75°F
weather icon Clear

EDITORIAL: The PERS crisis no one is talking about

The Public Employees’ Retirement System of Nevada is doing so poorly that officials want to underfund it to avoid a spike in contribution rates.

In July, the retirement contribution rate for government employees will go from 29.75 percent of pay to 33.5 percent. For police and fire employees, it will go from 44 percent to 50 percent. Those contributions are split 50/50 between employees and employers, read taxpayers.

Those are shockingly high numbers. It means that for every three teachers, the equivalent of another teacher’s base salary goes toward pension costs. The pension cost of just two public safety employees could fund the base pay of another police officer.

It’s a bad situation for public employees, too. They’ll start the next fiscal year staring down a nearly 2 percent cut in take-home pay. For police and fire, it’ll be 3 percent. As the Nevada Policy Research Institutes notes, those hikes are needed to pay down past debt, not increase benefits. It gets worse.

Officials determined that the rates need to be 37.5 percent for general employees and 57.5 percent for public safety. But they’re phasing them in over four years. That appears to be an attempt to avoid political fallout for their mismanagement. One problem.

“During the phase-in period, the plan will not receive the same contributions as it would without the phase-in, which will create contribution losses,” the consulting firm Segal noted in its 2021 Actuarial Valuation and Review. That “will therefore increase the actuarially determined contributions going forward.”

Translation: Underfunding now will mean increased contributions in the future. But it may lower the political heat on pension officials. Priorities, priorities.

The system’s unfunded liability now tops $18 billion. That’s around double Nevada’s general fund budget over the past two years. The number would be dramatically higher if PERS had to use a risk-free rate of return.

These realities stand in stark contrast to how PERS officials portray the system to lawmakers and the public. For instance, a 2013 review of the system by AonHewitt found the system financially healthy. It predicted the plan would be fully funded by 2034. It predicted contribution rates would drop to 17.5 percent for regular employees and 30 percent for public safety.

That didn’t happen, and Nevadans are paying for it.

For decades, we have been one of the few voices warning that this system is plagued with problems and an overhaul is needed.

Gov. Joe Lombardo and legislative Democrats need to ignore the happy talk and excuses of pension officials and implement substantive solutions to this expensive system, which would include directing new hires into a defined contribution system.

Don't miss the big stories. Like us on Facebook.
THE LATEST
LETTER: Books in the children’s section; sexualization and grooming

Editor’s note: This complaint was originally emailed to Pahrump library trustee John Shewalter on Sept. 27, 2022. It is being republished after library trustees voted 5-0 Monday to craft a review system of “questionable” materials in the youth library that’s likely to include a number of LGBTQ-affirming titles. The writer of the complaint is unknown. Trustees redacted the name and email address of its sender before circulating a printed copy of the complaint at a public meeting this week.

COMMENTARY: Donald Trump gets just what he wanted

Does anyone really want to be indicted? Maybe if your name is Donald Trump, and you’re facing four investigations, three of them for serious abuse of presidential powers and one for using a lousy fix-it lawyer who paid hush money to an alleged mistress, writes columnist Susan Estrich.

TALK OF THE TOWN: Pahrump is hungry for new restaurants & business

Pahrump is hungry for new restaurants and other businesses. That’s evident by the long lines that snaked around the new Arby’s that opened along the frontage road of Highway 160 on Tuesday. Here’s what PV Times readers are saying about our most-read story of the week.

TALK OF THE TOWN: Pahrump ‘fired up’ after claims from firefighters unions

PVT readers share their thoughts about a 56-point list of health, safety and mismanagement concerns co-written by members of the local firefighters union that called for Pahrump Fire Rescue Chief Scott Lewis to step down — or face removal from his position.

CALL FOR SUBMISSIONS | Share your stories of ‘progress through perseverance’

In fewer than 350 words, we invite you to tell us about an initiative or project that you or your organization have successfully executed since the pandemic. Describe the problems you faced, and explain how you solved them. Tell us about the people behind the project who propelled it foward. Lastly, share a bit on how others in the community benefited from your progress. We will publish excerpts from the best stories, along with photos that celebrate PROGRESS through perseverance in an upcoming special section.