Wednesday, February 25, 2009

Candace Kant reports on Senate Government Affairs hearing

The Senate Committee on Government Affairs conducted a hearing on the PERS system on Wednesday, February 25th in Carson City. The hearing was on video conference at the Sawyer Building. The findings of the Chamber of Commerce study were presented by Jeremy Aquero, Principal Analyst of Applied Analysis, Las Vegas, Steve Hill, Chairman, Board of Trustees, LV Chamber of Commerce and Veronica Meter, Vice President, Government Affairs, L.V. Chamber of Commerce.

The presentation included information already presented in a number of venues such as the Sage Commission. It was pointed out that Nevada is not overstaffed with state workers. Indeed, Nevada ranks 50th in the nation in the number of public employees per capita. Senator Raggio emphasized this face. Senator Care commented that because we are understaffed, more is expected of each employee. The Chamber finding indicated that the PERS system was well managed and planned and was low cost while giving benefits amont the best. The Chamber study also looked at the PEBP. They then used an illustration of Carl the Custodian (no kidding!) to illustrate the salary, retirement, and health care benefits received by public employees in comparison with those in the private sector. Their final point had to do with taxes. They concluded that the Nevada tax base was not stable and that revenue would decline. They indicated that modifications would have to be made. They pointed out that the three main sources of revenue are the sales tax (2% goes to the state, the rest to local entities - the slide was unclear here, so be careful of this statistic), Property tax (46% goes to the state, 54% to local government) and gaming revenues (100% to the state, except that Clark County does also levy a gaming tax.) Veronica Meyer stated that Nevada Public Employee pay was the 8th highest in the nation, that public employees make 28% higher than the private sector, that teachers make only 93% of the national average, that state workers makes 102% of the national average and that local government employees make 131% of the national average. (Be careful of those statistics, some were refuted by later speakers.)

Steve Hill summed up the Chamber presentation by stating that the Chamber recommendations affected only new public employees, not current or retired employees, with the exception of health care. He stated that the Chamber did not support the 6% pay cut for public employees and that they opposed reductions in teacher and state employee pay. He noted the disparity between the pay of local and state employees, and thought they should be aligned better. Unfortunately, it seems he wanted to do this by holding local public employ stable until State employee pay caught up. Some time was also spent discussing the collective bargaining process for public empoyees. He recommended that the amount of time necessary to qualify for PERS retirement be extended for new employees and that a minimum retirement age be established. He also wanted to calculate benefits differently and to base the PERS benefit on the 5 highest years of pay rather than the 3 it is based on now. He did point out that Nevada public workers do not pay into or get social security, so the Nevada tax payer has the entire burden of the retirement system. He recommended that the subsidy for retired health benefits be ended for new employees, but that promises made to current and retired employees should be kept. In addition, the amount of time necessary to work in order to receive the retired health benefits be aligned with the PERS vesting.

Dana Bilyeu, Executive Officer of PERS, was asked not to give her presentation in the interest of time. She did, however, comment that when the Chamber study finding that Nevada employees do not pay into their retirement plan was misleading. She informed the hearing that Nevada workers take a salary reduction in order to pay into the PERS system. She also reported that the average retirement benefits for state workers was $27,000.

David Kallas, Director of Government Affairs, LV Police Protective Association commented that he found it unbelievable that a private entity (the chamber) was proposing reforms to a public agency. He asked "Who died and made the Chamber of Commerce our conscience?" He stated that there was a credibility issue with the chamber study, that the numbers did not match what he knew to be fact with police officers in the state. He also indicated that state workers did not make this mess, but were being asked to pay for it. He also indicated that the President of the Chamber makes a salary of $300,000.

Rusty McAllister, President, Professional Fire Fighters of Nevada, also presented numbers at variance with the chamber study. He reported that fire fighters in Nevada make an average of $21.69 per hour. He also pointed out that in the statistics looking at the number of state workers per capita of state residents, the 44 million tourists had been ommitted. He also pointed out that firefighters spend their pay in Nevada, at Chamber of Commerce businesses.

Lynne Warne of the NSEA (K-12 teachers) pointed out that custodians make an average of $26,000 (wondering where they ever found their "Carl the Custodian"), the starting pay for Nevada teachers was $27,000, and the average teacher salary was $47,000.

Danny Thompson of the AFLCIO emphasized that state workers do not get social security, and to put that information at the end of the report was less than honest. He also pointed out that the chamber study included occuatiions for which there was no equivalent in the public sector: floral designers, fast food cooks, ushers, telemarketers, valets, massage therapists, etc. He then said that what this was really about, was not PERS or PEBS. It was about taxation - the Chamber of Commerce doesn't want to pay taxes.

Danny Thompson then introduced Mark Murphy of AFSCME, a fiscal policy analyst from Washington D.C. Murphy pointed out the flaws in the methodology of the Chamber Study which was based on equivalent positions. He also pointed out that many of the occupations used in the chamber study have tip income which is not reported, thus their actual salary was underrepresented, weighing down the actual salaries of private sector workers.

Senators expressed concern that the unfunded liabilities of PERS and PEBP would affect Nevada's credit rating. Murphy and others showed information that this was not the case.

Jim Richardson, NFA representative testified toward the end of the three hour plus hearing, noting that not once had NSHE employees been mentioned, and said we were feeling like collateral damage in the battle between the LV Chamber and the unions. He commented on the red herring issue of the GASB liability and handed out a chart that shows the future 30 year liabilities for the four major budget categories for the state total $250 billion over 30 years even assuming no case load growth, a figure that dwarfs the $4 billion liability for PEBP. He also offered some critical comments about the methodology of the Chamber study, and said that legislators needed better research to allow better decisions.

Others, including several from the Benefits Coalition that NFA has helped organize also testified, offering critical remarks about the Chamber study.

At the end of the session, Senator Raggio stated that changes would have to be made to the PERS and PEBP systems in order to retain them for future employees.

Candace C. Kant, Ph.D.
Emerita Professor of History
College of Southern Nevada

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