CARSON CITY – A bill seeking to change the makeup of the public employees retirement system board to include three public members with areas of expertise in pension plans ran into resistance Monday from some lawmakers and participants in the plan.
Opponents offered a common refrain: the plan is well managed and no changes are needed.
Assembly Bill 3, sought by Randy Kirner, R-Reno, would change the makeup of the current board, which is now composed of seven members, all of whom are participants in the plan. Testimony lasted for more than two hours. No immediate action was taken on the measure.
Kirner, who has made reforms of PERS a priority in the 2015 session, said a public perspective would help the board manage the plan’s $35 billion in assets and long-term unfunded liabilities of $12.5 billion.
Kirner and some other Republicans, including Gov. Brian Sandoval, would like to change the public pension plan from a “defined benefit” plan, where retirees are guaranteed a monthly pension based on years of service and salary, to a “defined contribution” plan, where employees manage their own investments much like a 401(k) plan. A defined contribution plan would have no unfunded taxpayer liability.
Kirner plans to introduce such a bill later this session. It would only affect newly hired public employees.
Kirner said his bill to change the makeup of the board is not based on any concerns with the performance of PERS or its current board, but is intended to bring a public perspective to the management of the plan. The plan is funded by taxpayers who should have representation on the board, he said.
A packed hearing room, with overflow rooms holding even more attendees, saw a lot of opposition to the bill.
Assemblyman Richard Carrillo, D-Las Vegas, said a recent assessment of Nevada’s public pension plan by the national firm of Aon Hewitt described its actuarial funding policy as “best-in-class.”
The evaluation suggests no changes are needed, he said.
Assemblyman Glenn Trowbridge, R-Las Vegas, a PERS member as a retired Clark County parks and recreation director, said it was public members of the board in the mid-1980s who advocated for some bad investments by the plan, including a dog track in Henderson and the Rivera Hotel.
The suggested changes appear to be a step back, he said.
The board makeup was changed by the Legislature in 1987 to be composed of all public employee participants.
Tina Leiss, executive officer of PERS, said the board opposes the bill because the current system is a model of best practices. The removal of the private sector members in 1987 was done to take politics out of the management of the plan, she said.
Changes approved by the voters in the mid-1990s to protect the system were due in part to concerns that public pension plans could be raided and used for other purposes, Leiss said.
The plan is also overseen by a panel of state lawmakers who serve as the Interim Retirement and Benefits Committee, she said.
The board changes were supported by both the Reno-Sparks and Las Vegas Metro chambers of commerce.
Tray Abney, director of governmental relations for the Reno-Sparks chamber, called Kirner’s proposal a reasonable change to make to the PERS board.
“This should have been done a long time ago,” he said.
The purpose of the bill is to have some board members who are outside the system and don’t have a vested interest in the plan, Abney said. Even with the change, two-thirds of the board will still be PERS members, he said.