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Double dipping

How far does Nevada have to go to rein in the unsustainable costs and crippling future liabilities of public employee retirement benefits?

So far that it’s considered a taxpayer victory when schoolteachers might be told they can’t collect pensions and paychecks at the same time.

Eldorado High School special education teacher Sally Magnuson is among the Clark County School District instructors who’ve been kept on the job following their so-called retirement. They work in areas of “critical labor shortage,” which under a 2001 state law allows all government agencies to retain public employees who are drawing a pension if it’s believed a qualified replacement can’t be found for the position. Since the law took effect, 661 workers have been allowed to “double dip” — 380 of them hired by the school district.

Ms. Magnuson is currently paid about $115,000 a year. It is, to say the least, a sweet deal — with summers off, to boot.

“Most of the teachers said, ‘You’re getting paid what we should have been paid all along,’ Ms. Magnuson told the Review-Journal’s James Haug. ‘They were like, ‘You go, girl.’ “

Ms. Magnuson’s colleagues have quite the sense of entitlement. But because their union prefers massive layoffs to small compensation concessions to help the district deal with revenue shortfalls, there won’t be a “critical labor shortage” next school year — there will be a labor surplus. That means Ms. Magnuson and scores of other district workers likely will lose their windfall.

They’ll have to work for a salary or enjoy a pension-funded retirement, but not both. Guess which option they’ll choose?

The loss of such productive workers should be expected when the state gives them an enormous incentive to resign. Nevada’s Public Employees Retirement System awards pension payouts based on years of service, not a retiree’s age. That allowed Ms. Magnuson to start drawing her pension two years ago at age 55, after just 28 years of work for the school district. If the school district tells her to end her retirement or quit, she said it’s an easy call: She’ll fully retire at age 57.

So if Ms. Magnuson is fortunate enough to live to age 80 — about average for an American woman — she will have collected a pension nearly equaling her final, highest salary for 25 years despite working only 30 years. Under that scenario, including PERS cost-of-living adjustments, Ms. Magnuson will collect far more in retirement pay than she received in her entire working career.

And teachers complain that they’re underpaid?

No wonder PERS is $33.5 billion short of being fully funded, according to an American Enterprise Institute analysis that accounts for future market risk. Nevada taxpayers can’t possibly be expected to provide a bailout of that magnitude.

Social Security recipients can’t collect until they’re in their 60s — and if they want to keep working, their benefit checks take a hit or disappear altogether. Most private-sector retirement accounts assess big tax penalties for early withdrawals. Public employees have no such concerns — especially when a privileged few workers are allowed to turn a tax-deferred retirement benefit into a giant pay raise.

Nevada needs to free taxpayers of the burden of providing guaranteed retirements to public employees. The 2011 Legislature must move all future government hires into a defined-contribution system that encourages good, productive workers to stick around, not call it quits. If it doesn’t, the state’s current budget problems will be a walk in the park compared with what lies ahead.

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