State employees pension fund shows improvement

Thursday, April 8, 2004 | 9 a.m.

CARSON CITY -- After three years of sub-par investment performance, the $16 billion state Public Employees' Retirement System is back on track, officials said Wednesday.

For the first eight months of this fiscal year, the system has earned a 12 percent return on its investment, officials said.

"We're grateful to see the rebound," Investment Officer Laura Wallace told a legislative committee.

There are more than 87,000 active employees from state and local governments and school districts in the system with more than 27,000 people drawing pensions.

Dana Bilyeu, executive officer of the retirement system, told the lawmakers this pension plan is different than Social Security, which is facing a growing deficit. The Nevada plan is collecting premiums and investing them with a goal of 8 percent interest a year

Bilyeu said that despite three poor investment years the target is still to have a fully funded system by 2024. A fully funded system means that if it stopped then, it could pay out all owed pension benefits.

Since 1984, the system has earned an average of 10.7 percent on its investments, officials said.

But it lost 1.7 percent in fiscal year 2001 and 2.8 percent in 2002 before going up a 4.8 percent gain in fiscal 2003.

The system invests 40 percent in U.S. stocks, 30 percent in U.S. bonds and 10 percent each in international stocks, international bonds and alternate investments such as real estate.

Under questioning by Senate Majority Leader Bill Raggio, R-Reno, Wallace said there are 29 companies that do the investments and they were paid $21.8 million in fiscal year 2003 or .16 percent. She said the fee is below the average paid by other institutional investors.

Bilyeu said the retirement board that oversees the system is not talking about any increased benefits at this time.

Bilyeu also reported there were 101 retirees who have been hired back by state and local governments and school districts to fill critical vacancies. These people are able to continue to draw their retirement pay in addition to collecting salaries.

That kind of "double dipping" was controversial when Gov. Kenny Guinn allowed Dick Kirkland to draw both his retirement and pay as director of the state Department of Public Safety. Kirkland has since left that job.

Of the 101 retirees, more than 40 were hired back from retirement by the Clark County School District as teachers in hard-to fill areas, such as mathematics, speech therapist, science and special education.

Sen. Bob Coffin, D-Las Vegas, said he wanted more information why some school districts are designating school bus drivers as a critical shortage area. Washoe County School District has three bus drivers who are drawing pay and retirement and Carson City has two.

Bilyeu said she would get that information from the state Department of Education.

The Legislative Interim Retirement and Benefits Committee also reviewed the financial status of the state employees health insurance program. As of Jan. 31, this year it had a realized fund balance of $30 million, compared with $5.6 million last year.

In recent years, it had run into a deficit and the Legislature had to bail it out.

Raggio commended system executive director Forrest (Woody) Thorne for turning the system around. "You have stayed the course. We're looking at black ink rather than red ink," Raggio told him.