in Active Service on or After October 1, 1999: At least ten years of creditable service and at least normal retirement age. Eligibility for Members not in Active Service at Retirement, but in Active Service on or After October 1, 1999: At least five  years  of  creditable  service  and  at  least  normal  retirement  age. Benefit:  1/50  of  average  final  compensation  multiplied  by  years  of  membership  service  and  up  to  25  years  of  prior   service,  reduced  by  6%  for  each  year  retirement  age  is  less  than  age  65. Form of Payment: Life annuity. 88 Maine  Public  Employees  Re rement  System ♦ ACTUARIAL VALUATION JUNE 30, 2014 STATE EMPLOYEE AND TEACHER PROGRAM SUMMARY OF PROGRAM AND PLAN PROVISIONS (continued) B. Special Plans (State Employees) i.   State  Police  Employed  Before  9/16/84  and  Inland  Fisheries  and  Wildlife  Officers  Employed  Before  9/1/84 Eligibility: 20 years of creditable service in named positions. Benefit:  one-­half  of  average  final  compensation  plus  2%  for  each  year  of  service  in  excess  of  20.  If  greater,  the  pro-­ rated  portion  of  the  benefit  for  service  before  July  1,  1976  is  based  on  annual  pay  instead  of  average  final  pay. Form  of  Payment:  50%  joint  and  survivor  annuity,  or  life  annuity. ii. Forest Rangers Employed Before 9/1/84 Eligibility:  Age  50  with  25  years  of  creditable  service  as  a  forest  ranger. Benefit:  one-­half  of  average  final  compensation  plus  2%  for  each  year  of  service  earned  after  qualification  for   retirement.  If  greater,  the  pro-­rated  portion  of  the  benefit  for  service  before  July  1,  1976  is  based  on  annual  pay   instead  of  average  final  pay. Form of Payment: Life annuity. iii. Liquor Inspectors Employed Before 9/1/84 Eligibility:  Age  55  and  25  years  of  creditable  service  as  a  liquor  inspector. Benefit:  one-­half  of  average  final  compensation  plus  2%  for  each  year  of  service  earned  after  qualification  for   retirement.  If  greater,  the  pro-­rated  portion  of  the  benefit  for  service  before  July  1,  1976  is  based  on  annual  pay   instead  of  average  final  pay.     Form of Payment: Life annuity. iv. State Prison Employees Employed Before 9/1/84 Eligibility:  Age  50  and  20  years  of  creditable  service  as  a  prison  employee.     Benefit:  one-­half  of  average  final  compensation  plus  2%  for  each  year  of  service  earned  after  qualification  for   retirement. Form of Payment: Life annuity. v. 1998 Special Plan 1998  Entrants:  State  prison  employees,  airline  pilots,  forest  rangers  and  liquor  inspectors,  employed  after  8/31/84;;   defense,  veterans  and  emergency  management  firefighters  employed  on  and  after  7/1/98. 2000  Entrants:  Baxter  State  Park  Authority  rangers,  correctional  employees  and  state  fire  marshals  employed  on  or   after  1/1/2000. 2002  Entrants:  Capitol  security  officers  and  oil  and  hazardous  materials  emergency  response  workers. Eligibility: Ten years of creditable service under the 1998 Special Plan in one or a combination of the covered capacities  and  the  attainment  of  age  55  –  OR  –  25  years  of  creditable  service  in  one  or  a  combination  of  the  covered   capacities. Maine  Public  Employees  Re rement  System 89 ♦ ACTUARIAL VALUATION JUNE 30, 2014 STATE EMPLOYEE AND TEACHER PROGRAM SUMMARY OF PROGRAM AND PLAN PROVISIONS (continued) Benefit:  For  service  prior  to  coverage  in  the  1998  Special  Plan,  1/50  of  average  final  compensation  multiplied  by   years of service reduced for retirement before age 60 or 62, except oil and hazardous materials emergency response workers  and  certain  prison  employee  benefits  are  reduced  for  retirement  before  age  55. -ANDFor  service  under  the  1998  Special  Plan,  1/50  of  average  final  compensation  multiplied  by  years  of  service  reduced   for  retirement  before  age  55. Form of Payment: Life annuity. vi. 25 & Out Plan 1998  Entrants:  State  police  employed  on  or  after  9/16/84  and  special  agent  investigators  hired  before  6/21/82. 2002  Entrants:  Inland  fisheries  and  wildlife  officers  and  marine  resources  officers  employed  on  and  after  8/31/84. Eligibility:  25  years  of  creditable  service  in  named  positions. Benefit:  1/50  of  average  final  compensation  multiplied  by  years  of  service. Form of Payment: Life annuity. Members  in  Special  Plans  who  fail  to  qualify  for  special  plan  benefits  can  receive  regular  plan  benefits  when  and  as   eligible  and  qualified. 6.     Disability  Retirement  Benefits  Other  Than  No  Age  Benefits  (See  Item  7): Eligibility:  Disabled  as  defined  in  the  MainePERS  statutes  prior  to  normal  retirement  age;;  employed  prior  to  October  16,  1992   and  did  not  elect  No  Age  Disability  Benefits. Benefit:  66⅔%  of  average  final  compensation,  reduced  by  employment  earnings  over  the  specified  statutory  limit,  and  to   the  extent  that  the  benefit,  in  combination  with  Worker’s  Compensation  and  Social  Security,  exceeds  80%  of  average  final   compensation. Form  of  Payment:  Payment  begins  on  termination  of  service  and  ceases  on  cessation  of  disability  or  after  five  or  two  years,   depending on disability plan, unless the member is unable to engage in any substantially gainful activity, in which case payments  cease  on  the  earlier  of  ten  years  following  normal  retirement  age  or  on  the  date  the  service  retirement  benefit  equals   or  exceeds  the  disability  benefit. Conversion  to  Service  Retirement:  During  the  period  of  disability,  average  final  compensation  is  increased  with  cost-­of-­living   adjustments  and  service  is  credited.  On  the  date  when  service  benefits  reach  a  level  of  66⅔%  of  average  final  compensation   or  ten  years  after  the  normal  retirement  date,  if  earlier,  the  disability  benefit  converts  to  a  service  retirement  benefit  based  on   service  and  average  final  compensation  at  that  point. 7.   No  Age  Disability  Retirement  Benefits Eligibility:  Disabled  as  defined  in  the  MainePERS  statutes;;  employed  on  or  after  October  16,  1992  or  employed  prior  to   October 16, 1992 and elected the provisions of No Age Disability. Benefit:  59%  of  average  final  compensation,  reduced  by  employment  earnings  over  the  specified  statutory  limit,  and  to   the  extent  that  the  benefit,  in  combination  with  Worker’s  Compensation  and  Social  Security,  exceeds  80%  of  average  final   compensation. Form  of  Payment:  Payment  begins  on  termination  of  service  and  ceases  on  cessation  of  disability  or  after  five  or  two  years,   depending  on  disability  plan,  unless  the  member  is  unable  to  engage  in  any  substantially  gainful  activity;;  in  which  case   payments  cease  on  the  date  the  service  retirement  benefit  equals  or  exceeds  the  disability  benefit. 90 Maine  Public  Employees  Re rement  System ♦ ACTUARIAL VALUATION JUNE 30, 2014 STATE EMPLOYEE AND TEACHER PROGRAM SUMMARY OF PROGRAM AND PLAN PROVISIONS (continued) Conversion  to  Service  Retirement:  During  the  period  of  disability,  average  final  compensation  is  increased  with  cost-­of-­living   adjustments  and  service  is  credited.  On  the  date  when  service  benefits  reach  a  level  of  59%  of  average  final  compensation,   the  disability  benefit  converts  to  a  service  retirement  benefit  based  on  service  and  average  final  compensation  at  that  point. 8.   Pre-­Retirement  Ordinary  Death  Benefits: Eligibility: Death while active, inactive eligible to retire, or disabled. Benefit:  Designated  beneficiary,  spouse,  child(ren),  or  parents  entitled  to  benefit  calculated  as  if  deceased  member  had  retired   under  Option  2  (see  item  12);;  however,  beneficiary  may  elect  survivor  benefits  payable  to  a  surviving  spouse,  dependent   child(ren),  parent,  or  other  designated  beneficiaries  in  monthly  amounts  varying  by  status  of  beneficiary  and  number  of  eligible   survivors.  Otherwise  accumulated  contributions  with  interest  are  payable  to  designated  beneficiary,  spouse,  child(ren),  older   parents, or estate. 9.   Pre-­Retirement  Accidental  Death  Benefits: Eligibility: Death while active or disabled resulting from an injury received in the line of duty. • If the member is survived by a spouse who has the care of dependent child(ren) of the member, the surviving spouse shall receive    an  annual  sum  equal  to  the  member’s  average  final  compensation.  When  there  is  no  longer  any  dependent  child,   the  surviving  spouse  shall  receive  2/3  of  member’s  average  final  compensation  until  death. • If the member is survived by a spouse who does not have the care of the member’s dependent child(ren), the surviving spouse  and  dependent  child(ren)  shall  share  equally  an  annual  sum  equal  to  the  member’s  average  final  compensation.   When  there  is  no  longer  any  dependent  child,  the  surviving  spouse  shall  receive  2/3  of  member’s  average  final   compensation until death. • If the member leaves no spouse, the dependent child(ren) shall be paid an annual sum equal to the member’s average final  compensation.  Benefits  will  cease  when  the  last  dependent  child  no  longer  meets  the  definition  of  “dependent  child”. 10. Refund of Contributions: Eligibility: Termination of service without retirement or death. Benefit:  Member’s  accumulated  contributions  with  interest. 11. Cost-of-Living Adjustments: All  service  and  disability  retirement  and  survivor  benefits  are  adjusted  each  year  that  there  is  a  percentage  change  in  the   Consumer  Price  Index,  based  on  the  Index.  If  the  percentage  change  is  negative  then  no  adjustment  is  made  in  that  year.  In   subsequent years, the adjustment that would have been made will be adjusted downward to the extent necessary to recoup the full actuarial value of not having made the previous year’s negative adjustment. This process of adjustment may occur over a  multi-­year  period  if  needed  to  recoup  the  full  value  of  the  non-­zero  COLA. Cost-­of-­living  adjustments  are  effective  September  1  and  are  applied  to  that  portion  of  the  benefit  which  is  not  in-­excess   of  $20,000  (indexed)  for  all  benefits  which  have  been  in  payment  for  twelve  months.  The  maximum  annual  increase  is  3%.   Average  final  compensation  used  in  determining  disability  benefits  for  disabled  members  is  similarly  adjusted  for  purposes  of   determining  the  recipient’s  service  retirement  benefit  if  and  when  the  recipient  moves  to  service  retirement. Members on service retirement who did not have ten years of service on July 1, 1993 will not receive a cost-of-living adjustment until 12 months after their normal retirement age. No cost-of-living adjustments will be made until September 2014. Maine  Public  Employees  Re rement  System 91 ♦ ACTUARIAL VALUATION JUNE 30, 2014 STATE EMPLOYEE AND TEACHER PROGRAM SUMMARY OF PROGRAM AND PLAN PROVISIONS (continued) 12.   Methods  of  Payment  of  Service  Retirement  Benefits: At  retirement,  a  member  who  retires  with  a  benefit  must  choose  from  the  following  methods  of  payment: Full  Benefit:   Unadjusted  benefit  paid  for  the  life  of  the  member  only. Option  1:           Cash  refund  equal  to  the  remaining  employee  contribution  balance,  if  any,  at  the  date  of  death  (where  the       employee  contribution  balance  has  been  reduced  each  month  by  the  portion  of  the  monthly  benefit  deemed  to     be provided by employee contributions). Option  2:     100%  joint  and  survivor  annuity. Option  3:       0%  joint  and  survivor  annuity. Option 4: Joint and survivor annuity at any percentage other than those available under Option 2 and Option 3. Option  5:           Designated  percentage  of  the  benefit  (not  less  than  51%)  payable  to  the  member,  with  the  remaining       percentage  (the  two  to  equal  100%)  payable  to  a  beneficiary  (may  only  be  a  sole  beneficiary)  while  both  are     alive. At the death of either, the higher of the two percentages is paid to the survivor for the survivor’s life, and the  lower-­percentage  benefit  ceases  to  be  paid.       Option  6:   100%  joint  and  survivor  annuity  (Option  2)  with  pop-­up*. Option  7:     50%  joint  and  survivor  annuity  (Option  3)  with  pop-­up.* Option 8: Option 4 with pop-up*. *   The  “pop-­up”  feature  attached  to  a  given  Option  means  that  in  the  case  of  a  beneficiary  predeceasing  the  member,  the   member’s  benefit  will  be  revised  prospectively  to  the  amount  that  the  benefit  would  have  been  had  the  member  selected   Full  Benefit  payment  upon  retirement. 13. Changes since Prior Valuation: None 92 Maine  Public  Employees  Re rement  System ♦ ACTUARIAL VALUATION JUNE 30, 2014 STATE EMPLOYEE AND TEACHER PROGRAM ACTUARIAL ASSUMPTIONS and METHODS A. Actuarial Assumptions 1. Rate of Investment Return: State Employees 7.125% Teachers 7.125% Rate is net of both administrative and investment expense. 2.   Cost-­of-­Living  Increases  in  Benefits: 3. State Employees 2.55% Teachers 2.55% Rates of Salary Increase (% at Selected Years of Service): Service State Employees Teachers 0 10.50% 13.50% 5 6.00 6.25 10 4.50 5.00 15 3.95 4.50 20 3.70 3.70 25  and  over 3.50 3.50 The  above  rates  include  a  3.50%  across-­the-­board  increase  at  each  year  of  service. 