Town Clerk Barbara Lessard was one of many town employees across the state to announce her retirement this year, citing the state of the New Hampshire retirement system as a reason for doing so.

After putting in 23 years of service as town clerk, Lessard, 63, said she wanted to make sure she would retain her medical subsidy, a benefit that is in flux with the current $2.7 billion shortfall in the state’s retirement system.

The potential loss of that subsidy due to a lack of funding and the end of her three-year term as town clerk made her decide not to run for the position again, which after three years would put her retirement at age 66.

“Everything seemed to be all in a row,” said Lessard shortly after announcing her retirement in February.

The state House of Representatives and Senate are currently bandying versions of legislation that aim to repair the retirement system for current retirees and make it sustainable for future retirees, but finding a compromise that will appease taxpayers, employers and employees has proven difficult.

There are about 70,000 current employees and retirees in the state’s retirement system, classified into one of two groups: Group I, which includes town office employees and teachers; and Group II, which includes public safety employees.

The problems with the retirement system started when it was discovered that the method used to transfer money from the corpus retirement fund into a special account for medical subsidies was flawed, and resulted in the over-estimation of what was actually in the fund.

Legislators must determine a way to dig out of the $2.7 billion hole.

The House responded to the shortfall by drafting HB 1645, which garnered support from many towns across the state but was unappealing to employees. The bill, which the Senate decided not to pass in its original form, would have taken away some of the retirement benefits for Group I employees, including an annual 8 percent increase in medical subsidy payments and transfer $250 million into the pension fund.

For new Group II employees, the House bill would raise the minimum retirement age to 50 rather than 45 and extend the time required to retire to 25 years instead of 20.

The House bill would also change the make-up of the New Hampshire Retirement System Board of Trustees by cutting it from 14 members to 12, which would include financial and accounting professionals.

The Senate is looking closely at the bill – along with labor unions and municipalities – and has proposed some amendments which went through the final approval in the Senate Executive Departments and Administration Committee on Monday, May 2.

The Senate’s version would not change the age or time requirements for Group II employees to retire; would freeze the 8 percent increase in medical subsidy payments until 2012, at which time a 4 percent yearly increase would go into effect; and further would leave the composition of the board of trustees as is.

Salem School District Superintendent Michael Delahanty said the district has some teachers who have announced retirement because of the July 1, 2008, deadline established for those who want to retain the current benefits offered through the retirement system.

“There are people who are making their decision based on the (medical) subsidy expiring, or not being available to anyone retiring after June 2008,” Delahanty said. He added for some, the availability or lack thereof of the medical subsidy was a make or break factor.

“We have two or three teachers who may have delayed their retirement if they were sure they medical subsidy would be available beyond June of 2008,” Delahanty said.

There has been some discussion at the state level on pushing that deadline to 2009, Delahanty said, but added he’s uncertain whether such a bill would pass.

The Local Government Center provided towns and school districts with a funding calculator that would allow them to figure out how doing nothing about the state of the retirement system would compare financially to the changes proposed in HB 1645.

According to that calculator, Salem taxpayers would shoulder a $762,408 additional burden to pay for retirement benefits if nothing is done about the retirement system.

The passage of the House bill would reduce that impact to $29,473. The Senate’s version, if passed, would result in a slightly bigger number.