SAGE Commission looks at cutting state benefits

RENO - The SAGE Commission, charged with looking for ways to save the state money, is considering potentially major reductions in state health and retirement benefits.

The Spending And Government Efficiency Commission will present its recommendations to Gov. Jim Gibbons and the Nevada Legislature over the next two years.

Meeting in Reno on Friday, the group headed by former U.S. Printer Bruce James, rolled out proposals that would make major changes to state benefits.

Member Bob Feldman said the changes to the Public Employee Benefits Program alone would save the state about $300 million over the next five years. He said it would do so by reducing the state's contribution to health benefits from 100 percent of premium costs for active employees to the average of what private industry pays.

"We feel private industry pays about 75 percent for the employee benefits and roughly 50 percent on the dependents," Feldman said. "One hundred percent for employees? That's a little out of whack."

"The big issue here is the employees need to be paying part of this benefit plan," he said.

James said the job of the commission is to make sure any changes they recommend are "proper for the workforce."

"We're talking about a real impact on state employees," he said. "How can we minimize the impact to the employees?"

Former budget director Perry Comeaux said one idea the commission should look into is treating lower income state employees differently than highly paid state employees.

Public Employee Benefits Program Director Leslie Johnstone said that wouldn't save money because her program would still need the same total amount.

But, James said, health care costs "have a very different impact on an employee making $30,000 than an employee making $130,000."

In addition, the commission looked at several potential changes to the Public Employees Retirement System, including eliminating the ability to retire at any age after meeting a certain minimum number of years service. That would have its biggest impact on police and fire employees who are now allowed to retire after 20 years service and do so at an average age of less than 55. The plan would establish instead a minimum age of 60 to begin collecting pension benefits.

Other proposals on the list include reducing the rate at which retirement benefits accrue below the current 2.67 percent per year. Under that formula, an employee with 20 years service gets about 54 percent of the salary they received during their highest three years of state earnings as a pension.

A lower rate would reduce the final pension. So would the proposal to define that final average salary as the average of the highest five years instead of the highest three years.

No estimates on what the changes would save was available.

No action was taken on either idea.

The commission also reviewed two other proposals: One, dumping costs on the counties, and the other designed to save Medicaid money by finding fraud and overpayments.

Comeaux presented a proposal to shift responsibility for both administering and funding the property tax rebates senior citizens receive to the counties. Comeaux said that when the program was formed, the state was rebating to seniors part of the property tax money it received in the 1970s. But the tax shift of 1981 took the state out of the property tax business except for 17 cents it collects to pay off bonds. The counties, cities and schools receive the rest of the maximum $3.54 per $100 of assessed value in property taxes they collect.

The commission was told those rebates are budgeted for $5.4 million this year, $5.9 million next and $6.2 million in 2011.

James said that because the state doesn't get property taxes to rebate, it's actually just an expense to the general fund which one could argue the counties should pay.

Carole Vilardo of the Nevada Taxpayers Association told fellow commissioners the law needs to be changed because among those getting property tax rebates are renters in low-income housing projects that don't pay property taxes. She questioned why they should get a rebate of a tax they aren't paying.

Sabra Smith-Newby, administrative services director for Clark County, said they are willing to take over administration of the program.

"That said, Clark County would be opposed to taking over the cost of the program."

Finally, Chuck Duarte, administrator of the Health Care Financing and Policy Division, presented a plan to add six positions to the unit charged with finding both accidental and intentional Medicaid overpayments.

The 2007 Legislature added four staff to the unit last year and three more early this year, bringing it to 10 people. As a result, according to Duarte's information packet, recovered overpayments rose from less than $50,000 in the second quarter of fiscal year 2007 to more than $800,000 in the third quarter. When the final three staffers were added in March, total money recovered increased to $1.4 million.

He told the commission that adding six more people to the unit would enable them to go into may areas of potential fraud not now being investigated and, hopefully, greatly increase recoveries.

One such area, Duarte said, is payments for durable medical equipment such as motorized wheelchairs. The added staff could examine invoices to verify the items were actually purchased and that recipients are actually getting the equipment.

No action was taken on any of the proposals. James said any potential changes to retirement and health benefits provided by state government would have to be much more thoroughly reviewed before final recommendations are sent to the governor.

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