4. Rates of Termination (% at Selected Service): Service State Employees Teachers 0 30.00% 37.00% 5 7.50 12.00 10 4.40 6.90 15 4.00 5.50 20 4.00 5.50 25 4.00 5.50 Non-vested members are assumed to take a refund of contributions with interest. Once vested, the member is assumed to  elect  the  greater  of  the  deferred  vested  benefit  or  a  refund. Maine  Public  Employees  Re rement  System 93 ♦ ACTUARIAL VALUATION JUNE 30, 2014 STATE EMPLOYEE AND TEACHER PROGRAM ACTUARIAL ASSUMPTIONS and METHODS (continued) 5. Rate of Mortality for Active Healthy Lives and Retired Healthy Lives at Selected Ages (number of deaths per 10,000 members)*: State Employees *   Teachers Age Male Female Male Female 50 16 13 14 11 55 27 24 22 20 60 53 47 41 36 65 103 90 81 71 70 177 155 142 125 75 306 249 246 204 80 554 413 448 338 85 997 708 807 571 90 1,727 1,259 1,418 1,026 95 2,596 1,888 2,267 1,654 For  State  Regular  and  Teachers  5%  of  deaths  assumed  to  arise  out  of  and  in  the  course  of  employment;;  for  State   Special  20%  of  deaths  are  assumed  to  arise  out  of  and  in  the  course  of  employment. Rates  for  State  Employees  are  based  on  the  RP  2000  Mortality  Table  for  Males  and  Females  projected  forward  for  2015   using Scale AA. Rates for Teachers are based on the same projected table but with a two-year set back. 6. Rates of Mortality for Disabled Lives and Retired Disabled Lives at Selected Ages (number of deaths per 10,000 members): State Employees Teachers Age Male Female Male Female 25 30 35 40 45 50 55 60 65 70 92 112 134 160 193 236 295 362 446 576    72 89 109 126 144 165 191 226 272 331 92 112 134 160 193 236 295 362 446 576    72 89 109 126 144 165 191 226 272 331 Rates  are  based  on  the  Revenue  Ruling  96-­7  Disabled  Mortality  Table  for  Males  and  Females. 94 Maine  Public  Employees  Re rement  System ♦ ACTUARIAL VALUATION JUNE 30, 2014 STATE EMPLOYEE AND TEACHER PROGRAM ACTUARIAL ASSUMPTIONS and METHODS (continued) 7. Rates of Retirement at Selected Ages (number retiring per 1,000 members): State Employees Age *   Tier 1 Tier 2 Tier 3 Teachers Tier 1 Tier 2 Tier 3 45 3 NA NA 13 NA NA 50 19 NA NA 29 NA NA 55 19 NA NA 79 NA NA 59 58 75 75 150 225 225 60 300 100 100 225 225 225 61 300 100 100 230 225 225 62 270 250 125 250 300 225 63 270 250 125 260 300 225 64 250 250 125 270 300 225 65 250 250 250 300 300 300 70 1,000 1,000 1,000 1,000 1,000 1,000 Members  of  Special  Groups  are  assumed  to  retire  at  a  rate  of  50%  per  year,  once  they  reach  eligibility  for  unreduced   benefits  at  every  age.   In the case of State Regular and Teacher employees, Tier 1 refers to those who had accrued at least ten years of service by  July  1,  1993.  Tier  2  are  those  who  had  not  or  were  hired  after  that  date  but  had  five  years  of  service  by  July  1,  2011.   Tier  3  are  those  who  did  not  have  five  years  of  service  by  July  1,  2011.     8. Rates of Disability at Selected Ages (members becoming disabled per 10,000 members)*: Age State Employees 25 30 6.8   Teachers   7.6 35 10.2 40 19.0 3.5 3.8 3.8   5.1 45   27.9 11.6 50   42.7 18.2 55   53.0 24.8 63.0 31.3 60   *  10%  assumed  to  receive  Workers  Compensation  benefits  offsetting  disability  benefit;;  also,  rates  for  State  Special  groups     are  higher  by  7  per  10,000  at  all  ages. 9. Family Composition Assumptions: 80%  of  active  members  are  married  and  have  two  children  born  when  the  member  is  24  and  28;;  children  are  dependent   until  age  18;;  female  spouse  is  three  years  younger  than  male  spouse;;  member  has  no  dependent  parents;;  unmarried   members  have  beneficiaries  entitled  to  benefits  worth  80%  as  much  as  those  of  married  members’  beneficiaries. Maine  Public  Employees  Re rement  System 95 ♦ ACTUARIAL VALUATION JUNE 30, 2014 STATE EMPLOYEE AND TEACHER PROGRAM ACTUARIAL ASSUMPTIONS and METHODS (continued) 10. Vacation/Sick Leave Credits: For members who had ten years of service on July 1, 1993, credits for unused vacation and sick leave may be used to increase  final  average  compensation  and/or  creditable  service.  In  order  to  reflect  this,  projected  retirement  benefits  are   increased  by  0.48%  for  state  (regular)  employees  and  0.75%  for  teachers. 11. Date of Adoption of Assumptions The assumptions were adopted by the Trustees as a result of the latest experience study review performed in 2011 and covering  the  period  July  1,  2005  through  June  30,  2010. 12. Changes since Last Valuation   The  rate  of  investment  return  assumption  was  changed  from  7.25%  to  7.125%. B. Actuarial Methods 1. Funding Method: The  Individual  Entry  Age  Normal  method  is  used  to  determine  costs.  Under  this  funding  method,  a  total  contribution  rate  is   determined  which  consists  of  two  elements:  the  normal  cost  rate  and  the  unfunded  actuarial  liability  (UAL)  rate. For Teachers and State Employees, including each of the State Special Plans, a normal cost rate is determined for each active member. This rate is determined by taking the value, as of age at entry into a plan in the Program, of the member’s projected  future  benefits,  reducing  it  by  the  value  of  future  member  contributions,  and  dividing  it  by  the  value,  also  as  of   the member’s entry age, of the member’s expected future salary. In addition to contributions required to meet a plan’s normal cost, contributions are required to fund the plan’s unfunded actuarial  liability.  The  actuarial  liability  is  defined  as  the  present  value  of  future  benefits  less  the  present  value  of  future   normal costs and future member contributions. The unfunded actuarial liability is the total of the actuarial liability for all members less the actuarial value of assets. The actuarial liability includes projections of future member pay increases and future  service  credits  and  should  not  be  confused  with  the  Accrued  Benefit  Liability. The unfunded actuarial liability is amortized by annual payments. The payments are determined so that they will be a level percentage  of  pay,  assuming  payroll  increases  3.50%  per  year.  The  UAL  measured  as  of  June  30,  2011  is  amortized  over   the remaining 14-years of the statutory period. Net gains or losses to the System are amortized over a 10-year period from  the  date  when  they  are  first  measured. 2. Asset Valuation Method: For purposes of determining the State contribution to the plans in the Program, we use an actuarial value of assets. The  asset  adjustment  method  dampens  the  volatility  in  asset  values  that  could  occur  because  of  fluctuations  in  market   conditions.  Use  of  an  asset  smoothing  method  is  consistent  with  the  long-­term  nature  of  the  actuarial  valuation  process. In  determining  the  actuarial  value  of  assets,  we  calculate  an  expected  actuarial  value  based  on  cash  flow  for  the  year  and   imputed returns at the actuarial assumption. This expected value is compared to the market value and one-third of the difference  is  added  to  the  preliminary  actuarial  value  to  arrive  at  the  final  actuarial  value. In  the  2014  valuation  there  was  an  additional  recognition  of  37.5%  of  the  remaining  balance  of  past  investment  gains. 3. Changes since Last Valuation: There  was  an  additional  recognition  of  37.5%  of  the  past  investment  gains  in  the  asset  smoothing  method. 96 Maine  Public  Employees  Re rement  System ♦ ACTUARIAL VALUATION JUNE 30, 2014 CONSOLIDATED PLAN FOR PARTICIPATING LOCAL DISTRICTS SUMMARY OF PROGRAM AND PLAN PROVISIONS Consolidated Plan for Participating Local Districts 1. Member Contributions: Members are required to contribute a percent of earnable compensation, which varies by Plan as follows: Regular  AC  &  AN Regular  BC Special  1C  &  1N Special  2C  &  2N Special  3C  &  3N Special  4C  &  4N 7.0% 3.5% 7.0% 7.0% 8.5%  for  first  25  years,  7.0%  after 8.0%  for  first  25  years,  7.0%  after Member  contributions  to  increase  by  0.5%  in  FY  16  and  FY  17. 2. Average Final Compensation: For  purposes  of  determining  benefits  payable  under  the  Plan,  average  final  compensation  is  the  average  annual  rate  of   earnable compensation for the three years of creditable service (not necessarily consecutive) which produce the highest such average. 3. Creditable Service: Creditable  service  includes  service  while  a  member,  certain  service  prior  to  the  establishment  of  the  Plan,  purchased  service   credit  of  which  there  are  several  types,  and  service  while  receiving  disability  benefits  under  the  Plan. 4.   Service  Retirement  Benefits: Regular Plan AC Normal Retirement Age: Plan Members prior to July 1, 2014:                    New  Members  to  the  Plan  on  or  after  July  1,  2014:   60 65 Eligibility  for  Member  in  Active  Service  and  Inactive  Members:  25  years  of  creditable  service. Eligibility Alternative for Members in Active Service: At least one year of creditable service immediately before retirement and at least normal retirement age. Eligibility for Members not in Active Service at Retirement and not in Active Service on or after October 1, 1999: At least ten years of creditable service and at least normal retirement age. Eligibility  for  Members  not  in  Active  Service  at  Retirement  but  in  Active  Service  on  or  after  October  1,  1999:  At  least  five  years   of creditable service and at least normal retirement age. Benefit:  1/50  of  average  final  compensation  multiplied  by  years  of  membership  service  under  Consolidated  Plan  AC  reduced   by:   Plan  Members  prior  to  July  1,  2014:   approximately  2¼%  for  each  year that a member is younger than age 60 at retirement.     New  Members  to  the  Plan  on  or  after  July  1,  2014:     6%  for  each  year  that  a  member  is younger  than  age  65  at  retirement. Maine  Public  Employees  Re rement  System 97 ♦ ACTUARIAL VALUATION JUNE 30, 2014 CONSOLIDATED PLAN FOR PARTICIPATING LOCAL DISTRICTS SUMMARY OF PROGRAM AND PLAN PROVISIONS (continued) Form  of  Payment:  Life  annuity  (“full  benefit”),  unless  an  optional  method  of  payment  is  selected. Cost-­of-­Living  Adjustment:  See  item  10. Regular Plan AN This  benefit  plan  is  the  same  as  Regular  Benefit  Plan  AC,  except  that  there  is  no  provision  for  cost-­of-­living  adjustments. Regular Plan BC Normal Retirement Age: Plan Members prior to July 1, 2014:                    New  Members  to  the  Plan  on  or  after  July  1,  2014:   60 65 Eligibility  for  Member  in  Active  Service  and  Inactive  Members:  25  years  of  creditable  service. Eligibility Alternative for Members in Active Service: At least one year of creditable service immediately before retirement and at least normal retirement age. Eligibility for Members not in Active Service at Retirement and not in Active Service on or after October 1, 1999: At least 10 years of creditable service and at least normal retirement age. Eligibility  for  Members  not  in  Active  Service  at  Retirement  but  in  Active  Service  on  or  after  October  1,  1999:  At  least  five  years   of creditable service and at least normal retirement age. Benefit:  1/100  of  average  final  compensation  multiplied  by  years  of  membership  service  under  Consolidated  Plan  BC  reduced   by:   Plan  Members  prior  to  July  1,  2014:   approximately  2¼%  for  each  year that a member is younger than age 60 at retirement.     New  Members  to  the  Plan  on  or  after  July  1,  2014:     6%  for  each  year  that  a  member  is younger  than  age  65  at  retirement. Form  of  Payment:  Life  annuity  (“full  benefit”),  unless  an  optional  method  of  payment  is  selected. Cost-­of-­Living  Adjustment:  See  item  10. Regular Plan Notes 1.   Under  certain  circumstances,  Regular  Plan  service  can  count,  on  a  pro  rata  basis,  toward  meeting  Special  Plan  benefit   eligibility requirements. 2.     The  actual  benefit  for  service  earned  prior  to  coverage  under  the  Consolidated  Plan  may  be  based  on  a  variable   percentage  of  average  final  compensation  multiplied  by  years  of  service  under  any  previous  plan(s)  (the  percentage   depends on the previous plan(s)). Special Plan 1C Eligibility: 20 years of creditable service in named positions. Benefit:  One-­half  of  average  final  compensation  plus  2%  for  each  year  of  service  in  excess  of  20. 98 Maine  Public  Employees  Re rement  System ♦ ACTUARIAL VALUATION JUNE 30, 2014 CONSOLIDATED PLAN FOR PARTICIPATING LOCAL DISTRICTS SUMMARY OF PROGRAM AND PLAN PROVISIONS (continued) Form  of  Payment:  Life  annuity  (“full  benefit”),  unless  an  optional  method  of  payment  is  selected. Cost-­of-­Living  Adjustment:  See  item  10. Special Plan 1N This  benefit  plan  is  identical  to  Special  Benefit  Plan  1C,  except  that  there  is  no  provision  for  cost-­of-­living  adjustments. Special Plan 2C Eligibility:  25  years  of  creditable  service  in  named  positions. Benefit:  One-­half  average  final  compensation  plus  2%  for  each  year  of  service  in  excess  of  25. Form  of  Payment:  Life  annuity  (“full  benefit”),  unless  an  optional  method  of  payment  is  selected. Cost-­of-­Living  Adjustment:  See  item  10. Special Plan 2N This  benefit  plan  is  identical  to  Special  Benefit  Plan  2C,  except  that  there  is  no  provision  for  cost-­of-­living  adjustments. Special Plan 3C Eligibility:  25  years  of  creditable  service  in  named  positions. Benefit:  Two  thirds  of  average  final  compensation  plus  2%  for  each  year  of  service  in  excess  of  25. Form  of  Payment:  Life  annuity  (“full  benefit”),  unless  an  optional  method  of  payment  is  selected. Cost-­of-­Living  Adjustment:  See  item  10. Special Plan 3N This  benefit  is  identical  to  Regular  Benefit  Plan  3C,  except  that  there  is  no  provision  for  cost-­of-­living  adjustments. Special Plan 4C Eligibility:  Age  55  with  25  years  of  creditable  service  in  named  positions. Benefit:  1/50  of  average  final  compensation  multiplied  by  years  of  membership  service  under  Consolidated  Plan  4C  reduced   by:    Plan  Members  prior  to  July  1,  2014:              New  Members  to  the  Plan  on  or  after  July  1,  2014:               approximately  2¼%  for  each  year that a member is younger than age 55  at  retirement. 6%  for  each  year  that  a  member  is        younger  than  age  55  at  retirement. Form  of  Payment:  Life  annuity  (“full  benefit”),  unless  an  optional  method  of  payment  is  selected. Cost-­of-­Living  Adjustment:  See  item  10. Maine  Public  Employees  Re rement  System 99 ♦ ACTUARIAL VALUATION JUNE 30, 2014 CONSOLIDATED PLAN FOR PARTICIPATING LOCAL DISTRICTS SUMMARY OF PROGRAM AND PLAN PROVISIONS (continued) Special Plan 4N This  benefit  plan  is  identical  to  Special  Benefit  Plan  4C,  except  that  there  is  no  provision  for  cost-­of-­living  adjustments. Special Plan Notes 1.   