In 2017, we implored local Nevada media to stop misrepresenting the nature of PERS unfunded liability.
Specifically, local media repeatedly claimed that PERS unfunded liability represents an amount that would only have to be paid in the event the government ceased to exist — and, given that such a scenario is obviously unrealistic, it would be safe to disregard the unfunded liability as a meaningless figure with no real-world consequences.
That description, however, is completely false. In reality, the unfunded liability represents the amount the system needs in additional funds today in order to fully fund already-promised benefits, even after accounting for expected future investment returns. (A full explanation and an accurate definition are available here.)
Yet, despite being alerted to their error, the outlets never issued a correction, and, consequently, this falsehood remains online in multiple news articles to this day.
PERS is no small matter — which is why providing the public with accurate information is so crucial. The system consumes approximately 13 percent of all tax revenue collected by state and local Nevada governments. Public employees have seen their retirement costs increase nearly 50 percent since 2007 to a level that is now the highest nationwide. The entirety of that cost increase has gone towards paying down PERS unfunded liability, rather than the employee’s own future benefit.
But as my colleague Michael Schaus explained in his latest column for the Nevada Independent, these facts are poorly known — even among PERS members themselves. A recent poll found that most PERS members did not know that their costs are going up again this July, nor did they know that paying down the system’s unfunded liability was the reason for this increase.
Acceptance of the falsehood that the unfunded liability is an essentially meaningless figure might explain this.
Indeed, the top reader comment on Schaus’ article repeated this falsehood almost verbatim, which was then used to suggest that concerns over the unfunded liability are nothing more than a “contrived” political issue that ought to be ignored.
This highlights the harm caused by such misinformation: it obscures the reality that the unfunded liability is the primary reason for the growing inequity and inefficiency stemming from forcing public employees and taxpayers to pay more, while getting less in return.
And that deception has real consequences: While 52 percent of PERS members initially said that costs were “about right,” that number plummeted to only 25 percent when they were given accurate information.
There is now concrete data showing that PERS members are profoundly misled about how the system works. The media should be helping to dispel that fog of misinformation or, at the very least, stop contributing to it.