The Public Employee Benefits Program adopted regulations Thursday to put in place rules for which retirees can be in the plan and which ones can't.
Effective Sept. 1, 2008, only those public employee groups which have their active members in the state plan can send their retirees to the state. At present, any public retiree can join the state plan whether his government or school district is in the plan.
In addition, lawmakers ruled the local governments where those retirees worked must subsidize those retiree premiums to at least the same degree the state subsidizes its retirees.
Lawmakers who created the new rules did so, saying local governments and school districts were reducing or eliminating coverage for retirees and dumping them on the state.
That cuts the per-person cost for local governments and schools because younger active workers are healthier and it costs less to provide benefits. But state officials said it raises costs to the state plan, which is becoming disproportionately retirees.
Lawmakers said effective next year, the rule is "all in or all out."
The new law is pushing large numbers of experienced public workers at local governments and school districts to consider early retirement so they can get in the state plan before that deadline, further increasing the strain on entities like the Clark and Washoe county school districts, which are concerned they will lose a large number of experienced teachers.
One issue created by the new rules is still unresolved. The Las Vegas Metropolitan Police has refused to pay the subsidy for its state plan retirees, saying their benefits are provided through a collectively bargained trust which puts them outside the statute requiring the subsidy.
A Las Vegas judge agreed, but the plan appealed. PEBP Director Leslie Johnson said if Metro loses, it will have to make back payments to the state totaling over $1 million. If the benefits program loses, Johnstone said PEBP will have to absorb that cost.
But she said it has another ramification. If Metro wins, its estimated 100 state retirees will have to leave PEBP because only public workers covered by that statute, NRS287, can be in the program.
That would apply to an estimated 3,500 other retirees in PEBP as well, more than 2,000 of them retired Clark County teachers, since the district plan is also provided through a collectively bargained trust.
That case is scheduled for argument before the Nevada Supreme Court on Jan. 24.
