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EDITORIAL: PERS reform

$6.3 billion deficit demands immediate, wholesale changes

The biggest threat to Nevada's public education, law enforcement and welfare systems is not the anemic economy, a purportedly unstable tax base or any ballot question that seeks to limit the government's ability to increase tax collections. It is the state's dangerously unstable and fundamentally unfair public employee pension plan that will one day collapse the foundations of Nevada governments if lawmakers don't institute wholesale reforms.

On Tuesday, the Las Vegas Chamber of Commerce released a fiscal analysis of the Nevada Public Employees Retirement System that lays out the frightening threats to taxpayers and public services thanks to the outrageous largess awarded the state's government workers. The pension fund has a $6.3 billion unfunded liability that will consume an ever-increasing share of available tax revenue in the years ahead, eventually chewing into programs lawmakers claim are inadequately funded in the first place.


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  • But in this space yesterday, we laid out why fiscal sustainability alone isn't a sufficient goal for PERS reform -- not when Nevada's government employees are already paid significantly more than their private-sector counterparts, not when taxpayers who struggle to save for their own retirement see so much of their tax burden going to fund benefits they can't dream of.

    So how should lawmakers address PERS reform? There are a number of incremental approaches, including some that have been adopted by other states facing similar pension deficits.

    The root of PERS' problems lies in Nevada's collective bargaining system. Public employee unions have used it to obtain some of the highest government salaries in the nation. Because pension distributions are based on the highest wages paid during active employment, the result is overly generous retirement checks -- the highest in the nation, according to the chamber's analysis.

    Taxpayers have no advocate in the collective bargaining process, which unfolds in secret negotiations between government administrators on the public payroll and unionized public employees. Exposing these procedings to a little sunshine, and giving the public a dog in the fight, would help reduce the state's costs and liabilities.

    The pension fund's deficit is so high, in part, because public employees can retire so young. Whereas Social Security eligibility is based on age, PERS collections are based on years of service. Public employees can retire with full benefits after 28 to 30 years of service, allowing some to quit before turning 50 -- and collect pension checks for more years than they actually worked. Police and firefighters can retire with full benefits after 25 years of service.

    In 2007, the Legislature briefly discussed (and rejected) the idea of forcing public employees to work more years to gain full benefits. Tying PERS eligibility to Social Security's standards makes even more sense. Why should a private-sector secretary have to wait until age 66 or 67 to retire to live on savings and a meager Social Security check, while a better-paid government receptionist might be able to quit working 10 years sooner, without having to save, with far superior benefits?

    Another possible reform involves changing the way PERS distributions are calculated. Currently, full benefits pay 75 percent of a government retiree's average earnings during the three years they received their highest pay. This might be the biggest giveaway of the entire PERS scheme. The chamber report says it allows public employees near retirement to beef up their pay -- and their lifetime pension -- when supervisors conspire to help them collect extra "callback, standby, holiday, shift differential, extra duty, hazard and longevity pay" in their final years of work.

    The state of Kansas addressed this problem by upping the three-year average to five years, with a maximum annual wage growth of 7 percent. How sad that this little tweak was considered a major political victory.

    Unfortunately, all of these approaches would merely delay the implosion of PERS. A piecemeal solution is no solution at all -- the entire program needs to be sealed off from all future hires, who must be placed in a parallel, defined-contribution retirement program. Michigan, Nebraska and Alaska have taken such a step to minimize future fiscal disaster. Nevada Assemblyman Ty Cobb, R-Reno, has requested such a bill draft for the 2009 session.

    It should receive full attention and consideration from lawmakers. No doubt they'll be reluctant to do so, given the blind loyalty many swear to the public employee unions. But how can taxpayers be expected to take lawmakers' moaning and groaning about current state funding seriously if they're content to ignore Nevada's biggest budget-buster of all?

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    brightside wrote on September 24, 2008 06:35 PM: I guess it's easy to offer the steriotype of the well paid govt. recpetionist. But I can tell you that this author is not looking at the big picture.

    I am public sector, and function in a support role to firefighters. Before you begrudge them their retirement, answer who in private sector is required to forfeit their life if need be as part of the job? 9/11 proves that these public sector employees don't back away from their committment. Yes they get an early retirement, but the job obviously comes with the requirement for a certain level of physical strength. do you seriously expect a 65 year old man or woman to be able to carry a 200 lb adult down a ladder to get out of a burning building? what a joke.