If  a  Special  Plan  member  fails  to  meet  the  Special  Plan  eligibility  criteria,  their  service  retirement  benefit  is  that  provided   by  the  applicable  underlying  Regular  Plan;;  Special  Plan  service  credits  are  used  toward  Regular  Plan  eligibility   requirements. 2.   Service  in  all  Special  Plans  counts,  on  a  percentage  basis,  toward  meeting  the  benefit  eligibility  requirements  of  any   Special Plan. 3.     The  actual  benefit  for  service  earned  prior  to  coverage  under  the  Consolidated  Plan  may  be  based  on  a  variable   percentage  of  average  final  compensation  multiplied  by  years  of  service  under  any  previous  plan(s)  (the  percentage   depends on the previous plan(s)). 5.   Pre-­Retirement  Accidental  Death  Benefits: Eligibility: Death while active or disabled resulting from injury received in the line of duty. Benefit: • If  the  member  leaves  no  dependent  children,  two-­thirds  of  the  member’s  average  final  compensation  to  the  surviving   spouse until death. • If the member is survived by a spouse who has the care of dependent child(ren) of the member, the surviving spouse shall  receive  an  annual  sum  equal  to  the  member’s  average  final  compensation.  When  there  is  no  longer  any  dependent   child(ren),  the  surviving  spouse  shall  receive  two-­thirds  of  member’s  average  final  compensation  until  death. • If the member is survived by a spouse who does not have the care of the member’s dependent child(ren), the surviving spouse  and  dependent  child(ren)  shall  share  equally  an  annual  sum  equal  to  the  member’s  average  final  compensation.   When  there  is  no  longer  any  dependent  child(ren),  the  surviving  spouse  shall  receive  two-­thirds  of  member’s  average  final   compensation until death. If  the  member  leaves  no  spouse,  the  dependent  child(ren)  shall  be  paid  an  annual  amount  equal  to  the  member’s  average  final   compensation.  Benefits  will  cease  when  the  last  dependent  child  no  longer  meets  the  definition  of  “dependent  child.” 6.   Pre-­Retirement  Ordinary  Death  Benefits: Eligibility: Death while active, inactive, eligible to retire, or disabled. Benefit:  Designated  beneficiary,  spouse,  child(ren),  or  parents  entitled  to  benefit  calculated  as  if  deceased  member  had  retired   under  Option  2  (see  item  12);;  however,  beneficiary  may  elect  survivor  benefits  payable  to  a  surviving  spouse,  dependent   child(ren),  parents,  or  other  designated  beneficiaries  in  monthly  amounts  varying  by  status  of  beneficiary  and  number  of   eligible  survivors.  Otherwise,  accumulated  contributions  with  interest  are  payable  to  designated  beneficiary,  spouse,  child(ren),   older parent or estate. 7.   Disability  Retirement  Benefits  Other  Than  No  Age  Benefits  (See  Item  8): Eligibility:  Disabled  as  defined  in  the  MainePERS  statutes,  prior  to  normal  retirement  age,  employed  prior  to  October  16,  1992   and  did  not  elect  No  Age  Disability  Benefits. Benefit:  66⅔%  of  average  final  compensation,  reduced  by  employment  earnings  over  the  specified  statutory  limit,  and  to   the  extent  that  the  benefit  in  combination  with  Worker’s  Compensation  and  Social  Security,  exceeds  80%  of  average  final   compensation. 100 Maine  Public  Employees  Re rement  System ♦ ACTUARIAL VALUATION JUNE 30, 2014 CONSOLIDATED PLAN FOR PARTICIPATING LOCAL DISTRICTS SUMMARY OF PROGRAM AND PLAN PROVISIONS (continued) Form  of  Payment:  Payment  begins  upon  termination  of  service  and  ceases  on  cessation  of  disability  or  after  five  years,  unless   the member is unable to engage in any substantially gainful activity, in which case payments cease on the earlier of ten years following  normal  retirement  age  or  date  the  service  retirement  benefit  equals  or  exceeds  the  disability  benefit. Conversion  to  Service  Retirement:  During  the  period  of  disability,  service  is  credited  and  average  final  compensation  may  be   increased  with  cost-­of-­living  adjustments  (see  item  10).  On  the  date  when  service  benefits  reach  a  level  of  66⅔%  of  average   final  compensation  or  ten  years  after  the  normal  retirement  date,  if  earlier,  the  disability  converts  to  a  service  retirement  benefit   based  on  service  and  average  final  compensation  at  that  point. 8.   No-­Age  Disability  Benefits:   Eligibility:  Disabled  as  defined  in  the  MainePERS  statutes,  employed  on  or  after  October  16,  1992  or  employed  prior  to   October 16, 1992 and elected the provisions of No Age Disability. Benefit:  59%  of  average  final  compensation,  reduced  by  employment  earnings  over  the  specified  statutory  limit,  and  to   the  extent  that  the  benefit  in  combination  with  Worker’s  Compensation  and  Social  Security,  exceeds  80%  of  average  final   compensation. Form  of  Payment:  Payment  begins  upon  termination  of  service  and  ceases  on  cessation  of  disability  or  after  five  years,  unless   the member is unable to engage in any substantially gainful activity, in which case payments cease on the date the service retirement  benefit  equals  or  exceeds  the  disability  benefit. Conversion  to  Service  Retirement:  During  the  period  of  disability,  service  is  credited  and  average  final  compensation  may   be  increased  with  cost-­of-­living  adjustments  (see  item  10).  On  the  date  when  service  benefits  reach  a  level  of  59%  of   average  final  compensation,  the  disability  benefit  converts  to  a  service  retirement  benefit  based  on  service  and  average  final   compensation at that point. 9. Refund of Contributions: Eligibility: Termination of service other than by retirement or death. Benefit:  Member’s  accumulated  contributions  with  interest. 10. Cost-of-Living Adjustments (COLA): All  service  and  disability  retirement  (and  survivor)  benefits  payable  to  (or  in  relation  to)  benefit  recipients  who  were  employed   by  a  PLD  that  elected  a  plan  which  provides  for  a  COLA  are  adjusted  each  year  that  there  is  a  percentage  change  in  the   Consumer  Price  Index,  based  on  the  Index.  If  the  percentage  change  is  negative,  then  no  adjustment  is  made  in  that  year.  In   subsequent years the adjustment that would have been made will be adjusted downward to the extent necessary to recoup the full actuarial value of not having made the previous year’s negative adjustment. This process of adjustment may occur over a multi-­year  period  if  needed  to  recoup  the  full  value  of  the  non-­zero  COLA. Cost-­of-­living  adjustments  are  effective  September  1  and  are  applied  to  all  benefits  which  have  been  in  payment  for  twelve   months  for  retirees  who  retire  on  or  after  September  1,  2015  or  six  months  for  retirees  who  retire  prior  to  September  1,  2015.   The  maximum  annual  increase  is  3%  (4%  prior  to  the  2014  COLA). Maine  Public  Employees  Re rement  System 101 ♦ ACTUARIAL VALUATION JUNE 30, 2014 CONSOLIDATED PLAN FOR PARTICIPATING LOCAL DISTRICTS SUMMARY OF PROGRAM AND PLAN PROVISIONS (continued) 11.   Methods  of  Payment  of  Service  Retirement  Benefits: At retirement, a member must choose one of the following methods of payment. Full  Benefit:    Unadjusted  benefit  paid  for  the  life  of  the  member  only. Option  1:   Cash  refund  equal  to  the  remaining  employee  contribution  balance,  if  any,  at  the  date  of  death  (the  employee           contribution  balance  having  been  reduced  each  month  by  the  portion  of  the  monthly  benefit  deemed  to  be       provided by employee contributions). Option  2:     100%  joint  and  survivor  annuity Option  3:     50%  joint  and  survivor  annuity Option 4: Joint and survivor annuity at any percentage other than those available under Option 2 and Option 3. Option  5:     Designated  percentage  of  the  benefit  (not  less  than  51%)  payable  to  the  member,  with  the  remaining  percentage         (the  two  to  equal  100%)  payable  to  a  beneficiary  (may  only  be  a  sole  beneficiary)  while  both  are  alive.  At  the  death     of either, the higher of the two percentages is paid to the survivor for the survivor’s life, and the lower-percentage     benefit  ceases  to  be  paid. Option  6:     100%  joint  and  survivor  annuity  (Option  2)  with  pop-­up* Option  7:     50%  joint  and  survivor  annuity  (Option  3)  with  pop-­up* Option 8: *   Option 4 with pop-up* The  “pop-­up”  feature  attached  to  a  given  Option  means  that  in  the  case  of  a  beneficiary  predeceasing  the  member,  the   member’s  benefit  will  be  revised  prospectively  to  the  amount  that  the  benefit  would  have  been  had  the  member  selected   Full  Benefit  payment  upon  retirement. 12. Changes in Plan Provisions: None. 102 Maine  Public  Employees  Re rement  System ♦ ACTUARIAL VALUATION JUNE 30, 2014 CONSOLIDATED PLAN FOR PARTICIPATING LOCAL DISTRICTS ACTUARIAL ASSUMPTIONS and METHODS A. Actuarial Assumptions 1. Annual Rate of Investment Return:   7.25% 2.   Cost-­of-­Living  Increases  in  Benefits:   3. 3.12%   through  2014  then  2.55%  thereafter   (where Applicable) Rates of Termination at Selected Years of Service*: Service 0 Regular Special              20.0%            25.0% 1   17.5 2   15.0 3   12.5   7.5 10.0   5.0 4   12.5 10.0 5   7.5 10   2.5   4.0 2.5 15   2.5   2.5 *  Members  with  five  or  more  years  of  service  are  assumed  to  elect  deferred  vested  benefits;;  other  terminations  are   assumed to elect refunds. 4. Rates of Active Healthy Life Mortality at Selected Ages (number of deaths per 10,000 members)*: Age Male Female 50 16 13 55 27 24 60 53 47 65 103 90 70 177 155 75 306 249 80 554 413 85 997 708 90 1,727 1,259 95 2,596 1,888 *  For  Regulars,  5%  of  deaths  are  assumed  to  arise  out  of  and  in  the  course  of  employment;;  for  Specials,  20%  of  deaths   are assumed to arise out of and in the course of employment. Rates  are  based  on  the  RP  2000  Mortality  Table  for  Males  and  Females  projected  forward  for  2015  using  Scale  AA. Maine  Public  Employees  Re rement  System 103 ♦ ACTUARIAL VALUATION JUNE 30, 2014 CONSOLIDATED PLAN FOR PARTICIPATING LOCAL DISTRICTS ACTUARIAL ASSUMPTIONS and METHODS (continued) 5. Rates of Mortality for Disabled Lives at Selected Ages (number of deaths per 10,000 members): Age Male Female 25 30 35 40 45 50 55 60 65 70 92 112 134 160 193 236 295 362 446 576    72 89 109 126 144 165 191 226 272 331 Rates  are  based  on  the  Revenue  Ruling  96-­7  Disabled  Mortality  Table  for  Males  and  Females. 6. Rates of Retirement at Selected Ages (number retiring per 1,000 members): Regular Plans Age Assumption 45 50 55 60 65 70      50      50 100    270 300 1,000 Special Plans Service 20 21-24 25 26-29 30 31-34 35+ Assumption 400 300 400 300 400 300 1,000 Note  that  the  rates  are  only  applied  once  the  member  is  eligible  to  retire,  so  those  in  25  year  plans  are  not  assumed  to   retire at 20 years of service. 104 Maine  Public  Employees  Re rement  System ♦ ACTUARIAL VALUATION JUNE 30, 2014 CONSOLIDATED PLAN FOR PARTICIPATING LOCAL DISTRICTS ACTUARIAL ASSUMPTIONS and METHODS (continued) 7. Rates of Disability at Selected Ages (members becoming disabled per 10,000 members)*: Age All Plans 25 30 35 40 45 50 55 3 4 5 7 15 33 61 *  10%  assumed  to  receive  Worker’s  Compensation  benefits  offsetting  disability  benefit. 8. Family Composition Assumptions: 80%  of  active  members  are  married  and  have  two  children  born  when  the  member  is  24  and  28;;  children  are  dependent   until  age  18;;  spouses  are  same  age;;  member  has  no  dependent  parents;;  unmarried  members  have  beneficiaries  entitled   to  benefits  worth  80%  as  much  as  those  of  married  members’  beneficiaries. 9. Salary Growth Assumption: Rates of Increases at Selected Years Years of Service Increase 0      9.5% 1 7.5 2 6.0 3 4.7 4 4.3 5 4.0 10 3.5 15 3.5 20 3.5 25 3.5 30 3.5 10. Date of Adoption of Assumptions: The economic assumptions and mortality tables were adopted by the Trustees as a result of the latest experience study review  performed  in  2011  and  covering  the  period  July  1,  2005  through  June  30,  2010.  The  remaining  assumptions  were   adopted by the Trustees as a result of the experience study review performed in 2008 and covering the period July 1, 2000 through June 30, 2008. 11. Assumption Changes Since Last Valuation: None Maine  Public  Employees  Re rement  System 105 ♦ ACTUARIAL VALUATION JUNE 30, 2014 CONSOLIDATED PLAN FOR PARTICIPATING LOCAL DISTRICTS ACTUARIAL ASSUMPTIONS and METHODS (continued) B. Actuarial Methods 1. Funding Method: The  Individual  Entry  Age  Normal  method  is  used  to  determine  costs.  Under  this  funding  method,  the  total  employer   contribution rate is determined which consists of two elements: the normal cost rate and the pooled unfunded actuarial liability  (PUAL)  rate.  The  actual  contribution  for  a  given  PLD  will  include  an  IUUAL  payment  as  well,  unless  the  PLD  came   into  the  Plan  with  surplus  assets  or  has  paid  off  its  IUUAL. For each Regular and Special Plan, a normal cost rate is determined for each active member. This rate is determined by taking  the  value,  as  of  age  at  entry  into  the  Plan,  of  the  member’s  projected  future  benefits,  reducing  it  by  the  value  of   future member contributions, and dividing it by the value, also as of the member’s entry age, of the member’s expected future salary. In addition to normal cost contributions calculated per Plan, the employers in each Plan are required to make contributions to  fund  that  plan’s  PUAL,  if  any.  The  actuarial  liability  is  defined  as  the  present  value  of  future  benefits  less  the  present   value  of  future  normal  costs,  less  future  member  contributions,  and  less  expected  IUUAL  payments.  