PERS rate hike to cut into state paychecks
January 8, 2011
State workers will get hit with another 1 percent cut in their take-home pay effective July 1 as the cost of their retirement plan rises.
The Public Employees Retirement System in December announced it will raise contribution rates for both regular and public safety employees. The increase translates to a 1.125 percent cut in take home pay for regular workers and a nearly 2 percent cut for police and fire members, according to PERS Executive Officer Dana Bilyeu.
Those pay cuts are on top of the 4.6 percent reduction state workers are already suffering from their day-a-month furloughs and any additional pay cuts imposed this coming session by Gov. Brian Sandoval and the Nevada Legislature.
Furthermore, the changes in rates don’t just impact state workers. The higher rates will be applied to all Nevada state and local government and school district employees covered by the system. Bilyeu said how those public entities actually impose the cuts is “a mixed bag.”
“They (the employees) either take them as salary reductions or go to the bargaining table to give up a cost of living adjustment,” she said. “More and more of them are going for the salary reduction.”
In addition, the rate increase will hit state government since the state splits the monthly premium cost with workers. Bilyeu estimated the impact to the General Fund would be about $9 million.
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She said the amount of the increase is set by an actuarial firm employed by PERS to cover the ongoing cost of providing benefits and to eventually pay down the system’s unfunded liability. The system currently has about $24.3 billion in assets to cover the eventual cost of benefits for its 183,000 members statewide. Beyond that, the system has an unfunded liability of about $10 billion, she said.
“We’re about 70 percent funded,” she said. “We’re paying a mortgage off over time.”
In addition, there is one more potential hit to state worker take-home pay out there: increases in the rates the Public Employee Benefits Program may have to impose this coming fiscal year. PEBP Executive Officer Jim Wells said his actuaries and senior staff won’t finish the new rate schedule for about five weeks but that he doesn’t expect a major hit to state workers.
“For the employee only, we don’t think there’s going to be a big increase,” he said.
Wells said, however, those in the HMO plan and dependents of state workers “will see an increase.”
Wells said most of the changes PEBP made weren’t to premiums but in the form of plan design changes.