AUGUSTA — Retired state workers and teachers will get up to $600 each in September when the Maine Public Employees Retirement System distributes lump sum payments that are designed to replace annual cost-of-living increases that were frozen by the Legislature last year.

Retirement system Executive Director Sandy Matheson said Friday that about $12 million is needed to distribute payments to the 26,000 eligible retirees. That money is available through the state surplus, which is more than $20 million, said Department of Administrative and Financial Services Commissioner Sawin Millett.

Millett declined to release the exact amount of the surplus in advance of a meeting scheduled Monday with the Legislature’s Appropriations Committee. However, he confirmed this week that there is enough money to cover the retirement payments.

That’s because the payments are third in line to receive any surplus funds, and the first two — replenishment of the governor’s $350,000 contingency account and a $1 million payment to the Finance Authority of Maine — will not use all of the money, he said.

Chris Quint, executive director of the Maine State Employees Association, said the payments will be the first time in three or four years that retired state workers and teachers have received any additional payments.

“We’re happy retirees will be getting this much needed (cost-of-living adjustment) in this time of economic uncertainty,” he said.

However, the employees union, which fought against the reforms, will continue to work to reverse the changes, he said.

Part of that work may come through the court system, where the Maine Association of Retirees is suing the state retirement system to reverse the freeze on cost-of-living increases. The suit, which was filed in February, is pending in U.S. District Court in Bangor.

Association Executive Director Florence Hoover Johnson said while her group was “pleasantly surprised” by the forthcoming payment, retirees are never going to make up ground that’s been lost because their benefits have been frozen.

“They are never, ever, ever going to dig their way out of this,” she said. “They’re never going to make it up.”

The payments are intended to replace annual cost-of-living increases that were frozen for three years by the Legislature when it passed a series of reforms to the system. However, the payments — and any future increases — are limited to no more than 3 percent of the first $20,000 of the retirement benefit. The payments will be made only when there’s a state surplus.

The amount that will be sent to each retiree varies depending on years of service and benefit level. The most any retiree will receive is $600.

The Legislature shaved $1.7 billion off the unfunded liability of the retirement system by enacting new limits on benefits and freezing the cost-of-living adjustments. The state faces a constitutionally mandated deadline of 2028 to pay off all retirement system debts.

The current unfunded liability is $2.7 billion, according to the retirement system.

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