By Mark Waite
A report presented to Nye County commissioners May 1 estimated the actuarial accrued liability of the county’s post retirement medical plan as of June 1, 2010 was $48.83 million, of which none has been funded.
A representative of Hay Group Inc., which prepared the report, in an interview with the Pahrump Valley Times on background, compared it to a parent budgeting the cost of their children’s future college education while they were still in elementary school. Almost no government entities are doing that, outside of the U.S. Postal Service.
Consultants recommended Nye County contribute $3.64 million annually on a pay-as-you-go basis for the cost of providing retiree health care benefits for fiscal year 2011. They reported the county is expected to contribute $1.14 million. The recommended annual contribution is the normal cost of one year of liability, about $2.01 million, plus amortization over 30 years of the cost of the unfunded liability.
Nye County employees may receive health care coverage for life. The county has 480 active employees receiving medical coverage and 182 retirees, according to the report.
The company assumes health care costs increased by 6.54 percent last year, but will decrease over 70 years to 4.2 percent. A consultant said costs could go down with health care reform.
New regulations by the Governmental Accounting Standards Board GASB requires employers to anticipate future health care costs by adjusting today’s health care costs with projected health care trend rates.
The county pays a premium with no reduction for former employees covered by Medicare. The gross premium paid by the county for using a preferred provider is $579.69 per month for an employee, or $1,558.20 for an employee with a family.
The liability has emerged as a campaign issue raised by District 2 commission candidate Garren Hesketh in appearances at local forums.
“I have a Masters in Business Administration. I’ve been a Department of the Defense inspector general. I understand finance and I’m not happy with what our commissioners have done with finance in the last 12 years. We’re kicking the can down the road. We have an unfunded obligation of $48 million for the employees future health benefits and other benefits. We spend 77 percent of what’s collected to pay salaries, wages and benefits. We cannot continue to operate that way,” Hesketh said during an appearance at the Artesia Community Center last Tuesday.
He also referred to comments by county accountant Dan McArthur, in the annual audit report, that it would take 28 years to pay off the unfunded actuarial accrued liability.
Hesketh warned county revenues will start to drop, while the cost of employee salaries will rise. The county needs to do something, like getting concessions from the employees, he said.
Nye County Commissioner Joni Eastley said laws on benefits under the Public Employee Retirement System are set by the state.
“How are we supposed to address that when the PERS laws are set by the Legislature? If he believes the county has a $48 million liability in terms of future retirement benefits, he should address it to the Legislature,” Eastley said.
At the May 1 meeting, Commissioner Dan Schinhofen noted a previous article in a Pahrump newspaper that stated County Manager Pam Webster would receive medical benefits for life with her recent promotion from assistant county manager.
“This is pretty much something we do for the employees, they get health care after they retire?” Schinhofen asked.
Eastley replied it’s part of the settlement with the employees collective bargaining unit, providing employees meet certain criteria.
“So you’re not getting anything anybody else isn’t getting, right Pam?” Eastley asked.
After some hesitation, Webster replied, “true.”
Nye County Human Resources Director Donelle Shamrell said the purpose of the report is to document the county’s post retirement liability. It’s now required every two years by the new accounting standards.
“This is an actuarial report to notify you of potential future liability. We have chosen as a county to budget and pay as we go. We do not have any liability provisions set up for this future obligation. I just want you to understand that as you approve this,” Webster said.
“Is this the best way to go?” Schinhofen asked.
Webster joked, “The best way to go is to have this all reserved on your books. I mean I would love to have that, in a world of a budget that’s not continuing to go down.”
Webster didn’t respond to a phone call for a follow-up interview.
Nye County Comptroller Susan Paprocki told the Pahrump Valley Times she has been busy preparing the final budget and hasn’t yet had time to review the report to determine if it is a serious situation down the road.
“I believe if it was an issue it was an issue that would’ve been brought to the commissioners’ attention during the audit,” Paprocki said.
As usual medical benefits overwhelm everything. Everyone is so quick to want to “reform” the healthcare system, but what they never seem to want to address is the out right greed and waste in our healthcare system.
No one wants to be non PC and deny treatment to illegal aliens, no one wants to put price controls on fees and charges from hospitals, Put caps on what insurance pays for (So people don’t run to the doctor for a stuffed up nose), of course no one wants to cap doctors fees. Until we start looking at those options, health care will always be a killer.
Its really sad when you take a loved one to a doctor’s office and get told that they need this or that, and you have to wonder, do they REALLY need it, or does the doctor need to make another payment on his new BMW.
Before anyone tells me otherwise, I know better, I came from a long line of medical professionals in my family.
I would suggest that Nye County start looking at ways to cut costs before asking me (via taxes) to pay more for these people’s health care.
THAT WHICH CANNOT BE PAID WILL NOT BE PAID
As I have posted before the public employees sector is in for a shock of monumental consequences. Wait until there is not enough money to pay present retirees.
