Posts Tagged ‘dana bilyeu’

Nevada’s Public Employee Retirement Plan Saw Improvement In 2012

By Sean Whaley | 3:22 pm November 19th, 2012

CARSON CITY – The long-term unfunded liability of Nevada’s public employee retirement plan improved slightly in fiscal year 2012, up to 71 percent fully funded from 70.2 percent in the previous year, a state official said today.

The plan saw the modest improvement even though the return on investment for the fiscal year was only 2.9 percent. The small gain came after a record 21 percent investment gain in 2011.

The 2012 return was still better than the median gain of 1.15 percent for public pension plans in fiscal year 2012 reported earlier this year by Wilshire Associates.

Dana Bilyeu, executive officer of the Public Employees’ Retirement System, said the plan, which covers nearly all of Nevada’s local and state public employees, had assets of $27.4 billion as of June 30, 2012, up from $25.8 billion in 2011.

PERS Executive Officer Dana Bilyeu.

The unfunded liability dollar value increased as well, however, to $11.2 billion from $11 billion.

The numbers and percentages reflect the combined plans for regular public employees and police and fire fighters.

At its high point in 2000 Nevada’s public employee retirement plan was 85 percent funded.

The long-term unfunded liabilities of the PERS plan, and of public employee pension plans nationwide, are generating concern from policy makers, although Nevada’s plan is considered to be well managed and in better fiscal shape than many others around the country.

Nevada Gov. Brian Sandoval has advocated for a change to the pension plan for future workers from a defined benefit to a 401(k)-style defined contribution plan. Defined contribution plans eliminate any unfunded fiscal liability for states. The 2011 Legislature took no action on the issue but it is expected to resurface in 2013.

The financial health of Nevada’s public employee pension plan was found to be cause for serious concern because it was only 70 percent funded as of fiscal year 2010, the Pew Center on the States said in June. The funding ratio in Nevada is below the 80 percent benchmark that fiscal experts recommend for a sustainable program.

In response to the report, Bilyeu said in June the heavy reliance by Pew on the funding ratio for the state rankings presents an incomplete picture.

Nevada’s contribution rates, which will increase again in the next two-year budget, are based on an analysis by an independent actuary, and are fully funded each year, she said.

PERS manages retirement benefits for about 100,000 active government workers and more than 40,000 retirees.

State Public Employee Pension Plan Sees 2.9 Percent Return In Fiscal Year 2012

By Sean Whaley | 5:07 pm July 11th, 2012

CARSON CITY – 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, an official with the plan said today.

The 2012 return is below the 8 percent anticipated annual return for the system’s investments over the long term.

While well below the record 21 percent return in Fiscal Year 2011, and the 10.8 percent return in Fiscal Year 2010, the 2012 gain will be in the top 20 percent of performers for large public pension plans for the year when adjusted for risk, said Dana Bilyeu, executive officer of PERS.

“So as far as looking at all of the big institutional investors across the country, we’re quite competitive with that kind of return,” she said. “In fact I think it’s going to be one of the top performing funds in the nation. You can only get what these markets are going to give you.”

Dana Bilyeu, executive officer of the Public Employees' Retirement System

The three years of positive returns follow a 15.8 percent loss in 2009.

A final report on the year’s performance will be presented to the board overseeing the plan in August.

The estimated returns are after fees are paid to the investment managers overseeing the retirement funds on behalf of the nearly 100,000 state and local government employees and 41,000 retirees participating in the public pension plan as of June 30, 2011.

“When you talk to the investment professionals, I think most of them would say that what we’ve sort of taken here is a pause in what has been a very large increase in the overall equity markets over the last couple of years,” Bilyeu said. “So maintaining a positive return, maintaining the corpus of the trust, and really just pausing I think is what you see happening here. And that’s what I sort of think this particular fiscal year was.”

The uncertainty over the presidential election is partly responsible for the lackluster equity market, she said.

Over 28 years, the average return for the plan is 9.2 percent after fees have been paid, above the 8 percent assumed return. Some critics of the state’s defined-benefit public pension plan say the expectation of an 8 percent long-term return is overly optimistic given the volatile markets of the past decade.

The plan was only 70.2 percent fully funded at the end of fiscal year 2011, a level below the minimum 80 percent some experts say is the best measure for a healthy plan. The long-term unfunded liability equated to $11 billion as of June 30, 2011. The funding ratio through 2012 will be reported to the board in November.

