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Nevada Employee Benefits News (Cont.)

March 10th, 2007 Posted by Mark

As far back as 1983, for those of you who have been around that long as employers, the state of Nevada self-funded for all of the benefits for its employees. That means that it put away its own money in some sort of trust fund, instead of giving that money to some insurance company for benefits. Some of you employers out there might actually self-fund for your health benefits for your employees, or perhaps your workers’ comp, so you know exactly what I am talking about. Anyway, basically self-finding is a way for you to earn interest on that saved money, instead of the insurance company.

But with programs that are not run well—one of the dangers of self funding, especially on the public side of things—the Missouri benefits system ran aground financially in the late 1990s, and actually the financial problems with the employee benefits system lasted up until 2003. Now, the public employee benefits system is funded enough to make its short term financial commitments.

The issue, however, is long term security. The state carries so called long term unfunded liabilities for future benefits—a fancy way to say that the state will run out of money in te future sometime and will not be able to pay health benefits to its employees after that point. This risk threatens to make the state’s bond rating drop, which threatens to make the state a bad risk all around for loaners.

So the governor’s plan, to give the $31 million is spare cash directly to the benefits program, as well as another additional $19 million from other sources, should shore up the benefits fund. To make sure it stays sound, the governor is also hiring a financial manager to run the fund. The current 26,500 employees of the state and the 6,800 retirees all should be happy about this.