Windham police Capt. Pat Yatsevich said he’s ready to retire after a long battle with illness, but worries about how the current funding and decision-making concerns surrounding the New Hampshire retirement system will affect his medical treatment.

Two years ago, Yatsevich was diagnosed with myeloma, a rare form of blood cancer in which excess white blood cells in his body began to mutate and attack his body.

After several treatments including a stem cell transplant in February 2007 costing over $100,000, Yatsevich went into remission.

In December 2007, Yatsevich said, tests revealed that his white blood cell counts were increasing rapidly. After follow-up testing over the next couple months, doctors told him the disease had resurfaced and that he may need another stem cell transplant, something he won’t be able to afford if he retires.

“If I was to retire, I could keep the same plan that the town has, however I’d have to make up the difference out of pocket,” said Yatsevich, who turned 45 this year and is now eligible to retire. “Until I know what’s going to happen with my health, I’m going to work as long as I can.”

With the struggle at the state level involving reforming the New Hampshire retirement system, Yatsevich is not the only one concerned about how his retirement would play out.

After years of the state’s using a flawed accounting method, it was discovered that the state’s retirement fund contained about $2.7 billion less than what officials initially thought, leaving the burden of recharging the system on municipal employers and, ultimately, taxpayers.

Legislators have been proposing ways to reform the system in a way that would please state and municipal workers, employers and taxpayers.

House Bill 1645, which made its way into the Senate recently, proposed slicing out an 8 percent annual increase in medical subsidy payments and transferring $250 million from the special account for medical subsidies into the corpus of the fund.

It would also have changed the composition of the New Hampshire Retirement System Board of Trustees from 12 to 14 members, which would include accounting and financial professionals.

For public safety employees, including police officers and fire fighters, the House bill would change the minimum retirement age to 50 and increase the amount of years they need to put in to qualify for retirement benefits from 20 to 25 years.

The Senate’s Executive Departments and Administrative Committee had their final discussion on approving a version of the House bill that would lean a little further in the employer’s direction.

The Senate version, if passed, would freeze the yearly increase in medical subsidy payments until 2012, at which time a four percent yearly increase would be instituted.

It would also leave the minimum age and time requirement for public safety employees to retire where they are, at age 45 with 20 years of service.

The Senate version would also retain the Board of Trustees’ current composition, proposing the use of specialized committees to aid in decision making.

According to Pelham Town Administrator Tom Gaydos, the town would have to shoulder an extra $190,000 in 2009-10 if nothing was done for the retirement system.

If House Bill 1645 were to pass, that impact would be greatly lessened to about $8,000. The Senate proposal would cost slightly more than that, although estimates are not yet available.

“What has to happen, in my opinion, is the system has to come in line with the rest of the world,” said Gaydos. “They’re going to break the backs of taxpayers. The taxpayers are not going to put up with this.”

He added he thinks eliminating the medical subsidy escalator as outlined in the House bill would have eventually brought the fund back in line.

If the bill were passed, Windham’s costs toward the retirement system would be a $248,385 total increase in taxes, according to the Local Government Center.

“The last thing we want to see is a stampede of teachers leaving because of retirement system shortfalls,” said Frank Bass, superintendent for Pelham and Windham schools. “I think everyone’s in a position of entrenchment.”

According to Fran DeCinto, the human resources director for Pelham and Windham schools, said the two districts have several retirements this year: eight teachers, one food service employee in Pelham; three administrators, five teachers and a library assistant in Windham.

At least two of those retiring in each district voiced their intention to leave because of the state of medical subsidy funding in the retirement system, DeCinto said.

Pelham Fire Chief Michael Walker said upping the minimum retirement age and increasing the amount of years public safety workers must put in before retiring would affect recruitment and retention in those careers.

“You’re actually exerting yourself more than a professional athlete,” said Walker, saying the stress and physical demands of the job are showing in statistical evidence that about half of firefighters fatalities are the result of cardiovascular problems, including heart attacks.

“Unless someone can show me statistics that indicate that as people we are in better shape and there’s better modeling for an extension of that age, I think on the other end you’re going to get higher costs on workman’s comp,” Walker said, adding many may try for a disability pension rather than retirement.

Extending the age would also requiring paying employees for longer periods of time, which also affects the tax rate.

“I hope it comes out that there’s some sort of compromise,” Walker said.