Some estimates put the unfunded liability at much higher levels based on a different type of analysis.

The Pew Center on the States said in June the financial health of Nevada’s public employee pension plan is cause for serious concern because it is below the 80 percent benchmark that fiscal experts recommend for a sustainable program.

Bilyeu argues that a better measure of the health of a pension plan is whether it is being funded each year at the levels recommended by an independent actuary, which is the case for the PERS plan. Not all public pension plans across the country are funded annually to the recommended levels, she said.

Nevada Gov. Brian Sandoval is advocating for a change to the pension plan for future workers from a defined benefit to a 401(k)-style defined contribution plan. Defined contribution plans eliminate any future unfunded fiscal liability for states. The 2011 Legislature took no action on the issue but it is expected to resurface in 2013.

The PERS fund is currently invested 35 percent in bonds and 65 percent in equities and other “risk exposed” investments.

“Over the long haul we remain very, very committed to the investment strategies we have,” Bilyeu said. “We’re in it for the long haul.”

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Audio clips:

Dana Bilyeu of PERS says equities took a pause in Fiscal year 2012:

071112Bilyeu1 :33 fiscal year was.”

Bilyeu says the 2.9 percent return will be among the best performing large institutional funds for 2012 after being adjusted for risk:

071112Bilyeu2 :10 in the nation.”

 

Views Mixed On Effect Of New National Public Pension Reporting Rules On Nevada PERS

By Sean Whaley | 11:50 am June 29th, 2012

CARSON CITY – The Governmental Accounting Standards Board (GASB) has voted to approve two new standards that the group says will substantially improve the accounting and financial reporting of public employee pensions by state and local governments.

“The new standards will improve the way state and local governments report their pension liabilities and expenses, resulting in a more faithful representation of the full impact of these obligations,” said GASB Chairman Robert H. Attmore. “Among other improvements, net pension liabilities will be reported on the balance sheet, providing citizens and other users of these financial reports with a clearer picture of the size and nature of the financial obligations to current and former employees for past services rendered.”

The new rules were approved June 25 and take effect beginning in 2014.

There are differences of opinion about whether the new reporting requirements will mean significant changes for how the Nevada Public Employees’ Retirement System (PERS) calculates and funds its long-term liability.

Dana Bilyeu of PERS says the changes won’t be significant in Nevada

Bilyeu, executive officer of Nevada PERS, said the new rules are not expected to change the metrics that form the basis for how the public pension plan liability is currently being funded over the long-term. Pension funding is governed by the Actuarial Standards of Practice, not GASB, she said.

The GASB rules require uniform reporting of pension liabilities for the purpose of providing comparable information, for instance, when states or municipalities sell bonds, Bilyeu said The new rules may lead to confusion because there will be two different numbers used to calculate pension liabilities when they take effect, she said.

The funding side of the public pension plan in Nevada will continue to use assumptions built around plan experience such as an eight percent return annualized over 30 years, Bilyeu said.

The rate for the financial reporting rule will be different, but not dramatically so, in Nevada, she said, in light of current plan experience.

“In Nevada, at least preliminarily, I don’t see a huge difference,” she said. “What they’re trying to do is put standards in place so there is uniformity in reporting in the bond market, as well as for other uses of financial statements.”

For states such as Illinois that do not fully fund their public pension plans on a consistent basis, the reported liability discount rate for financial reporting could be much lower, closer to 4 percent, Bilyeu said.

The concept is designed to allow the users of the financial statements, as in the bond market, to evaluate what the default risk is for the sponsor by showing a measure of how that sponsor pays on other debt, such as pension debt.

Bilyeu said she is concerned that the rate of return used for financial reporting purposes will be used by critics of the public pension program to argue contribution rates should be higher than those calculated now to fund the system using the estimated 8 percent discount rate.

The financial reporting rule will lend itself to much more volatile results over time, she said.

The two different numbers that will be reported in future years are not meant to be comparable, Bilyeu said. In fact GASB specifically indicated that the new pension reporting requirements are deliberately drafted so as not to influence funding decisions, she said.

The Nevada Policy Research Institute says the changes could spur PERS reforms

Geoff Lawrence, deputy policy director at the libertarian think tank, said at the least the new rules will present a more accurate report showing that public that pension liabilities, in Nevada and elsewhere, are much greater than what are being estimated currently.

There is still a lot of uncertainty because the actual rules won’t be available for review until August.

But since the long-time liability of PERS is only 70 percent funded, the new reporting could push the system to imposing higher contribution rates to make it fully funded, he said.

“It looks like GASB is going to allow pension systems that they consider well-funded to continue with the same accounting methods that they’ve used in the past regarding the discount rate,” Lawrence said. “And well-funded pension systems are usually considered those within 80 percent funding level or above. Now Nevada PERS, along with many other states, currently falls below that funding ratio.”

If forced to use a lower discount rate, Nevada and other public pension plans will see their unfunded liabilities grow by tens of billions of dollars, he said.

If a 5 percent return calculation is used for PERS, the liability is closer to $35 billion than $10 billion, and would require much higher contribution rates, Lawrence said.

“I guess the take away for most citizens and lawmakers and so forth is that cities, counties and the state are now going to face higher annual contribution rates in order to work towards retiring that unfunded liability amount which is going to be much higher,” he said.

The contribution rate for this year and next in Nevada is 23.75 percent of a regular public employee’s wage, with half paid by the employer and half by the employee. The contribution rate will be recalculated in November for the next two-year budget. The rate for public safety employees is much higher.

Higher contribution rates mean bigger financial hits to taxpayers.

The new rule will spur some public recognition that pension liabilities are being under reported, Lawrence said.

“We are going to have these two sets of numbers, and one is the official GASB number which most economists are going to throw their weight behind,” he said. “And it’s going to show some disconnect at the legislative level and within PERS administration that is probably going to compel some type of drive towards changing the fund management rules at the state level.”

Changing the state pension plan to a 401(k)-style defined contribution plan would eliminate the unfunded liability for the future, but the liability for the current plan will still have to be funded over time.

Nevada PERS, which covers most state and local government workers, is a defined benefit pension plan, guaranteeing a set retirement income based on years of service and salary.

The Pew Center on the States recently reported that the financial health of Nevada’s public employee pension plan is cause for serious concern because it is only 70 percent funded as of fiscal year 2010 with a $10 billion gap. The funding ratio in Nevada is below the 80 percent benchmark that fiscal experts recommend for a sustainable program.

Bilyeu has argued, however, that Nevada has always fully funded its annual pension obligations as calculated by an independent actuary, and that this is a better measure for determining the health of a public employee pension plan than the funding ratio.

Gov. Brian Sandoval says he intends to pursue changes to PERS in 2013

Sandoval on Thursday reiterated his intention to make changes to the pension plan in the 2013 legislative session during an interview on the Nevada NewsMakers television program.

“Of course I’m concerned about our PERS system, the public employee retirement system, and the fact that it is underwater,” he said.

Sandoval said one of his disappointments of the 2011 session was getting a bill through providing for a study of PERS, but only if private sector funding was obtained. That money was not forthcoming and the study did not proceed.

“Right now I’m working to get a study done so that we can have the background, but at the end of the day we know that we have to reform our PERS system because we can’t keep going in the direction that we are,” he said.

There are critics of the new GASB rules

A national group, the National Public Pension Coalition, has criticized the new rules.

“These accounting changes undermine the retirement security of teachers, cops, firefighters and other public workers by making unfunded liabilities appear much larger than they actually are,” said Jordan Marks, executive director of the group. “These unnecessary changes add a new layer of red tape resulting in wasteful administrative costs for taxpayers, enabling politicians to slash the modest pensions of public workers while continuing to let Wall Street off-the-hook.”

The new rules are found in Statement No. 67, Financial Reporting for Pension Plans, which revises existing guidance for the financial reports of most pension plans, and Statement No. 68, Accounting and Financial Reporting for Pensions, which revises and establishes new financial reporting requirements for most governments that provide their employees with pension benefits. The complete rules will not be available for review until August.

The GASB is the independent, not-for-profit organization formed in 1984 that establishes and improves financial accounting and reporting standards for state and local governments. Its seven members are drawn from the board’s diverse constituency, including preparers and auditors of government financial statements, users of those statements, and members of the academic community.

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Audio clips:

Gov. Brian Sandoval says he will pursue changes to PERS in the next legislative session:

062912Sandoval :10 that we are.”

Geoff Lawrence of NPRI says Nevada PERS does not meet the definition of a well-funded plan:

062912Lawrence1 :29 that funding ratio.”

