Arizona judges mostly victorious in pension-plan dispute

Arizona judges mostly victorious in pension-plan dispute

PHOENIX - State lawmakers acted illegally in requiring most sitting judges to pay more into their retirement system, another judge has ruled.

Maricopa County Superior Court Judge Douglas Rayes said judges were effectively made a promise about their pensions when they went on the bench. At that time they were paying 7 percent of their salaries into the Elected Officials Retirement Plan.

The 2011 legislation boosted their contribution to 10 percent, with automatic increases up to 13 percent depending on the plan's performance.

At the same time, the legislation also limited inflation increases after judges retire.

Before the legislation, judges had been getting annual bumps of 4 percent.

The law changed how cost-of-living increases were to be calculated, resulting in a 2.5 percent increase in 2011 and none at all in 2012.

Attorney Ron Kilgard said the legislation violates the judges' rights. He said the contribution rate and the cost-of-living increases were "legally vested" when the judges took office and cannot be changed.

Rayes agreed.

The ruling is not a complete victory for the approximately 200 currently sitting judges on the Supreme Court, Court of Appeals and superior courts of the state's 15 counties.

Rayes noted a change in law adopted in 2000 specifically said the benefits for those in the Elected Officials Retirement Plan do not "vest" when they are hired, but instead at the time they retire. He said that means those who were not already on the bench in 2000 - more than half in the group - are not entitled to the same legal protections against higher contributions and smaller future cost-of-living adjustments.

This is the second defeat for the state in its bid to rein in the costs of the underfunded Elected Officials Retirement Plan.

In an earlier ruling, Judge John Buttrick ruled in favor of several already retired judges, concluding the state cannot limit their future cost-of-living increases. That case is now before the Arizona Supreme Court.

The court actions come as the Legislature is seeking to wipe out the Elected Officials Retirement Plan entirely, the most generous of all four state plans available.

It allows someone to retire at 80 percent of pay after 20 years; most other state workers are in plans that require them to work almost double the number of years to get close to that benefit.

Part of the result is that elected officials plan has about $700 million in liabilities. The 2011 legislation was an attempt to stop the financial losses.

Scrapping the plan entirely would still leave that retirement fund, and, ultimately the state, responsible for benefits for all current and already retired judges. But any new judges would instead be put into a 401(k)-style plan, where both they and the state would contribute equal amounts, and each individual's pension would depend on the performance of their investments.

The House already has approved closing down the plan, which also covers lawmakers themselves as well as most other state, county and local elected officials. HB 2608 now awaits action by the full Senate.

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