“The powers-that-be will hold the system together until they have thoroughly cleaned out all of the middle class wealth.” Me
I dont see where ANY “Generation X , Y or below” has passed ANY of the current laws regarding these issues in the United States. I also dont see where a single generation benefits from ANY of these issues…..Except for the generation that has raped the system, given half of our welfare system away to an invading horde and now are outright pilfering us on their way out the door.
The only generation to profit from “Bail outs”, “15,000 stock markets”, “High gas prices”, “freddy and fannie” and the “Social welfare security program” …..all of which are coincidentally timed to run out the same day the first Generation X/Y’er (AKA The only generation since the ‘greatest generation’ to volunteer and fight in a REAL war) turns retirement age.
Gen x can you tell what a real war is?
Apparently a real war to some is one where they and the other chicken hawks and their children didn’t have to serve in. It’s one where we send out best young men and women to fight and die because someone tried to kill his daddy.
Real War, my butt!
Afghanistan never attacked us Iraq never attacked us so how are these REAL wars president cheney and “shrub 2″ got us into these wars to benefit war profiteers. Al qaida is not a country they are a group of individuals who flew our planes into the world trade center NO COUNTRY ATTACKED US so their is no real war we just have a bunch of paople dying and getting maimed so a few select people can get rich.
We are ranked as the most impoverished county in Nevada. The logical way for the county to handle this is too re-open the labor agreements and employee agreements, and negotiate different terms, which puts more of the cost on the employees.
Expecting the citizens here to cough up more to pay benefit increases in these times id preposterous. Some of the highest paid employees in the county are county workers. They are in a better position to absorb this than the taxpayers here.
So the biggest cost is health care right? The solution is of course, single payer, universal health coverage. While the passage of the Affordable Health Care Act is far from perfect, it does contain one silver lining. It allows states to pursue single payer. Vermont will be the first one to do so. If Nevada did this, not only would this local problem be solved, but we would also see businesses flock to Nevada because this would remove the largest expense they have. Think about it. If you owned a business and had the choice of paying huge insurance bills or not, which would you choose?
There is so much we (Nevada) can do if we only had politicians with guts.
Robert, (condescension removed: PVT)Words like that are completely lost on the majority of people here in Nevada and the rest of the country. A single payer system WOULD be the solution to the health care problem, but the Republicants want the health care system to fail the American people because they want the government to fail so they can trot out the symbol of the problems and the causes of what got us into this mess.
No, don’t try using logic or make sense. In the health care issue, failure is the desired option.
I think those commenting in here are missing the point. Governments at all levels all over the country negotiated with employees promising certain benefits and payments. They never budgeted the money to meet the benefits they promised and are now saying they must renege on what they negotiated. WHAT!!! Try negotiating with somebody to paint your house and then when he is finished, tell him that you are sorry you didn’t budget for his payment so – sorry – you won’t pay him.
the one thing you can bet your life savings on is the government will renege.
Why?
because they cannot mathematically pay it.
Once people understand this, then they demand lower costs for public employees and lower government budgets.
Did it ever dawn on anyone that our government doesn’t want a good economy any more? Because if they did they would not be passing laws that discourage economic growth.
rise up
and rise up again
until lambs become lions
Well! What do we have here to backup what I posted.
This article describes a new tax on small businesses proposed by Sen. Harry Reid. Harry is why we need term limits.
http://www.heritage.org/research/reports/2012/05/student-loan-payroll-tax-increase-another-attack-on-small-business
If these people were serious about creating jobs, they would never impose a tax like this.
They are not serious about creating jobs. They are very serious about suppressing commodity prices and wages so that they can print more money without causing inflation.
Those who make their living off of infinite fiat currency do not want any inflation that would make them shut down their printing presses.
Make no mistake about the demise of America. It has been in the works for a long time.
Rise up
and rise up again
until lambs become lions
While you still retain the ability to do so.
The Heritage Foundation? Really? The Heritage Foundation along with the Cato Institute were created and funded by the Koch Brothers. That’s all you need to know about that. In other words, you might as well believe what Fox Noise is telling you.
Also, the Heritage Foundation is the group that came up with the “individual mandate” in the Affordable Health Care Act.
I posted about the tax increase for small businesses.
Here ………Forbes also writes about it. Find fault with that?
http://www.forbes.com/sites/kellyphillipserb/2012/05/16/congress-attempts-to-sneak-tax-increase-into-student-loan-bill/
as previously posted …………Did it ever dawn on anyone that our government doesn’t want a good economy any more? Because if they did they would not be passing laws that discourage economic growth.
rise up
and rise up again
until lambs become lions
while you still retain the ability to do so.
Maybe we should just turn the whole mess over to Romney and he can do like he did at Bain: Take his MILLIONS in profit, file bancruptcy, fire everyone, and not pay any of the obligations… then, send the jobs overseas.