Pair’s pension increase means more cash needed in state fund

Wednesday, Feb. 2, 2000 | 9:41 a.m.

CARSON CITY -- Because of the Nevada Supreme Court's ruling on a 300 percent retirement increase for two former lawmakers, taxpayers will have to cough up an additional $70,000 a year to keep the pension fund stable, a state official said Tuesday.

George Pyne, executive officer for the Public Employees Retirement System of Nevada, said the court ruling will mean anywhere from $350,000 to $450,000 in back retirement benefits for former Assemblymen Robert Craddock of North Las Vegas and David Nicholas of Reno.

The pension fund for legislators has $4.8 million in assets, and the state kicks in $166,000 a year to help support the system.

The court ruling adds another $70,000 a year to maintain the pension program, Pyne told the Legislative Committee on Interim Retirement and Benefits.

Lawmakers now pay 15 percent of their salaries into the pension plan in addition to the state's contribution.

The Supreme Court, in a 4-2 ruling last month, held that Craddock and Nicholas were entitled to the controversial pension increase approved in 1989.

The Legislature approved a 300 percent hike in retirement benefits, but it was vetoed by Gov. Bob Miller. The lawmakers overrode the veto.

Craddock and Nicholas were not members of the Legislature in 1989, but after the pension was increased, they filed for their higher benefits. Craddock had 18 years of service and Nicholas had eight years.

There was a public uproar over the pension increase and the lawmakers asked Miller to call them into special session to repeal the law. It was wiped off the books in a one-day session. But by that time, Craddock and Nicholas were getting the higher amount.

The Supreme Court ruled their benefits could not be reduced. Pyne said there may be one more lawmaker entitled to the 300 percent, but he said more research is being done.

In other business, Pyne told the legislative committee the retirement system is nearing completion of a study of whether those who retire should be permitted to come back to work for a public agency and still draw their full pension benefits.

Legislators have asked about this issue, particularly as it involves schoolteachers. Because of the teacher shortage some lawmakers wonder if they can draw teachers out of retirement by allowing them to keep their full pensions while earning their salaries.

There is presently a limit on what a person who returns to work for a public agency can earn without suffering a pension cutback.

California, Pyne said, has a new program to entice back retired teachers. Teachers in that state who retired before July 1, 1998, can return to work for two years with full salary and without losing their pension benefits.

Senate Majority Leader Bill Raggio, R-Reno, said he is sure the issue will come before the 2001 Legislature. Pyne called it a trend that is starting in an effort "to address the tight labor market."

Also, the legislative committee was told by retirement system investment officer Laura Wallace that the employees' fund now totals $12.9 billion with 40 percent invested in U.S. bonds, 32 percent in U.S. stocks, 10 percent in international bonds, 9 percent in international stocks and 9 percent in real estate.