The Las Vegas Police Protective Association (LVPPA) is suing the state’s Public Employee Retirement System (PERS) over an $80 million fiscal note that the state pension system attached to a bill earlier this year — a fiscal note, the union argued, that may ultimately tank the bill. 

The bill, AB351, sponsored by two former law enforcement members in Assemblymen Toby Yurek (R-Henderson) and Brian Hibbetts (R-Las Vegas), sought to establish a Deferred Retirement Option Program (DROP) that would allow police officers and firefighters to obtain monthly retirement benefits while continuing public employment. It is exempt from legislative deadlines, but has not received a hearing.

Hibbetts said he was not aware of the lawsuit, and Yurek said he was not aware that LVPPA — which represents officers employed by the Las Vegas Metropolitan Police Department — would “definitively” bring the lawsuit until he was told Friday.

“I understand the LVPPA’s disappointment with this fiscal note,” Yurek told The Nevada Independent in a statement Friday. “I had asked them to not bring a lawsuit like this during session, but again, I understand their frustration.”

Steve Grammas, president of the LVPPA, said the complaint was served to the PERS board Thursday, but declined to comment on the pending lawsuit.

The fiscal note submitted by PERS Executive Officer Tina Leiss, who is named as a defendant in the lawsuit, estimated that the bill would cost PERS more than $34 million during the next two years, and then more than $48 million per biennium after that, with the new benefit expected to cost “1.14 [percent] of the police/fire payroll.”

Reached by email on Friday, Leiss said the civil complaint delivered to PERS officials during the board meeting was unsigned by an attorney and, as a result, the system could not comment “unless and until properly served with a summons and complaint.”

However, Leiss did describe the process by which PERS crafted the fiscal note, which she said was drafted based on a cost projection created by an independent actuarial analysis. 

“At all times, PERS, its board and staff, acted in good faith and in compliance with [state law] and the Nevada Constitutional requirements to adhere to the assumptions recommended by the independent actuary,” Leiss wrote.

During the legislative process, state agencies and local governing bodies add fiscal notes to bills requiring state or local bodies to spend money or reduce their existing revenue. 

The Legislative Counsel Bureau’s Fiscal Analysis Division will either request fiscal notes be prepared by the bodies a bill affects or entities will submit fiscal notes unsolicited. These notes are estimates and are only prepared for the bill as written, not necessarily updating them as the bill is amended or otherwise changed. Many measures making their way through the Legislature receive significant fiscal notes that shift following implementation.

The lawsuit filed Thursday in the First Judicial District Court in Carson City alleges that the fiscal note is “inaccurate and misleading” and that Leiss committed fraud, breached fiduciary duty, conspired against the measure and violated state law, among other claims, though it was not immediately clear what evidence the LVPPA had that the fiscal note was inaccurate. 

“As a direct, proximate, and foreseeable result of Defendants’ conduct, LVPPA’s members … have sustained damages in excess of $15,000,” attorneys wrote in the filing.

The lawsuit alleges that the fiscal note “has caused the Nevada Legislature not to consider AB351.”

Versions of such alternative pension programs exist nationwide, though the use of DROP was most notably implemented in Los Angeles in 2002. There, the program has come under scrutiny in the years since as police officers and firefighters in the city have pulled an extra $1.6 billion in pension payments through 2018, according to an investigation from the Los Angeles Times. 

That investigation found that police and firefighters in the DROP program “were nearly twice as likely to miss work for injuries, illness or paid leave.”

However, as vacancy rates in police departments nationwide have soared, state, county and municipal governments have increasingly explored programs that would allow retired officers to be rehired as a means to fill gaps. 

Similar programs have also been considered in other contexts, including a Nevada proposal from Gov. Joe Lombardo to allow retired teachers to pull from PERS and draw a salary if they fill vacancies in the classroom and if the governor declares a “critical labor shortage.” That proposal is included in Lombardo’s education omnibus bill, AB400, which is among a handful of the governor’s bills now stuck in legislative limbo.