PERS reform pushed to 2017 legislative session

CARSON CITY — Faced with wildly divergent estimates of the cost of moving Nevada’s current public employee pension system to a defined contribution plan for new workers, a state lawmaker said Saturday he is abandoning the effort this session.

Instead, Assemblyman Randy Kirner, R-Reno, said he is seeking to further study the issue in the coming interim with an eye to making changes in the 2017 session.

Kirner, who proposed a change from the current defined benefit plan to a new hybrid retirement plan for public employees that would rely more on a defined contribution element, said the true financial costs of such a change would be clarified in such a study.

The current plan provides a guaranteed pension amount for most state and municipal employees in Nevada based primarily on years of service and salary level. Kirner wants to move the system for new workers to more of a 401(k)-type plan where employees make their own investment decisions and there is no taxpayer liability.

Kirner argued the costs to move to his hybrid plan as outlined in Assembly Bill 190 would be minimal, while the Public Employees Retirement System administration said it would cost the state and local governments tens of millions of dollars more a year in increased contribution costs to the existing retirement plan.

Kirner said that while he believes his estimate is accurate, the issue could be independently answered in a study to allow for a potential change in the 2017 session. To become a reality, the study would have to be approved by the full Legislature by Monday’s adjournment. AB190 is in the Ways and Means Committee.

Kirner has been advocating for a change to the current system to begin addressing a long-term unfunded liability that by one calculation totals $12.5 billion. He said the unfunded liability should be a concern to lawmakers and taxpayers.

A shift to the new hybrid plan would end any growth in the unfunded liability in the existing plan, which would still have to be paid off as part of his proposal.

Kirner’s plan brought out strong opposition from public employee groups and PERS officials at two hearings this session.

His plan would continue the existing Public Employees Retirement System pension plan for current workers. But new hires would shift to a plan that had a smaller defined benefit pension and a new and larger defined contribution plan.

The defined contribution plan would create no taxpayer liability.

While the change won’t occur this session, Kirner finally had a thorough vetting of his proposal for the first time because Republicans who now control the Assembly gave it a hearing.

Some more modest changes could be made to the PERS plan as a result of other measures being approved by lawmakers. The most significant of these is Senate Bill 406, which is expected to save the retirement system $1 billion every decade. The measure has been approved by both houses and sent to Gov. Brian Sandoval.