JAY — Selectmen voted Monday to ask voters in June if they want to pay off about $237,000 owed to the Maine State Retirement System.

It has been an unfunded town liability since July 1, 1994, town Financial Director Lisa Bryant said Wednesday.

Prior to then, the Maine State Retirement System administered more than 250 individual retirement plans for various participating local districts or towns, Bryant said. The Participating Local District Consolidation plan brought those individual plans together under one umbrella plan. It is less complex and less expensive to administer and that improves service and benefits for members and employees, she said.

On July 1, 1994, towns were invited to join the Retirement System’s consolidated plan. Prior to that towns had a stand-alone rate that fluctuated each year, Bryant said.

When towns joined the plan, a snapshot was taken of the financial districts and an actuary determined each town’s rate based on existing liabilities for retirees already collecting retirement, disability and death payments. Some towns had enough money on hand at the time to fund future liabilities on their retirees, some had excess amounts, and dozens like Jay did not have enough. Jay has been paying on it since it joined the plan, Bryant said.

As of June 30, 2010, $290,964 was owed and since then it has been lowered by monthly payments from the school at $2,046 a month, and from the town at $2,402 a month, Bryant said.

That brings the debt to $255,380 this month and it is expected to be at about $237,000 as of July 1. The interest rate the town pays is currently 3.22 percent and is expected to increase as of July 1.

With the school department no longer being a town department once school consolidation goes into effect on July 1, the town will need to pay the full liability.

Even if voters choose not to pay it off, then monthly payments will still be made by the town, Bryant said.

The resolution between Jay and the Maine State Retirement System was signed June 29, 1994, by David McCluskey, then chairman of the Board of Selectmen, Bryant said.

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