EDITORIAL: Nevada’s PERS problem continues to fester

You can’t treat a disease by only addressing its symptoms. Yet that has been the preferred approach when it comes to the Public Employees’ Retirement System of Nevada.

The Nevada Highway Patrol can’t hire and retain enough officers. As the Review-Journal’s Glenn Puit recently reported, its vacancy rate is around 50 percent. Lawmakers have already tried the obvious solution — higher pay. In 2023, the state approved a 23 percent raise. Yet the agency is still struggling, despite continued recruitment efforts.

Digging deeper, it becomes apparent that there is another factor at work. New troopers start with a salary of around $64,000 or $81,000. That’s a significant gap. The difference is PERS, which provides defined benefit retirement payouts to government retirees.

Here’s where it gets complicated. In Nevada’s system, retirement contributions are split evenly between the employing agency and employees. Local government agencies (read: taxpayers) cover the employee’s contribution on behalf of the employee. In theory, the increased cost is absorbed by the local government in lieu of a salary increase. This means that the advertised pay for local police officers represents that amount after the local government has paid the officer’s share of the pension contribution.

It’s different for state employees. They can have a higher salary and then pay their share of the retirement contribution. If PERS contribution rates were around 10 percent, as they were in the 1970s, this wouldn’t make much difference.

But today, the combined PERS contribution rate for police and fire employees is 58.75 percent. The total rate is slightly different for state employees who contribute to PERS out of their paychecks.

These sky-high rates are necessary to pay down PERS’ unfunded liability. In theory, these pensions should be fully funded by employee contributions and stock market gains.

The theory didn’t work. If you look at the generosity of some of these pensions, you can see why. According to state Controller Andy Matthews’ Open Financial Portal, some PERS recipients rake in more than $300,000 annually. More than 150 retirees collect $200,000 annually.

PERS has been raising pension contribution rates for decades, seeking to backfill its massive unfunded liability.

This isn’t just a problem for Highway Patrol, although it’s one obvious place where it shows up. PERS’ higher contribution rates have been squeezing budgets throughout the state.

Ignoring the PERS problem and trying to throw money at its symptoms isn’t a viable long-term strategy, yet it has been the go-to approach for the Democrats who dominate the Legislature. Republican Gov. Joe Lombardo and legislators need to move Nevada toward a hybrid system — one that pushes new hires into a defined contribution pension program — to protect taxpayers from future liability.