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JOHN L. SMITH: Problem facing PERS obvious; solution will be complicated beyond measure

The formidable contingent representing the Las Vegas Chamber of Commerce would hate to be called dreamers. They're a practical and studious bunch, and it appears they've done their homework.

With help from respected fiscal analysts Guy Hobbs and Jeremy Aguero, the chamber has just published a study that could give nightmares to the keepers of the government status quo. It's called "An Overview and Comparative Analysis of the Nevada Public Employees' Retirement System."


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  • In short, Nevada's PERS is headed for a world of hurt, and its worsening health should concern all taxpayers. Currently with a $6.3 billion unfunded liability, the system jeopardizes future budgets and funding for everything from education to public safety, the chamber's study concludes.

    Let's be candid. It's hard to imagine a study emanating from the Las Vegas Chamber of Commerce ever reaching the conclusion public employees ought to be better paid. When your stated mission is "to strengthen, enhance and protect business in Nevada," you're unlikely to ever be overheard chanting for bigger government and higher taxes.

    But that's what makes the chamber's latest pitch so intriguing and thoughtful this time. It wisely commissioned Aguero of Applied Analysis and Hobbs of Hobbs, Ong & Associates to generate the PERS study. Both have won the respect of clients and reporters with their reputations for compiling solid numbers and reaching credible conclusions.

    For working people, a PERS package is to be prized. For regular employees, the taxpayers contribute 20.5 percent of their salaries to fund retirement after as few as 28 years on the job at a rate of 75 percent of their highest three-years salary. For police and firefighters, the taxpayers put 33.5 percent of salary into the retirement package and they can retire at 75 percent of pay after only 25 years. Although overtime is excluded from the pension formula, when you add in hazard pay, callback time and other add-ons, retired public employees do substantially better than many in the private sector.

    Nevada might lag far behind in the areas of public education and social services, but its public employees' retirement plan is the most generous in the nation.

    Years ago, the argument held, public employees received juicier pensions because they performed difficult duty for salaries far inferior to those available in the private sector. Trouble is, in many areas of local and state government in Nevada, that's no longer the case.

    It's not difficult to see PERS needs to be adjusted if it's to remain solvent, but how do you trim the sails of such a cumbersome and politically connected ship?

    The chamber believes the best method is to change the whole heavy system from its current status as a defined- benefit program to a defined- contribution plan such as the 401(k) programs that many in the private sector feed. A few states are making that transition, with mixed success.

    Other states are trimming retirement add-ons such as callback pay. Still others are planning to funnel new hires into a system with a substantially smaller formula multiplier, which in Nevada is a lusty 2.67 percent annually.

    In bruising economic times, all these changes look good on paper and figure to help balance the public employee retirement books to greater and lesser degrees. But I think the chamber is dreaming if it plans to walk into the 2009 Legislature and drop its impressive study on the toes of elected officials who know very well the power of all those public employees and their unions.

    Politicians who depend on the grass roots and fundraising skills of the police and firefighters unions, not to mention their coveted endorsements, will think twice before signing on to turn Nevada PERS into a glorified 401(k), which these days shines like a Ferrari but performs like a Yugo.

    From a practical standpoint, winning even a few substantive changes at the Legislature will probably prove difficult unless the economy slips further into recession. But if the chamber pumps a substantial amount of its members' money into a marketing campaign designed to rein in PERS in the face of a worsening economy, many politicians will at least find the problem difficult to ignore.

    The good news for taxpayers is this report should at least be a conversation starter in Carson City.

    Beyond that, hope for a great Public Employee Retirement System debate might end up being just a dream.

    John L. Smith's column appears Sunday, Tuesday, Wednesday and Friday. E-mail him at Smith@reviewjournal.com or call (702) 383-0295.

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    Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background.

    NV Pers wrote on September 22, 2008 09:04 AM: John L. Smith is a moron, plain and simple.


    County Joe Cont. wrote on September 10, 2008 11:18 AM: If you take into account a cost of living wage of 2-4% every year for 20-30 years, it adds up to quite a salary. Is it fair that the public pays for our retirement? No. Is it fair that the public pays for a war over seas that you don’t support? No.

    It’s a great opportunity and we’re taking advantage of what has been offered to us. Let me repeat “What was offered to us”. If some one offered you $10,000 with the “Chance” of increase later or $5,000 with guaranteed merit and cost of living increases from now till you retired, what would you choose? Don’t blame us for taking the $5,000 and reaping the benefits 20 years later. My friends drive new cars, live in bigger houses, and always seem to take that vacation they “Need” every year, while I continue to plug away paycheck to paycheck. I know what’s coming to me and I can wait for it.

    Why can't you leave the public employees alone? Or at least compare salaries and benefits when the employee starts a job not when they’re about to retire.