The  PUAL  is  the   total of the actuarial liability for all members less the actuarial value of the Plan’s assets. The actuarial liability includes projections of future member pay increases and future services credits. The  Initial  Unpooled  Unfunded  Actuarial  Liability  (IUUAL)  was  calculated  at  entry  into  the  Consolidated  Plan  for  each  PLD.   For  PLDs  with  liabilities  greater  than  assets,  these  amounts  are  amortized  by  annual  payments  over  a  fixed  number  of   years.  Additional  unpooled  unfunded  liability  amounts  that  arise  for  a  given  PLD  after  its  entry  to  the  Consolidated  Plan   are  amortized  over  a  period  of  not  more  than  15  years. 2. Asset Valuation Method: For purposes of determining the State contribution to the plans in the Program, we use an actuarial value of assets. The  asset  adjustment  method  dampens  the  volatility  in  asset  values  that  could  occur  because  of  fluctuations  in  market   conditions.  Use  of  an  asset  smoothing  method  is  consistent  with  the  long-­term  nature  of  the  actuarial  valuation  process. In  determining  the  actuarial  value  of  assets,  we  calculate  an  expected  actuarial  value  based  on  cash  flow  for  the  year  and   imputed returns at the actuarial assumption. This expected value is compared to the market value and one-third of the difference  is  added  to  the  preliminary  actuarial  value  to  arrive  at  the  final  actuarial  value. 3. Changes since Last Valuation: There  was  an  additional  recognition  of  37.5%  of  the  past  investment  gains  in  the  asset  smoothing  method. 106 Maine  Public  Employees  Re rement  System ♦ ACTUARIAL VALUATION JUNE 30, 2014 JUDICIAL RETIREMENT PROGRAM SUMMARY OF PROGRAM AND PLAN PROVISIONS Judicial Retirement Program 1. Membership: Membership is a condition of employment for all judges serving on or after December 1, 1984. Membership ceases on the earlier of withdrawal of contributions, retirement, or death. Judges who retired prior to December 1, 1984 are covered under a different plan. 2. Member Contributions: Members  are  required  to  contribute  7.65%  of  earnable  compensation. 3. Average Final Compensation: For  purposes  of  determining  benefits  payable,  average  final  compensation  is  the  average  annual  rate  of  earnable   compensation for the three years of creditable service (not necessarily consecutive) that produce the highest such average. For  active  judges  as  of  July  1,  2003,  July  1,  2004,  and  July  1,  2010,  average  final  compensation  shall  be  increased  to  reflect   missed salary increases. 4. Creditable Service: Creditable  service  includes  the  following: A.   all  judicial  service  as  a  member  after  November  30,  1984;; B.   all  judicial  service  before  December  1,  1984;;   C.   service  credited  while  receiving  disability  benefits  under  the  Program;;  and, D. all service creditable under the State Employee and Teacher Program provided the member elects to have the member’s own and the employer’s contributions on behalf of such service transferred to the Judicial Program. 5.   Service  Retirement  Benefits: Eligibility: A. Eligibility for Members with at Least Ten Years of Creditable Service on July 1, 1993 i. Eligibility for members in active service and inactive members: 25  years  of  creditable  service. ii. Eligibility alternative for members in active service: Attainment  of  age  70  with  at  least  one  year  of  service  immediately  before  retirement. iii. Eligibility for members not in active service at retirement and not in active service on or after October 1, 1999: Attainment of age 60 and ten years of creditable service. iv. Eligibility for members not in active service at retirement but in active service on or after October 1, 1999: Attainment  of  age  60  and  five  years  of  creditable  service. Maine  Public  Employees  Re rement  System 107 ♦ ACTUARIAL VALUATION JUNE 30, 2014 JUDICIAL RETIREMENT PROGRAM SUMMARY OF PROGRAM AND PLAN PROVISIONS (continued) B. Eligibility for Members with Less Than Ten Years of Creditable Service on July 1, 1993 i. Eligibility for members in active service and inactive members: 25  years  of  creditable  service. ii. Eligibility alternative for members in active service: Attainment  of  age  70  with  at  least  one  year  of  service  immediately  before  retirement. iii. Eligibility for members not in active service at retirement and not in active service on or after October 1, 1999: Attainment of age 62 with ten years of creditable service. iv. Eligibility for Members not in active service at retirement but in active service on or after October 1, 1999: Attainment  of  age  62  and  five  years  of  creditable  service. C. Eligibility for Members with Less Than Five Years of Creditable Service on July 1, 2011 i. Eligibility for members in active service and inactive members: 25  years  of  creditable  service. ii. Eligibility alternative for members in active service: Attainment  of  age  70  with  at  least  one  year  of  service  immediately  before  retirement. iii. Eligibility for members not in active service at retirement and not in active service on or after October 1, 1999: Attainment  of  age  65  with  ten  years  of  creditable  service. iv. Eligibility for Members not in active service at retirement but in Active Service on or after October 1, 1999: Attainment  of  age  65  and  five  years  of  creditable  service. Benefit: Sum of: (1)   (2)   (3)   for  service  after  November  30,  1984  and  before  July  1,  1998  and  creditable  service  allowed  under  Section  1302(3),  2%   of  average  final  compensation  multiplied  by  years  of  service;;   for  service  on  or  after  July  1,  1998,  3%  of  average  final  compensation  multiplied  by  years  of  service;;  and, for  judicial  service  prior  to  December  1,  1984,  75%  of  November  30,  1984  salary  for  the  position  held  at  retirement,  pro-­ rated for prior service less than ten years. The  benefit  is  reduced  for  retirement  before  age  60  at  the  rate  of  approximately  2¼%  for  each  year  retirement  age  is  less   than  60,  for  members  with  at  least  ten  years  creditable  service  on  July  1,  1993;;  reduced  for  retirement  before  age  62  by  6%   for  each  year  the  member’s  age  is  less  than  age  62,  if  less  than  ten  years  creditable  service  on  July  1,  1993,  but  at  least  five   years  creditable  service  on  July  1,  2011;;  reduced  for  retirement  before  age  65  by  6%  for  each  year  the  member’s  age  is  less   than  age  65,  if  less  than  five  years  creditable  service  on  July  1,  2011. Maximum  Benefit:  Total  benefit  cannot  exceed  70%  of  average  final  compensation  except  as  provided  under  the  minimum   benefit  provision. 108 Maine  Public  Employees  Re rement  System ♦ ACTUARIAL VALUATION JUNE 30, 2014 JUDICIAL RETIREMENT PROGRAM SUMMARY OF PROGRAM AND PLAN PROVISIONS (continued) Minimum  Benefit:  For  a  judge  in  service  and  age  50  or  older  on  December  1,  1984,  75%  of  salary  on  6/30/84  for  the  position   held  at  retirement,  increased  by  6%  per  year  from  6/30/84  to  6/30/89  or  retirement  date  if  earlier,  and  increased  beyond   6/30/89  by  the  cost-­of-­living  increase  granted  the  previous  September. Form  of  Payment:  Life  annuity;;  except,  for  a  judge  in  service  and  age  50  before  December  1,  1984,  50%  joint  and  survivor   annuity to surviving spouse. 6.   Disability  Retirement  Benefits  Other  Than  No  Age  Benefits  (See  Item  7): Conditions:  Disabled  as  defined  in  the  Judicial  Retirement  Program  statutes,  prior  to  normal  retirement  age;;  employed  as  a   judge prior to October 16, 1992, and did not elect No Age Disability Option. Benefit:  66-­2/3%  of  average  final  compensation,  reduced  by  employment  earnings  over  the  specified  statutory  limit,  and  to   the  extent  that  the  benefit,  in  combination  with  Worker’s  Compensation  and  Social  Security,  exceeds  80%  of  average  final   compensation. Form of Payment: Payment begins on termination of service and ceases on cessation of disability or after two years, unless the  member  is  unable  to  engage  in  any  substantially  gainful  activity,  in  which  case  payments  cease  on  the  earlier  of  age  70   and  the  date  the  service  retirement  benefit  exceeds  the  disability  benefit. Conversion  to  Service  Retirement:  During  the  period  of  disability,  average  final  compensation  is  increased  with  cost-­of-­ living  adjustments  and  service  is  credited.  On  the  date  when  service  benefits  reach  a  level  of  66-­2/3%  of  average  final   compensation,  or  at  age  70  if  earlier,  the  disability  benefit  converts  to  a  service  retirement  benefit  based  on  service  and  pay  at   that point. 7.   No  Age  Disability  Retirement  Benefits: Conditions:  Disabled  as  defined  in  the  Judicial  Retirement  Program  statutes;;  employed  as  a  judge  on  or  after  October  16,   1992 or a judge employed prior to October 16, 1992, who elected the provisions of No Age Disability. Benefit:  59%  of  average  final  compensation,  reduced  by  the  amount  by  which  employment  earnings  plus  the  disability   allowance  exceeds  the  current  salary  of  the  position  held  at  disability,  and  to  the  extent  that  the  benefit,  in  combination  with   Worker’s  Compensation  exceeds  80%  of  average  final  compensation.  A  member  in  service  on  November  30,  1984,  may  elect   benefits  applicable  for  retirement  before  December  1,  1984. Form of Payment: Payment begins on termination of service and ceases on cessation of disability or after two years, unless the  member  is  unable  to  engage  in  any  substantially  gainful  activity;;  in  which  case  payments  cease  on  the  date  the  service   retirement  benefit  exceeds  the  disability  benefit. Conversion  to  Service  Retirement:  During  the  period  of  disability,  average  final  compensation  is  increased  with  cost-­of-­living   adjustments  and  service  is  credited.  On  the  date  when  service  benefits  reach  a  level  of  59%  of  average  final  compensation,   the  disability  benefit  converts  to  a  service  retirement  benefit  based  on  service  and  pay  at  that  point. 8.   Pre-­Retirement  Ordinary  Death  Benefits: Eligibility: Death while active, inactive eligible to retire or disabled. Benefit:  Designated  beneficiary,  spouse,  child(ren),  or  parents  entitled  to  benefit  calculated  as  if  deceased  member  had  retired   under  Option  2  (see  item  12);;  however,  beneficiary  may  elect  survivor  benefits  payable  to  a  surviving  spouse,  dependent   child(ren),  parents,  or  other  designated  beneficiaries  in  monthly  amounts  varying  by  status  of  beneficiary  and  number  of   eligible  survivors.  Otherwise,  accumulated  contributions  with  interest  are  payable  to  designated  beneficiary,  spouse,  child(ren),   older parent, or estate. Minimum  Benefit:  For  a  judge  in  service  prior  to  December  1,  1984,  one-­half  of  the  judge’s  retirement  benefit  determined  on   date  of  death,  payable  to  the  spouse  and/or  dependent  children. Maine  Public  Employees  Re rement  System 109 ♦ ACTUARIAL VALUATION JUNE 30, 2014 JUDICIAL RETIREMENT PROGRAM SUMMARY OF PROGRAM AND PLAN PROVISIONS (continued) 9.   Pre-­Retirement  Accidental  Death  Benefits: Eligibility: Death while active or disabled resulting from injury received in the line of duty. Benefit:  If  the  member  leaves  no  dependent  children,  two-­thirds  of  the  member’s  average  final  compensation  to  the  surviving   spouse until death. • If the member is survived by a spouse who has the care of dependent child(ren) of the member, the surviving spouse shall receive  an  annual  sum  equal  to  the  member’s  average  final  compensation.  When  there  is  no  longer  any  dependent  child,   the  surviving  spouse  shall  receive  two-­thirds  of  member’s  average  final  compensation  until  death. • If the member is survived by a spouse who does not have the care of the member’s dependent child(ren), the surviving spouse  and  dependent  child(ren)  shall  share  equally  an  annual  sum  equal  to  the  member’s  average  final  compensation.   When  there  is  no  longer  any  dependent  child,  the  surviving  spouse  shall  receive  two-­thirds  of  member’s  average  final   compensation until death. If  the  member  leaves  no  spouse,  the  dependent  child(ren)  shall  be  paid  an  annual  amount  equal  to  the  member’s  average  final   compensation.  Benefits  will  cease  when  the  last  dependent  child  no  longer  meets  the  definition  of  “dependent  child”. 10. Refund of Contributions: Eligibility: Termination of service without retirement or death. Benefit:  Member’s  accumulated  contributions  with  interest. 11. Cost-of-Living Adjustments: All  service  and  disability  retirement  and  survivor  benefits  are  adjusted  each  year  that  there  is  a  percentage  change  in  the   Consumer  Price  Index,  based  on  the  Index.  If  the  percentage  change  is  negative,  then  no  adjustment  is  made  in  that  year.  In   subsequent years, the adjustment that would have been made will be adjusted downward to the extent necessary to recoup the full actuarial value of not having made the previous year’s negative adjustment. This process of adjustment may occur over a  multi-­year  period  if  needed  to  recoup  the  full  value  of  the  non-­zero  COLA. Cost-­of-­living  adjustments  are  effective  September  1  and  are  applied  to  that  portion  of  the  benefit  not  in  excess  of  $20,000   (indexed)  for  all  benefits  that  have  been  in  payment  for  12  months.  The  maximum  annual  increase  is  3%.  Average  final   compensation  used  in  determining  disability  benefits  for  disabled  members  is  similarly  adjusted  for  purposes  of  determining   the  recipient’s  service  retirement  benefit  if  and  when  the  recipient  moves  to  service  retirement. Members on service retirement who did not have ten years of service on July 1, 1993 will not receive a cost-of-living adjustment until 12 months after their normal retirement age. No cost-of-living adjustments will be made until September 2014. Minimum  benefits  are  increased  6%  per  year  from  July  1985  through  June  1989,  and  as  described  above  thereafter. 