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Public employees facing major cuts to benefits

By Bob Conrad
A crew from the Wildland Fire Fuels Reduction Division. Image: Trevor Bexon

Nevada’s public employees are facing cuts to their benefits as part of a benefits package restructuring proposed by the Nevada Public Employee Benefits Program.

Next week, on Monday, the PEBP board is meeting to consider cuts to meet a $36 million shortfall. About $20 million will be made up with employee hiring freezes and possible position eliminations, a PEBP report noted, but an additional $16 million is proposed to be cut from employee benefits.

The cuts are part of the 12% reductions facing all state agencies as a result of the COVID-19 pandemic. Public employees include teachers, local government workers, law enforcement, fire fighters and state employees.

Possible cuts include:

  • Reductions or eliminations of life insurance benefits
  • Elimination of the long-term disability benefits
  • Elimination of a $135 credit to retiree Medicare benefits
  • Reductions to Medicare contributions by the state
  • Removing coverage for dependents of retirees
  • Increasing plan premiums

The board will also consider removing Medicare benefits in favor of allowing retirees to purchase health insurance through the state’s health insurance exchange.

“In many instances, those employers that do provide retiree benefits, have transitioned to providing retirees with financial assistance in the form of a Health Reimbursement Arrangement (HRA) contributions,” PEBP staff noted. “Retirees can then seek and purchase their own health coverage and use their HRA to offset the cost of premiums and/or out-of-pocket costs.”

The disadvantage: those living in rural areas or who have high incomes “will be hardest hit,” staff said. That approach will require legislative changes, however.

One PEBP board member has already registered opposition to how the cuts are being proposed.

David Smith, a state employee, submitted a written public comment prior to Monday’s meeting.

“My preference is that any negative plan changes implemented to offset a decrease in budget appropriations should be equitable to all participants, and not unevenly shifted to one group or another,” he said. “My career decisions have been based in part on the expectation that my service to the State included the access to reasonable health insurance as a State retiree. I strongly urge the Board to resoundingly reject any notion of ‘un-doing’ the commingling provision and focus on cost-reduction areas that are equitable to all participants.”

Board staff said the reductions could change based on Economic Forum projections for the biennium that will be made in December.

“These reserve proposals are being used for budget planning purposes and may be adjusted when the Economic Forum releases the official forecast of future state General Fund revenues in December,” the state report noted. “The options presented in this report are for consideration not only for Plan Year 22 plan benefit design, but to be included, as necessary, in PEBP’s FY22/23 agency request budget.”

The PEBP board meets Monday, Nov. 23, at 9 a.m. Get details here.

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