Lawrence says the new GASB rules could require higher contribution rates to retire the unfunded liability:

062912Lawrence2 :24 be much higher.”

Lawrence says the new rules could prompt changes to PERS fund management rules:

062912Lawrence3 :27 the state level.”

 

 

Purchase Of ‘Air Time’ Not Frequent But Some Nevada Lawmakers Want to Review

By Sean Whaley | 2:00 am April 16th, 2012

CARSON CITY – A little-known benefit of Nevada’s public employee pension plan is the right to purchase up to five years of service towards retirement.

Referred to by some as “air time,” or the ability to add years of retirement without actually putting in the time in a public sector job, the benefit can allow state and local government workers to retire early, collecting annual pensions years before they would be eligible otherwise.

A 60-year old state worker with five years in the Public Employees’ Retirement System, could, for example, buy five years of retirement credit and retire right away with a pension worth about 25 percent of salary.

Teachers and many other public employees are in the state pension plan. / Photo by DanielbdaDirector via Wikimedia Commons.

A 50-year-old teacher with 25 years of service could buy five years and retire right away with about 75 percent of salary. Regular public sector workers in Nevada can retire at any age with 30 years of service.

Former Clark County D.A. David Roger a case in point

An example of the use of air timewas reported recently by the Las Vegas Review-Journal concerning former Clark County District Attorney David Roger, who purchased five years of service and retired at age 50 to take another job. According to the newspaper, Roger paid about $330,000 to purchase the five years. He is now eligible for an annual pension of about $150,000 five years before he would be eligible otherwise.

But the cost of purchasing a year of retirement credit is not cheap, and a review of such purchases in Nevada suggests it is not used all that frequently by public employees.

Even so, some state lawmakers say the benefit, along with other aspects of the public pension program in Nevada, are worthy of review in the 2013 legislative session.

The 2011 Legislature approved a study of the public employee retirement system, but a $250,000 private sector donation was required before the review could get under way. The contribution has yet to materialize.

The primary interest for many policy makers, including Gov. Brian Sandoval, is whether Nevada’s public employee pension plan should be changed from a defined benefit plan to a defined contribution plan, similar to a private sector worker’s 401(k), for new public workers going forward.

Air time purchases are offered in many states

Some states make it much less costly for public workers to purchase retirement credits. The ability to buy “air time” was recently highlighted in a news report in USA Today, which found 21 states that allow for such purchases.

Numbers provided by PERS to the Nevada News Bureau shed some light on the use of the benefit.

About $17.2 million was spent on purchase of service in fiscal year 2011, not counting a special program created by the Legislature for teachers who work in at-risk schools. This represents about 1.2 percent of the $1.4 billion in total contributions made to PERS that year from both public employers and employees.

In fiscal year 2010, the number was $13.5 million out of $1.4 billion in total contributions or just under 1 percent.

These amounts may include some purchases of service by a local government in order to encourage workers to retire as a way to save money in the budget.

The Washoe County School District last week, for example, approved 68 early retirement applications to help resolve a $40 million budget shortfall.

The PERS website has a calculator to show what it would cost to buy a year of service. Based on the average salary for all active regular employees of $49,000, it would cost a worker nearly $20,000 to buy one year of service at age 55.

For a police officer or firefighter with an average salary in 2011 of about $74,000, the cost to buy one year of service at age 55 would be nearly $30,000. Public safety employees can retire at any age with 25 years of service.

So dividing these amounts into the $17.2 million in purchase of service in 2011 would equal 860 years of service purchased if all the purchases were by regular employees. For police and fire, the number of years purchased would be about 573 years.

With nearly 100,000 active employees in 2011 and each earning a year of retirement credit for working, the number of purchases appears to be a small piece of the public employee retirement puzzle. The PERS system covers state workers, local government employees and school district personnel across the state.

Air time purchases not that common in Nevada

Dana Bilyeu, executive officer of PERS, said the agency does not collect data by individual on the purchase of service. Even if it did so, pension information about individual retirees has long been considered confidential, although this issue is now before the Nevada Supreme Court.

The Reno Gazette-Journal is seeking individual retirement information and won a court ruling in Carson City District Court in its favor. That ruling has been appealed to the Supreme Court by the PERS board.

