‘A challenging environment’

Nevada’s public employee pension saw sluggish growth over the past fiscal year, falling to even approach the annual return necessary to ensure it becomes fully funded decades down the road.

The performance — while only over 12 months — should raise questions about the rosy assumptions built into the plan’s long-term revenue projections.

Tina Leiss, executive officer of the state’s Public Employee Pension System, announced last week that preliminary numbers show the fund grew by about 2.3 percent in the 2016 fiscal year, which ended June 30. That’s far below the 8 percent return necessary to ensure the system has enough money over the long haul to meet billions in obligations.

Ms. Leiss put the best spin on the numbers, pointing out that PERS over the same period outperformed the S&P 500, which saw a 1.5 percent bump. She also noted the Nevada fund did better than its counterparts in most other states.

Great. But it doesn’t disguise the reality that the fund, which now stands at about $34.9 billion and covers 103,000 people, lost ground over the past 12 months and remains, according to PERS figures, only 73 percent funded.

California pension officials face a similar predicament. The Wall Street Journal reported Tuesday that the state system posted a 0.6 percent gain for fiscal year 2016, the lowest since the market bust of 2009. California’s investment aim is 7.5 percent, lower than the Nevada goal.

“We are cognizant that this is a challenging environment,” a Calpers investment officer told the Journal, which also reported that California officials are evaluating whether the 7.5 percent objective is overly optimistic.

It’s a question PERS officials should also be asking.

The Nevada system has performed fairly well over the decades, averaging 9.2 percent growth since the early 1980s and even hitting 17.6 percent in fiscal 2014. But returns have trended downward. The Nevada Policy Research Institute, a free-market think tank based in Las Vegas, noted recently that the system’s earnings have topped the 8 percent benchmark just twice in the past 13 years.

Meanwhile, direct taxpayer contributions to the fund continue to increase steadily.

Lofty revenue assumptions make it easier to mask deficiencies and fight off necessary reform. A handful of fiscally responsible lawmakers in Carson City have pushed to transition new hires to a defined contribution fund, a goal they should continue to pursue. But in the meantime, lawmakers need to take a closer look at the numbers buttressing the pension system’s long-term viability.