Town Administrator Janice VandeBogart is one of many municipal employees across the state who has announced her retirement this year after hearing about the state of flux the New Hampshire retirement system is in.

Having started out as deputy town clerk in 1983 and moving up to become Dunbarton’s first town administrator, VandeBogart has about 25 years in the retirement system.

Currently, Group I municipal employees, including teachers and town office staff, are eligible for the medical subsidy at the age of 60, provided they have paid into the system for 20 years.

The medical subsidy for such employees is disappearing, and while the deadline was extended until 2009, the initial deadline for those who wanted to retire with the current benefits was July 1, 2008.

While VandeBogart looks forward to spending more time with her husband, she admitted the possibility of losing some or all of her medical subsidy benefit weighed heavily in her decision to retire this year.

After figuring out the formula used in the past to set employer contribution rates and allocate funding was faulty, legislators and municipalities alike set to work to figure out a way to fill a $2.7 billion shortfall in the main part of the fund.

The House of Representatives put forth a proposal, House Bill 1645, aimed at correcting the problem. The Senate is currently pondering its own version of the proposal.

The House’s proposal, if passed, would eliminate an 8 percent annual increase in medical subsidy payments to retirees and transfer $250 million from a special account for medical subsidies into the corpus of the fund and include financial and accounting professionals on the New Hampshire retirement system’s Board of Trustees.

It would also have increased the minimum retirement age for public safety employees, such as police officers and firefighters, to 50 instead of the current 45 years old and would have increased the number of years they needed to put in to retire from 20 to 25 years total. The current Senate version of the bill freezes the annual increase in the medical subsidy until 2012, at which time 4 percent annual increases would begin.

It would also leave both the Board of Trustees’ composition and the age limit and time requirements for public safety employees as they are.

The Local Government Center calculated the impact of House Bill 1645 compared to the costs associated with taking no action to fix the retirement system for towns and school districts across the state.

According to Goffstown Town Administrator Sue Desruisseaux, if nothing is done at the state level to fix the retirement system, the town and school employer contributions for the 2009-10 year would increase by about $600,000 from what they currently are.

The cost falling to taxpayers for the town side alone would be $261,730 for 2009-10, according to projected estimates. If the House bill is passed, it would result in an estimated $17,293.80 in contribution costs to the town.

The school’s portion of the contributions would add another $325,000 or so to those costs if nothing is done, Desruisseaux said.

“Our Board of Selectmen took a stand to support House Bill 1645 and sent letters to all our representatives and senator. They’re also supporting Local Government Center starting a legal fund that if (House Bill) 1645 doesn’t pass to take legal action,” Desruisseaux said.

Many towns and school districts across the state have joined in the coalition with Local Government Center if the medical subsidy costs fall to employers, and therefore taxpayers, saying that situation would result in an unfunded mandate.

Darrell Lockwood, superintendent for Goffstown, Dunbarton and New Boston schools, said all three school boards in those districts have joined that coalition with the stipulation that they could choose to withdraw from it upon seeing the language of the suit.

“In reality, it’s a tough one. There’s a lot of different voices in this one and certainly it’s important to our school boards to have good benefits for their staff, and yet, they’re also responsible for the taxpayers’ dollars,” Lockwood said.

Lockwood said one of the most important aspects of the retirement issue is the stark difference in the points of view of the House and Senate on how to fix it.

“It’s a system that I believe everyone realizes is broken, but there’s still many viewpoints in terms of how to proceed in fixing this,” he said.

Weare Superintendent Christine Tyrie said Weare’s School Board also joined that coalition, but the School Board at John Stark Regional High School has not.

“The boards are very concerned about increases in retirement,” Tyrie said. “They’re wondering how, if they’re negotiating a contract of planning their budget for next year, how they’re going to absorb that and keep their budgets low.”

New Boston employees in the town offices are on a retirement plan separate from the state, but the Police Department would still be greatly impacted by the passing of House Bill 1645.

Police Chief Christopher Krajenka said the House’s proposal would have severe implications in terms of the health and wellness of older officers, given the high stress level of the job.

“This job is truly a young man’s game. Realistically, the stress of this job is taking years off of our lives,” Krajenka said, saying increasing the retirement age to 50 and extending the time officers have to pay into the retirement system before retiring to 25 years is pushing it.

“Forcing people beyond that time, I think we’re setting them up and I think we’re setting the communities up,” Krajenka added.