Posts Tagged ‘study’

Nevada Public Employee Pension Plan Sees Record Investment Return In 2011

By Sean Whaley | 5:24 pm July 25th, 2011

CARSON CITY – Nevada’s public employee retirement system saw a whopping 21 percent return on its investments in the fiscal year ending June 30, the executive officer of the agency said today.

“I believe this is the best performance we’ve had in at least 25 years with the fund,” said Dana Bilyeu, executive officer of the Public Employees’ Retirement System (PERS).

The value of the retirement plan stood at $25.2 billion as of June 30, up from $20.9 billion on June 30, 2010, she said.

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

But the PERS investments, just like those of millions of Americans saving for retirement, could suffer in a big market sell off if Congress does not resolve the debt ceiling dispute by Aug. 2.

Bilyeu said a failure to extend the federal government’s debt ceiling limit would indirectly affect the plan the same as it would other investors.

“Because we’re always fully invested, the impact is going to be what that does to the markets themselves,” she said. “It’s really not about the default but really what that ripple effect is throughout the investment markets.”

If Congress fails to approve an extension of the debt limit, the markets will react and they won’t react very well, Bilyeu said. So the likely result would be a second vote by Congress, as happened with the TARP bailout legislation in 2008, to reach agreement and extend the limit, she said.

“I think the end result is going to be they are going to vote to lift the debt ceiling, to some level, we don’t know what that is,” Bilyeu said. “But I think they will get there. I think everyone at this point is trying to work as much into it as they can.”

PERS had over 102,000 active members in 2010, covering virtually all Nevada public employees, from school teachers and city workers to state employees. The plan is a defined benefit pension, where employees earn a guaranteed amount at retirement based on years of service and salary.

The 21 percent return for the just-ended fiscal year comes on the heels of a 10.8 percent return in fiscal year 2010. The plan saw a 15.8 percent loss in 2009.

Bilyeu said the high rate of return in 2011 was due in part to the plan’s significant investments in the S&P 500 and the EAFE stock indexes, both of which were among the top performers in fiscal year 2011.

The annualized rate of return on its investments is 9.6 percent over 28 years, ahead of the 8 percent return assumption over the long term.

The healthy return on the system’s mix of stocks, bonds and other investments will have a positive effect on the long-term financial health of the plan, which was 70.5 percent fully funded as of June 30, 2010, Bilyeu said. But the long-term unfunded liability will not be recalculated until this fall.

The unfunded liability as of June 30, 2010, totaled $10 billion. At its high point in 2000 the plan was 85 percent fully funded.

This long-term unfunded liability, which supporters of the current system say will be funded over time, is one reason Gov. Brian Sandoval in the 2011 session advocated for fundamental changes to the retirement plan. Others have advocated for a change as well, suggesting a switch to a “defined contribution” plan modeled after the 401(k) retirement plans commonly offered in the private sector.

A defined contribution plan is one where the employer contributes a set amount to an employee’s retirement. The employee makes the investment decisions. The employer has no long-term liability with such a plan.

In his state of the state address in January, Sandoval said: “We must also admit that Nevada’s Public Employee Retirement System cannot sustain its current level of liability. Future employees must join PERS under some form of a defined contribution plan.”

No action was taken to alter PERS in the just ended session. Instead, the Legislature passed a bill providing for a study of the plan to assess what, if any changes should be recommended to the 2013 Legislature.

Sandoval said through a spokeswoman today that he looks forward to the results of the independent analysis of PERS required as part of the 2011 budget agreement.

Supporters of the current plan say it is well managed and that no major changes are necessary.

The financial health of public employee retirement plans has become a concern nationally.

A review of these pension plans by the Pew Center on the States in February 2010 identified Nevada as one of 19 states where “serious concerns” exist about the long-term health of the retirement plan because of the size of its long-term unfunded liability.

Audio clips:

Dana Bilyeu, executive officer of PERS, says the 21 percent return was the best in 25 years:

072511Bilyeu1 :08 with the fund.”

