The Associated Press March 1, 2011, 12:21PM ET

Sandoval wants new retirement system for new hires

Nevada Gov. Brian Sandoval wants a separate retirement system for new hires that will rely more on employee contributions and limit long-term state pension liability, administration officials said Monday.

The reforms being sought to the Nevada Public Employees Retirement System is one of 83 bill draft requests submitted to legislative bill drafters on Friday -- the deadline for measures that implement the governor's budget or policy changes.

The PERS proposal would only apply to new employees after Jan. 1, 2012.

In a briefing with reporters, Heidi Gansert, Sandoval's chief of staff, said the proposal would lower the amounts retirees receive under the traditional defined benefit system, and combine it with a defined contribution plan, such as a 401(k), that employees could add to, along with contributions from the state.

Another provision would require all employees to pay their share of the split, Gansert said. Under existing law, local governments or school districts can agree to cover the employees' retirement portion.

Currently, state employees who retire after 30 years of service get about 75 percent of the salary they received in their three years of highest earnings. That formula would be revised under the new system, and salary percentage for retirement roughly cut in half.

At the same time, Gansert said, "the current plan needs to be able to fund itself" to provide guaranteed benefits to existing retirees and current workers.

The governor's plan would only apply to state workers. Local governments and school districts also belong to the PERS system, and it wasn't immediately clear how the bill would affect those employees.

Gansert said the goal is to ease the state's pension liabilities. "The savings is in the long run," she said.

As of June 30, PERS had an unfunded liability of $10 billion.

To help close the gap, PERS administrators said employers and employees beginning July 1 will increase their combined contributions to 23.75 percent, up from the current rate of 21.25 percent. The increase will be divided, with employees contributing 11.875 percent of their salary, up from the 10.75 percent now, and employers covering the other half of the increase.

Sandoval's plan would restrict the state's contribution rate to 6 percent for state employees, and 10 percent for police and fire personnel, who are classified separately. The state would also pay up to 2 percent of a workers' voluntary contribution into a defined contribution plan.

At least three other bills sought by Sandoval are geared toward education reform, including a grading system for schools, ending teacher tenure, and evaluating teachers and principals, said Dale Erquiaga, the governor's senior adviser.

Sandoval also plans to introduce a constitutional amendment that would allow taxpayers dollars to be distributed to sectarian schools, a provision that would allow implementation of his school voucher proposal. Amending the constitution would require approval by lawmakers in 2011 and 2013, and the by voters in 2014.

Democratic lawmakers last week unveiled their own education reform proposals. Their plan would increase the probationary period for teachers from one to three years and make it easier for administrators to get rid of poor teachers. They also want to improve evaluation procedures and create a state board to oversee charter schools.


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