City, county governments grapple with retirees’ benefits

Saturday, July 2, 2005 | 12:14 p.m.

WEEKEND EDITION

July 2-3, 2005

While the state grapples with how it will pay for health care benefits for government retirees, cities and counties are grumbling about what they're paying now.

The governments are irritated by the impact of a state law passed in 2003, Assembly Bill 286, which gives any local government employee the option of joining the state health care program once they retire, even if the local agency hasn't been a participant.

Supporters say AB286 rewards local government retirees for their public service by giving them easier access to affordable health care.

As of April, 339 county government retirees had taken advantage of the law by enrolling in Nevada's Public Employees' Benefits Program for health care. The number of city employees in the program was not immediately available.

But local governments say the law amounts to an unfunded mandate for them because they are forced to help pay for their retirees' health care premiums.

"It forces us to take money from somewhere else, such as public safety, libraries or after-school programs," Andrew List, Nevada Association of Counties executive director, said. "The state has mandated this without giving the counties the necessary funds to pay for it."

The association found that the 17 counties had to budget a combined $1.06 million this year to help pay for health care premiums for their retirees because of the law. Clark County leads the way with a $300,000 expense, followed by $130,215 from Churchill County and $110,000 each from Washoe and Elko counties.

"If you have a rural county like White Pine or Mineral, they are on the edge of being financially insolvent," List said. "They don't have the sales to generate sales taxes because businesses have closed up. They have problems with property tax revenue because they have declining assessed values. They are recovering less revenue while they have had more mandated services."

Clark County expects its expense to exceed $400,000 in the next fiscal year because of AB286, Ed Finger, its assistant finance director, said. The county plans later this year to study the extent to which the law has created an unfunded liability because the county will be liable for future health care payments.

"It would be challenging to address an unfunded liability because of all the fiscal challenges the county faces," Finger said.

The county opposed AB286 because it had been providing what it thought was a fair plan for retirees.

The plan enables retirees to purchase health care premiums from the county at a discount rate because the county is able to co-mingle the retiree health plans with lower-cost plans for current employees. With AB286, the county has to help pay for health care for retirees who opt into the state program.

"This intrudes into our management of retiree benefits and we find it unwarranted," Finger said.

The Nevada League of Cities, which opposed AB286, had estimated two years ago that the law would force cities to budget at least $1.5 million a year to cover their share of payments for health care benefits.

Part of the problem with the law is that cities and counties have no way of knowing how much they should budget each year because they don't know how many retirees will opt into the state program, according to David Fraser, executive director of the league.

There is also no statistic kept on the number of city and county government retirees who live in Nevada.

"Many cities negotiate these benefits through collective bargaining, and we bargain in good faith," Fraser said. "But by mandating that cities provide this, it takes this issue off of the collective bargaining table. So this law hits us coming and going."

Assemblywoman Chris Giunchigliani, D-Las Vegas, agrees that local governments got stuck with an unfunded mandate. She promised the issue would be addressed this year by a special legislative committee she chairs that is studying health care benefits for public employees.

"That was a bad error," she said.