EDITORIAL: Latest PERS reform bills a positive step, but not nearly enough
The state Legislature this week held hearings on two bills that attempt to reduce the cost of pension benefits through very modest changes that would only apply to new hires. Not to any retiree currently drawing a pension from the Nevada Public Employees Retirement System, nor to any current public-sector employee.
Both bills have their positives, but neither one does nearly enough to address a program that is currently 71 percent funded and states its long-term unfunded liability at $12.5 billion — with some estimates pegging that liability far higher.
As reported by the Review-Journal’s Sean Whaley, Assembly Bill 312 — sponsored by Las Vegas Republican Glenn Trowbridge — would raise the retirement age for regular public employees to receive full retirement benefits, making it equal to 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. Assembly Bill 387, sponsored by North Las Vegas Democrat Marilyn Kirkpatrick, would still allow public employees to purchase up to five years of retirement credits, but that “air time” could not be used to calculate an early retirement date.
AB312 takes the proper step of bringing public-sector employees into the real world of private-sector citizens who can’t collect Social Security until they’re in their 60s. This is at least a move toward making PERS a retirement benefit, rather than an income stream to supplement new positions and careers. Because public employees can “retire” after 20 to 30 years of service and draw a full pension, many government workers start collecting benefits in their 40s and 50s, and keep right on working. If you want retirement benefits, you should have to retire.
AB387 forces public employees to wait an extra five years to collect their full pension, even if they bought the credits — which come at a steeply discounted 20 to 40 percent of the worker’s annual salary.
While these bills mark a step forward, this is still just nibbling around the edges, seeing if there’s any way to get even a little giveback on overly generous PERS benefits. The Republican-led Legislature is now nearly halfway through the 2015 session, and this may be its only shot to make much-needed major reforms to the state’s pension plan. The GOP needs to go big.
First and foremost, pass Assembly Bill 190, which shifts future government hires — again, not retirees or current employees — into a new, 401(k)-style defined contribution retirement plan, to bring PERS into line with the private-sector workers who pay those pensions but will never enjoy such benefits.
Further, scrap Assemblyman Trowbridge’s five-year proposal and calculate retirement benefits on a career average of earnings — lower-earning years should have as much influence as higher-earning years — and calculate pension benefits only on base salary. And double-dipping should end. PERS beneficiaries should not be able to work in Nevada public-sector jobs, even if a labor shortage has been declared for those jobs. That’s not retirement.
It’s a positive development to see bills from both sides of the aisle addressing PERS’ long-term liabilities and general unfairness to the taxpayers. But much more needs to be done. And the clock is ticking. It’ll be June 1 before you know it.