Study: Many public-sector retirees making more than they did on job
CARSON CITY — Most people who make the decision to retire have to figure out how to live on fewer dollars, but that is not always the case with Nevada state and local government employees, a new analysis has found.
The analysis by the conservative think tank Nevada Policy Research Institute, using newly available public data provided by the Public Employees Retirement System, shows that many public sector retirees actually receive a raise upon retirement.
The analysis, which looked at 10 of Nevada’s largest government agencies, including the state of Nevada, Las Vegas, Clark County and the Clark County School District, found that in many cases, retiring meant a pay increase for the average local government employee.
On average, those employees retiring with 30 or more years of service took in 100.59 percent of their base pay in retirement payouts, the analysis shows.
Retirement in the public sector with a full life of government service is expected to top out at 75 percent or 90 percent depending on the date of hire.
But pensions can end up higher than actual base pay because other forms of compensation can be counted toward retirement, including call-back pay, longevity and shift differential, but not overtime, the analysis said.
“Nevada taxpayers are providing extraordinarily high pensions — far above what they themselves can expect upon retirement — to what has become, by stealth, a privileged class,” said the report’s authors, Victor Joecks and Robert Fellner of the Las Vegas-based institute.
Fellner, transparency manager for NPRI, said he was surprised at how commonplace it was to find employees retiring with higher incomes than when they were working.
“I figured there might be a few who exceeded 100 percent, but it was pretty commonplace across the board,” he said.
“Pensions are a huge part of public employee compensation, but they are easy to ignore,” Fellner said. “But it is a cost that is being borne by taxpayers.”
The study only looked at those retiring with 30 years or more of service, however. In fiscal year 2014, the retirement system reported that the average number of years of service for regular employees at retirement was just under 19 with an average benefit that was 53 percent of the average monthly compensation at retirement. The average age of retirement was 66.
For police and firefighters, the average number of years of service was 22.3 with a retirement benefit that was just under 62 percent of the average monthly compensation at retirement. The average retirement age was 59.
A PERS official said Wednesday she could not comment until she sees the analysis.
But Fellner said the analysis is valid because it is looking at employees who work a full career in the public sector to make a comparison to those in the private sector.
One notable finding is that a full public-sector career is just over 30 years compared with much longer years of service for private-sector workers before they become eligible for Social Security, he said.
“Getting a pension equal to base pay is a strong incentive to stop working past the 30-year mark,” Fellner said.
NPRI is advocating for changes to the state retirement system to address a long-term unfunded liability that PERS reports as being about $12.5 billion. Some estimates from other groups using different calculations put the liability much higher. NPRI says it is $40 billion.
The think tank is advocating that the 2015 Legislature reform the retirement system to move public workers from the current “defined benefit” pension plan to a hybrid plan that would include a “defined contribution” element that carries no liability for government agencies or taxpayers.
Assemblyman Randy Kirner, R-Reno, will introduce legislation to make such a change for new public employees.
PERS system officials say the retirement plan is financially sound and is on track to be fully funded over time.
The analysis looked at public-sector employees retiring with at least 30 years of service. It shows that most agencies were below 100 percent of base pay, but the results were influenced by retiring police and firefighters.
At the Metropolitan Police Department, the 2013 pension for 50 retirees from 2011 to 2013 averaged 112.4 percent of final base pay.
Chris Collins, executive director the Las Vegas Police Protective Association, questioned the conclusions of the study, noting that the maximum pension available is 75 percent of a retiree’s salary.
Collins, also a member of the state’s PERS board, said: “I think the system works well.”
Some types of officer pay get factored into PERS retirements, and others don’t. A SWAT team member on overtime called out for an emergency is earning pensionable income. But the overtime of a cop doing traffic control for special events isn’t factored into pension payments.
Collins also noted that police officer retirees aren’t eligible for Social Security benefits.
For the 107 Clark County retirees reviewed in the analysis, pensions exceeded 100 percent as well, averaging 102 percent.
Other local governments and the state reviewed in the analysis were below 100 percent, ranging from 87.5 percent in North Las Vegas to 98.7 percent for the city of Las Vegas.
The Clark County School District rate for 253 retirees was 90.1 percent while the state of Nevada was 83.7 percent.
For police and fire retirees only, looking at Clark County, Henderson and other local jurisdictions, the overall average for 84 retirees was 114.4 percent. The highest percentage was 126.7 percent of final base pay for 15 Clark County police and fire retirees.
Because of a state Supreme Court ruling in 2014 that found retirement information about individual retirees is public, a list of the individuals receiving pensions used in the analysis has been posted to the agency’s TransparentNevada.com website.
Among the retirees included in the analysis are Clark County fire Capt. Eddie Beaman, who retired with just over 35 years of service in 2013. His annual pension of $114,843 is 124.7 percent of his base pay of $92,106.
Retired Las Vegas police Lt. Theodore Snodgrass retired with just under 33 years of service in 2011. His pension of $159,735 is 132.7 percent of his $120,411 base pay.
Review-Journal Ben Botkin contributed to this report. Contact Sean Whaley at swhaley@reviewjournal.com or 775-687-3900. Find him on Twitter: @seanw801.
