How NVPERS, step by step, made Nevada government employees some of the nation’s richest

Executive Summary

To tell the tale of the troubles facing Nevada’s Public Employees’ Retirement System — and thus, also, the need for serious reform that now confronts the taxpayers of the Silver State — nothing substitutes for a simple walk down Memory Lane.

So that’s the approach this white paper takes — examining the actual legislative history of NVPERS over the decades.

Such an examination is quite revealing and offers important insights — such as:

• How the complexity of public pension plans allowed a coalition of public unions and the NVPERS board — functionally a public union itself — to regularly mislead Nevada legislators over 30-plus years and, at tremendous cost to taxpayers, stealthily enhance public pensions.

• How this ever-increasing enhancement of benefits is a primary source of NVPERS’ soaring unfunded liability — playing a bigger role, indeed, than the market collapse of 2008. Most clearly, this is revealed by the extraordinary enhancements given police and fire personnel, when their compensation was already well above the national average.

• How a flawed approach to pension funding — an approach rejected both by private U.S. pension plans and even the public pension plans of most other nations — encourages NVPERS to bet big, when most experts are advising caution. To justify its 8 percent discount rate, NVPERS has now allocated more of its portfolio to risky assets than at any other time in its history. This makes the system exceptionally vulnerable, should the market downturn that most experts predict within the next decade occur.

• How Nevada’s public-pension debt grew so great that — should another serious market collapse occur — Nevadans would be unable to bail NVPERS out. In that scenario, retirees would face almost certain benefit reductions.

• Why governments, finally, are ill-equipped to provide public pensions: Financially naïve citizen-lawmakers can too easily be lobbied and/or intimidated by public unions into approving legislation that enriches union members at the expense of the general public. Because the costs of the schemes are essentially hidden in the pensions’ actuarial complexity and are extended out over future generations, compliant lawmakers escape election accountability. Repeatedly, over the past 30 years of Nevada’s legislative sessions, this has been the pattern. Starting with a sizable increase that was laughably referred to as “fixing a discriminatory provision,” enhancements are now so rich that men in their 40s are drawing $100k-plus “retirement incomes” while working full-time for other governments.

Read the entire report by clicking here:Download file Footprints: How NVPERS, step by step, made Nevada government employees some of the nation’s richest

 

Robert Fellner

Robert Fellner

Vice President & Director of Policy

Robert Fellner joined the Nevada Policy Research Institute in December 2013 and currently serves as the Institute’s Vice President and Director of Policy. Robert has written extensively on the issue of transparency in government. He has also conducted legal research and assisted in crafting legal arguments for numerous public records-related lawsuits, including one which prevailed at the Nevada Supreme Court, resulting in a landmark decision that protected and expanded Nevadans’ rights to access and inspect government records.

An expert on government compensation and its impact on taxes, Robert has authored multiple studies on public pay and pensions. He has been published in Business Insider, Forbes.com, the Las Vegas Review-Journal, the Los Angeles Times, the Orange County Register, RealClearPolicy.com, the San Diego Union-Tribune, the Wall Street Journal, the Washington Examiner, ZeroHedge.com and elsewhere.

Robert has lived in Las Vegas since 2005 when he moved to Nevada to become a professional poker player. Robert has had a remarkably successfully poker career including two top 10 World Series of Poker finishes and being ranked #1 in the world at 10/20 Pot-Limit Omaha cash games.

Additionally, his economic analysis on the minimum wage won first place in a 2011 George Mason University essay contest. He also independently organized a successful grassroots media and fundraising effort for a 2012 presidential candidate, before joining the campaign in an official capacity.