Bilyeu says the PERS fund could suffer if Congress does not reach a deal on raising the debt ceiling:

072511Bilyeu2 :12 the investment markets.”

Bilyeu says she believes Congress will reach agreement on the debt ceiling:

072511Bilyeu3 :11 as they can.”

Chilean School Voucher Program Increased High School Graduation Rates, New Study Concludes

By Nevada News Bureau Staff | 3:19 pm June 28th, 2010

CARSON CITY – A major study of a school voucher program operating in the country of Chile for the past 29 years has found both an increase in high school graduation rates and an increase in the number of students going on to college.

A preliminary draft of the lengthy study, performed by researchers from the University of Nevada, Reno, the University of Pennsylvania and the University of Chile, was released today.

Along with other school decentralization efforts, education reforms implemented in 1981 included making Chile the only country in the world to have a nationwide school voucher program.

The study looked at students who began school in the early 1970s all the way up through students who began school in the early ‘90s. It shows that the reforms increased high school graduation rates by 3.6 percent and increased college-going rates by 3.1 percent.

The reforms also increased the rate of those completing at least two years of college by 2.6 percent and the rate of those completing at least four years of college by 1.8 percent.

Sankar Mukhopadhyay, assistant professor of economics at UNR and a co-author of the study, said that while there have been quite a few studies on the possible effects of school vouchers on grades and test scores, there has been very little research conducted on the possible effects of school vouchers on the level of education attained by students, or on employment and earnings.

“I think this study provides very interesting, new information for those considering school vouchers,” Mukhopadhyay said. “I think these results will surprise some people; the results actually surprised us.”

Mukhopadhyay and the research team drew their information from nearly 4,000 people, ranging in ages from 6 to 45.

The study also found that the voucher program significantly increased the demand for private subsidized schools and decreased the demand for both public and nonsubsidized private schools.

In addition, although opponents of school voucher programs have long theorized that vouchers would mostly benefit the rich, this study showed that individuals from poor and non-poor backgrounds in Chile, on average, experienced similar educational attainment gains under the voucher program. There was also a modest reduction in earnings inequity once the voucher reforms were enacted. Overall however, the reforms did not lead to increased overall average earnings.

The reforms reduced the number of people ages 16 to 25 in the workforce by about 2 percent because more people were staying in school longer, Mukhopadhyay said.

“So the earnings benefits of having greater educational attainment were at least partly offset by the delay in entering the workforce.”

Ray Bacon, executive director of the Nevada Manufacturers Association and member of an education reform task force created by Gov. Jim Gibbons, said he is glad to see the analysis but questions whether the results can be attributed solely to the voucher school program. The country implemented a number of reforms at the same time, he said.

“It is interesting that someone has actually taken a look at it,” Bacon said. “In a controlled environment you want to change one thing at a time to see if it had any effect or not.”

But the study contains good data and will no doubt provoke a lot of discussion on the value of a voucher school program, he said. One encouraging finding is that the education reforms in Chile “leveled the playing field” among the different socioeconomic classes, Bacon said.

The study will be published in its entirety in the inaugural issue of a new journal published by the Econometric Society, Quantitative Economics, in August. The co-authors of the study are Mukhopadhyay; David Bravo, economics professor at the University of Chile; and Petra Todd, economics professor at the University of Pennsylvania.

audio clip:

Ray Bacon comment on the voucher study:

062830Bacon :25 people don’t expect.”

Las Vegas Chamber Study Concludes Nevada Students Are Below National Averages on Achievement Tests

By Sean Whaley | 4:24 pm March 29th, 2010

CARSON CITY – A study showing how well Nevada’s students perform on achievement tests, released today by the Las Vegas Chamber of Commerce, concludes they fare no better than mid-range, and often well below, students in other states.

The report consolidates the results of several K-12 achievement tests and compares the target and actual percentages of standards as measured by the federal No Child Left Behind (NCLB) Act.

In addition, the report shows how Nevada students rank nationally in the National Assessment of Educational Progress, which measures 4th and 8th grade math and reading scores, as well as state-by-state comparisons of SAT and ACT scores taken by students planning to attend college.

