An informal presentation on the Public Employees’ Retirement System and the ramifications of pending legislation in the Nevada Legislature drew about 125 people to the Oasis Community Church on Thursday.
Current and retired employees representing all segments of local and state government served by PERS attended the two-hour meeting. The Nevada Classified School Employees and Public Workers Association also sponsored the presentation.
Cheryl Price, operations officer for PERS, said presenters wanted to advise public employees of their benefits and of PERS’ stance during the 2015 session. Ron Dreher, a retired Reno policeman and member of the Peace Officers Association, also provided information pertaining to those involved with law enforcement.
Dreher offered his insight on 13 bills — for, neutral and against.
According to retired Fallon educator Nancy Stewart, she said Dreher believes the legislature may go into a special session after the regular session and anything may occur with Assembly Bill 190.
Price was pleased with the Fallon meeting.
“It was very informative, and we had good feedback from the audience,” she said.
On the other hand, Price said she has an inkling that AB190 may not pass this legislative session. Price, though, said PERS has made some concessions to raise the eligibility age, for example, to 55 for 30 years of service to meet the language of Senate Bill 406.
“The PERS Board is in opposition to AB190, and the PERS Board has adopted a neutral position for SB406,” she said. “The Board believes that our current plan is well funded. We have one of the best performing funds in the country. Our assets have more than doubled in the last 15 years (even through the Great Recession).”
Price said PERS is in favor of recipients receiving 75 percent of their benefits after 33 and one-third years of service or collecting at age 55 after 30 years. PERS is also in favor of reducing the annual benefit multiplier from 2.50 percent to 2.25 percent for new hires.
Since the beginning of February, state lawmakers have been tinkering with revising eligibility ages for receiving benefits and reducing the annual percentage employees credit toward their retirement.
Price said PERS opposes AB190, which would change eligibility requirements and contribution formulas for future public employees hired after July 1. At issue is a proposal made by Reno Assemblyman Randy Kirner. He would like to see new workers placed into a hybrid 401k plan. He also claims PERS’ unfunded liability is worse now than 15 years ago.
PERS Director Tina Leiss recently told the Assembly Ways and Means Committee that many of Kirner’s claims are incorrect.
In her Thursday presentation, Price gave an overview on PERS’ structure and staffing. As of June 30, PERS has 88,709 active members with the average age of 46.4 and number of average years in the system at 10.1. She said the average annual salary of public employees excluding police and fire is $48,057, slightly down from the annual average salary o $48,626 as of June 30, 2013.
The average entry age for police and fire personnel is 29.3 with an annual salary of $71,990, down from $72,637 on June 30 2013.
Price told the attendees that 1.1 percent of benefit recipients receive benefits of more than $100,000 annually compared to 9.5 percent of police and fire recipients.
Price’s presentation also showed PERS’ investment approach and strategy is at least 8 percent (net) annually.
“Ultimately, we do believe that the current structure of the plan is good and we are on track to pay off the unfunded liability in 22 years,” she said. “We do not believe any changes to the structure of the plan or the funding is required at this point; however, if SB406 passes, we can implement.”
Senate Bill 406
The Nevada State Education Association teachers’ union joined police, firefighters and business groups in supporting SB406 on Monday. Republican Senate Majority Leader Michael Roberson, the bill’s sponsor, said it will save the retirement system $1 billion every 10 years by paying out slightly less to employees hired on or after July 1, 2015.
“The point is to try to balance the competing concerns ... regarding PERS reform, and to bend the cost curve down over time to increase the solvency of the system,” Roberson said.
The bill changes the way benefits are calculated to pay out less to new hires, and only considers income up to $200,000 a year when determining an employee’s payout. Those measures are meant to reduce a multibillion-dollar unfunded liability in the pension system.
Another provision in the bill prevents public workers from collecting benefits after being convicted of certain felonies stemming from their public work, including bribery, embezzlement or stealing public money. Upon conviction, the system would have to return contributions paid by employee without interest, but wouldn’t have to pay out state matching funds.
The teacher’s union and others sharply opposed another PERS overhaul bill, AB190. That measure was sponsored by Kirner and sought to create a hybrid pension system with elements similar to a private 401(k) plan.
Officials with the PERS system said they believed there were constitutionality issues with that bill, and said it could pay out so little that state employees would need to use Social Security. By contrast, PERS’ officials said SB406 was in line with the pension system’s mission.
Priscilla Maloney of the American Federation of State, County and Municipal Employees union had technical concerns about the bill, and other union representatives said they worried that the lower pension payouts would make it harder to attract new employees.
But overall, witnesses that cried foul on other Republican-backed PERS bills were supportive of this one.
“We believe that it’s a reasonable approach to reform,” said Rusty McAllister of the Professional Fire Fighters of Nevada.
With wire reports