Breaking: National study finds Nevada pension costs are crowding-out education spending

PC: goo.gl/5cPeMy

(NPRI) A study released today from one of the nation’s top public pension experts, Manhattan Institute Senior Fellow Josh B. McGee, documents how soaring pension costs are crowding out spending on educational services at public schools nationwide.

The study, Feeling the Squeeze: Pension Costs Are Crowding Out Education Spending, highlights Nevada as one of only eight states that have “experienced the double whammy of declining per-pupil expenditures and growing pension contributions” over the 2000-2013 time period surveyed.

Nevada per-pupil educational spending declined 13 percent while pension contributions grew 10 percent. In dollar terms, per-pupil pension contributions increased by $195 while education expendituresdeclined by $1,259.

McGee notes that the two areas that appear to suffer the most from rising pension costs are, ironically, teacher salaries and retirement benefits.

This finding is consistent with previous NPRI reports — see here andhere — that those losing the most from the Public Employees’ Retirement System of Nevada (PERS) are recent and future teachers themselves.

While per-pupil spending on teacher salaries increased 2 percent nationally, Nevada experienced an 11 percent decline.

Only three states having fared worse, according to the study.

The reduction in retirement benefits was even worse. In part due to the benefit reductions passed for all teachers hired after July 1, 2015, Nevada teachers saw their average future benefits cut by an amount worth approximately 14 percent of payroll.

That is the largest reduction nationwide and well above the national average cut of 1 percent of payroll.

McGee concludes by warning that this problem is only going to worsen in coming years — as costs are set to rise even if plans hit their highly optimistic assumptions!

In Nevada, McGee projects a 1.5 percent annual increase in PERS contribution rates if all assumptions are hit. That increase jumps to 3.5 percent if the system only returns the 6 percent their investment advisor has forecast.

The full study can be downloaded from the Manhattan Institute’s website here.

For NPRI’s analyses of the Nevada PERS situation, visit:http://www.npri.org/issues/detail/pers

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