Employee Benefits must cut $57.8M

The Public Employees Benefits Program must cut its proposed 2009-2011 budget request by $57.8 million to fit within mandates set by the governor.

Executive Director Leslie Johnstone said that means both reducing benefits and higher employee and retiree premiums.

"Everybody's ox is going to be gored," said outgoing board member Jacque Ewing Taylor.

Johnstone said she would bring the board a list of options to consider at its September meeting, but that the governor has made it clear the program will get no more for retirees in the coming biennium than it did this biennium and that the per-employee contribution for current employees will not be increased.

She said that is in spite of the fact medical claims are expected to increase about 9 percent each year and inflation is expected to raise costs 10 percent a year.

"There will be direct financial impacts on participants," she said.

She said staff is proposing making the cuts 50-50 between benefit reductions and cost-shifting premiums more onto the backs of employees and retirees.

The board voted to approve that concept as the basis for outlining the proposed budget, which must be submitted to the budget office by the end of this month. Johnstone said the board will work out exactly what changes to make in the benefits plan between September and the November meetings.

The original reduction called for was $66.4 million during the biennium. That was cut back to $8.6 million when the board decided to defer its request to expand benefits to cover domestic partners - both same and opposite sex couples. They did so after being told Gov. Jim Gibbons would just remove that enhancement from the budget anyway because of the economic situation.

Jim Richardson of the University Faculty Alliance urged the board not to kill the idea completely saying it is a much needed recruiting tool for Nevada campuses since every state higher education system in the West except Idaho offers domestic partner benefits. He pointed out less than a third of those couples are same sex.

"We're facing some serious competition, some recruitment problems and some retention problems," he said.

Richardson asked them and board members agreed to put on the record that the issue is still alive and will be raised again when the state's fiscal situation improves.

But the board agreed to keep the new position of wellness coordinator in its budget request after being advised by staff, the position would generate far more in savings than its roughly $100,000 a year cost.

The program provides health benefits to more than 41,000 state employees, non-state workers employed by local governments and retirees. PEBP's state support for the coming biennium, Johnstone said, will be capped at $509.8 million under the governor's orders. When state worker, retiree and non-state worker premiums are added in, the program's total proposed budget will be just under $1 million for the biennium.

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