The Federal Reserve recently examined Nevada’s pension system. The results are sobering.
It found that Nevada’s Public Employees’ Retirement System had an unfunded liability of $43.3 billion in 2016. For context, Gov. Steve Sisolak’s proposed two-year general fund budget is $9 billion.
PERS’ funding ratio, which compares assets with liabilities, was only 45.5 percent in 2016. In 2008, PERS’ funding ratio bottomed out at 41.4 percent. That’s not good. It gets even worse.
From its low point in 2009 to 2016, the S&P 500 nearly tripled in value. PERS contribution rates went up during the same time. For regular employees, rates went from 20.5 percent to 28 percent, a 36 percent increase. Rates for police and fire employees jumped from 33.5 percent to 40.5 percent, a 22 percent increase. A soaring stock market and higher contribution rates barely made a dent in PERS’ unfunded liability. What happens when the market has another correction?