Newspaper column: Do not shroud public employee pensions in secrecy

Some lawmakers in Carson City are pushing a bill that basically declares that it is none of your business how your tax money is spent. Senate Bill 224 would make the names of recipients of pensions through the Public Employees’ Retirement System secret.

The first glimpse at the kinds of duplicity this bill invites is the fact that two of the three chief sponsors of the bill — state Sens. David Parks and Joyce Woodhouse — are currently drawing six-figure pensions from PERS, a fact that would not be known if this bill were already in law.

At a recent hearing on the bill, the third sponsor, state Sen. Julia Ratti, argued that PERS benefits are set aside for the public employees’ future use and asked, “At what point is public servant no longer a public person?”

The answer is: When that person no longer obliges the public to guarantee that pension. Right now the taxpayers are on the hook for $40 billion in unfunded liabilities, when standard accounting practices are used to make the calculation. Never mind that the taxpayers paid half of the pension contributions for that government worker retiree and all of the rather princely salary that public employee used for their half of the contribution.

Perhaps the most egregious argument made in the hearing is that the bill would cut the cost of litigation. It was PERS itself that created that cost by trying to skirt court rulings that stated the names of public pensioners and their pension amounts are public records under the Nevada public records law, which states that its purpose is to foster democratic principles by providing taxpayers with access to public records.

After the state Supreme Court ruled the records were public, PERS changed the way it kept the records, prompting Chief Justice Michael Douglas to suggest PERS had “gone out of its way to violate the spirit of the law.”

The bill’s backers are still arguing that revealing the names of pensioners might expose them to identity theft and fraud. The state Supreme Court dismissed that claim in its 2013 ruling by saying, “Because PERS failed to present evidence to support its position that disclosure of the requested information would actually cause harm to retired employees or even increase the risk of harm, the record indicates that their concerns were merely hypothetical and speculative. Therefore, because the government’s interests in nondisclosure in this instance do not clearly outweigh the public’s presumed right to access, we conclude that the district court did not err in balancing the interests involved in favor of disclosure.”

During a hearing on SB224, Robert Fellner, policy director for the Nevada Policy Research Institute, countered that the publication of public pension information has enabled the public to correct abuses of such systems. A tip to California’s fraud hotline resulted in the system recovering more than $200,000, Fellner noted, causing CalPERS to release a statement praising “the great value of the public’s assistance in CalPERS’ efforts to protect the state pension system from fraud, waste, and abuse.”

In another example, Fellner noted that the importance of disclosing names was highlighted when a Los Angeles television station discovered that a police officer who was drawing a disability pension from one city was working full-time as a police officer for another agency.

“This type of abuse will be impossible to detect if SB224 becomes law and makes secret the names of those drawing tax-funded public pensions,” he testified, adding that 20 states maintain online public pension databases.

The law that set up PERS states: “It is the policy of this State to provide, through the Public Employees’ Retirement System: A reasonable base income to qualified employees who have been employed by a public employer and whose earning capacity has been removed or has been substantially reduced by age or disability.”

Yet in a previous court case NPRI’s attorney Joseph Becker observed that there are retirees in their 40’s collecting six-figure disbursements from PERS, while still earning income from other sources. “Only through the publication of name, pension payout and related data can the public better understand how the system works and the legislative purpose be effectuated,” he wrote.

Lawmakers should reject SB224’s effort to blinder the public. If not, Gov. Steve Sisolak — who once told a newspaper columnist, this one, that public employee contracting should be transparent and that the public employee pension system was overdue for reform — should veto it.

A version of this column appeared this week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel and the Lincoln County Record — and the Elko Daily Free Press.

Newspaper column: State public employee unions will bust the budget

Ramirez cartoon

While Gov. Steve Sisolak has promised no new taxes in his proposed budget for the next two years, he also plans to light the fuse on a huge tax bomb in the future.

In his State of the State speech in Carson City before lawmakers he casually  tossed out that state public employees “should be empowered to bargain collectively in the years ahead.” Since 1969 local government workers in Nevada have been allowed to form unions and collectively bargain for pay and benefits, but   not so state government employees.

Sisolak doubled down during an interview at the Smith Center in Las Vegas with the editor of the news and commentary website The Nevada Independent, saying, state public workers generally are paid less than local government workers and discussion of collective bargaining rights for state workers is long overdue.

Sisolak said, “Our state employees should be treated in a fair and respectful manner. The fact that they haven’t had a raise in 10 years and the fact they don’t have the same working conditions that other jurisdictions had. I’m coming from a county that employees did have collective bargaining … they make a lot more money. … The pay is probably 30 to 40 percent less than any other governmental entity that exists. And to attract good people at those wages is simply not going to happen.”

After editor Jon Ralston pointed out that collective bargaining would cost the state a lot more tax money, the governor responded, “We’re going to invest in our people, Jon. That’s a good thing. I don’t think that’s a downside. We’re going to invest in the people who provide services to Nevada and we’re going to have to find the resources in order to make those accommodations.”

First of all, state workers were given 3 percent cost-of-living pay increases in each of the past two years.

For years local government pay in Nevada has exceeded those in both state government employ and in the private sector, due to collective bargaining. But according to Bureau of Labor Statistics figures for the second quarter of 2018 the average weekly wage for private sector Nevadans was $908, while the local government worker was paid $1,049 and the state public employee averaged $1,097. By the way, the federal employees in Nevada averaged $1,406.

Back on Nevada Day this past year, the researchers at the Nevada Policy Research Institute crunched the Census data for 2017 and found that local government workers in Nevada were the fifth highest paid in the country compared to other local government employees, while Nevada’s private-sector workers ranked a distant 47th compared to private sector workers in other states.

“On a statewide basis, government pay and benefits cost taxpayers roughly $10 billion last year — which was equal to 80 percent of all tax revenue collected by every state and local government agency in Nevada,” noted NPRI policy director Robert Fellner. “Thus, in the event Nevada’s government pay gap continues its upward growth, the resulting tax hikes necessary to sustain such excess may become too great to bear.”

Fellner argued, “Because such outsized pay packages come at the expense of taxpayers who earn much less themselves, elected officials should consider the fairness and sustainability of continually caving in to government unions’ endless demands for even more.”

Imagine what the future will look like if state workers are allowed to form unions and bargain collectively.

Under Nevada’s collective bargaining law, if negotiations come to an impasse, an arbitrator is appointed to settle the dispute and the primary criteria for granting a union’s demands is whether the government entity has the ability to pay what is demanded. That determination is usually in favor of the union.

As we have noted in the past, none other than the icon of progressivism, Franklin D. Roosevelt, pointed out in a 1937 letter the problem with collective bargaining for public employees: “All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people …”

When the people are paid less than their servants, who is the master?

A version of this column appeared this week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel and the Lincoln County Record — and the Elko Daily Free Press.

Editorial: Local government unions create huge pay gap

It is good to be a public servant in Nevada, downright lucrative in fact.

The folks at the Nevada Policy Research Institute have crunched the Census data for 2017 and found the median earnings for local government workers in Nevada were 46 percent higher than for those in the private sector — $58,644 for local government workers per year, compared to $40,259 in the private sector. That 46 percent gap is the highest of any state in the nation.

Hawaii and California had the second and third highest gaps.

Nevada local government workers had the fifth highest wages in the country, while private-sector workers came in at a distant 47th.

NPRI is quick to point out that much of the pay disparity is due to differences in experience, education and other factors, but that does not negate the fact the Nevada gap is the highest in the nation. Also, NPRI notes that when Nevada’s local government workers health and retirement benefits and more generous paid leave are factored in the gap with the private sector widens to 57 percent.

For example, both state and local public workers contribute to the Nevada Public Employees’ Retirement System. Currently 28 percent of a worker’s salary is contributed to cover the cost of pensions — half from the taxpayers and half from the employee. The figure for police and fire employees is 40 percent to account for often shorter working careers. But many local government unions have collectively bargained to have the taxpayers pick up all of the PERS contributions, effectively adding a hidden cost not seen in salaries alone.

“On a statewide basis, government pay and benefits cost taxpayers roughly $10 billion last year — which was equal to 80 percent of all tax revenue collected by every state and local government agency in Nevada,” notes NPRI policy director Robert Fellner. “Thus, in the event Nevada’s government pay gap continues its upward growth, the resulting tax hikes necessary to sustain such excess may become too great to bear.”

Fellner argues, “Because such outsized pay packages come at the expense of taxpayers who earn much less themselves, elected officials should consider the fairness and sustainability of continually caving in to government unions’ endless demands for even more.”

Unlike state government employees, local government workers in Nevada are largely covered by union contracts. State government workers generally are paid more than those in the private sector, but less than local government employees.

In past legislative sessions, lawmakers have attempted to allow state government workers to unionize, though they should instead take away the right of local government workers to unionize. The unions hold too strong a sway over local elected officials who must bargain with the unions over wages.

None other than the icon of progressivism, Franklin D. Roosevelt, said in a 1937 letter:  “All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management.”

He went on to add, “The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people …”

Who is the servant and who is the boss?

