Ruling may force 3,500 retirees out of state benefit program

A judge's ruling that the Las Vegas Metropolitan Police Department doesn't have to pay a state-mandated subsidy for its retirees who join the Public Employee Benefits Program may force as many as 3,500 retirees out of the state plan.

PEBP director Leslie Johnstone said District Judge Mark Denton agreed with Metro's union that because its health benefits are provided by a collectively bargained trust, it is outside the control of NRS287.

She said what the judge probably didn't realize is that only public retirees from jurisdictions covered by that statute are eligible to be in benefits program.

So his ruling means not only will about 100 retired Metro retirees be booted out of the state benefits program, every other retiree whose benefits were provided through a collectively bargained trust will have to leave with them.

"We don't know the total number that will impact but we think it's close to 3,500 people," Johnstone said.

But she said she is certain it will include some 1,900 Clark County School District retirees because they are covered by a similar trust fund.

Johnstone said another issue is whether Metro's own benefits plan and the Clark teachers' benefits plan will take those booted out of PEBP back.

She said the situation is further complicated for school district retirees by the fact that their plan is only available in three Southern Nevada counties. Any retirees from the district who moved north or out of state won't be able to get coverage unless they move back to Southern Nevada.

She said Clark school teachers considering retirement should be aware of the situation. Johnstone said they should be aware of the law, which says effective Oct. 1, 2008, individual local government and school district employees can only join PEBP upon retirement if all their retirees are covered by PEBP.

That "all in, all out" language was put in law by Sen. Mark Amodei, R-Carson City to stop local governments from trying to cut costs by dumping unhealthy retirees on the state plan while keeping healthy workers in their own plan.

But Johnstone said it has convinced a number of teachers to consider retiring a couple of years early to beat that deadline so they can still join the state plan as individuals.

"If somebody is now making a decision about retirement and they pull the trigger before this case is settled, it may mess up their retirement plans," she said.

Because the state plan was getting so many local government and school retirees, lawmakers in 2005 passed legislation requiring local governments and school districts to pay the state at least the same subsidy the state provides for its retirees in order for their retirees to join PEBP. The push for that legislation was caused by school districts and local governments dropping retiree benefits so they could keep more money for active employees.

Metro, pushed by its unions, refused to pay and went to court saying they should be exempt because of the trust.

The law enforcement unions were joined by Clark County on behalf of its firefighters who also receive benefits through a trust program. Clark has been paying the subsidy each month but, until the judge's order arrives, Johnstone said PEBP doesn't even know if it will have to pay back the subsidy money for the firefighters.

Johnstone said when the formal order in the case arrives, the PEBP Board will decide on an appeal. A meeting was tentatively set today in hopes the order would arrive in time but she said it may have to be pushed back a week.

• Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.