110 Maine  Public  Employees  Re rement  System ♦ ACTUARIAL VALUATION JUNE 30, 2014 JUDICIAL RETIREMENT PROGRAM SUMMARY OF PROGRAM AND PLAN PROVISIONS (continued) 12.   Methods  of  Payment  of  Service  Retirement  Benefits: At retirement, a member must choose from the following methods of payment: Full  Benefit:     Unadjusted  benefit  is  paid  for  the  life  of  the  member  only. Option  1:       Cash  refund  equal  to  the  remaining  employee  contribution  balance  at  the  date  of  death  (where  the  employee         contribution  balance  has  been  reduced  each  month  by  the  portion  of  the  monthly  benefit  deemed  to  be  provided     by employee contributions). Option  2:       100%  joint  and  survivor  annuity. Option  3:       50%  joint  and  survivor  annuity. Option 4: Joint and survivor annuity at any percentage other than those available under Option 2 and Option 3. Option  5:       Designated  percentage  of  the  benefit  (not  less  than  51%)  payable  to  the  member,  with  the  remaining  percentage         (the  two  to  equal  100%)  payable  to  a  beneficiary  (may  only  be  a  sole  beneficiary)  while  both  are  alive.  At  the     death of either, the higher of the two percentages is paid to the survivor for the survivor’s life, and the lower     percentage  benefit  ceases  to  be  paid. Option  6:       100%  joint  and  survivor  annuity  (Option  2)  with  pop-­up*. Option  7:       50%  joint  and  survivor  annuity  (Option  3)  with  pop-­up*. Option 8: *   Option 4 with pop-up*. The  “pop-­up”  feature  attached  to  a  given  Option  means  that  in  the  case  of  a  beneficiary  predeceasing  the  member,  the   member’s  benefit  will  be  revised  prospectively  to  the  amount  that  the  benefit  would  have  been  had  the  member  selected   Full  Benefit  payment  upon  retirement. 13. Plan Changes since Last Valuation: None. Maine  Public  Employees  Re rement  System 111 ♦ ACTUARIAL VALUATION JUNE 30, 2014 JUDICIAL RETIREMENT PROGRAM ACTUARIAL ASSUMPTIONS and METHODS A. Actuarial Assumptions 1. Annual Rate of Investment Return:   7.125% 2. Annual Rate of Salary Increase:   3.50% 3. Annual Cost-of-Living Increase:   2.55% 4. Normal Retirement Age: 100%  retirement  assumed  to  occur  at  age  60  for  members  with  at  least  ten  years  of  creditable  service  on  July  1,  1993. For  members  with  less  than  ten  years  of  creditable  service  on  July  1,  1993,  50%  are  assumed  to  retire  each  year  after   reaching age 62. For  members  with  less  than  five  years  of  creditable  service  on  July  1,  2011,  50%  are  assumed  to  retire  each  year  after   reaching  age  65. 5. 6. 7. 112 Probabilities of Employment Termination at Selected Ages Due to: Age Disability Termination Male Death Female 25 30 35 40 45 50 55 .0006 .0006 .0007 .0011 .0022 .0042 .0072 .07 .06 .05 .04 .03 .02 .01 .0003 .0004 .0007 .0010 .0012 .0016 .0027 .0002 .0002 .0004 .0006 .0009 .0013 .0024 Rate of Healthy Life Mortality at Selected Ages: Age Male Female 55 .0027 .0024 60 .0053 .0047 65 .0103 .0090 70 .0177 .0155 75 .0306 .0249 80 .0554 .0413 Rates are based on the RP-2000 Mortality Table for Males  and  Females,  projected  with  Scale  AA  to  2015. Rates of Disabled Life Mortality at Selected Ages: Age Male Female 25 30 35 40 45 50 55 .0092 .0112 .0134 .0160 .0193 .0236 .0295 .0072 .0089 .0109 .0126 .0144 .0165 .0191 Rates  are  based  on  the  Revenue  Ruling  96-­7  Disabled   Mortality Table for Males and Females. Maine  Public  Employees  Re rement  System ♦ ACTUARIAL VALUATION JUNE 30, 2014 JUDICIAL RETIREMENT PROGRAM ACTUARIAL ASSUMPTIONS and METHODS (continued) 8. Family Composition Assumptions:   80%  of  active  members  are  married  and  have  two  children  born  when  the  member  is  24  and  28;;  children  are  dependent   until  age  18;;  female  spouse  is  three  years  younger  than  male  spouse;;  member  has  no  dependent  parents;;  unmarried   members  have  beneficiaries  entitled  to  benefits  worth  80%  as  much  as  those  of  married  members’  beneficiaries. 9. Date of Adoption of Assumptions: The assumptions were adopted by the Trustees as a result of the latest experience study review performed in 2011, covering  the  period  July  1,  2005  through  June  30,  2010. 10. Assumption Changes since Last Valuation: The  rate  of  investment  return  assumption  was  changed  from  7.25%  to  7.125%. B. Actuarial Methods 1. Funding Method: The  Entry  Age  Normal  actuarial  funding  method  is  used  to  determine  costs.  Under  this  funding  method,  the  total  employer   contribution  rate  consists  of  two  elements:  the  normal  cost  rate  and  the  unfunded  actuarial  liability  (UAL)  rate. The normal cost rate is developed for each active employee. This rate is determined by taking the value, as of entry age into  the  plan,  of  the  member’s  projected  future  benefits,  reducing  it  by  the  value  of  future  member  contributions,  and   dividing it by the value, also as of the member’s entry age, of the member’s expected future salary. In addition to contributions required to meet the plan’s normal cost, contributions will be required to fund the plan’s unfunded  actuarial  liability.  The  actuarial  liability  is  defined  as  the  present  value  of  future  benefits,  less  the  present  value  of   future normal costs and future member contributions. The unfunded actuarial liability is the total actuarial liability less the actuarial value of plan assets. The unfunded liability is amortized by annual payments over an open ten-year period. The payments are determined so that  they  will  be  a  level  percentage  of  pay,  assuming  total  pay  increases  3.50%  per  year. 2. Asset Valuation Method: For purposes of determining the State contribution to the plans in the Program, we use an actuarial value of assets. The  asset  adjustment  method  dampens  the  volatility  in  asset  values  that  could  occur  because  of  fluctuations  in  market   conditions.  Use  of  an  asset  smoothing  method  is  consistent  with  the  long-­term  nature  of  the  actuarial  valuation  process. In  determining  the  actuarial  value  of  assets,  we  calculate  an  expected  actuarial  value  based  on  cash  flow  for  the  year  and   imputed returns at the actuarial assumption. This expected value is compared to the market value and one-third of the difference  is  added  to  the  preliminary  actuarial  value  to  arrive  at  the  final  actuarial  value. In  the  2014  valuation,  there  was  an  additional  recognition  of  37.5%  of  the  remaining  balance  of  past  investment  gains. 3. Changes since Last Valuation: There  was  an  additional  recognition  of  37.5%  of  the  past  investment  gains  in  the  asset  smoothing  method. Maine  Public  Employees  Re rement  System 113 ACTUARIAL VALUATION JUNE 30, 2014 ♦ LEGISLATIVE RETIREMENT PROGRAM SUMMARY OF PROGRAM AND PLAN PROVISIONS Legislative Retirement Program 1. Membership: Except as provided by statute, membership is mandatory for every Legislator in service in the Legislature on or after December 3, 1986, and optional for those who were members of the Retirement System on December 2, 1986. Membership ceases on the earlier of withdrawal of contributions, retirement, or death. 2. Member Contributions: Members  are  required  to  contribute  7.65%  of  earnable  compensation. 3. Average Final Compensation: For  purposes  of  determining  benefits  payable,  average  final  compensation  is  the  average  annual  rate  of  earnable   compensation for the three years of creditable service (not necessarily consecutive) as a legislator that produce the highest such average. 4. Creditable Service: Creditable  service  includes  the  following: A.   all  legislative  service  as  a  member  after  December  2,  1986;; B. all legislative service before December 3, 1986, for which contributions have been made to the Retirement System at the applicable  rate,  including  appropriate  interest;;   C.   service  credited  while  receiving  disability  benefits  under  the  Program;;  and, D. all service creditable under the Retirement System as a State Employee, provided the member elects to have the member’s own and the employer’s contributions on behalf of such service transferred to the Legislative Program. 5.   Service  Retirement  Benefits: Eligibility: A. Eligibility for Members with at Least Ten Years of Creditable Service on July 1, 1993 i. Eligibility for members in active service and inactive members: 25  years  of  creditable  service. ii. Eligibility alternative for members in active service: Attainment of age 60. iii. Eligibility for members not in active service at retirement, and not in active service on or after October 1, 1999: Attainment of age 60 and ten years of creditable service. iv. Eligibility for members not in active service at retirement, but in active service on or after October 1, 1999: Attainment  of  age  60  and  five  years  of  creditable  service. 114 Maine  Public  Employees  Re rement  System ♦ ACTUARIAL VALUATION JUNE 30, 2014 LEGISLATIVE RETIREMENT PROGRAM SUMMARY OF PROGRAM AND PLAN PROVISIONS (continued) B. Eligibility for Members with Less Than Ten Years of Creditable Service on July 1, 1993 i. Eligibility for members in active service and inactive members: 25  years  of  creditable  service. ii. Eligibility alternative for members in active service: Attainment of age 62. iii. Eligibility for members not in active service at retirement, and not in active service on or after October 1, 1999: Attainment of age 62 with ten years of creditable service. iv. Eligibility for members not in active service at retirement, but in active service on or after October 1, 1999: Attainment  of  age  62  and  five  years  of  creditable  service. C. Eligibility for Members with Less Than Five Years of Creditable Service on July 1, 2011 i. Eligibility for members in active service and inactive members: 25  years  of  creditable  service. ii. Eligibility alternative for members in active service: Attainment  of  age  65. iii. Eligibility for members not in active service at retirement, and not in active service on or after October 1, 1999: Attainment  of  age  65  with  ten  years  of  creditable  service. iv. Eligibility for Members not in Active Service at Retirement, but in Active Service on or After October 1, 1999: Attainment  of  age  65  and  five  years  of  creditable  service. Benefit:  1/50  of  average  final  compensation  multiplied  by  years  of  creditable  service,  reduced  for  retirement  before  age  60  at   the  rate  of  approximately  2¼%  for  each  year  retirement  age  is  less  than  age  60,  for  members  with  at  least  ten  years  creditable   service  on  July  1,  1993;;  reduced  for  retirement  before  age  62  at  the  rate  of  6%  for  each  year  retirement  age  is  less  than  age   62,  for  members  with  less  than  ten  years  creditable  service  on  July  1,  1993,  but  at  least  five  years  creditable  service  on  July   1,  2011;;  reduced  for  retirement  before  age  65  at  the  rate  of  6%  for  each  year  retirement  age  is  less  than  age  65,  for  members   with  less  than  five  years  creditable  service  on  July  1,  2011;;  minimum  benefit  $100  per  month  if  at  least  ten  years  of  creditable   service. Form of Payment: Life annuity. 6.   Disability  Retirement  Benefits  Other  Than  No  Age  Benefits  (See  Item  7): Eligibility:  Disabled  as  defined  in  the  MainePERS  statutes,  prior  to  normal  retirement  age;;  employed  prior  to  October  16,  1992   and did not elect No Age Disability Option. Benefit:  66-­2/3%  of  average  final  compensation,  reduced  by  employment  earnings  over  the  specified  statutory  limit,  and  to   the  extent  that  the  benefit,  in  combination  with  worker’s  compensation  and  Social  Security,  exceeds  80%  of  average  final   compensation. Form  of  Payment:  Payment  begins  on  termination  of  service  and  ceases  on  cessation  of  disability  or  after  five  years,  unless   the  member  is  unable  to  engage  in  any  substantially  gainful  activity;;  in  which  case,  payments  cease  on  the  earlier  of  ten  years   following  normal  retirement  age  or  the  date  the  service  retirement  benefit  equals  or  exceeds  the  disability  benefit. Maine  Public  Employees  Re rement  System 115 ♦ ACTUARIAL VALUATION JUNE 30, 2014 LEGISLATIVE RETIREMENT PROGRAM SUMMARY OF PROGRAM AND PLAN PROVISIONS (continued) Conversion  to  Service  Retirement:  During  the  period  of  disability,  average  final  compensation  is  increased  with  cost-­of-­living   adjustments  and  service  is  credited.  On  the  date  when  service  benefits  reach  a  level  of  66-­2/3%  of  average  final  compensation   or  ten  years  after  the  normal  retirement  date,  if  earlier,  the  disability  benefit  converts  to  a  service  retirement  benefit  based  on   service  and  average  final  compensation  at  that  point. 7.   No  Age  Disability  Retirement  Benefits: Eligibility:  Disabled  as  defined  in  the  MainePERS  statutes;;  employed  on  or  after  October  16,  1992  or  employed  prior  to   October 16, 1992 and elected the provisions of No Age Disability. Benefit:  59%  of  average  final  compensation,  reduced  by  employment  earnings  over  the  specified  statutory  limit,  and  to   the  extent  that  the  benefit,  in  combination  with  worker’s  compensation  and  Social  Security,  exceeds  80%  of  average  final   compensation. Form  of  Payment:  Payment  begins  on  termination  of  service  and  ceases  on  cessation  of  disability  or  after  five  years,  unless   the  member  is  unable  to  engage  in  any  substantially  gainful  activity;;  in  which  case,  payments  cease  on  the  date  the  service   retirement  benefit  equals  or  exceeds  the  disability  benefit. Conversion  to  Service  Retirement:  During  the  period  of  disability,  average  final  compensation  is  increased  with  cost-­of-­living   adjustments  and  service  is  credited.  