By Sean Whaley, Nevada News Bureau: Nevada’s public employee pension plan saw its long-term funding ratio decrease slightly in the fiscal year ending June 30, dropping to 70.2 percent from 70.5 percent in fiscal year 2010.
The Public Employees’ Retirement System board heard an update on the plan, which covers virtually all state public employees, at a meeting Wednesday in Las Vegas.
Dana Bilyeu, executive officer of PERS, said in a telephone interview that the slight increase in the long-term unfunded liability of the plan comes even as the pension investments saw a record 21 percent return in fiscal year 2011, which ended June 30. The pension plan is still absorbing a 15.8 percent loss in 2009 and a loss in 2008 as well, she said.
While the assets in the plan increased significantly in fiscal year 2011, growing to $25.8 billion from just under $21 billion in the prior year, the value of the unfunded liability grew as well, reaching $11 billion on June 30 compared to $10 billion in 2010.
“So from a long-term benchmarking, it’s kind of status quo from last year to this year on the funding of the system,” Bilyeu said. “We had a significant increase in assets on hand, but are continuing to absorb losses from the down market period as well.”
The numbers and percentages reflect the combined plans for regular public employees and police and fire fighters.
At its high point in 2000 the plan was 85 percent funded.
One interesting note in the report to the board was evidence of a reduction in the public employee workforce due to budget cutbacks, Bilyeu said. The regular employee membership declined by 2.5 percent, a reduction from 90,219 as of June 30, 2010 to 87,975 on June 30, 2011.
The police-fire sector saw an even bigger decline of 3.5 percent, she said. Active members declined from 12,375 in 2010 to 11,936 in 2011.
The long-term unfunded liabilities of the PERS plan, and of public employee pension plans nationwide, are generating concern from policy makers, although Nevada’s plan is considered to be well managed and in better fiscal shape than many other plans around the country.
There are also analyses that argue that the method of accounting for the long-term unfunded liabilities used by public pension officials vastly understates the real size of the potential financial impact to taxpayers.
A recent report by Andrew Biggs, a resident scholar at the American Enterprise Institute in Washington, DC, prepared for the Nevada Policy Research Institute, a conservative think tank, argues Nevada’s pension liabilities are much greater than reported.
The analysis found that when the long-term unfunded liabilities of the plan are calculated using a “market-based” valuation, a measure endorsed my most professional economists, the shortfall is actually closer to $41 billion than the $10 billion as of 2010 cited by PERS and its actuary.
Biggs presented his findings at a NPRI luncheon in Las Vegas earlier this month.
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Audio clip:
PERS Executive Officer Dana Bilyeu said the report on the pension plan for 2011 is status quo:
