Public Pension Reform Debate To Proceed, But Without Bill From Sandoval Administration

CARSON CITY – Despite citing the need to reform Nevada’s public employee pension plan, Gov. Brian Sandoval did not introduce a bill seeking changes to the retirement system by a deadline Monday.

Even so, Heidi Gansert, Sandoval’s chief of staff, said the administration will “be a part of the conversation” as other measures addressing potential reforms to the Public Employees’ Retirement System are considered in the 2011 legislative session.

“There are other bills that open up that chapter and so we want to be part of that conversation,” she said. “We just could not get agreement on the terms of the bill, and the process was so delayed at getting these bills out, that we ended up deciding we would look for another bill and be part of the discussion.”

Five measures relating to the retirement system for public employees have been introduced this session. One, Assembly Bill 405 by Speaker John Oceguera, D-Las Vegas, proposes to eliminate call-back pay as compensation for retirement purposes for employees hired after Jan. 1, 2012.

Gansert said Sandoval’s original proposal, the details of which were described at a briefing with the press last month, does not have to be the solution to the issue of the retirement system, which faces a $10 billion long-term unfunded liability.

“That proposal was something that we put together looking at what was done in other states,” she said. “But we know there are other ideas out there, so we are willing to talk to everybody about it recognizing that we do have a large unfunded liability and we want to work on that.”

Sandoval said during his campaign he wanted to change PERS for future government hires to make it a defined contribution plan, where employers and employees contribute to retirement but the employees are responsible for managing their funds. This is in contrast to the current “defined benefit” plan where contributions are managed by PERS and the employee is guaranteed a set pension on retirement based on salary and years worked.

In the briefing in February, the proposal being considered by Sandoval would have maintained the current defined benefit system but at about half the contribution rate in effect now, in effect halving the pension payments as well as the future liability to taxpayers. It would have been complemented with a 401(k)-style defined contribution plan that employees could contribute to for a bigger pension on retirement.

The defined benefit plans offered by states and government entities around the country have sparked concern over the potential future liability to taxpayers if there isn’t enough money to pay the benefits. Some plans are much healthier financially than others.

Supporters of Nevada’s current system, which covers virtually all state and local employees, say it is well managed and will be fully funded over time. They argue no changes are necessary.

A recent study by the Pew Center on the States identified Nevada’s public pension plan as one of 19 where “serious concerns” about the long-term health of the plan have been identified.

Nevada’s plan was 70.5 percent fully funded as of June 30, 2010.

Gansert said there are numerous interest groups, including the Las Vegas Chamber of Commerce, which will be involved in the PERS reform discussions as well.

Sandoval has said the public retirement system needs to more closely mirror what is offered by the private sector.

Audio clips:

Chief of Staff Heidi Gansert says the administration will pursue pension reform despite not having its own bill:

032911Gansert1 :16 of the discussion.”

Gansert says the administration will work with the Las Vegas chamber and others on reforms:

032911Gansert2 :14 work on that.”