But based on anecdotal evidence, Bilyeu said the purchase of service benefit is not used to any great degree of frequency by Nevada public employees.

“You can tell from the numbers that it is not a huge thing for us,” Bilyeu said. “We don’t have a lot of five-year purchases. We usually get purchases of 18 months or a year by an employee to get to 10 years to retire at age 60.”

An employee nearing 30 years of service might purchase a year or half a year to retire a bit early, she said.

The USA Today report said air time is coming under scrutiny as states try to curb retirement spending and make their pension systems resemble private-sector plans. Federal law allows air-time purchases only in government pension plans.

Nevada lawmakers may take up the “air time” issue next year

Assemblyman Randy Kirner, R-Reno, said the $17.2 million in air time purchases in 2011 may not seem large in the context of one year revenue for PERS.

“However, if one were to figure the benefit costs over a lifetime to be paid out, I suspect the resulting math would astound normal citizens who can never hope to have such a staggering benefit,” he said. “So it’s not the $17.2 million but the lifetime cost that’s important to consider. Paying $20,000 or $30,000 per year purchased may be insignificant to the lifetime benefit.

“Bottom line, Assembly Republicans have raised this and other related issues to PERS as potential issue for the 2013 session to address,” Kirner said.

Geoffrey Lawrence, deputy director of policy at the conservative think tank Nevada Policy Research Institute, said his concern with the purchase of service is that employees may not be contributing enough money to cover the cost of the additional retirement benefit.

When years are purchased, PERS assumes it will get an 8 percent return on its money, he said. If that target is not met over the long term, taxpayers could be on the hook to make up any shortfalls, Lawrence said.

“So if you’ve got a bunch of employees buying air time early in their career, and PERS doesn’t get the return that they are assuming, then taxpayers in ensuing years are going to have to make larger contributions into the account to pay back the unfunded liability,” he said. “So this is something that is of concern because it can exacerbate the unfunded liability.”

The PERS plan was 70.2 percent funded as of June 30, 2011.

But Lawrence said he isn’t surprised at the small amount of money going to purchases because most employees probably don’t have $20,000 or more to buy a year of service.

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Audio clips:

Geoffrey Lawrence of NPRI says taxpayers could be on the hook for air time purchases if the pension plan doesn’t hit its investment target:

041212Lawrence1 :28 the unfunded liability.”

Lawrence says the low use of the program is not surprising:

041212Lawrence2 :15 deal, you know.”

 

 

 

Nevada’s Public Pension Plan Sees Long Term Unfunded Liability Grow Slightly In 2011

By Sean Whaley | 5:09 pm November 18th, 2011

CARSON CITY – Nevada’s public employee pension plan saw its long-term funding ratio decrease slightly in the fiscal year ending June 30, dropping to 70.2 percent from 70.5 percent in fiscal year 2010.

The Public Employees’ Retirement System board heard an update on the plan, which covers virtually all state public employees, at a meeting Wednesday in Las Vegas.

Dana Bilyeu, executive officer of PERS, said in a telephone interview that the slight increase in the long-term unfunded liability of the plan comes even as the pension investments saw a record 21 percent return in fiscal year 2011, which ended June 30. The pension plan is still absorbing a 15.8 percent loss in 2009 and a loss in 2008 as well, she said.

Dana Bilyeu, executive officer of the Public Employees' Retirement System

While the assets in the plan increased significantly in fiscal year 2011, growing to $25.8 billion from just under $21 billion in the prior year, the value of the unfunded liability grew as well, reaching $11 billion on June 30 compared to $10 billion in 2010.

“So from a long-term benchmarking, it’s kind of status quo from last year to this year on the funding of the system,” Bilyeu said. “We had a significant increase in assets on hand, but are continuing to absorb losses from the down market period as well.”

The numbers and percentages reflect the combined plans for regular public employees and police and fire fighters.

At its high point in 2000 the plan was 85 percent funded.

One interesting note in the report to the board was evidence of a reduction in the public employee workforce due to budget cutbacks, Bilyeu said. The regular employee membership declined by 2.5 percent, a reduction from 90,219 as of June 30, 2010 to 87,975 on June 30, 2011.

The police-fire sector saw an even bigger decline of 3.5 percent, she said. Active members declined from 12,375 in 2010 to 11,936 in 2011.