Some of the findings include:

-          Nevada’s 4th and 8th graders placed no higher than 43rd in math or reading on any of the most recent National Assessment of Educational Progress (NAEP) exams.

-          Only 26 percent of high school seniors and 11 percent of high school juniors took the SAT.  Of that group, Nevada placed 35th nationally in critical reading, 39th in math and 40th in writing.

-          Of the Nevada students who took the ACT, they ranked 28th nationally in composite score, 27th in English, 28th in math, 28th in reading and 31st in science.

“Nevada continues to rank well below national averages on standardized student proficiency exams administered to elementary school, middle school, and college-bound high-school students,” the report says.

“It doesn’t surprise me,” said Ray Bacon, executive director of the Nevada Manufacturers Association and a member of Governor Gibbons’ new education task force. The NEAP scores in particular show how Nevada students perform compared to students in other states, and the news isn’t good, he said.

“It’s pretty ugly,” Bacon said.

As for how to improve student achievement, Nevada ought to look to Florida, where several reforms have been made that are helping improve performance, he said. The Nevada Policy Research Institute recently issued a report on Florida’s reforms, Bacon said.

Florida has stopped the so-called “social promotion” of students beyond the third grade, meaning they can’t move on to a higher grade if they have not learned to read, and the state also now rates schools using an “A” to “F” grade so parents can get easily accessible performance information, Bacon said. Florida also created a virtual school where students can take courses online.

“None of the changes do much in the short term,” he said. “But we’re so far in the ditch, there is nothing we can do short term that will make any difference.”

The Las Vegas chamber report contained some good news, however.

The report found there was “meaningful improvement” by Clark County students in meeting or exceeding standards.  “…while the (Clark County School District) did not make AYP (Adequate Yearly Progress) in 2009, elementary school students meeting or exceeding standards have increased from 45.5 percent to 57.2 percent in English/language arts and 49.5 percent to 63.0 percent in math between 2003 and 2009.”

If one of the 37 possible subgroups (including certain minority groups, English language learners, economically disadvantaged students, and students with disabilities) fails to make progress under the guidelines, then the entire school is designated as failing. The No Child Left Behind Act requires 100 percent student proficiency by the 2013-2014 school year.

The report also notes that often cited national tests are given to only a select number of students in each state and in fact “no comprehensive, national comparison of the proficiency of all students has ever been undertaken, let alone published.”

The report was done by the Las Vegas firm Applied Analysis, and is the first in a series of reports focusing on Nevada’s quality of education, education fiscal policy, and factors impacting educational attainment. The reports are designed to assess the current state of education and to lay a foundation from which the chamber and other interested parties can assess public policy issues regarding K-12 education.

“While we are encouraged by the improved performance of Nevada’s students in some areas in recent years, our education achievement needs to be significantly better,” said Hugh Anderson, chairman of the Chamber’s Government Affairs Committee. “We look forward to working with elected officials, educators, and the community to improve our education results.”

Legislative Panel Recommends Four Proposals as Finalists for Revenue Study

By Sean Whaley | 1:37 pm October 15th, 2009
CARSON CITY – A legislative panel today moved four proposals forward as finalists for a study of Nevada’s revenue structure, with a submittal by Moody’s Analytics at a cost of $253,000 receiving the highest rating from lawmakers.
The other three proposals recommended for further consideration are Willdan Financial Services, the second choice of the panel, with a study cost of $153,205; and two tied for third: the Center for Regional Studies at the University of Nevada, Reno, at a cost of $909,861; and Nevada Consultants Inc. of Las Vegas at a cost of $500,000.

Moody’s is based in West Chester, Penn., and Willdan is out of Sacramento, Calif.

Four other proposals were rejected.

The finalists were selected after each lawmaker picked their top three favorites. The top selection received three points, the second, two points and the third, one point. Lawmakers offered a number of reasons for their selections, including knowledge of Nevada and Nevada issues, the quality of the proposal, cost and the ability to meet the required deadlines.