    County Joe wrote on September 10, 2008 11:17 AM: It bothers me to no end the amount of slamming that public employees receive. When positions open up for hiring lists it never fails that the list fails to bring truly "qualified" candidates. So, if the Public positions are paying so much more than the private sector, why is there a shortage of "qualified" candidates? The answer is the Public salaries start much lower than the entry level private positions. I can't blame a recent college grad for chasing the dollar right out of school. But with a little research you find that our benefits, cost of living increases, merit increases and any other monetary information is open to the public. The RJ publishes a list of the highest paid employees every year. It's all out there people. I'm not complaining because I weighed the options and took the job. I started at a lower wage but within 10 years, I could be making a very comfortable wage. You struggle in the beginning but in the end you come out ok. If you want to complain about money, why don't you go knock on the doors of those huge buildings along Las Vegas Blvd and ask that they pay more taxes. Casinos continue to make millions and millions of dollars, expand their buildings, and bring in more and more riff raff associated with their development. Is anything being done about it? I doubt it. People want money now rather than later…instant gratification. The highest paid employees are those that have been in the system for most of their lives.


    FedUP wrote on September 10, 2008 08:18 AM: kdr81: RE-What are you waiting for we have a lot of work to do to stop people from migrating here?
    What part of the definition of ILLEGAL (as in "in violation of the law") do you not understand? I have nothing against the hard working LEGAL immigrants who have come to the USofA for decades, learned ENGLISH, and waved the American flag and not that of their birth country as they achieved the AMERICAN dream. It's the ILLEGAL immigrants I have a problem with - you know, the ones you like to call "migrant" or "undocumented" to confuse the issue and cover up the fact these people are CRIMINALS!


    John wrote on September 09, 2008 09:24 PM: As a Firefighter, my ovetime does not count toward my retirement unless I am called less than 12hrs prior to a shift. This is not that common. Most of our overtime is decided 7 days out. Something else to mention, we work a 56hr schedule per week. 16hrs per week more than your average person. The reason you see some individuals making high salaries, is because they work alot of OT hrs. Vacation and sick time must be covered! Do you want a Fire Engine staffed with less people than is safe? We cannot run short, or public safety is severely compromised. Also to add, a Firefighter lives on average 15-20 years less than your average worker. You want to raise the retirment age so they never see a retirement? Do you want 60 yr old fireman responding to your house to help your loved ones? Yes we dont pay into Socal Security, and its a good thing, most would never see it. 25 Years of stress on ones body is enough. Leave our retirement alone! We definitely have earned it!


    Mrs. Reuben wrote on September 09, 2008 06:38 PM: One interesting note is that teachers are so under paid that this retirement system should pay them back in the end...but not even close. It is not a great retirement system and doesn't pay all that well upon retirement. You should check the facts before generalizing the retirement system for all employees and ask those that are going to have it and see how they feel!!


    Michael wrote on September 09, 2008 03:50 PM: The real problem is elected Commissioners and Councilpersons refusing to take tough stances with unions, who promise to campaign against them if they don't approve hefty raises and PERS contributions. To save their jobs, they bend to the will of the unions, particularly police and fire. As a result, the non-public safety unions get great increases by arguing they shouldn't be treated less-kindly. Its all in the politics!


    kdr81 wrote on September 09, 2008 02:52 PM: FedUp, turning America into a socialist police state just might stop the Mexicans from coming up here.

    Afterall, they're trying to escape a socialist police state.

    If we can mimic their economic policies we could destroy our own wealth and they won't want to come up here and work!

    Brilliant!!!!!!!

    So, lets all vote for Obama, raise taxes, increase the regulatory burdeon, heavily subsidize big corporations and raise barriers on small companies, seize control of anything that makes too much profit, and institute universal healthcare while outlawing private care.

    What are you waiting for we have a lot of work to do to stop people from migrating here?


    kdr81 wrote on September 09, 2008 02:46 PM: The solution is easy, privatize the entire fund.

    Doing the solution is the hard part. You'll have to overcome the immediate self interest of thousands of state employees.


    be informed wrote on September 09, 2008 02:38 PM: "And now we need to fix the Platinum Retirement plan where if one works over 20 years they get 80% of salary and sometimes they keep working and double salary."

    They have. Current employees must work 5 years to be vested - but how much is 2.67 x salary, x 5 years? This isn't the problem. In the past, older employees had a program where if you worked more than 30 years, you're actually getting more than the 75%. Nowadays, they fixed it so it can't go higher. for employees who started working earlier than July 2001, the factor was 2.5%, then for years after 2001, the new factor is 2.67%. You can get a headache doing all the math, but in fixing one thing, they adjusted another.
    So, like another poster mentioned, you can go ahead and take something away, but it'll come back some other way. If you continue to try and take something away, just imagine the services you're getting now. ANd how employees will feel when you take it away? If less firefighters were on the street, how much longer is response time getting to your home? How good are the people at their jobs, and their decision making skills. I for one, would rather have a fire or medic crew that is within 3 miles than 6-8 miles away. its bad now cuz the economy is in a downturn. If people act in haste, you'll cause a different problem. PERS took away a good health program as of August, and we lost a lot of good employees and teachers this year. Anyone close to retirement cashed out all at the same time. Does that make it any better?


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