Assembly Panel Hears Bill Seeking Modest Reforms To Public Employee Retirement Plan

CARSON CITY – The Nevada Legislature finally took up the issue of reforms to the state’s public employee retirement system today, but the proposed changes from Democratic Assembly Speaker John Oceguera are modest.
Oceguera spoke in support of Assembly Bill 405, which would eliminate call-back pay as a form of compensation used to compute retirement benefits for new government workers hired starting Jan. 1, 2012. Call-back pay is used when certain police officers or fire fighters are called back to work in an emergency.
It also proposes that the Legislature make no changes in benefits to the Public Employees’ Retirement System (PERS) for 10 years unless necessary to maintain the financial integrity of the plan. After 10 years, the Legislature would not enact any benefit increases unless the system’s long-term unfunded liability was at least 85 percent funded.
The plan is currently 70.5 percent funded.
Oceguera said his changes would bring down the liabilities of the plan while increasing the predictability of the system, which covers virtually all state and local government employees in Nevada.
Oceguera said the Legislature made major changes to the PERS plan in 2009, and those changes need time to take effect. The 10-year moratorium on any changes would allow the system to assess how those reforms are affecting the long-term liability, which stood at $10 billion on June 30, 2010.
Local government and business representatives supported the proposed changes, while some public employee labor groups spoke in opposition. The panel did not take immediate action on the bill, which faces a Friday deadline for passage.
Gov. Brian Sandoval has advocated for a major change to the retirement system to begin work on reducing the unfunded liability of the plan, but he did not introduce a bill this session addressing the issue.
Heidi Gansert, chief of staff to Sandoval, said the administration would participate in a debate on reforms to the retirement plan as bills dealing with the system came up for hearing, but no one from the governor’s office testified on AB405.
Supporting the bill were Ted Olivas, representing the city of Las Vegas, and Tray Abney, with the Reno-Sparks Chamber of Commerce.
Ron Cuzze, representing the Nevada State Law Enforcement Officers’ Association and the Nevada Association of Public Safety Officers, spoke in opposition to the measure, saying the proposed change to call-back pay is a “knee-jerk reaction” to a “group of individuals” in the public employee system that defrauded the taxpayers.
Cuzze was referring to allegations of sick leave abuse by some Clark County fire fighters.
Rusty McAllister, representing the Professional Fire Fighters of Nevada, said the proposed changes in the bill are modest, but that no reforms should be advanced without a discussion of Nevada’s revenue system.
The changes to PERS agreed to in 2009 were made in exchange for the temporary tax increase approved by lawmakers to help fund the current two-year budget, he said.
“We traded, if you will, permanent changes to the PERS and the collective bargaining system for temporary changes in the revenue structure in the state,” McAllister said. “And certainly, we would hope that if this is going to move forward, that this could again be part of a discussion, but part of a discussion as a permanent fix to the revenue stream and not just continuing to pile permanent fixes on the public employees while we have temporary fixes to our problems.”
Sandoval has repeatedly rejected any call for new taxes or fees to balance his $5.8 billion general fund budget.
Dana Bilyeu, executive officer for the retirement system, said her board has not yet taken a position on the bill. Staff will recommend a neutral position on the benefit change, and an endorsement of the legislative pledge for no benefit modifications for 10 years. The proposal mirrors the system board’s funding policy in effect now, she said.
Audio clips:
Assembly Speaker John Oceguera says major reforms to the public employee retirement system were approved in 2009:
041311Oceguera1 :11 is significant change.”
Ron Cuzze, representing Nevada law enforcement, says the change in call-back pay is a knee-jerk reaction:
041311Cuzze :25 doesn’t make sense.”
Rusty McAllister, representing Nevada fire fighters, says further PERS reforms should only be made in exchange for dealing with the state’s revenue problems:
041311McAllister :29 to our problems.”