On  the  date  when  service  benefits  reach  a  level  of  59%  of  average  final  compensation,   the  disability  benefit  converts  to  a  service  retirement  benefit  based  on  service  and  average  final  compensation  at  that  point. 8.   Pre-­Retirement  Ordinary  Death  Benefits: Eligibility: Death while active, inactive eligible to retire or disabled. Benefit:  Designated  beneficiary,  spouse,  child(ren),  or  parents  entitled  to  benefit  calculated  as  if  deceased  member  had  retired   under  Option  2  (see  item  12);;  however,  beneficiary  may  elect  survivor  benefits  payable  to  a  surviving  spouse,  dependent   child(ren),  parents,  or  other  designated  beneficiaries  in  monthly  amounts  varying  by  status  of  beneficiary  and  number  of   eligible  survivors.  Otherwise,  accumulated  contributions  with  interest  are  payable  to  designated  beneficiary,  spouse,  child(ren),   older parent or estate. 9.   Pre-­Retirement  Accidental  Death  Benefits: Eligibility: Death while active or disabled resulting from injury received in the line of duty. Benefit:  If  the  member  leaves  no  dependent  children,  two-­thirds  of  the  member’s  average  final  compensation  to  the  surviving   spouse until death. • If the member is survived by a spouse who has the care of dependent child(ren) of the member, the surviving spouse shall receive  an  annual  sum  equal  to  the  member’s  average  final  compensation.  When  there  is  no  longer  any  dependent  child,   the  surviving  spouse  shall  receive  two-­thirds  of  member’s  average  final  compensation  until  death. • If the member is survived by a spouse who does not have the care of the member’s dependent child(ren), the surviving spouse  and  dependent  child(ren)  shall  share  equally  an  annual  sum  equal  to  the  member’s  average  final  compensation.   When  there  is  no  longer  any  dependent  child,  the  surviving  spouse  shall  receive  two-­thirds  of  member’s  average  final   compensation until death. • If the member leaves no spouse, the dependent child(ren) shall be paid an annual amount equal to the member’s average final  compensation.  Benefits  will  cease  when  the  last  dependent  child  no  longer  meets  the  definition  of  “dependent  child.” 10. Refund of Contributions: Eligibility: Termination of service without retirement or death. Benefit:  Member’s  accumulated  contributions  with  interest. 116 Maine  Public  Employees  Re rement  System ♦ ACTUARIAL VALUATION JUNE 30, 2014 LEGISLATIVE RETIREMENT PROGRAM SUMMARY OF PROGRAM AND PLAN PROVISIONS (continued) 11. Cost-of-Living Adjustments: All  service  and  disability  retirement  and  survivor  benefits  are  adjusted  each  year  that  there  is  a  percentage  change  in  the   Consumer  Price  Index,  based  on  the  Index.  If  the  percentage  change  is  negative  then  no  adjustment  is  made  in  that  year.  In   subsequent years, the adjustment that would have been made will be adjusted downward to the extent necessary to recoup the full actuarial value of not having made the previous year’s negative adjustment. This process of adjustment may occur over a  multi-­year  period,  if  needed  to  recoup  the  full  value  of  the  non-­zero  COLA. Cost-­of-­living  adjustments  are  effective  September  1  and  are  applied  to  that  portion  of  the  benefit  not  in  excess  of  $20,000   (indexed)  for  all  benefits  that  have  been  in  payment  for  12  months.  The  maximum  annual  increase  is  3%.  Average  final   compensation  used  in  determining  disability  benefits  for  disabled  members  is  similarly  adjusted  for  purposes  of  determining   the  recipient’s  service  retirement  benefit  if  and  when  the  recipient  moves  to  service  retirement. Members on service retirement who did not have ten years of service on July 1, 1993 will not receive a cost-of-living adjustment until 12 months after their normal retirement age. No cost-of-living adjustments will be made until September 2014. 12.   Methods  of  Payment  of  Service  Retirement  Benefits: At  retirement,  a  member  who  retires  with  a  benefit  must  choose  from  the  following  methods  of  payment: Full  Benefit:  Unadjusted  benefit  is  paid  for  the  life  of  the  member  only. Option  1:   Cash  refund  equal  to  the  remaining  employee  contribution  balance,  if  any,  at  the  date  of  death  (where  the         employee  contribution  balance  has  been  reduced  each  month  by  the  portion  of  the  monthly  benefit  deemed  to  be     provided by employee contributions). Option  2:     100%  joint  and  survivor  annuity. Option  3:     50%  joint  and  survivor  annuity. Option 4: Joint and survivor annuity at any percentage other than those available under Option 2 and Option 3. Option  5:     Designated  percentage  of  the  benefit  (not  less  than  51%)  payable  to  the  member,  with  the  remaining  percentage       (the  two  to  equal  100%)  payable  to  a  beneficiary  (may  only  be  a  sole  beneficiary)  while  both  are  alive.  At  the  death     of either, the higher of the two percentages is paid to the survivor for the survivor’s life, and the lower-percentage   benefit  ceases  to  be  paid. Option  6:     100%  joint  and  survivor  annuity  (Option  2)  with  pop-­up*. Option  7:     50%  joint  and  survivor  annuity  (Option  3)  with  pop-­up*. Option 8: Option 4 with pop-up*. *   The  “pop-­up”  feature  attached  to  a  given  Option  means  that  in  the  case  of  a  beneficiary  predeceasing  the  member,  the   member’s  benefit  will  be  revised  prospectively  to  the  amount  that  the  benefit  would  have  been  had  the  member  selected   Full  Benefit  payment  upon  retirement. 13. Changes since Last Valuation: None. Maine  Public  Employees  Re rement  System 117 ♦ ACTUARIAL VALUATION JUNE 30, 2014 LEGISLATIVE RETIREMENT PROGRAM ACTUARIAL ASSUMPTIONS and METHODS A. Actuarial Assumptions 1. Annual Rate of Investment Return:   7.125% 2. Annual Rate of Salary Increase:   3.50% 3. Annual Cost-of-Living Increase:   2.55% 4. Normal Retirement Age: Age 60 for members with at least ten years of creditable service on July 1, 1993. Age 62 for members with less than ten years of creditable service on July 1, 1993. Age  65  for  members  with  less  than  five  years  of  creditable  service  on  July  1,  2011.   5. 6. 7. 118 Probabilities of Employment Termination at Selected Ages Due to: Age Disability Termination Male Death Female 25 30 35 40 45 50 55 .0006 .0006 .0007 .0011 .0022 .0042 .0072 .07 .06 .05 .04 .03 .02 .01 .0003 .0004 .0007 .0010 .0012 .0016 .0027 .0002 .0002 .0004 .0006 .0009 .0013 .0024 Rate of Healthy Life Mortality at Selected Ages: Age Male Female 55 .0027 .0024 60 .0053 .0047 65 .0103 .0090 70 .0177 .0155 75 .0306 .0249 80 .0554 .0413 Rates are based on the RP-2000 Mortality Table for Males  and  Females,  projected  with  scale  AA  to  2015. Rates of Disabled Life Mortality at Selected Ages: Age Male Female 25 30 35 40 45 50 55 .0092 .0112 .0134 .0160 .0193 .0236 .0295 .0072 .0089 .0109 .0126 .0144 .0165 .0191 Maine  Public  Employees  Re rement  System Rates  are  based  on  the  Revenue  Ruling  96-­7  Disabled   Mortality Table for Males and Females. ♦ ACTUARIAL VALUATION JUNE 30, 2014 LEGISLATIVE RETIREMENT PROGRAM ACTUARIAL ASSUMPTIONS and METHODS (continued) 8. Family Composition Assumptions:   80%  of  active  members  are  married  and  have  two  children  born  when  the  member  is  24  and  28;;  children  are  dependent   until  age  18;;  female  spouse  is  three  years  younger  than  male  spouse;;  member  has  no  dependent  parents;;  unmarried   members  have  beneficiaries  entitled  to  benefits  worth  80%  as  much  as  those  of  married  members’  beneficiaries. 9. Date of Adoption of Assumptions: The assumptions were adopted by the Trustees as a result of the latest experience study review performed in 2011, covering  the  period  July  1,  2005  through  June  30,  2010. 10. Assumption Changes since Last Valuation: The  rate  of  investment  return  was  reduced  from  7.25%  to  7.125%. B. Actuarial Methods 1. Funding Method: The  Entry  Age  Normal  actuarial  funding  method  is  used  to  determine  costs.  Under  this  funding  method,  the  total  employer   contribution  rate  consists  of  two  elements:  the  normal  cost  rate  and  the  unfunded  actuarial  liability  (UAL)  rate. The normal cost rate is developed for each active employee. This rate is determined by taking the value, as of entry age into  the  plan,  of  the  member’s  projected  future  benefits,  reducing  it  by  the  value  of  future  member  contributions,  and   dividing it by the value, also as of the member’s entry age, of the member’s expected future salary. In addition to contributions required to meet the program’s normal cost, contributions will be required to fund the program’s unfunded  actuarial  liability.  The  actuarial  liability  is  defined  as  the  present  value  of  future  benefits,  less  the  present  value  of   future normal costs and future member contributions. The unfunded actuarial liability is the total actuarial liability less the actuarial value of plan assets. The unfunded liability is amortized by annual payments over an open ten-year period. The payments are determined so that  they  will  be  a  level  percentage  of  pay,  assuming  total  pay  increases  3.50%  per  year. 2. Asset Valuation Method: For purposes of determining the State contribution to the plans in the Program, we use an actuarial value of assets. The  asset  adjustment  method  dampens  the  volatility  in  asset  values  that  could  occur  because  of  fluctuations  in  market   conditions.  Use  of  an  asset  smoothing  method  is  consistent  with  the  long-­term  nature  of  the  actuarial  valuation  process. In  determining  the  actuarial  value  of  assets,  we  calculate  an  expected  actuarial  value  based  on  cash  flow  for  the  year  and   imputed returns at the actuarial assumption. This expected value is compared to the market value and one-third of the difference  is  added  to  the  preliminary  actuarial  value  to  arrive  at  the  final  actuarial  value. In  the  2014  valuation,  there  was  an  additional  recognition  of  37.5%  of  the  remaining  balance  of  past  investment  gains. 3. Changes since Last Valuation: There  was  an  additional  recognition  of  37.5%  of  the  past  investment  gains  in  the  asset  smoothing  method. Maine  Public  Employees  Re rement  System 119 ♦ ACTUARIAL VALUATION JUNE 30, 2014 [This page intentionally left blank.] 120 Maine  Public  Employees  Re rement  System STATISTICAL SECTION ♦ STATISTICAL SECTION MAINE PUBLIC EMPLOYEES RETIREMENT SYSTEM STATISTICAL SECTION (unaudited) This section of the Maine Public Employees Retirement System’s Comprehensive Annual Financial Report presents detailed information as a context for understanding this year’s financial statements, note disclosures, and supplementary information. This information has not been audited by the independent auditor. Page TABLE OF CONTENTS FINANCIAL TRENDS 123 - 131 These tables contain trend information that may assist the reader in assessing the System’s current financial performance by placing it in historical perspective. Changes in Net Position (Last Ten Fiscal Years) Defined Benefit Plan ..............................................................................................................123 Group Life Insurance Plan ....................................................................................................126 Defined Contribution Plan ....................................................................................................127 Retiree Health Investment Trust ..........................................................................................128 Benefit and Refund Deductions from Net Position by Type (Last Ten Fiscal Years) Defined Benefit Plan ..............................................................................................................129 Group Life Insurance Plan ....................................................................................................131 Source: Unless otherwise noted, the information in the Financial Trends tables is derived from the annual financial reports for the relevant year. OPERATING INFORMATION 132 - 139 These tables contain service and infrastructure indicators that can enhance one’s understanding of how the information in the System’s financial statements relates to the services the System provides and the activities it performs. Defined Benefit Plan Retired Members by Type of Benefit, Last Ten Fiscal Years ....................132 Defined Benefit Plan Average Benefit Payments, Last Ten Fiscal Years......................................133 Defined Benefit Plan Retired Members by Type of Benefit and Option ......................................135 Employee Contribution Rates, Last Ten Fiscal Years .....................................................................136 Employer Contribution Rates, Last Ten Fiscal Years......................................................................137 Principal Participating Employers, Current Year and Nine Years Ago .......................................138 Participating Employers, Detailed Listing .......................................................................................139 122 Maine  Public  Employees  Re rement  System LAST TEN FISCAL YEARS DEFINED BENEFIT PLAN CHANGES IN NET POSITION - STATE EMPLOYEE AND TEACHER PLAN ♦ STATISTICAL SECTION Maine  Public  Employees  Re rement  System 123 DEFINED BENEFIT PLAN CHANGES IN NET POSITION - PLD CONSOLIDATED PLAN LAST TEN FISCAL YEARS STATISTICAL SECTION 124 Maine  Public  Employees  Re rement  System ♦ DEFINED BENEFIT PLAN CHANGES IN NET POSITION - PLD AGENT PLAN LAST TEN FISCAL YEARS ♦ STATISTICAL SECTION Maine  Public  Employees  Re rement  System 125 126 Maine  Public  Employees  Re rement  System Change in net position $15,995,457 11,426,895 Total deductions from plan net position 1,153,841 Administrative expenses Refunds Benefit  payments 10,273,054 27,422,352 Total additions to plan net position Deductions 14,763,783 Investment Income (net of expenses) - 7,950,385 