A version of this editorial appeared this week in some of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record.

Editorial: Nevada court rightly upholds public right to know

The Nevada Supreme Court has made it clear that public officials cannot skirt the state public records law by using privately owned electronic devices to conduct the public’s business.

This past week the court unanimously overturned a lower court ruling that rejected a request for records from Lyon County commissioners because those records were not stored on devices owned by the county. The county conceded that public business was indeed conducted using personal phones and email addresses. The county website even lists those phone numbers and email addresses as the commissioners’ contact information.

“The use of private entities in the provision of public services must not deprive members of the public access to inspect and copy books and records relating to the provision of those services,” wrote Justice Michael Cherry, author of the opinion.

The Nevada Public Records Act (NPRA) states that, unless otherwise specifically exempted by law, “all public books and public records of a governmental entity must be open at all times during office hours to inspection by any person, and may be fully copied or an abstract or memorandum may be prepared from those public books and public records.”

Cherry further clarified, “In light of these requirements, (NPRA) cannot be read as limiting public records to those that are physically maintained at a government location or on a government server and are immediately accessible to the public during the business hours of that governmental entity. Such an interpretation would render … (the law) meaningless, as the records of private entities rendering public services would not necessarily be stored at the government office, and providing a time frame for resolving a records request would be unnecessary if records were required to be immediately produced for inspection at that location.”

Barry Smith, executive director of the Nevada Press Association, called the ruling important and substantial.

“If it had gone the other way, it would have created a gaping loophole in the law,” Smith said. “During oral arguments, justices asked the right questions. Essentially, they wondered, ‘How could the open-records law work if public officials could simply avoid it by using their personal devices?’”

Smith noted that John Marshall, the attorney for Lyon County citizens seeking the records, had a good analogy. “He said it would be like an official typing up a county document on his own typewriter at home and storing it in his personal filing cabinet. The principle remains the same. If it was public business, then it was a public document,” Smith explained.

Nevada Policy Research Institute Transparency Director Robert Fellner issued a statement saying, “In finding that public officials cannot hide their activities by simply conducting government business on personal devices, the Court reinforces the mandate within Nevada’s Public Records Law that it ‘be construed liberally to carry out [the] important purpose’ of a transparent and open government.”

In order for the public to properly evaluate the conduct of their elected and appointed officials, they must be able to see, hear and read what those officials are doing, why they are doing it, how they are doing it and for whom.

In this particular case Lyon County commissioners had rejected a zoning request for an industrial development, but later reversed themselves. Citizens filed a public records request seeking access to communications about the zoning matter whether contained on public or private devices.

Cherry’s opinion made it abundantly clear that public business must be transparent, writing, “We conclude that the NPRA does not categorically exempt public records maintained on private devices or servers from disclosure. To withhold a public record from disclosure, the government entity must present, with particularity, the grounds on which a given public record is exempt.”

We applaud the court for again upholding the public’s right to know.

A version of this editorial appeared this week in some of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record.

How Nevada provides a disincentive for experienced teachers and other employees to continue working

Once again the folks at the Nevada Policy Research Institute have put out a jeremiad lamenting the state’s self-defeating, tax-draining, counter-productive public employee retirement system.

The opinion section of the Sunday newspaper carries an op-ed by Robert Fellner, director of transparency research at NPRI, that points out that the Public Employees’ Retirement System of Nevada provides a powerful disincentive for experienced teachers, school administrators and other public workers to continue working and providing services to taxpayers.

Thinkstock graphic posted with Fellner op-ed online.

For example, if Clark County Schools Superintendent Pat Skorkowsky were to continue working to age 60 — instead of retiring next year at age 53 after 30 years on the job as announced — he would forfeit approximately $1.5 million in PERS payments. The same principle, though lesser amounts, applies to our most experienced classroom teachers, leaving Nevada’s youth, who already trail nearly every other state in educational achievement, in the hands of less experienced instructors.

Feller points out that if the state were to opt for a 401(k)-style retirement plan — as in the private sector — there would be an incentive to continue working because retirement benefits would grow every year instead of reaching a maximum after 30 years.

This is something we have been advocating for years. While various proposals have been floated, all have been sunk by the entrenched public employee unions.

In 2011 a report drafted for the NPRI by Andrew Biggs, an economist with the American Enterprise Institute, concluded the Nevada Public Employees’ Retirement System is vastly underfunded by more than $40 billion.

