A Maricopa County judge has ordered the Arizona Legislature to significantly increase funding for a statewide pension system for judges and other elected officials that is in danger of going bankrupt.

Superior Court Judge Timothy Thomason, in a ruling released Monday, did not tell the Legislature how, specifically, to fix the shortfall in the Elected Officials’ Retirement Plan. But he advised that payments from public employers, such as the state, would need to nearly double or lawmakers would need to pump an additional $43 million a year into the trust.

If changes are not made, assets in the trust are expected to be depleted in the next 13 years, the ruling says.

Thomason threw out a key provision in a 2013 law that capped EORP pension contribution payments from employers at 23.5 percent of what an elected official was paid. That law also directed a $5 million annual payment from the state general fund and judicial fees to the trust in an attempt to keep it solvent.

However, that was not enough money.

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Thomason ruled that even with the annual general fund allocation and $10 million in judicial fees, the amount that must be contributed by government employers to keep EORP solvent is equivalent to 53 percent of each employee’s current pay.

Or, the judge noted, lawmakers could add $43 million more annually to the trust fund and not increase the contribution rates from employers.

Employers in this case means the state, counties and municipalities that pay elected officials and judges.

If lawmakers decide to increase contribution rates from the current level to 53 percent, it will cost the state and counties $78,002 a year to pay the pension benefits of a superior court judge earning $147,175 annually.  The cost of judges’ salaries is split between the state and counties.

The elected officials’ trust fund had about $311 million in assets last year — about 40 percent of what is needed to pay off its pension obligations.

Arizona Senate President Steve Yarbrough, who supported the 2013 law, said the ruling will mean there’s less money to spend on education, transportation or health care next year. Or, he said, it will result in higher taxes and court filing fees.

Yarbrough said lawmakers tried to fix EORP because it was a system with benefits that were too generous and contributions that were too low. The court has undone that effort, he said.

Yarbrough said he doesn’t have an estimate on what the court ruling will cost. However, he said he was pleased that the main part of the 2013 law, which closed EORP to newly elected officials, was allowed to stand. Those new members are in a less-generous pension plan that’s less costly to taxpayers.

Thomason’s ruling is the latest court decision to strike down pension reforms passed by lawmakers. 

The Legislature in 2011 tried to make other fixes to EORP and the Public Safety Personnel Retirement System, a trust for police officers and firefighters, by curtailing cost-of-living adjustments and having employees pay more for their pensions.

Other court rulings threw out those reforms, citing a provision in Arizona’s constitution that states membership in a public retirement system is a contractual relationship and those pension benefits cannot be impaired or diminished. 

Those two systems, run by the same board and administration, have become a burden on taxpayers as more public payments have been needed to offset growing benefits to retirees and lower-than-projected investment earnings.

The average annual EORP pension is $51,729, while the average annual PSPRS pension is $52,342. Pension benefits have grown 40 percent during the past decade for EORP retirees, while retirement benefits have grown 29 percent the past 10 years for PSPRS retirees. 

The rate of inflation during that time was about 16 percent.

Yarbrough said lawmakers might need to ask voters to amend the state constitution to rein in pension benefits.

“People will say we have had enough of this, and their wrath may apply to these plans,” Yarbrough said. “Eventually, the people may get sick and tired of this because not many of them have pensions that are as attractive.”

Arizona mayors also are calling on Gov. Doug Ducey to fix the pension system for public-safety workers, while a House committee has scheduled hearings around the state to look at reforms for the Public Safety Personnel Retirement System. The next hearing is 5 p.m. on Wednesday at Prescott High School.

Retired Maricopa County Superior Court Judge Ken Fields brought the most recent case against EORP.

Colin Campbell, another former judge who represented Fields, said Arizona case law is clear that lawmakers cannot defund a pension plan and that is what would have occurred without the court ruling.

Bennett Evan Cooper, a lawyer for EORP, said the trust fund was neutral in the case, even though it was a defendant.

“We tried to stay out of the line of fire,” Cooper said. “This is between the Legislature and plaintiffs.”

Christian Palmer, a spokesman for EORP, said the board that oversees that trust asked lawmakers earlier this year to increase contribution rates from employers because the fund was in danger of becoming insolvent.

Reach the reporter at [email protected] or 602-444-8478.


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