Sandoval proposes reforms for schools, retirement system

CARSON CITY -- Gov. Brian Sandoval's office on Monday unveiled proposals for major reform to the state's public school system and a plan to create a new retirement system for state employees.

The education reforms include a proposed constitutional amendment to offer private school vouchers and a system to grade schools based on student performance. The retirement proposal would cut the amount of money set aside for incoming state workers.

Sandoval's senior policy adviser, Dale Erquiaga, and Chief of Staff Heidi Gansert described the proposals during a media briefing in the Capitol.

The governor was in Washington, D.C., on Monday for a governors conference.

"The governor proposed as you know in his State of the State address an extensive education reform package," Erquiaga said in announcing the more than 80 bill draft requests that the governor sent to the Legislature to meet a Friday deadline. That's when Sandoval must submit measures that implement his budget or change policy.

Sandoval's bill drafts were no surprise.

The Republican campaigned on promises to increase accountability for student performance in public schools and to address the long-term cost to the state of providing worker retirement benefits.

But the proposals drew quick criticism from advocates for public school teachers and other unionized public employees, an indication that many of the proposals will face stiff opposition in the Democratic-controlled Legislature.

The education reforms are included in three separate bill draft requests, and the proposed new retirement system is in a fourth.

The remainder of the bill draft requests relate to implementation of Sandoval's proposed budget, in which he attempts to limit general fund spending for 2011-13 to $5.8 billion, a decrease of 6.4 percent from the previous two years.

The Legislative Counsel Bureau will turn the requests into bills for the Legislature to consider.

Administrative officials did not have complete details on the proposals available Monday.

EDUCATION PLAN FEATURES THREE PARTS

Sandoval's education reform package has three major components:

■ An accountability bill that would eliminate teacher tenure and do away with so-called "last in, first out" priorities when it comes to teacher layoffs.

■ A proposed constitutional amendment to provide vouchers for parents to send their children to private schools.

■ A system of evaluating schools with letter grades and ending social promotion, similar to reforms made in Florida under former Gov. Jeb Bush.

Lynn Warne, president of the Nevada State Education Association, which represents public school teachers, said Sandoval should increase funding for education before seeking to impose reforms.

"He is taking away all the tools available to our educators," said Warne of Sandoval's budget, which seeks to cut state support for K-12 education by about $210 million over the next two years.

"If he wants to move forward with a Florida model, let's have a conversation about how Florida funds its schools," Warne said.

Warne also criticized Sandoval for making proposals for teacher and principal evaluations that Democratic leaders in the Legislature have already proposed and his proposal to reduce or eliminate seniority as a factor in making layoff decisions.

"It would be left up to the subjective discretion of the principal, and that is not an appropriate way to make staff decisions," she said.

The proposed voucher system would require votes by the Legislature in two consecutive sessions plus approval from the voters in order to change the constitution to allow state money to be spent on religious schools.

Under Sandoval's plan, vouchers would be issued based on financial need, with families at or below poverty level qualifying for a maximum amount and families who make more money getting a lesser subsidy.

"The further away you get from the poverty line the less your voucher would be good for," Erquiaga said.

The administration did not provide a cost estimate for the program.

STATE WORKER RETIREMENT

The retirement bill draft request seeks to create a separate retirement benefits system for new state employees, a plan independent from the current Public Employees Retirement System, or PERS.

The new system would include a defined contribution component, as opposed to the current defined benefit plan, and limit the amount of risk to which state taxpayers are exposed.

Under the new retirement system, state workers "would have a lower benefit but they will also have a lower contribution rate," said Gansert.

The changes would leave the system for current employees and retirees in place but would reduce benefits for new hires beginning Jan. 1, according to The Associated Press.

"What it does is reduce the benefit, which also would reduce the liability for the state moving forward," Gansert said.

About 103,000 active employees and 43,000 retirees from nearly every level of government throughout Nevada are in the PERS system. State employees represent about 16 percent of the total. Currently, employees can earn 2.5 percent of salary per year of service, with retirement pay capped at 75 percent of salary.

The system as a whole has liabilities that are $10 billion higher than assets. There is a 25-year plan to fill the hole with employee and taxpayer contributions.

Under Sandoval's plan, new employees would be directed into a two-part system.

The first part would be a defined benefits plan, such as PERS, except the workers would receive just 1.25 percent per year with a cap on retirement pay at about 35 percent of salary.

The second part would be a defined contribution plan, similar to a 401(k), which would include an employee contribution plus a state match.

"Right now the exposure or the risk for making the pension plans whole is on the taxpayer basically," Gansert said. "We're saying it should be shared, and the state exposure for these plans will be capped at a certain rate."

PERS BACKERS SAY SYSTEM ISN'T BROKEN

Dana Bilyeu, executive officer of the PERS program, hasn't seen details of Sandoval's retirement plan.

But Bilyeu said closing off the existing system to new participants could have big upfront costs.

That's because it would compress the time frame allowed to bring assets in line with liabilities.

One recent study posted on the PERS website said a complete shift from defined benefits to defined contributions could cost as much as $1.2 billion in the upcoming biennium.

"When you close a system, you have to fund over the remaining active period," Bilyeu said.

She also said the plan would increase long-term costs to the system by trying to put state workers in a system that wouldn't likely include local government workers.

"When you pool people, costs tend to be lower because you have a much broader group," Bilyeu said.

David Kallas, a lobbyist for Nevadans for Nevada, a coalition of public employee unions, said the retirement system for state workers is fine and doesn't need Sandoval's changes.

"Out of all of the systems in the country," Kallas said, "one of the five systems that will never run out of money is Nevada PERS.

"We're hard pressed to make much statement about it other than, 'Why?' "

Contact reporter Benjamin Spillman at bspillman@ reviewjournal.com or 702-477-3861.