“What people don’t realize,” Biggs said to a luncheon audience back then, “is your typical public sector pension plan is a lot more generous than what a typical person is going to get in the private sector. Let’s just take a person and run their wages through what they would get from PERS versus what they could get from a typical 401(k) plan combined with Social Security, because public employees here don’t participate in Social Security. They both pay the same amount on average. The total contribution is about the same, but the benefits for someone under PERS — for a full career employee — is somewhere around 50 percent higher.”

A year ago Fellner penned for NPRI “Footprints: How NVPERS, step by step, made Nevada government employees some of the nation’s richest.”

Fellner warned that “should today’s international no-growth economy stumble into the deep financial crisis that many forecasters fear, NVPERS’ fantasy economic forecasts will be replaced by immediate bankruptcy — leaving every Silver State household with a sudden, implicit, $50,000-plus tax liability.”

The report detailed how NVPERS benefits have ratcheted up over the decades by virtue of incremental benefit increases, collective bargaining gains, earlier retirement age, allowing the purchase of years of service, padding base pay with add-ons such as callback, standby, holiday, shift differential, extra duty, hazard and longevity pay, and simple compound interest.

Fellner noted that local government employees have taken advantage of their collective bargaining union contracts and negotiated to have their employers actually pay the employees’ pension contribution, claiming this is done in lieu of a salary increase or in conjunction with a salary decrease — even though local government pay checks rank eighth highest in the nation.

In a report published during the 2015 legislative session, NPRI’s Fellner wrote, “Over the past 20 years, the amount Nevada taxpayers contribute toward public employee retirements has skyrocketed — from $384 million in 1995 to $1.4 billion today. That’s an increase of more than 50 percent after adjusting for both inflation and membership growth.”

 

The giant sucking sound is drowned out by the chirping crickets.

 

 

 

 

 

 

Newspaper column: Lawmakers must finally address public worker retirement reform

Gov. Sandoval gives State of the State speech. (R-J photo)

Gov. Sandoval gives State of the State speech. (R-J photo)

In his State of the State speech this past week Gov. Brian Sandoval tossed out tax money like trinkets and candy from a Mardi Gras parade float — a couple million here for this or that education program, a few million there for a veterans’ home, millions for a medical school, more millions for an engineering school and pay raises for state employees.

“This session, my budget includes a 4 percent cost of living adjustment and increased funding for health benefits to recognize the shared sacrifice and dedication of our state employees,” the smiling governor said about his spending proposal for the coming two years.

Overall, Sandoval proposed a 10 percent increase in the general fund portion of the state budget, even though the cost of living increase for 2016 was only 2 percent.

What the governor did not address was how the taxpayers are going to pay for the commensurately higher retirement pensions that are tied to the salaries of those state employees.

Nor did he take note of the fact his proposed budget — total budget, not just the general fund — is 49 percent higher than the total budget he proposed when he first took office, while over the past decade the Nevada median household income has fallen 17 percent.

A part of the growth in state government spending has been due to burgeoning pensions for state employees, who upon retirement are guaranteed a percentage of their highest salary level — which officially is 70 percent after 25 years, but can often top 100 percent after various pay add-ons and gimmicks are employed. Public employees in Nevada can retire in their 40s and get paid more in retirement than they were paid for actually working.

In 2008 the Las Vegas Chamber of Commerce called on the Legislature to change public employee retirement benefits from the current direct benefit plan to a direct contribution plan, similar to a 401(k), because the expenditures were growing at an unsustainable pace.

In 2011 a report drafted for the Nevada Policy Research Institute by Andrew Biggs, an economist with the American Enterprise Institute, concluded the Nevada Public Employees’ Retirement System is vastly underfunded by more than $40 billion.

“What people don’t realize,” Biggs said to a luncheon audience back then, “is your typical public sector pension plan is a lot more generous than what a typical person is going to get in the private sector. Let’s just take a person and run their wages through what they would get from PERS versus what they could get from a typical 401(k) plan combined with Social Security, because public employees here don’t participate in Social Security. They both pay the same amount on average. The total contribution is about the same, but the benefits for someone under PERS — for a full career employee — is somewhere around 50 percent higher.”

In 2015 Reno Republican Assemblyman Randy Kirner introduced Assembly Bill 190, which called for reforming PERS, which at the time was costing nearly $15,000 per Nevadan per year and growing.

The changes Kirner proposed would have applied to future state and local government workers and not current ones.

AB190 would have introduced a hybrid — part defined benefit, part defined contribution.

The bill also tied the minimum retirement age for receiving full benefits to that allowed under Social Security, though police officers and firefighters would be able to retire with full benefits 10 years earlier.