The next step in the selection process will be oral presentations by the four finalists to the full Interim Finance Committee’s Subcommittee to Conduct a Review of Nevada’s Revenue Structure, likely in late October or early November. Ultimately the IFC, made up of the Senate Finance and Assembly Ways and Means committees, will pick the firm to perform the review. It must be completed by July 1, 2010, well ahead of the 2011 session of the Legislature.

A maximum budget of $500,000 has been set for the study, but the IFC can go higher if it decides it wants to do so.

Lawmakers want a study to provide guidance on how to deal with a two-year budget in 2011 that is expected to be as much as $2.4 billion out of balance.

Senate Minority Leader Bill Raggio, R-Reno, the chairman of the panel reviewing the tax study bids, said at a meeting Oct. 7 there is no preordained decision to increase taxes.

He also said it is critical that a study be performed without a hint of special interest influence. Because of that and the high cost, Raggio did not select the UNR proposal as one of his favorites.

Raggio said the presentation was outstanding, but that there might be a perception among some people that the end product would be biased, given that UNR is funded with general fund dollars by the Legislature.

Even so, the decision to move the UNR proposal was part of a unanimous vote of the panel.

Knight Allen, a resident of Las Vegas who testified as a Nevada citizen, asked the panel to reconsider including the UNR proposal because of the need for unbiased study results. Whether intentional or not, biases can creep into the best intentioned study when it is being performed by a public entity involving public revenue matters, he said.

The panel did not change its recommendation, however.

Steven Miller, vice president for policy at the Nevada Policy Research Institute, said the purported study will be biased no matter who performs the work.

“It’s the same old story,” he said. “The politicians spend every cent in sight. Then they try to fool the voters with a study that is never designed to get spending under control but to find new revenue.”

Given that the result is predetermined, the least costly proposal is the best of a bad lot for taxpayers, Miller said.

The study will go forward despite objections from Gov. Jim Gibbons that the inevitable result will be a recommendation for higher taxes. Gibbons voted against the funding request Tuesday at a meeting of the Board of Examiners, but the other two members of the board voted in favor.

Funding for Tax Study Approved Over Governor’s Objections

By Sean Whaley | 11:28 am October 13th, 2009

CARSON CITY – Over the objections of Gov. Jim Gibbons, the Board of Examiners today approved a request to spend $500,000 on a study of Nevada’s revenue structure sought by a bipartisan group of legislative leaders.

The $500,000 figure is not guaranteed to be the final price of the study, an uncertainty that caused Gibbons to vote against the request.

Eight bids have been submitted to lawmakers ranging from a low of $32,200 to $909,861. Six of the eight were for $500,000 or less.

Lorne Malkiewich, director of the Legislative Counsel Bureau, presented the request to the Board of Examiners, saying the actual amount of the contract will be negotiated and approved by the Legislature’s Interim Finance Committee on Nov. 19 if not before.

But Gibbons said it was not appropriate to bring a $500,000 “carte blanche” request to the board. The legislative subcommittee reviewing the eight bids should make a selection and bring that amount to the board, he said.

“It seems to be premature to approve $500,000,” Gibbons said.

The Board of Examiners will meet again before the IFC meeting, and a specific proposal could be approved at that time, Gibbons said.

But the other two members of the board, Secretary of State Ross Miller and Attorney General Catherine Cortez Masto, voted to approve the request. Gibbons is a Republican, while Miller and Masto are both Democrats.

State Budget Director Andrew Clinger informed the board that any amount approved would be a recommendation only, and that the Legislature could appropriate any amount for the study it saw fit.

Malkiewich said lawmakers decided to seek the $500,000 now because of the urgency of the study, which is scheduled to be completed by July 1, 2010. The lawmaker panel is going to review the bids again on Oct. 15.

The $500,000 bid was submitted by The Nevada Consultants Inc., a Las Vegas-based company.

Lawmakers want a study to provide guidance on how to deal with a two-year budget in 2011 that is expected to be as much as $2.4 billion out of balance.

