By Rachel O'Brien, Deputy Policy Editor, OpenTheBooks.com
Nevada’s underfunded pension system and retiree health care benefits have saddled taxpayers with a burden of approximately $800 each, while the City of Las Vegas’ contributions are also lacking.
Non-profit Truth In Accounting’s annual Financial State of the States for 2022 ranked Nevada No. 23 out of 50 because, according to the state’s latest audited financial report for FY 2021, Nevada needs $878 million to pay bills that are due, most of which are retirement obligations.
That’s as the Public Employees Retirement System of Nevada, or NVPERS, is estimated to be underfunded by a total of $18 billion, Nevada Policy Research Institute reported.
The TIA report, completed in conjunction with University of Denver’s Daniels College of Business, School of Accountancy, gave the state a “C” financial grade — given to states with a taxpayer burden up to $4,900.
The pension system didn’t collect enough contributions from employees in the past decades and now current taxpayers and employees are stuck paying off that debt through higher contributions.
Last year, the system paid out $1 billion more than what it took in via contributions.
Debt is now so high that when regular plan members contribute their 33.5 percent contribution rate, half of it goes to debt, not to be used for the employee’s own benefit, Nevada Policy Institute reported.
The state also doesn’t have any money set aside for promised retiree health care benefits, meaning future taxpayers will be burdened with paying the under-funded retirement promises.
Las Vegas, on the other hand, has a debt of $200 for every city taxpayer, according to Financial State of the Cities for 2023.
The report, also completed by TIA in conjunction with University of Denver’s Daniels College of Business, School of Accountancy, ranked Las Vegas No. 29 out of the 75 most populous cities and, like the state, the city received a “C” financial grade.
Like the state, Las Vegas hasn’t contributed as much as it should have for its employees’ pensions, and needing $37 million to pay its bills amounts to a burden of $200 for every city taxpayer.
The city had saved only 75% of promised pension benefits and 31% of promised retiree health care benefits, the report found, citing Las Vegas’ 2021 audited comprehensive financial report and retirement plans’ reports.
The TIA report calculates the city’s pension liability by subtracting earned and promised benefits from the market value of pension assets.
The debt improved from 2020 for both the city and state, which were helped by federal Covid -19 aid and increases to the value of much pension assets.
Asked for comment, Las Vegas spokesman Jace Radke sent a February press release about S&P Global Ratings changing the city’s bond rating from AA to AA .
“This adjustment is an indication of the city’s fiscal responsibility as we continue to move forward with funding of projects to benefit the community,” City Manager Jorge Cervantes said in the press release.