Nevada public pensions

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Nevada public pensions are organized into three pension systems, including the Public Employees' Retirement System of Nevada.

Nevada has 35,105 total public employees as of 2010.^[1] In Fiscal Year 2010, the state has a total of 114,478 active and inactive pension fund members, with 43,985 receiving periodic benefit payments. ^[2]

State employees hired after January 1, 2010, will have their annual pension benefits calculated using a new formula. Instead of the old formula by which the state multiplied the number of years of service by 2.67 to derive the percentage of salary to be replaced by pension benefits, the state dropped the multiplier to 2.5.^[3]

In December 2010, then Gov.-elect Brian Sandoval, 47, a Republican, has pushed for an employee-supported plan to cut costs for the fund, which has $10.4 billion less than needed to pay benefits, documents show. But, Nevada’s pension system would pay $1.2 billion more over the next two fiscal years than its current obligation to retirees to convert its $24.7 billion plan to one based on employee contributions, a report says. ^[4]

At a November meeting of the PERS board, it was announced that the system’s long-term unfunded liability hit $10 billion as of June 30, 2010, up from $9.1 billion as of June 30, 2009. The plan was 70.5 percent fully funded on June 30, 2010, down from 72.5 percent in the previous year. At its high point in 2000 the plan was 85 percent funded. ^[5] The PERS board recommended increases in the contribution rates paid by public employers and their employees to maintain adequate funding for the retirement system. <re name=issue/>

In 2010, Nevada paid 92 percent of the recommended contribution to its pension plans and just 21 percent of what the state should have paid to fund retiree health benefits, a Pew Center for the States pension report found. ^[6]

According to the United States Census Bureau, the state has no locally-administered pension systems.^[7]

Nevada pension plans

PERS

At the end of 2010, the Nevada PERS had 183 participating employers, 102,594 active members, and 43,919 retirees and beneficiaries. The System is comprised of two sub-funds, Regular, consisting of members who are not police or fire employees, and Police and Firefighters (Police/Fire).

The average monthly benefit for regular members of the system is over $2,400. ^[10]

Elibility

Nevada’s employees are eligible for retirement benefits at age 62 with 10 years of service, instead of age 60.^[3]

Calculating pension benefits

State employees hired after January 1, 2010, will have their annual pension benefits calculated using a new formula.^[3] The state multiplies the number of years of service by 2.5% to derive the percentage of final salary to be replaced by pension benefits. In the past, the state multiplied the number of years of service by 2.67%.^[3]

Funding levels

The state's pension liabilities can be calculated in a variety of ways, which yield different numbers. Below are the numbers as calculated by to the Pew Center on the States,^[3] the American Enterprise Institute^[11] and Professors Robert Novy-Marx of the University of Chicago and Joshua Rauh of Northwestern University, Kellogg Graduate School of Management.^[12]

Other information from the Pew Center on the States Feb. 2010 publication "The Trillion Dollar Gap":

This data is based on projected data from 2008 census data.^[13] In 2008, $1.94 trillion was set aside for pensions, but it is estimated that states have $5.17 trillion in unfunded liabilities.

Rate of return

Nevada presumes an 8 percent return rate on its pension investments.^[3]

Nevada’s Public Employees’ Retirement System earned an estimated 2.9 percent return on its investments in the fiscal year ending June 30, and is now valued at $25.8 billion. ^[14]

Pension reforms

Some changes were made to the retirement system by the 2009 Legislature, including raising the retirement age to 62 from 60 for an employee with 10 years of service. An employee can still retire at any age with 30 years of service. ^[5]

The SAGE Commission, a panel created by outgoing Gov. Jim Gibbons to look for efficiencies in state government, also recommended changes to the retirement system but did not advocate a change to a defined contribution plan. Recommendations from the Spending and Government Efficiency panel include setting a minimum retirement age of 60 before benefits can be paid out. Other recommendations include calculating the retirement benefit over five years of pay, not the current three highest pay years, and imposing a moratorium on any benefit enhancements until the plan is fully funded. ^[5]

Nevada does not prohibit "double-dipping." Almost 700 state workers have taken advantage of the double-dipping law, which allows some workers who are retired and collect a pension to come back to work at state jobs where a "critical labor shortage" exists and earn paychecks. These are positions that state employers have found difficult to fill for a variety of reasons, including that they are in rural locations, don't pay well or require special skills. The state retirement program spent $54.4 million on double-dipping employees from 2001 to 2008, according to a study done for the Legislature. The next report isn't due until 2014, so a current assessment of what it's costing is not available. ^[15]

In 2011 the PERS unfunded liability worsened from $10 billion to $11 billion, while assets in the plan increased to $25.8 billion. The plan is funded at 70.2 percent, down from its high point of 85 percent in 2000. ^[16]

Pension transparency

The Reno Gazette-Journal filed a lawsuit against the retirement system, which denied the newspaper's request for the names and benefit amounts of retired public employees. The paper said the information is a matter of public record. Carson City District Judge James Russell supported the newspaper, concluding that the purpose of the Nevada Public Records Act is to "ensure accountability of the government to members of the public by facilitating public access to vital information about government activities." Judge Russell ordered PERS to hand over the records.

PERS disagrees. Chris Wicker, the attorney for PERS, said the law is not that clear. "Since the 1970s, PERS has interpreted (state laws) as treating employee files as confidential," Wicker said, adding that PERS wants to comply, but needs a "definitive statement" from high court justices on what the law means. ^[17]

Local public pensions

Main article: Local government public pensions

According to the United States Census Bureau, the state has no locally-administered pension systems.^[7]

Transparency

Main articles: Public pension disclosure and Governmental Accounting Standards Board

Data availability

The pension website provides a Popular Annual Financial Report, but the Comprehensive Annual Financial Report must be requested to be mailed, and previous reports are not archived online.^{[18] [19]}

According to state law, "The official correspondence and records, other than the files of individual members or retired employees, and, except as otherwise provided in NRS 241.035, the minutes, audio recordings, transcripts and books of the System are public records and are available for public inspection."^[20] On December 22, 2011, in response to a lawsuit brought by the Reno Gazette-Journal, District Judge James Todd Russell ruled that the names and pension amounts of retired employees were public record.^{[21] [22]}

Fund performance data

Pension fund performance data can be obtained by requesting a Comprehensive Annual Financial Report through NVPERS, or downloading the 2011 CAFR from Sunshine Review^[19][23] A Popular Annual Financial Report is available online, though it's less detailed than the CAFR.^[24] Unlike many other state pension systems, NVPERS doesn't provide previous CAFRs and other financial information online.

Rate of return

The actuarial rate of return objective is 8 percent, and the annualized rate of return is 9.7 percent.^[23]

Unfunded liabilities

The unfunded actuarial accrued liabilities are slightly more than $11 billion.^[23]

Oversight

In law, Nevada has some statutes in place for public access of asset disclosure, gifts, and hospitality given to board members and administrators of public pension funds, but the statutes become relevant only after board members and administrators receive a specific level of income, which, in practice, make the statutes inactive.^[25]

For the CAFR, an independent auditor reviews the report before publication. Clifton Gunderson LLP audited the 2011 CAFR.^[23]

See also

• Public pensions
• Nevada state budget
• Nevada state government salary
• IN DEPTH: Public service pays off

External Links

• Public Employees' Retirement System of Nevada
• Nevada State Pension Fund Management - State Integrity Investigation

References

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