Employer contributions Other contributions 4,708,184 2014 Member contributions Additions $9,780,775 11,318,802 892,115 - 10,426,687 21,099,577 9,380,206 - 7,138,693 4,580,678 2013 $2,741,056 9,236,695 1,035,953 3,702 8,197,040 11,977,751 467,352 - 7,005,992 4,504,407 2012 $12,878,429 9,652,578 970,354 18,145 8,664,079 22,531,007 11,060,639 - 6,836,808 4,633,560 2011 $7,291,320 9,634,243 1,053,242 25,819 8,555,182 16,925,563 5,522,062 - 6,825,209 4,578,292 2010 $(8,524,373) 10,986,230 987,371 32,291 9,966,568 2,461,857 (8,851,694) - 6,812,155 4,501,396 2009 Fiscal Year LAST TEN FISCAL YEARS GROUP LIFE INSURANCE PLAN CHANGES IN NET POSITION $1,399,075 9,073,556 842,136 20,511 8,210,909 10,472,631 (1,755,010) 220,933 6,363,100 5,643,608 2008 $7,152,288 8,906,935 856,436 30,157 8,020,342 16,059,223 6,978,299 243,115 2,223,692 6,614,117 2007 $1,723,080 8,416,777 812,833 32,002 7,571,942 10,139,857 1,290,819 216,103 2,170,510 6,462,425 2006 $1,717,035 8,074,081 841,752 17,279 7,215,050 9,791,116 1,122,921 211,576 2,157,420 6,299,199 2005 STATISTICAL SECTION ♦ $4,680,773 $3,831,450 757,592 113,827 643,765 - 4,589,042 1,815,398 - 111,327 2,662,317 2013 $2,149,966 1,100,982 45,964 1,055,018 - 3,250,948 318,640 - 43,434 2,888,874 2012 $3,957,049 820,773 50,143 770,630 - 4,777,822 1,939,674 - 47,377 2,790,771 2011 $2,710,110 468,076 56,686 411,390 - 3,178,186 742,235 - 53,956 2,381,995 2010 $316,616 630,385 159,635 470,750 - 947,001 (1,173,821) - 153,334 1,967,488 2009 $99,584 586,597 16,583 570,014 - 686,181 (512,020) - 16,583 1,181,618 2008 *The System currently has this information available for the years indicated. Additional information will be added to the schedule each year until the requisite ten years is obtained. Change in net postion 2,144,473 112,015 Administrative expenses Total deductions from plan net position 2,032,458 Refunds and withdrawals Benefit  payments - 6,825,246 Total additions to plan net position Deductions 3,210,308 Investment Income (net of expenses) - 109,515 Employer contributions Other contributions 3,505,423 Member contributions Additions 2014 Fiscal Year LAST TEN FISCAL YEARS DEFINED CONTRIBUTION PLAN CHANGES IN NET POSITION ♦ STATISTICAL SECTION Maine  Public  Employees  Re rement  System 127 128 Maine  Public  Employees  Re rement  System $ 29,474,566 90,030 Total deductions from plan net position Change in net position 90,030 - Refunds Administrative expenses - Benefit payments Deductions 29,564,596 Total additions to plan net position - Other contributions 29,564,596 - Employer contributions Investment Income (net of expenses) - Member contributions Additions 2014 $ - 20,461,091 85,609 85,609 - - 20,546,700 18,706,315 - 1,840,385 2013 $ - 6,890,691 68,643 68,643 - - 6,959,334 959,334 - 6,000,000 2012 $ Fiscal Year LAST TEN FISCAL YEARS - 37,697,586 64,510 64,510 - - 37,762,096 23,350,728 - 14,411,368 2011 RETIREE HEALTH INVESTMENT TRUST CHANGES IN NET POSITION $ - - - 13,087,243 56,754 56,754 - - 13,143,997 13,143,997 2010 $ - - - (16,140,122) 55,695 55,695 - - (16,084,427) (16,084,427) 2009 STATISTICAL SECTION ♦ ♦ STATISTICAL SECTION DEFINED BENEFIT PLAN BENEFIT AND REFUND DEDUCTIONS FROM NET POSITION BY TYPE LAST TEN FISCAL YEARS Maine  Public  Employees  Re rement  System 129 130 LAST TEN FISCAL YEARS DEFINED BENEFIT PLAN BENEFIT AND REFUND DEDUCTIONS FROM NET POSITION BY TYPE (continued) STATISTICAL SECTION Maine  Public  Employees  Re rement  System ♦ LAST TEN FISCAL YEARS GROUP LIFE INSURANCE PLAN BENEFIT AND REFUND DEDUCTIONS FROM NET POSITION BY TYPE ♦ STATISTICAL SECTION Maine  Public  Employees  Re rement  System 131 ♦ STATISTICAL SECTION DEFINED BENEFIT PLAN - RETIRED MEMBERS BY TYPE OF BENEFIT LAST TEN FISCAL YEARS STATE AND TEACHER PLAN Fiscal Year Ending June 30: 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Service Retirees 24,210 23,486 22,304 20,848 20,164 19,512 18,878 18,378 17,870 17,395 Service Retiree Beneficiary Recipients 6,057 6,023 5,986 5,882 5,861 5,832 5,620 5,582 5,460 4,883 Disability  Benefit Recipients 1,701 1,687 1,756 1,716 1,721 1,683 1,691 1,688 1,673 2,096 Pre-Retirement Death  Benefits Recipients 643 648 643 661 689 700 802 813 878 896 Total Pension Benefit  Recipients 32,611 31,844 30,689 29,107 28,435 27,727 26,991 26,461 25,881 25,270 Pre-Retirement Death  Benefits Recipients 174 174 166 174 171 166 225 237 228 238 Total Pension Benefit  Recipients 8,333 8,122 7,520 7,409 7,172 7,021 6,939 6,872 6,777 6,618 Pre-Retirement Death  Benefits Recipients 0 0 0 0 0 0 0 0 0 0 Total Pension Benefit  Recipients 191 196 199 201 198 214 252 253 260 362 PARTICIPATING LOCAL DISTRICT (PLD) CONSOLIDATED PLAN Fiscal Year Ending June 30: 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Service Retirees 5,853 5,659 5,181 5,060 4,830 5,382 5,253 5,182 5,118 4,216 Service Retiree Beneficiary Recipients 1,898 1,883 1,826 1,827 1,824 1,134 1,065 1,056 1,045 1,732 Disability  Benefit Recipients 408 406 347 348 347 339 396 397 386 432 PARTICIPATING LOCAL DISTRICT (PLD) PLAN - WITHDRAWN Fiscal Year Ending June 30: 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 132 Service Retirees 137 140 143 201 198 214 252 253 260 362 Service Retiree Beneficiary Recipients 54 56 56 0 0 0 0 0 0 0 Maine  Public  Employees  Re rement  System Disability  Benefit Recipients 0 0 0 0 0 0 0 0 0 0 ♦ STATISTICAL SECTION DEFINED BENEFIT PLAN - AVERAGE BENEFIT PAYMENTS LAST TEN FISCAL YEARS Maine  Public  Employees  Re rement  System 133 ♦ STATISTICAL SECTION DEFINED BENEFIT PLAN - AVERAGE BENEFIT PAYMENTS LAST TEN FISCAL YEARS (continued) ALL DEFINED BENEFIT PENSION PLANS, COMBINED Retirement Effective Dates July 1, 2004 - June 30, 2014 Years of Creditable Service Less than 5 5-10 10-15 15-20 20-25 25-30 Period 7/1/2004 to 6/30/2005 Average  Monthly  Benefit Average Final Salary Number of Active Retirants 132 17,769 375 329 20,676 957 511 18,974 2,827 855 23,337 2,442 1,408 28,063 3,607 1,634 32,716 5,843 2,343 36,905 5,925 Period 7/1/2005 to 6/30/2006 Average  Monthly  Benefit Average Final Salary Number of Active Retirants 137 18,131 372 339 21,370 972 534 19,934 2,801 884 24,207 2,472 1,449 28,918 3,644 1,688 33,712 6,033 2,429 38,236 6,205 Period 7/1/2006 to 6/30/2007 Average  Monthly  Benefit Average Final Salary Number of Active Retirants 143 18,663 371 357 22,659 1,009 561 20,722 2,806 931 25,350 2,484 1,514 29,825 3,682 1,769 34,774 6,264 2,549 39,620 6,476 Period 7/1/2007 to 6/30/2008 Average  Monthly  Benefit Average Final Salary Number of Active Retirants 148 19644 371 371 23,981 1065 585 21,766 2796 966 26,250 2510 1,565 30,720 3718 1,831 35,744 6412 2,643 41,078 6789 Period 7/1/2008 to 6/30/2009 Average  Monthly  Benefit Average Final Salary Number of Active Retirants 388 23532 451 398 24,858 1132 616 22,828 2810 1,017 27,456 2570 1,625 31,630 3827 1,907 36,735 6657 2,737 42,107 7501 Period 7/1/2009 to 6/30/2010 Average  Monthly  Benefit Average Final Salary Number of Active Retirants 617 25338 559 388 26,322 1175 617 23,944 2819 1,016 28,556 2594 1,583 32,700 3898 1,867 37,655 6782 2,653 43,265 7868 Period 7/1/2010 to 6/30/2011 Average  Monthly  Benefit Average Final Salary Number of Active Retirants 419 26382 551 399 27,791 1276 636 25,452 2913 1,035 29,842 2681 1,599 34,108 4083 1,877 38,836 7060 2,681 44,693 8221 Period 7/1/2011 to 6/30/2012 Average  Monthly  Benefit Average Final Salary Number of Active Retirants 647 25,200 568 427 59,515 1,402 671 27,199 3,013 1,083 31,429 2,777 1,678 35,443 4,182 1,979 40,189 7,413 2,845 46,386 8,863 Period 7/1/2012 to 6/30/2013 Average  Monthly  Benefit Average Final Salary Number of Active Retirants 364 28,688 440 433 30,446 1,482 681 28,554 3,112 1,105 32,680 2,860 1,698 36,429 4,288 2,006 41,244 7,658 2,881 47,413 9,194 Period 7/1/2013 to 6/30/2014 Average  Monthly  Benefit Average Final Salary Number of Active Retirants 179 9877 1821 470 27332 2123 727 29082 3537 1168 33579 3320 1728 37127 4328 2026 41680 7537 2908 48133 9274 134 Maine  Public  Employees  Re rement  System Greater than 30 ♦ STATISTICAL SECTION DEFINED BENEFIT PLAN RETIRED MEMBERS BY TYPE OF BENEFIT AND OPTION As of June 30, 2014 Maine  Public  Employees  Re rement  System 135 136 7.65% 7.65% Legislative Employees School Teacher Employees Maine  Public  Employees  Re rement  System 8.65% 8.65% 8.65% 8.65% 8.65% 8.65% 8.65% Police - Grandfathered Marine Wardens - Grandfathered Game Wardens - Grandfathered Prison Wardens - Grandfathered Forest Rangers - Grandfathered 1998 Special Groups HazMat/DEP 24030 6.50% 3.00% 6.50% 6.50% 8.00% 7.50% 6.50% 6.50% 6.50% 8.00% 7.50% AC - General COLA BC - General COLA 1C - Special COLA 2C - Special COLA 3C - Special COLA 4C - Special COLA AN - General No COLA 1N - Special No COLA 2N - Special No COLA 3N - Special No COLA 4N - Special No COLA Employee Class: Participating Local District Employees 7.65% General State of Maine Employees 7.65% Judicial Employees 2014 7.50% 8.00% 6.50% 6.50% 6.50% 7.50% 8.00% 6.50% 6.50% 3.00% 6.50% 8.65% 8.65% 8.65% 8.65% 8.65% 8.65% 8.65% 7.65% 7.65% 7.65% 7.65% 2013 7.50% 8.00% 6.50% 6.50% 6.50% 7.50% 8.00% 6.50% 6.50% 3.00% 6.50% 8.65% 8.65% 8.65% 8.65% 8.65% 8.65% 8.65% 7.65% 7.65% 7.65% 7.65% 2012 7.50% 8.00% 6.50% 6.50% 6.50% 7.50% 8.00% 6.50% 6.50% 3.00% 6.50% 8.65% 8.65% 8.65% 8.65% 8.65% 8.65% 8.65% 7.65% 7.65% 7.65% 7.65% 2011 7.50% 8.00% 6.50% 6.50% 6.50% 7.50% 8.00% 6.50% 6.50% 3.00% 6.50% 8.65% 8.65% 8.65% 8.65% 8.65% 8.65% 8.65% 7.65% 7.65% 7.65% 7.65% 2010 7.50% 8.00% 6.50% 6.50% 6.50% 7.50% 8.00% 6.50% 6.50% 3.00% 6.50% 8.65% 8.65% 8.65% 8.65% 8.65% 8.65% 8.65% 7.65% 7.65% 7.65% 7.65% 2009 Fiscal Year EMPLOYEE CONTRIBUTION RATES LAST TEN FISCAL YEARS 7.50% 8.00% 6.50% 6.50% 6.50% 7.50% 8.00% 6.50% 6.50% 3.00% 6.50% 8.65% 8.65% 8.65% 8.65% 8.65% 8.65% 8.65% 7.65% 7.65% 7.65% 7.65% 2008 7.50% 8.00% 6.50% 6.50% 6.50% 7.50% 8.00% 6.50% 6.50% 3.00% 6.50% 8.65% 8.65% 8.65% 8.65% 8.65% 8.65% 8.65% 7.65% 7.65% 7.65% 7.65% 2007 7.50% 8.00% 6.50% 6.50% 6.50% 7.50% 8.00% 6.50% 6.50% 3.00% 6.50% 8.65% 8.65% 8.65% 8.65% 8.65% 8.65% 8.65% 7.65% 7.65% 7.65% 7.65% 2006 7.50% 8.00% 6.50% 6.50% 6.50% 7.50% 8.00% 6.50% 6.50% 3.00% 6.50% 8.65% 8.65% 8.65% 8.65% 8.65% 8.65% 8.65% 7.65% 7.65% 7.65% 7.65% 2005 STATISTICAL SECTION ♦ 40.43% 31.20% 35.98% 29.05% 22.36% 22.65% 22.65% Marine Wardens - Grandfathered Game Wardens - Grandfathered Prison Wardens - Grandfathered Forest Rangers - Grandfathered 1998 Special Groups HazMat/DEP 7.90% 10.50% 6.90% 3.40% 7.10% 4.20% 5.80% 3.80% 4C - Special COLA AN - General No COLA 1N - Special No COLA 2N - Special No COLA 3N - Special No COLA 4N - Special No COLA 12.80% 1C - Special COLA 3C - Special COLA 3.90% BC - General COLA 2C - Special COLA 6.50% AC - General COLA Employee Class: Participating Local District Employees 18.14% Police - Grandfathered 15.68% 0.00% 13.25% General Employee Class: State of Maine Employees School Teacher Employees Legislative Employees Judicial Employees 2014 Maine  Public  Employees  Re rement  System 3.60% 5.50% 4.00% 6.80% 2.80% 6.60% 10.00% 7.50% 12.20% 3.20% 5.30% 17.39% 17.39% 13.69% 26.83% 38.60% 33.44% 39.36% 14.21% 13.85% 0.00% 11.98% 2013 3.00% 4.50% 3.30% 5.60% 2.40% 5.50% 8.30% 6.30% 10.20% 2.70% 4.40% 17.33% 17.33% 13.65% 26.74% 38.47% 33.33% 39.22% 14.18% 13.85% 0.00% 11.99% 2012 2.40% 3.60% 2.60% 4.50% 1.90% 4.40% 6.60% 5.00% 8.10% 2.10% 3.50% 19.06% 19.06% 22.32% 27.03% 54.48% 54.49% 51.26% 16.92% 17.28% 0.00% 14.12% 2011 1.90% 2.90% 2.20% 3.60% 1.50% 3.50% 5.30% 4.00% 6.50% 1.70% 2.80% 18.27% 18.27% 21.84% 25.81% 53.30% 53.32% 50.19% 16.38% 17.28% 0.00% 14.35% 2010 1.90% 2.90% 2.20% 3.60% 1.50% 3.50% 5.30% 4.00% 6.50% 1.70% 2.80% 19.50% 19.50% 22.18% 25.68% 50.14% 40.67% 48.69% 17.37% 16.72% 0.00% 15.85% 2009 Fiscal Year EMPLOYER CONTRIBUTION RATES LAST TEN FISCAL YEARS 1.90% 2.90% 2.20% 3.60% 1.50% 3.50% 5.30% 4.00% 6.50% 1.70% 2.80% 19.09% 19.09% 21.70% 25.15% 49.11% 39.94% 47.70% 17.01% 16.72% 0.00% 15.87% 2008 1.90% 2.90% 2.20% 3.60% 1.50% 3.50% 5.30% 4.00% 6.50% 1.70% 2.80% 18.11% 18.11% 18.21% 24.29% 47.07% 45.63% 44.04% 15.88% 17.23% 0.00% 15.01% 2007 1.90% 2.90% 2.20% 3.60% 1.50% 3.50% 5.30% 4.00% 6.50% 1.70% 2.80% 17.68% 17.68% 17.79% 23.70% 45.94% 44.55% 43.02% 15.52% 17.23% 0.00% 15.09% 2006 1.90% 2.90% 2.20% 3.60% 1.50% 3.50% 5.30% 4.00% 6.50% 1.70% 2.80% 15.55% 15.55% 15.78% 17.79% 39.03% 38.27% 35.00% 13.74% 16.02% 0.00% 18.08% 2005 ♦ STATISTICAL SECTION 137 138 Maine  Public  Employees  Re rement  System 545 523 523 RSU #6 - MSAD #6 Bar Mills South Portland School Department Auburn School Department 11 10 9 8 7 6 5 4 3 2 1 Rank 100.00 61.78 0.93 0.93 0.97 0.97 1.06 1.38 1.57 2.12 2.58 25.71 Percentage of Total System 314 214 530 School Districts Totals: 1 Legislative Retirement System Participating Local Districts 1 Employer Count Judicial Retirement System In  2014,  "All  Others"  consisted  of: 34,817 24,745 9,824 182 66 Member Count Note:  All  Others  includes  employees  covered  under  two  or  more  employer  types. 