Kirner argued his bill would have a minimal impact on taxpayers, but the PERS administration claimed it would cost millions to implement. Kirner withdrew the bill so the funding could be studied and he could re-introduce it again this year, but Kirner decided to not seek re-election.

Instead, state Controller Ron Knecht has offered a bill nearly identical to Kirner’s, but it is questionable whether it will get much of a hearing before a Legislature that is now comprised of majority Democrats in both chambers.

This past summer NPRI’s Director of Transparency Research Robert Fellner released a 36-page report warning that if the economy stumbles the PERS “fantasy economic forecasts will be replaced by immediate bankruptcy — leaving every Silver State household with a sudden, implicit, $50,000-plus tax liability.”

Nevada lawmakers have been kicking this can down the road so long it is now a 55-gallon drum ready to explode.

A version of this column appeared this week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel and the Lincoln County Record — and the Elko Daily Free Press.

Newspaper column: It is long past time to patch the broken public employee retirement system

“You know my rule, Andy,” says a grifter in an O. Henry tale, “that in all my illegitimate inroads against the legal letter of the law the article sold must be existent, visible, producible. In that way and by a careful study of city ordinances and train schedules I have kept out of all trouble with the police that a five dollar bill and a cigar could not square.”

This high-minded adherence to such strictures so as to avoid any comeuppance or accountability might very well be ascribed to our Carson City grifters who for the past 40 years have played a confidence game — otherwise known as the Public Employees’ Retirement System of Nevada, NVPERS to the initiated — and slipped it under the noses of the taxpaying rubes by nickel-and-diming until they can sneak out of town and leave their marks holding the empty bag.

NVPERS was created in 1947. According to statute its purpose is to provide: “A reasonable base income to qualified employees who have been employed by a public employer and whose earning capacity has been removed or has been substantially reduced by age or disability.”

From this safety net for public employees “whose earning capacity has been removed or has been substantially reduced,” NVPERS has gradually, and almost imperceptibly, grown into the richest public employee pension program in the nation, according to the American Enterprise Institute.

By AEI’s calculations Nevada’s public pensions have reached $64,000 a year or more than $1.3 million in lifetime benefits. That doesn’t include public-safety workers, such as firefighters and police, who can retire earlier and generally have higher salaries. Compare this to the average annual Social Security benefit of $14,220.

For years there have been warnings that the system is unsustainable and could collapse, leaving taxpayers on the hook. Lawmakers have utterly ignored the warnings and have even raised the ante and the risk.

The latest jeremiad on this topic comes curtesy of the Nevada Policy Research Institute, a libertarian-leaning think tank, which recently released “Footprints: How NVPERS, step by step, made Nevada government employees some of the nation’s richest.”

Written by NPRI’s Director of Transparency Research Robert Fellner, the 36-page report warns that “should today’s international no-growth economy stumble into the deep financial crisis that many forecasters fear, NVPERS’ fantasy economic forecasts will be replaced by immediate bankruptcy — leaving every Silver State household with a sudden, implicit, $50,000-plus tax liability.”

The report details how NVPERS benefits have ratcheted up over the decades by virtue of incremental benefit increases, collective bargaining gains, earlier retirement age, allowing the purchase of years of service, padding base pay with add-ons such as callback, standby, holiday, shift differential, extra duty, hazard and longevity pay, and simple compound interest.

Fellner notes that local government employees have taken advantage of their collective bargaining union contracts and negotiated to have their employers actually pay the employees’ pension contribution, claiming this is done in lieu of a salary increase or in conjunction with a salary decrease — even though local government pay checks rank eighth highest in the nation.

As examples of how the system is being gamed, Fellner points to two former fire chiefs from Southern Nevada who retired in their mid-40s and began collecting $100,000-plus annual pensions while working full-time in fire departments in other states.

The major problem with NVPERS — as NPRI and others have pointed out for years, only to be ignored in Carson City — is that it is a defined benefit system. Public employees are contractually guaranteed a percentage of their highest three years of salary, depending on the number of years of employment. Thus many may retire in their 40s and 50s at 75 percent of their working salary — and a few at more than 100 percent of their working salary due to the spiking of those add-ons in later years — and live into their 80s or longer, drawing pensions for more years than they worked.

This means taxpayers decades from now will be paying for benefits approved by current and past lawmakers. Fellner bluntly calls this “intergenerational theft.”

The solution is for Nevada to change to a defined contribution plan — comparable to 401(k) plans used in private industry — for future hires. The employer and employee would each contribute to a fund that would be invested, leaving the taxpayers off the hook should the economy turn sour. This has been offered and rejected.

A version of this column appeared this week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel and the Lincoln County Record — and the Elko Daily Free Press.