CARSON CITY – Bills seeking modest changes to the state public employees retirement system to reduce the cost of pension benefits for new hires were debated at length Monday in a legislative hearing.
Assembly Bill 312, by Glenn Trowbridge, R-Las Vegas, would raise the retirement age for a regular public employee to receive full retirement benefits to equal the age for retirement within the social security system. It would also set an employee’s pension based on five years of the highest salary instead of three years. A provision affecting the retirement age of police and firefighters was removed. The bill would take effect for new employees hired on July 1, 2016.
“What the effect of these two changes would be would be to reduce the outflow of PERS revenue and thereby gradually reduce any unfunded liability,” Trowbridge said.
Supporters included both the Reno-Sparks and Las Vegas Metro chambers of commerce, as well as the Nevada Policy Research Institute.
But public employee groups were uniformly opposed to the changes.
The committee also heard Assembly Bill 387, introduced by Minority Leader Marilyn Kirkpatrick, D-North Las Vegas, which would not allow the purchase of retirement credits to calculate an earlier retirement date.
The bill would still allow public employees to purchase up to five years of retirement credits. But the purchase of “air time” could not be used to calculate an earlier retirement date, she said.
Kirkpatrick said her bill would not affect most public employees because buying a year of retirement is expensive and most people can’t afford it.
The bill would affect employees hired in the system after July 1, 2015.
The intent of the bill really is to end criticism from the media when it reports about the rare and anecdotal case of a highly-paid public employee buying five years to retire early at a high salary, Kirkpatrick said.
Tina Leiss, executive officer of PERS, said the cost can run from 20 percent to 40 percent of an employee’s salary to purchase a year of service.
Both measures were heard by the Assembly Government Affairs Committee. No action was taken on either bill.
AB312 was opposed by the Nevada State Education Association, the Nevada Retiree Chapter 4041 of the American Federation of State, County & Municipal Employees, a coalition of law enforcement groups, firefighters and Service Employees International Union Nevada 1107, among other groups.
Ruben Murillo Jr., president of the Nevada State Education Association, said in written testimony that the changes would affect the ability of school districts to attract and retain teachers.
“Extending working obligations beyond 30 years to reach full retirement will create a disincentive for teachers to commit to a teaching career in Nevada and would likely create unintended costs due to an aging workforce population,” he said.
Priscilla Maloney, representing AFSCME, said the Nevada Public Employees’ Retirement System is addressing its long-term unfunded liability, which the agency reports at about $12.5 billion.
“PERS is a well-funded, sound system on track to reduce the unfunded liability,” she said. “All these bills do is nothing more than chip away at a sound system that functions properly.”
But Robert Fellner of NPRI, a conservative think tank, said increasing the retirement age is appropriate because people are living much longer.
Similar testimony was presented on both sides of Kirkpatrick’s bill.
Nevada PERS recipients do not participate in social security.
The measures are two of the more modest bills aimed at changing the PERS system in the Republican-controlled 2015 legislative session.
Despite strong opposition from public unions, Assemblywoman Dina Neal, D-North Las Vegas, asked which provisions of the many measures would be least objectionable to public employees. Some changes to PERS are likely to be approved this session, she said.
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