The Senate and Assembly money committees on Friday both approved the operating budget for the Public Employees Retirement System.
The decision includes adding a General Counsel for PERS to begin handling litigation in-house instead of hiring outside counsel for those cases.
Assemblyman Randy Kirner, R-Reno, said the approval has nothing to do with his AB190 bill that would essentially convert PERS into a supported 401K plan for all new hires.
That bill stalled in the Assembly Ways and Means Committee after PERS officials put a fiscal note estimating it would cost $800 million to implement because of the cost of paying off the unfunded liability of members in the existing defined benefits plan.
While one of the best funded public pension plans in the country, PERS still is only funded for 70.8 percent of its total liabilities if every member retired.
PERS officials say that’s not a critical issue because there’s no chance all members could retire at once.
Kirner said afterward he has submitted an amendment designed to reduce or eliminate that fiscal note but while “the bill is not quite on life support,” getting it approved is a major challenge.
“It’s a tough uphill climb because people like you don’t get it,” he told a reporter.
Kirner said PERS bases its ability to pay off that unfunded liability, which he said is some $12.5 billion, on projections the plan is going to earn 8 percent interest on investments over the next 22 years.
He argued no analyst believes that kind of return is possible for any retirement plan.
“PERS has outlived its time,” he said. “It doesn’t fit the world we’re in. I don’t believe we’re going to get 8 percent growth over the nest 20 years.”
The system’s operating budget, however, was approved with Kirner’s and other members support by both the Assembly committee and the Senate Finance Committee.
The new General Counsel is projected to greatly reduce outside legal expenses over time by handling cases in-house. That person would be paid about $145,000 a year.
Earlier in the session a 2.25 percent premium increase was approved by lawmakers. The increase raises the total premium to 28 percent of pay for regular public workers.
The cost is going to be split 50-50 between the employees and employers who are members of PERS. That effectively reduces the take home pay of state workers by 1.15 percent.
The state’s share will cost state government about $10 million a year. But the increase applies to all local governments and school districts as well — a total of about 88,700 members.
In addition, there are about 11,800 members who are classified police/fire. Their PERS rate, which is set independently of all other members, is not going to increase in the coming two years.