    I also think of my daughter's third grade teacher. This lady has three kids of her own, has invested her time and money in obtaining two masters degrees. Other teachers in school have PhDs. These are smart, presentable, well educated professoinals that would demand big bucks in private sector. Their motivation is love and dedication not money, I've volunteered in their classes and I can tell you that teaching the kids and maintaining a classroom is not for wimps. I never met one person at my kids school that matches the civil servant steriotype and I believe PERS recipients are mostly teachers.

    It would be more helpful learn from PERS and start an inititive for a financially solvent pension for prviate sector to suppliment their social security than to tear down PERS.


    Join Em wrote on September 11, 2008 08:08 PM: Okay, I worked in the private sector right out of college. Let me tell you, as you already know. It is ruthless. Your boss can fire you on the spot for something as simple as … “I just don’t think you fit in with the organization.” That’s it. It’s perfectly legal. On top of that, you’re lucky if you get a 5% match to your 401k up to the first 10,000 dollars.

    Now switch over to the government. You cannot get fired like above. You have recourse. And … here’s the best part, the gov kicks 20% (30% if you’re fire or police) towards your retirement. It’s incredible. If you can’t beat them, join them.

    Peace!


    RLJ wrote on September 11, 2008 11:06 AM: To the LVRJ:
    Your editorial is laughable. You did not bother to do even a basic fact check. The PERS retirement system is not unstable. PERS responded to request for information from Applied Analysis (Author of the Study) on September 4th. The response contained facts disputing the study. The author of the study ignored the facts he was provided because, I am assuming, facts did not fit his agenda (or the agenda of the Las Vegas Chamber of Commerce who funded the study). The study is blatantly dishonest. Then to compound the dishonesty, you published an editorial based on the dishonest study. I am not sure if the LVRJ is also dishonest or they are just incapable of doing the basic job of fact checking. I would hate to think the LVRJ also has an agenda...


    GWF wrote on September 11, 2008 09:33 AM: Congress shall make no law… abridging the freedom of… the press;

    When our founding fathers crafted that language, I’m sure they assumed there was no need to stipulate that they were referencing a “responsible” press – after all, they knew that freedom only comes at a price and that price is responsibility. From reviewing the diatribe you have been subjecting your readers to recently regarding Nevada PERS, I regret that our constitution is not clearer about the required responsibility of the press. Over the years I’ve read hundreds of articles about public employee retirement and I can state without equivocation that your collection would be very near the top of the irresponsible heap.

    It would take thousands of words to correct the plethora of misinformation you have been distributing. While no justice could be done to the subject within your 300 word limitation, you need not look beyond the two-page summary in the Chamber of Commerce report to find Nevada PERS is “well managed and prudently administered.” Further, considering that Nevada employees participate in PERS in lieu of Social Security, “Nevada’s total retirement contributions by both employers and employees fall among the lowest nationally.”

    Like most public employee retirement systems, Nevada PERS is actuarially-funded based on reasonable assumptions with a prudently invested portfolio, all designed to responsibly minimize taxpayer costs. In fact, more than two-thirds of their revenue comes from earnings on investments as well as contributions the employees themselves have made to the system. Assets in the trust have grown over the years to pay benefits for decades into the future, distributing valuable revenue streams into the Nevada economy.

    Any of your readers who are interested in truly understanding the situation should not consider your paper an independent unbiased source.


    CJJames wrote on September 10, 2008 11:30 PM: Sad, it figures that you would resort to those who call out Sherman and Thomas as "whining". The history of this editorial page speaks to the hate they have toward those who serve, and many times, save people just like them-and you.

    As for your first four questions, the answers are found in both the rebutal to this "editorial" on the front page of www.nvpers.org as well as in the fact that anyone can ask these same questions of PERS at ANY TIME. There is no need to case them as some dark cabal whose object is to destroy the tazpayers of the state. Sad, notice that you failed to mention all of the positive things mentioned about the administration of the PERS system that even lvrj couldn't avoid-see yesterday's front page article for more.

    Your second to last question assumes that the "facts" that both the LVCVA and the LVRJ-who have consistently opposed public employees and government-are unbiased and true. They are not. The success and stability of the PERS system over the DECADES speaks for itself. Don't be a sheep and let those who make RICHES off of the private sector tell you that the answer to our current financial ills is to make the pension system for those who serve the community less secure. Groups like LVCVA and LVRJ would love to see these secure investments turned loose in risky investments in narrow, vulnerable funds-because THE MARKET, they believe, will ALWAYS treat people fairly. Except that it doesn't-we learned that at the start of the last century.