The long-term unfunded liabilities of the PERS plan, and of public employee pension plans nationwide, are generating concern from policy makers, although Nevada’s plan is considered to be well managed and in better fiscal shape than many other plans around the country.

There are also analyses that argue that the method of accounting for the long-term unfunded liabilities used by public pension officials vastly understates the real size of the potential financial impact to taxpayers.

A recent report by Andrew Biggs, a resident scholar at the American Enterprise Institute in Washington, DC, prepared for the Nevada Policy Research Institute, a conservative think tank, argues Nevada’s pension liabilities are much greater than reported.

The analysis found that when the long-term unfunded liabilities of the plan are calculated using a “market-based” valuation, a measure endorsed my most professional economists, the shortfall is actually closer to $41 billion than the $10 billion as of 2010 cited by PERS and its actuary.

Biggs presented his findings at a NPRI luncheon in Las Vegas earlier this month.

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Audio clip:

PERS Executive Officer Dana Bilyeu said the report on the pension plan for 2011 is status quo:

111811Bilyeu :11 of the system.”

 

Legislature Votes To Cut Pay To State And University Workers

By Andrew Doughman | 3:54 pm May 10th, 2011

CARSON CITY – Legislators on money committees today approved on a party-line vote a 4.8 percent salary cut to state and higher education employees.

The proposal would include a 2.3 percent cut through furloughs – about six days per year – and a 2.5 percent salary reduction.

Gov. Brian Sandoval had proposed in his budget a 5 percent salary cut to state and higher education workers.

Speaker John Oceguera, D-Las Vegas, advanced the 4.8 percent “compromise” cut. Legislative staff said it would create a shortfall between $7.5 and $10 million in the governor’s budget.

The vote passed with all Democrats voting for the idea and all Republicans voting against it. In an earlier vote, Republicans voted to follow the governor’s recommendation while Democrats voted against it.

Republicans characterized the salary reductions and cuts to benefits as similar to reductions in the private sector.

“What we are seeing here is a continuation of that downsizing,” said Assemblyman Pat Hickey, R-Reno.

Democrats contended that government does not operate like private businesses; rather than seeing less business during a recession, more people depend on state services in a recession.

“If we are going to apply true business principles to government, we should be hiring right now … our demand is way up,” said Assemblyman Marcus Conklin, D-Las Vegas.

Union representatives and higher education faculty testified against the cuts, saying that they much preferred furloughs to salary cuts.

Danny Thompson of the AFL-CIO also said that reductions in the governor’s budget have provoked a grassroots movement that could punish Republicans during next year’s elections.

“I would caution you that if you don’t solve this problem, that organic uprising that has already happened is going to spread and the people are going to solve this problem,” Thompson said.

Legislators also voted to continue suspending merit and longevity pay as well as eliminating holiday premium pay for higher education and state workers. Legislative staff said that these decisions should save the state $71.5 million.

Yesterday, legislators voted to curtail health care benefits for public sector employees.

Public sector employee union representatives said they have already endured these reductions in pay and benefits for several years as Nevada has struggled through the recession.

“It is so totally unfair what we are doing to our state government,” said Jan Gilbert of the Progressive Leadership Alliance of Nevada.

The governor has earlier argued that furlough days resulted in less productivity from employees, causing longer lines at places such as the DMV.

None of the votes are binding, and the Legislature may decide to alter the proposals as they finalize the budget.

Legislative committees last week voted not to reduce pay for school district employees nor did they choose to suspend merit pay for school district employees.

Those decisions could cost the state $402 million during the next two years.

Democrats last week proposed a revenue package totaling about $1.2 billion comprising a continuation of taxes approved by the 2009 Legislature and scheduled to end this year as well as a tax on businesses’ gross revenue and a sales tax on some services.

If passed, these tax increases could pay for that $402 million cost.

Senate Majority Leader Steven Horsford, D-Las Vegas, also noted a potential budget consequence in cutting salaries. He said that the sustained compensation cuts could lead some state workers to favor retirement over working for less.

Dana Bilyeu of the Public Employees’ Retirement System estimated that 2,000 current state employees are eligible to collect full retirement benefits.

Should they choose to retire, the state would have an unfunded obligation to cash out those retiring employees for accrued sick leave, she said.

Bilyeu and others in the committee room could not estimate a cost, but she said about 1,000 more teachers than usual retired due to changes in benefits following the 2007 legislative session, causing the state to lose millions of dollars.