By Joshua Archer
Staff Writer
CARIBOU — The city of Caribou is getting funds back from the Maine State Retirement System (MSRS) in the approximate amount of $3.4 million and the City Council has decided to invest $3 million of those funds into 5-year CDs with Aroostook Savings and Loan.
“Approximately 25-30 years ago the city invested some extra money into the MSRS system, and that amount has grown to the $3.4 million in surplus funds that we have today,” City Manager Austin Bleess said.
Changes made by the Governmental Accounting Standards Board have affected the MSRS, and MSRS can no longer invest the surplus funds from municipalities, according to Bleess.
City council members shopped around for investment opportunities before deciding where to place the money. A proposal from a Caribou-based bank stood above the others. Aroostook Savings and Loan’s President and CEO John Swanberg swayed the council to invest back into the city.
“Keep your money at home so it builds your community,” Swanberg said.
The investment strategy will pay dividends to Caribou residents looking to build a home or business in the city in the form of low-interest loans. “Anytime you put money in the local economy it turns sevenfold,” Bleess said.
The city will now pay into MSRS on a monthly basis to cover the employer cost share of retirements for city employees who participate in the state retirement system. The city will make these payments utilizing the interest income from the 5-year CDs with Aroostook Savings and Loan.
“Only the police and fire department employees participate in the MSRS system. The 5-year investment is at a 3 percent interest rate, which will generate an annual interest income of $90,000,” Bleess said.
The annual interest income will cover the employer share of the retirement costs on an annual basis, “The remaining approximately $400,000 will be used to boost city reserves and offered to pay out unused sick/vacation time for current city employees today rather than when they retire,” Bleess said.
Back in the 1970s the city of Caribou didn’t offer a retirement plan for city employees. Allowing the accumulation of unused sick/vacation time to be paid out at retirement was used as their retirement plan. “By paying out the unused amounts today, this would allow the employees to invest in a retirement plan of their choosing and get the liability off of the city books,” Bleess said.
Bleess expects the city’s money to be deposited into Aroostook Savings and Loan sometime this July.