    Its the LVCVA and the LVRJ that is pretending that the problem does not exist, my friend. Open your eyes and GET REALITY-PERS have been a success and these two groups can't stand it.


    Sad Summerlin wrote on September 10, 2008 10:30 PM: CJJAMES

    Once you stop whining... can you please point out where in the editorial the RJ makes any reference or hate towards public employees...

    Does asking for fair and open collective bargaining mean they hate public employees?

    Does asking for an evaluation of length of service mean they hate public employees?

    Does asking for an evaluation of how disbursements are calculated mean they hate the public employees?

    Does asking for a solution to the problem mean they hate public employees?

    Are we going to solve the problem by pretending it doesn't exist just to avoid offending people like you?

    First step in solving the problem is admitting you have one... but I guess that means admitting you hate...

    GET REAL.


    CJJames wrote on September 10, 2008 09:37 PM: Wow. Sherman and Thomas hate public employees. No news here. Same daily story from the RJ-private business can do no wrong and government can do no right. So, when the LVCVA, principle cheerleader for private business in Nevada, attacks public employees, the RJ is happy to help like a loyal dog.

    Not all government employees in this state have colective barganing, in fact many do not-so much for the "root" of your argument, Sherman. In fact, many do not have their "entire" contribution to PERS covered, so there is another of your lies exposed, Sherm.

    It must be nice to be a rich publisher and feel as though you can tinkle on all the public servants to help your ego and pump up your self-worth. Must make you feel like quite a successful man-really, really important. Well, feel that way, Big Guy, because I wouldn't want to be in your shoes for all of the money in the world. The empty-headed hate-on you and Thomas have for all of government and those who serve the public only demonstrates the lack of imagination the two of you share.

    You hate government employees, and yet you would call government employees if you were in crisis.

    And....here's the cherry on the top of this pile of "editorial" that the two of you created today by selecting the file antigovernmentemployeerant.doc from Microsoft Word that has sat in your computer for years, copying, and then pasting in todays paper-you publish this garbage on the eve of the anniversary of a day when THOUSANDS OF GOVERNMENT EMPLOYEES GAVE THEIR LIVES TO HELP PEOPLE IN THE MOST DIRE OF NEEDS.

    You two have no class. You are so anxious to hate government employees that you RACE to re-re-re-re-regurgitate the same editorial. Shame on you.


    Sad Summerlin wrote on September 10, 2008 07:43 PM: Judy ---

    If you actually knew what the definition of a recession was, then you would know that WE ARE NOT IN A RECESSION.

    If you actually took off your partisan glasses, you would know that even though the economy is in a serious slowdown and unemployment is up to a 5 year high, we have still experienced economic growth, quarter on quarter --- even though it has not been at the pace of previous years.

    If you were not partisan, you would know that the housing crisis we have today spans both Republican and Democrat Presidential terms, as well as Rep/Dem lead congresses.

    If you weren't partisan, you would realize that Gibbons, while bumbling at times with stupid decision, is not the cause of our poor school system, but rather it is our State legislature (hmmm... I wonder who runs them) that has underfunded and overpromised and under-delivered...

    But why should I even address you... you will ignore everything I say and blame Bush for the Hurricanes and Gibbons for failing students...

    As to the PERS issues... Perhaps people that complain about their situation and employment and their benefits need to take personal responsibility and change to a job that better suits them and quit complaining... IF you don't like your 401k, go work for the State... if you don't like the small State salaries and declining benefits, go work in private industry... but FOR REAL PEOPLE... the complaining is deafening...


    JJ wrote on September 10, 2008 03:36 PM: There have been many comments these past two days regarding the actual # of employees per citizen, that workers pay half into the system, and that lazy workers need to be removed but the fact of the matter is that working for a government agency is not a birthright. If it is so fantastic then why isn't everyone lining up? The fact is that to get most government jobs, it is very competitive. I looked at NV PERS WWW today and see that they've already re-butted the RJ's editorial. http://www.nvpers.org/


    James wrote on September 10, 2008 03:34 PM: The R-J's (Republican Journal) editorial board needs enemies so they must continually write opinions that divide the electorate. Why? Because this is how the GOP has successfully campaigned for years.

    Whether the issue is evil state workers or the evil Democratic candidate Barack Obama or the evil Sen. Harry Reid their job is to distract voters from the last eight years of the failed Bush administration, the guy they supported wholeheartedly in two elections.

    This editorial is not about state workers, it's about something,... anything besides the failed Republican policies that have left us stranded in a deep, deep ditch.


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