Rules change for non-state workers in state benefits plan

The Senate Finance Committee moved Saturday to stop local governments and schools from sending a disproportionate number of their retirees to the state benefits program.

The Public Employees Retirement Program has allowed retirees from other governmental entities in Nevada access to PEBP benefits since the early 1990s. The purpose was to help some of Nevada's smallest municipal and county governments and school districts provide benefits to their active and retired employees. But large entities such as Clark County School District quickly saw a chance to move their retirees to the state's plan.

The state helped those retirees somewhat in 2003, ordering local governments and schools to at least match the amount the state subsidizes its retirees. But those non-state retirees still face large monthly premiums for benefits because very few of the younger, healthier active school and local employees are in the state plan. They are in their own entity's benefits plan.

Marty Bibb, representing retired state workers, said there are three active state workers for every retiree in the state benefits plan but there are 13 non-state retirees in the plan for every non-state active employee. He said that because active and retired workers in each of those two groups are rated as a unit to determine their potential medical costs, that means much higher premiums for non-state retirees in PEBP than for state retirees.

Sen. Bob Beers, R-Las Vegas, told other members of the finance committee the proposal in SB544 would attempt to fix that by mandating that school districts and local governments can only send their retirees to the state benefits program if they also have their active employees covered by the state plan.

"It would be all in or all out," he said. "Their retirees can't come to the state health plan unless they were members of the state health plan when they were active. Local governments need to be full participants in this plan rather than just sending us the higher-cost members."

A likely side effect, the committee was told, would be an increase in the premiums for active non-state employees whether they are part of the state plan or under their own entity's plan.

Sen. Bob Coffin, D-Las Vegas, who worked with Beers on the study committee that developed the proposal, said the change is inevitable. But, he said, lawmakers need to give the local governments and school districts time because they will have to decide which way to go.

"We have to give them time to negotiate that," he said.

Senate Majority Leader Bill Raggio, R-Reno, also agreed with the "all in or all out" rule.

"I don't see any alternative. We can't have the state take all the high-risk people."

Senate Minority Leader Dina Titus, D-Las Vegas, asked what would prevent those entities from not providing a subsidy to retirees.

"They have a moral obligation to do so," said Beers.

The committee voted unanimously to make the change but to delay its implementation until October 2008 to give time for negotiations at the local and school district level.

As part of the proposal, the committee also gave up on the idea of revamping membership on the PEBP executive board and dropped a proposal to put the plan under control of the Insurance Commissioner.

But they directed that, beginning with the fiscal 2008 plan year, PEBP account for and adjust the premiums of state retirees who also qualify for Medicare to recognize savings to the state program because Medicare pays the bulk of costs for those retirees.

The legislation will be heard on the Senate floor Monday.

• Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.