Judges file claim over changes to Arizona retirement contributions

Saying their rights have been violated, two appellate court judges are demanding the state ignore changes in their retirement system or pay them and their colleagues each $100,000 to compensate for the changes.

The claim filed on behalf of Philip Hall and Jon Thompson contends Arizona lawmakers acted illegally in requiring them to contribute more to their pension plan. It also says that a provision that would reduce future benefits is unconstitutional.

A claim against the state is the legal precursor for filing suit. If the state does not meet their demands within 60 days, the judges are free to sue.

More than just the benefits to the two judges are at stake. Hall and Thompson want the legal right to represent everyone in the Elected Officials Retirement Plan. That includes not only judges but also other elected officials, from the governor and legislators to county supervisors and some locally elected officials.

It would be the second lawsuit filed over the measure, which took effect earlier this month. Three unions that represent workers covered by the Arizona State Retirement System already have gone to court claiming that changes in their plan are unconstitutional.

The claim by the judges — and the possibility of a class-action lawsuit that would affect all judges — raises the question of who will be able to preside over the legal action.

“That’s an interesting question,’’ said attorney Ron Kilgard, who filed the claim. In fact, he noted that even retired judges could have a conflict as one of the changes affects future benefit increases.

At the heart of both lawsuits are changes enacted by lawmakers designed to make the retirement systems more solvent. In the case of the judges, one of the biggest changes will be to make them pay more.

Right now, judges contribute 7 percent of their salary to the pension. That changed immediately to 10 percent, with a schedule that has it going eventually to 13 percent.

At the same time, the legislation changes the way benefits are calculated.

Hall and Thompson, in their claim to James Hacking, administrator of the Elected Officials Retirement Plan, want him to disregard the law. And if the plan refuses, they are demanding a cash equivalent to the extra pension contributions and lost benefits.

Kilgard cites what he says are several legal problems with what lawmakers have done.

One is a constitutional provision that says that the salary of a judge cannot be reduced during the term to which each was appointed or elected. In forcing judges to contribute more, he said, the state has effectively reduced their salaries. He also points to other sections of the constitution that say that membership in a public retirement system is a contract and the Legislature cannot diminish benefits.

Former House Speaker Kirk Adams, who ushered the changes through the Legislature earlier this year, said what lawmakers did is legal. He also derided the efforts to overturn the changes.

“I think it’s ironic that because we ask somebody to pay more towards their own retirement ... so that the system that will be there to meet the immediate actuarial requirements, that somehow that’s a diminishment of their benefits,’’ he said. Adams said what judges should realize is that if legislators did nothing, there might be no benefits because “the system would crash on its own.’’

That is also the assessment of Gov. Jan Brewer, who signed the legislation making the changes. Press aide Matthew Benson said the condition of all four state retirement funds requires some “shared sacrifice’’ to keep them solvent.

“What’s important is that people take a long-term view here,’’ he said. “If there aren’t changes made to bring this system into balance, it’s inevitable that more significant cuts will have to be made in the future.’’

Kilgard said the Legislature is free to make changes in benefits and contributions — but only for those who are not yet elected. He said once someone becomes a judge, it is too late.

“Part of the agreement you make — and part of the cost-benefit analysis you make, especially leaving private practice — is you get the salary (which) can’t go down,’’ he said. “And you get this significant retirement benefit.’’

Kilgard said this kind of “defined benefit’’ pension, where judges get a fixed percentage of their salary, is “just hardly available in private law practice and really most private business.’’ He said it figures prominently in the decision of attorneys to leave private practice, where salaries can be more lucrative.

Benson said his boss is confident that any lawsuit will falter.

Adams acknowledged the constitutional provisions cited by Kilgard. But he said the constitution also gives lawmakers a “fiduciary responsibility’’ to ensure that pension systems remain solvent.