California Judges Lose Fight of Tighter Pension Scheme

SAN FRANCISCO (CN) – A group of six California trial judges cannot collect more generous benefits under an older iteration of the Judges Retirement System, but are subject to the more abstemious plan enacted after they took office, an appellate panel ruled Tuesday.

The judges, led by Judge Matthew McGlynn of Tehama County, were elected in June and July 2012, but did not take the bench until Jan. 7, 2013.

The group includes San Diego Superior Court Judge Gary Kreep, Alameda County Superior Court Judge Tara Flanagan, Imperial County Superior Court Judge Louis Brooks Anderholt, Kings County Superior Court Judge Jennifer Giuliani, and Yuba County Superior Court Judge Benjamin Wirtschafter.

Meanwhile, the California Public Employees’ Pension Reform Act of 2013 took effect on Jan. 1, 2013. As part of the state’s effort to address its enormous unfunded pension liability, the new law increases employment contributions, imposes fluctuating contribution rates based on market performance and actuarial projections, and bases monthly pension payments on an employee’s final three years of compensation, rather than just the year before retirement.

Newer members of the California Public Employees’ Retirement System were hit the hardest by these changes, including the six judges who realized after they began drawing a state salary on Jan. 7 that they would be treated as new members of the Judges’ Retirement System II, which became subject the less favorable provisions Gov. Jerry Brown signed into law on Jan. 1.

As a result, McGlynn and his fellow judges saw a 7.25 percent reduction in their take-home pay in 2014, which was reduced even further in 2015 due to an increased contribution rate.

The judges petitioned to be included in the old pension scheme but lost in state court. And on Tuesday, a three-justice panel of the First Appellate District affirmed San Francisco Superior Court Judge Ernest Goldsmith’s ruling that the judges should be part of the new retirement system, since their actual employment began after the new pension scheme took effect.

“We conclude, as did the trial court, that the judges did not obtain a vested right in JRS II benefits as judges-elect, but rather obtained a vested right to retirement benefits only upon taking office, after PEPRA went into effect,” Justice Kathleen Banke wrote.

The panel also affirmed Goldsmith’s ruling that the law’s fluctuating employee-contribution formula does not run afoul of the California Constitution’s non-diminution clause, which provides that the “salaries of elected officers may not be reduced during their term of office.”

Banke wrote, “The parties have cited no California case, nor are we aware of one, that has considered whether an increased payroll deduction, resulting in a commensurate reduction in a judge’s take-home pay, violates our state’s non-diminution clause.”

However, the justices looked to the U.S. Supreme Court’s decision in United States v.  Hatter, which laid out a framework for determining whether requiring judges to pay Medicare and Social Security taxes violates the federal Compensation Clause.

In the McGlynn case, the appellate panel found the law has widespread effect, was enacted to address the state’s pension problem, and unlike Social Security, JRS II has always been a contributory system. Taken together, the justices said, the new pension scheme doesn’t appear to single out judges.

“On the contrary, state judges are bearing the same financial obligation imposed on virtually every other state employee eligible to participate in a state retirement system,” Banke wrote.

The judges’ attorney, Costantin Kerestenzis with Beeson, Taylor & Bodine in Oakland, did not return an email seeking comment.

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