Thursday, February 26, 2009

Chamber of Commerce : faculty pay is below national norms

In yesterday's hearing before the Senate Government Affairs committee, The Las Vegas Chamber of Commerce -- despite being given most of the hearing to present its case for cutting pay and benefits from public service workers -- didn't mention in its testimony that its own studies released over the summer found that Higher Ed employees in Nevada make only 80% of the national average and that teaching faculty in particular make 5% less than national norms.

This finding is supported as well by the AAUP national study on faculty pay and compensation. See our fact sheet on higher ed faculty compensation, benefits and workload.

Indeed, attendees at last nights' Nevada Taxpayers' Association dinner report that no less than Bruce James, chair of the SAGE Commission, said in his remarks that higher ed faculty pay was probably too low to be competitive in many fields. This attitude is almost certainly the result of the effort of NFA members who spoke before several meetings of the SAGE commission last fall and have made efforts to contact, and educate, Chairman James -- with some evident success.

Among issues discussed before the Senate Government Affairs committee yesterday, the least well understood is the supposed "$4 billion PEBP" liability (its 10% less in the latest auditor's report and likely to get revised down further). In fact, this is a very small amount in relative terms, representing 1% of the state's estimated long-term liability for human services, education and public safety -- its most essential and expensive functions. (See our chart).

And, that the cost is entirely associated with estimated retiree health care benefits over 30 years, not the current PEBP accounts.

There was extended discussion of health coverage for retirees at the hearing, with some implying that only Nevada offers this benefit. The Center for State and Local Government Excellence, a non-partisan research center, reports that 45 of 50 states provide this benefit, and 19 states pay the entire premium for retirees (Nevada does not; see chart).

Moreover, of those 45 states, more than half do not pre-pay the cost of retiree health insurance, and therefore are carrying some long-term liability for the cost. Among these states, Nevada is in quite good shape, with the 7th smallest total liability and the 7th-smallest per capital liability (again, see the CSLSGE chart). In short, Nevada is handling this issue quite well, relative to other states, through a combination of partial pre-funding, careful monitoring of long-term costs, and limited scope of benefits.

In other words, Nevada is following some of the key conclusions of the CSLGE with respect to retiree health benefits; these conclusions are , in effect, the opposite of what the Chamber recommended yesterday. CSLGE finds that
  • "Several states [including Nevada] ...have recently taken actions to pre-fund retiree health care"
  • "[Public] employers must be careful not to enact such draconian benefit reductions that their ability to attract and retain desirable workers suffers."
  • "for many states [including Nevada] ... the reality is that they have small liabilities associated with these plans and there is no cause for alarm."

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