56,352 547 RSU #14 Total (540 Participating Entities) 600 Bangor School Department 34,817 779 Lewiston School Department All Others 886 1,192 Portland School Department City of Portland 1,452 14,488 Maine  Veterans  Home  -­  Central  Office State of Maine Participating Entity Covered Employees 2014 66,470 42,666 605 608 627 698 721 746 863 1,257 1,296 16,383 Covered Employees 2005 Data for this table are derived from the System's Benefit Administration System. Note: Covered employees of these employers are eligible to participate in the Defined Benefit Plans administered by MainePERS, which provide normal and disability retirement benefits and certain survivor benefits, as well as benefits under the Group Life Insurance Plan. Total (547 Participating Entities) All Others RSU #6 - MSAD #6 Bar Mills Sanford School Department Auburn School Department Lewiston School Department RSU #75 - MSAD #75 Topsham Bangor School Department Portland School Department Maine Veterans Home - Central Office City of Portland State of Maine Participating Entity CURRENT YEAR AND NINE YEARS AGO PRINCIPAL PARTICIPATING EMPLOYERS 11 10 9 8 7 6 5 4 3 2 1 Rank 99.99 64.19 0.91 0.91 0.94 1.05 1.08 1.12 1.3 1.89 1.95 24.65 Percentage of Total System STATISTICAL SECTION ♦ ♦ STATISTICAL SECTION PARTICIPATING EMPLOYERS, DETAILED LISTING PROGRAM: STATE EMPLOYEE / TEACHER RETIREMENT PROGRAM Participants: Employer: Reporting Entity: State Employees State of Maine State of Maine Participants: Employers: Reporting Entity: State Employees Various (as follows) Central Maine Community College Eastern Maine Community College Kennebec Valley Community College Maine Community College System - Admin Maine Dairy & Nutrition Council Maine Developmental Disabilities Council Maine Potato Board ME Community College - Career Advantage MECDHH/Gov. Baxter School for the Deaf Northern Maine Community College Northern New England Passenger Rail Authority Southern Maine Community College Washington County Community College Wild Blueberry Commission of Maine York County Community College Participants: Employers: Teachers State of Maine; School Administrative Units for Grant-funded Teachers Reporting Entity: (as follows) Acton School Department AOS  #43  Central  Office AOS #43 Howland AOS #43 Milo AOS  #47  Central  Office AOS #47 Dedham AOS #47 Orrington AOS  #66  Central  Office AOS #66 East Millinocket AOS #66 Medway AOS #77 Alexander AOS  #77  Central  Office AOS #77 Charlotte AOS #77 Eastport AOS #77 Lubec AOS #77 Pembroke AOS #77 Perry AOS #77 Robbinston AOS  #81  Central  Office AOS #81 - CSD #8 Airline AOS #81 Holden AOS #90 Baileyville AOS  #90  Central  Office AOS #90 East Range AOS #90 Lee AOS #90 Princeton AOS #91 Bar Harbor AOS  #91  Central  Office AOS #91 Cranberry Isle AOS #91 Frenchboro AOS #91 Mt Desert AOS #91 Mt. Desert Island High School AOS #91 Southwest Harbor AOS #91 Swans Island AOS #91 Tremont AOS #91 Trenton AOS  #92  Central  Office AOS #92 Vassalboro AOS #92 Waterville AOS #92 Winslow AOS #93 Bristol AOS  #93  Central  Office AOS #93 Great Salt Bay AOS #93 Jefferson AOS #93 Nobleboro AOS #93 South Bristol AOS #94 / MSAD #46 AOS  #94  Central  Office AOS #94 Harmony AOS #95 St John Valley Allagash AOS  #95  St.  John  Valley  Central  Office AOS #95 St. John Valley Ft. Kent AOS  #96  Central  Office AOS #96 Cutler AOS #96 East Machias AOS #96 Jonesboro AOS #96 Machias AOS #96 Machiasport AOS  #96  Marshfield AOS  #96  Northfield AOS #96 Roque Bluffs AOS #96 Wesley AOS #96 Whiting AOS #96 Whitneyville AOS  #97  Central  Office AOS #97 Fayette AOS #97 Winthrop AOS #98 Boothbay Harbor AOS  #98  Central  Office  Rocky  Channels  School  System AOS #98 Edgecomb AOS #98 Georgetown AOS #98 Southport Athens School Department Auburn School Department Augusta School Department Bangor School Department Biddeford School Department Brewer School Department Brunswick School Department Calais School Department Cape Elizabeth School Department Caswell School Department Chebeague Island School Department Cherryfield  School  Department CSD #13 - Deer Isle/Stonington CSD #17 - Moosabec CSD #18 - Wells/Ogunquit CSD #19 - Five Town CSD Easton School Department Erskine Academy Eustis School Department Falmouth School Department Foxcroft Academy Fryeburg Academy Maine  Public  Employees  Re rement  System 139 ♦ STATISTICAL SECTION PARTICIPATING EMPLOYERS, DETAILED LISTING (continued) TEACHERS (continued) George Stevens Academy Glenburn School Department Gorham School Department Gould Academy Greenbush School Department Hermon School Department Indian Island Indian Township Isle Au Haut School Department Islesboro School Department Kittery School Department Lee Academy Lewiston School Department Lincoln Academy Lincolnville School Department Lisbon School Department Long Island School Department Madawaska School Department Maine Central Institute Maine Education Association Maine Indian Education Maine School of Science & Mathematics Milford School Department Millinocket School Department Monhegan Plantation School Department MSAD #4 Guilford MSAD #7 North Haven MSAD #8 Vinalhaven MSAD #12 Jackman MSAD #13 Bingham MSAD  #20  Fort  Fairfield MSAD #23 Carmel MSAD #24 Van Buren MSAD #28 Camden MSAD #32 Ashland MSAD #33 St. Agatha MSAD #35 Eliot MSAD #40 Waldoboro MSAD #42 Mars Hill MSAD #45 Washburn MSAD  #53  Pittsfield MSAD  #58  Kingfield MSAD #59 Madison MSAD #65 Matinicus Otis School Department Oxford Hill Technical School #11 Pleasant Point School Portland School Department Region 2 School of Applied Southern Aroostook County Region 3 Northern Penobscot County Region 4 Southern Penobscot County Region 7 Waldo County Technical Center Region 8 Cooperative Board for Vocational Education Region 9 School of Applied Technology Region 10 Cumberland-Sagadahoc County Regional School Unit #1 Regional School Unit #2 - K.I.D.S Regional School Unit #3 - MSAD #3 Unity Regional School Unit #4 Regional School Unit #5 140 Maine  Public  Employees  Re rement  System Regional School Unit #6 - MSAD #6 Bar Mills Regional School Unit #9 - MSAD #9 Farmington Regional School Unit #10 Regional School Unit #11 - MSAD #11 Gardiner Regional School Unit #12 - Sheepscot Valley Regional School Unit #13 Regional School Unit #14 Regional School Unit #15 - MSAD #15 Gray Regional School Unit #16 Regional School Unit #17 - MSAD #17 South Paris Regional School Unit #18 Regional School Unit #19 Regional School Unit #20 Regional School Unit #21 Regional School Unit #22 - MSAD #22 Hampden Regional School Unit #23 Regional School Unit #24 Regional School Unit #25 Regional School Unit #26 Regional School Unit #29 - MSAD # 29 Houlton Regional School Unit #34 Regional School Unit #37 - MSAD #37 Harrington Regional School Unit #38 Regional School Unit #39 - Eastern Aroostook Regional School Unit #44 - MSAD #44 Bethel Regional  School  Unit  #49  -­  MSAD  #49  Fairfield Regional School Unit #50 Regional School Unit #51 - MSAD #51 Cumberland Center Regional School Unit #52 - MSAD #52 Turner Regional School Unit #54 - MSAD #54 Skowhegan Regional School Unit #55 - MSAD #55 Cornish Regional School Unit #57 - MSAD #57 Waterboro Regional School Unit #60 - MSAD #60 North Berwick Regional School Unit #61 - MSAD #61 Bridgton Regional School Unit #64 - MSAD #64 East Corinth Regional School Unit #67 - MSAD #67 Lincoln Regional School Unit #68 - MSAD #68 Dover-Foxcroft Regional School Unit #70 - MSAD #70 Regional School Unit #72 - MSAD #72 Fryeburg Regional School Unit #73 Regional School Unit #74 - MSAD #74 North Anson Regional School Unit# 75 - MSAD #75 Topsham Regional School Unit #78 Regional School Unit #79 - MSAD #1 Presque Isle Regional School Unit #84 - MSAD #14 Sanford School Department Scarborough School Department School Agent Carrabassett School Agent Coplin Plantation School Agent Pleasant Ridge Plantation South Portland School Department Thornton Academy Union 60 Greenville Union 60 Shirley Union 69 Appleton Union 69 Hope Union 76 Brooklin Union 76 Sedgewick Union 92 Surry School Department Union 93 Blue Hill Union 93 Brooksville Union 93 Castine ♦ STATISTICAL SECTION PARTICIPATING EMPLOYERS, DETAILED LISTING (continued) TEACHERS (continued) Union 93 Penobscot Union 103 Beals Union 103 Jonesport Union 122 New Sweden Union 122 Westmanland Union 122 Woodland Vanceboro School Department Washington Academy Westbrook School Department Yarmouth School Department York School Department PROGRAM: Participants: Employer: Reporting  Entity:     LEGISLATIVE RETIREMENT PROGRAM Legislators State of Maine Office  of  the  Executive  Director  of       the Maine Legislature PROGRAM: JUDICIAL RETIREMENT PROGRAM Participants: Judges Employer: State of Maine Reporting  Entity:          Administrative  Office  of  the  Courts PROGRAM: Employers: Reporting Entities: PARTICIPATING LOCAL DISTRICT RETIREMENT PROGRAM PLDs (Active and Withdrawn) (as follows) Androscoggin County Androscoggin Valley Council of Government Aroostook County Auburn Housing Authority Auburn Lewiston Airport Auburn Public Library Augusta Housing Authority Bangor Housing Authority Bangor Water District Bath Water District Baxter Academy for Technology and Sciences Belfast Water District Berwick Sewer District Biddeford Housing Authority Boothbay Region Water District Bowdoinham Water District Brewer Housing Authority Brunswick Fire And Police Brunswick Public Library Association Brunswick Sewer District Cape Elizabeth Police Caribou Fire & Police City of Auburn City of Augusta City of Bath City of Belfast City of Biddeford City of Brewer City of Calais City of Ellsworth City of Gardiner City of Hallowell City of Lewiston City of Old Town City of Portland City of Rockland City of Saco City of Sanford City of South Portland City of Westbrook Coastal Counties Workforce Incorporated Community School Dist. #912 Community School District #918 Corinna Sewer District Cornville Regional Charter School Cumberland County Dover-Foxcroft Water District Eagle Lake Water & Sewer District Eastern Aroostook RSU No. 39 Erskine Academy Falmouth Memorial Library Farmington Village Corporation Fort  Fairfield  Housing  Authority Fort  Fairfield  Utilities  District Franklin County Gardiner Water District Good Will Home Association Gould Academy Greater Augusta Utility District Hampden Water District Hancock County Harpswell Coastal Academy Houlton Water Company Jackman Utility District Kennebec County Kennebec Sanitary Treatment District Kennebec Water District Kennebunk Kennebunkport Wells Water Dist Kennebunk Light & Power District Kennebunk Sewer District Kittery Water District Lewiston Auburn 911 Lewiston Housing Authority Lewiston-Auburn Water Pollution Cont. Au Lincoln & Sagadahoc Multi-Co Jail Auth Lincoln Academy Lincoln County Lincoln County Sheriffs Lincoln Sanitary District Lincoln Water District Lisbon Water Department Livermore Falls Water District Lubec Water District M.A.D.S.E.C. Madawaska Water District Maine Academy of Natural Sciences Maine County Commissioners Association Maine Maritime Academy Maine Municipal Association Maine Municipal Bond Bank Maine Principals' Association Maine  Public  Employees  Re rement  System 141 ♦ STATISTICAL SECTION PARTICIPATING EMPLOYERS, DETAILED LISTING (continued) CONSOLIDATED PLAN FOR PLDs (continued) Maine Public Employees Retirement System Maine School Management Association Maine State Housing Authority Maine Turnpike Authority Maine  Veterans  Home  -­  Central  Office Mars Hill Utility Dist Mechanic Falls Sanitary Dist Midcoast Council of Governments Milo Water District Mount Desert Island Regional Mount Desert Water District MSAD #13 Bingham MSAD #31 Howland MSAD #41 Milo MSAD  #53  Pittsfield Newport Water District North Berwick Water District Norway Water District Old Town Housing Authority Old Town Water District Oxford County Paris Utility District Penobscot County Penquis C.A.P. Piscataquis County Pl Pt Passamaquoddy Resv Housing Auth Portland Housing Authority Portland Public Library Region 4 United Technologies Center Regional School Unit 1 Regional School Unit No. 2 Regional School Unit No. 4 Regional School Unit No. 5 Regional School Unit No. 10 Regional School Unit No. 16 Regional School Unit No. 20 Regional School Unit No. 21 Regional School Unit No. 23 Regional School Unit No. 24 Regional School Unit No. 25 Regional School Unit No. 26 Regional School Unit No. 34 Richmond Utility District RSU #29 - MSAD #29 Houlton RSU  #49  -­  MSAD  #49  Fairfield RSU #51 - MSAD #51 Cumberland Center RSU #54 - MSAD #54 Skowhegan RSU #60 - MSAD #60 North Berwick RSU #67 - MSAD #67 Lincoln RSU #73 Rumford Fire & Police Rumford Mexico Sewerage District Rumford Water District Sagadahoc County Sanford Housing Authority Sanford Sewerage District Sanford Water District Searsport Water District Somerset County South Berwick Sewer District South Berwick Water District 142 Maine  Public  Employees  Re rement  System South Portland Housing Authority Thompson Free Library Topsham Sewer District Town of Baileyville Town of Bar Harbor Town of Berwick Town of Bethel Town of Boothbay Harbor Town of Brownville Town of Brunswick Town  of  Buckfield Town of Bucksport Town of Camden Town of Carrabassett Valley Town of Chesterville Town of China Town of Corinna Town of Cumberland Town of Damariscotta Town of Dexter Town of Dover-Foxcroft Town of Durham Town of East Millinocket Town of Easton Town of Eliot Town  of  Fairfield Town of Falmouth Town of Farmington Town  of  Fort  Fairfield Town of Freeport Town of Frenchville Town of Fryeburg Town of Glenburn Town of Grand Isle Town of Greenville Town of Hampden Town of Harrison Town of Hermon Town of Hodgdon Town of Holden Town of Houlton Town of Jay Town of Kennebunk Town of Kennebunkport Town of Kittery Town of Lebanon Town of Levant Town of Limestone Town of Lincoln Town of Linneus Town of Lisbon Town of Livermore Falls Town of Lovell Town of Lubec Town of Madawaska Town of Mapleton Town of Mars Hill Town of Mechanic Falls Town of Medway Town of Milford Town of Millinocket Town of Monmouth Town of Monson ♦ STATISTICAL SECTION PARTICIPATING EMPLOYERS, DETAILED LISTING (continued) CONSOLIDATED PLAN FOR PLDs (continued) PROGRAM: Town of Mt. Desert Town of New Gloucester Town of Newport Town of North Berwick Town of Norway Town of Ogunquit Town of Old Orchard Beach Town of Orland Town of Orono Town of Orrington Town  of  Otisfield Town of Oxford Town of Paris Town of Phippsburg Town  of  Pittsfield Town of Poland Town of Princeton Town of Richmond Town of Rockport Town of Rumford Town of Sabattus Town of Scarborough Town of Searsport Town of Skowhegan Town of South Berwick Town of St. Agatha Town of Thomaston Town of Topsham Town of Trenton Town of Union Town of Van Buren Town of Vassalboro Town of Waldoboro Town of Washburn Town of West Bath Town of Wilton Town of Windham Town of Winthrop Town of Wiscasset Town of Yarmouth Town of York Training and Development Corporation Tri-­Community  Recycle\Sanitary  Landfill Van Buren Housing Authority Veazie Fire & Police Waldo County Washburn Water and Sewer District Washington County Waterville Fire & Police Waterville Sewerage District Wells Fire and Police Westbrook Fire & Police Winter Harbor Utility District Winterport Water & Sewer Districts Winthrop Utilities District Yarmouth Water District York County York Sewer District York Water District Individual Employers: PARTICIPATING LOCAL DISTRICT RETIREMENT PROGRAM Withdrawn (Non-Consolidated) Participating Local Districts Reporting Entities: (as follows) Bingham Water District Bridgton, Town of Cape Elizabeth School Support Cape Elizabeth, Town of Community School District #903 Fort Kent, Town of Knox County Limestone Water & Sewer District Milo, Town of New Canada, Town of Norway-Paris Solid Waste Incorporated Presque Isle, City of Western Maine Community Action Maine  Public  Employees  Re rement  System 143 ♦ STATISTICAL SECTION [This page intentionally left blank.] 144 Maine  Public  Employees  Re rement  System Public Employees Retirement System