Senate Minority Leader Bill Raggio, R-Reno, the chairman of the panel reviewing the tax study bids, said at a meeting Oct. 7 there is no preordained decision to increase taxes. An impartial study of the state’s tax structure is needed, however, to provide guidance, he said.

His comments were echoed by Senate Majority Leader Steven Horsford, D-Las Vegas, who said the Legislature wants options on how to balance the budget in 2011.

The study is required to be performed by a qualified and independent consultant and will examine the allocation of tax revenues between the state and local governments, the adequacy of revenues and the stability of different tax revenues, among other issues.

A panel of citizens, not yet appointed by the Legislature, will also participate in the study process.

Gibbons vetoed a bill passed by the 2009 Legislature for an appropriation for a revenue study, requiring lawmakers to use their contingency fund instead.

After the meeting, Gibbons said spending $500,000 on a tax study is unnecessary.

If a study is to be funded, do it for the least amount of money possible, he said.

“We don’t have a tax problem in the state of Nevada, we have a spending problem,” Gibbons said.

(This story was updated at 2:08 p.m. on Oct. 13, 2009.)

Legislative Panel Delays Selection of Consultant for Revenue Study

By Sean Whaley | 3:17 pm October 7th, 2009
CARSON CITY – A legislative panel today decided to seek clarifying information before selecting a proposal to study Nevada’s revenue structure.

Eight proposals were submitted by an Oct. 1 deadline from organizations both within Nevada and across the country.

However not all of the proposals, which range in cost from $32,200 to $909,861, were complete in providing all of the information sought by a working group of the Legislature’s Interim Finance Committee. Lawmakers directed staff to seek itemized costs for six of the eight proposals that did not provide the details.

The panel will meet again Oct. 15 to move forward, either by selecting one proposal or by ranking them in order of preference for the full IFC to consider.

Senate Minority Leader Bill Raggio, R-Reno, chairman of the working group, said he would prefer to recommend a single proposal, although that decision will be made by the entire eight-member panel, five of whom are Democrats.

A tax and revenue study is needed, but it must be free of bias if it is to serve any useful purpose, he said.

“There have been a lot of studies, but they all have some special interest that is funding them or directing them, and that is what I don’t want to see,” Raggio said. “I want to see an objective study that has at least some credibility.”

The decision by the Legislature to study the tax issue does not automatically mean there will be a push for a tax hike in 2011, Raggio said. But the next Legislature will face enormous challenges, given the fact that a $2.4 billion funding shortfall over the current budget has already been identified, he said.

The shortfall estimate is derived from a variety of factors, including tax increases approved in 2009 that are set to expire in 2011 and one-time federal stimulus funding that won’t continue into the next budget cycle.

The legislative working group did recommend that no more than $500,000 be spent on the study, but Senate Majority Leader Steven Horsford, D-Las Vegas, also a member of the working group, said the decision ultimately will rest with the full 24-member IFC.

The working group can negotiate with any of the submitters to bring the cost down, he said. There are also a number of proposals below $500,000 from contractors who may very well be able to produce the type of study lawmakers need to move forward.

“This is not an exercise in spending money,” Horsford said. “We want to pick the most qualified contractor who can evaluate our options for the upcoming legislative session.”

The costliest proposal was submitted by the Center for Regional Studies at the University of Nevada, Reno. The other proposal in excess of $500,000 was for $544,082 from the Center for Tax and Budget Accountability based in Chicago, Ill.

The Board of Examiners, made up of three executive branch officials including Gov. Jim Gibbons, will also vote on the proposal, including the contract cost, next month. But Legislative Counsel Brenda Erdoes told the working group that the IFC has the ultimate authority to determine how much should be spent on the study.

Funding for the study was rejected by Gibbons in the 2009 legislative session. The Legislature is instead using funds available in its contingency fund.

The study is required to be performed by a qualified and independent consultant and will examine the allocation of tax revenues between the state and local governments, the adequacy of revenues and the stability of different tax revenues, among other issues.

A panel of citizens, not yet appointed by the Legislature, will also participate in the study process.

A report is due to the Interim Finance Committee by July 1, 2010.