AZ Supreme Court Moves Forward With Judge Hall PSPRS Pension Benefit Lawsuit

http://www.azcentral.com/story/news/arizona/politics/2015/07/13/supreme-court-picks-five-judges-hear-pension-case/30114893/

Arizona Supreme Court picks five judges to hear pension case

Craig Harris, The Republic | azcentral.com July 13, 2015

Story Highlights:

  • The Arizona Supreme Court has drafted five subordinate justices to decide how much long-serving judges should pay for their state pension benefits.
  • A 2011 pension-reform law increased the amount judges must contribute to their retirement, raising it in steps from 7 percent of their salary to 13 percent.
  • Arizona Court of Appeals Judges Philip Hall and Jon W. Thompson filed suit to roll back the increase, arguing that their pension contributions were locked in by contract at a lower rate. They sued on behalf of themselves and others who were on the bench before July 20, 2011, when the pension-reform law went into effect
  • The case is expected to be heard by the end of the year, according to an attorney for the Elected Officials’ Retirement Plan.

LINK:  The Two Most Important Legal Issues Facing The PSPRS Public Safety Pension

The Arizona Supreme Court has drafted five subordinate justices to decide how much long-serving judges should pay for their state pension benefits.

The state’s high court last week appointed the five judges in an apparent bid to avert conflicts of interest, since the outcome of the case would affect the justices.

The five judges who will hear the nearly 4-year-old civil case are newer to their positions and are not a part of the old judicial retirement system. They therefore are not affected by the outcome of the lawsuit. In it, several judges challenged a hike in the cost of their retirement benefits by the Elected Officials’ Retirement Plan.

Though the Supreme Court sought to avert any appearance of a conflict, the new arrangement might still raise eyebrows because two of the replacement judges are colleagues of a key plaintiff in the case.

The Supreme Court did not give a reason for recusing itself, but the high court’s five justices would financially benefit if the suit prevails.

A 2011 pension-reform law increased the amount judges must contribute to their retirement, raising it in steps from 7 percent of their salary to 13 percent. The law was designed to save taxpayer money and shore up the financially ailing Elected Officials’ Retirement Plan and other state retirement systems.

Arizona Court of Appeals Judges Philip Hall and Jon W. Thompson filed suit to roll back the increase, arguing that their pension contributions were locked in by contract at a lower rate. They sued on behalf of themselves and others who were on the bench before July 20, 2011, when the pension-reform law went into effect. Hall has since retired.

The suit also seeks to restore pension cost-of-living increases after retirement.

Hall and Thompson won their case in Maricopa County Superior Court, claiming the law was an unconstitutional infringement on a judge’s state-mandated salary and contract. Because the plaintiffs were members of the appellate bench, the case bypassed the Court of Appeals and went to the state’s high court on appeal.

Should they prevail, they could have their contribution rates for pensions restored to 7 percent of their salary. That would eventually require government employers to put more taxpayer funds into the retirement system, according to the Elected Officials’ Retirement Plan’s most recent annual report.

By comparison, members of the more financially stable Arizona State Retirement System pay 11.47 of their pay for pension benefits.

If the judges win, the decision likely would also benefit police officers, firefighters and correctional officers. All of those groups have retirement plans through the Public Safety Personnel Retirement System, which acts as the umbrella organization for the Elected Officials’ Retirement Plan and pension programs for first responders and prison guards.

When a separate legal challenge restored cost-of-living increases for retired judges, those benefits also were restored for retired first responders and correctional officers. That cost the system a one-time hit of at least $233 million.

A spokesman for the Elected Officials’ Retirement Plan said Monday that the pension plan did not have an estimate of the cost should the judges prevail in the current case.

Judges ordered to hear the pension case are Randall Howe and Kent Cattani of the Court of Appeals, Michael Butler of Pima County, Karl Eppich of Pinal County and Patricia Trebesch of Yavapai County. All of these judges were seated after the law went into place, and therefore would not be affected because they are part of a different Elected Officials’ Retirement Plan retirement group.

Howe and Cattani are Appeals Court colleagues of Thompson, one of the lead plaintiffs in the case.

Supreme Court Chief Justice Scott Bales was unavailable to discuss the case.

Heather Murphy, a Supreme Court spokeswoman, said while Howe and Cattani serve on the same court as one of the plaintiffs, the system has a “rule of necessity” that says “someone has to have this case.”

Jon Riches, an attorney with the Goldwater Institute, said it may appear that a conflict of interest remains, but there is not much that can be done. The Goldwater Institute has previously sued over public-pension abuses in Phoenix.

“It’s a tough deal. There is no other entity that can make these rulings,” Riches said.

The case is expected to be heard by the end of the year, according to an attorney for the Elected Officials’ Retirement Plan.

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