Judicial Compensation Commission
Summary of Meeting of November 21, 2005
Room 334, State House
Convened: 9:45 a.m.
Edwin N. Clift
Lock Kiermaier, Legislative Analyst, Office of Fiscal & Program Review
Edward Kelleher, Public Information Officer, Judicial Department; Supreme Court Justice Robert W. Clifford; Gail Drake Wright, Executive Director, Maine State Retirement System; and Kathy Morin, Manager, Actuarial and Legislative Affairs, Maine State Retirement System.
Chair Featherman convened the meeting by noting the circumstances regarding the third member of the commission. Because of other commitments, David Flanagan is no longer able to serve on the commission and has resigned. As a replacement for Mr. Flanagan, the Speaker of the House has appointed Horace Hildreth Jr. as the new member of the Judicial Compensation Commission. Due to the timing of the appointment, Mr. Hildreth was not able to rearrange his schedule to be able to be present at this meeting of the commission.
Commission staff person Lock Kiermaier presented several pieces of information previously requested by commission members to provide a basis for comparing how the Legislature had dealt with judicial salaries and how they had dealt with executive branch salaries:
· First, Mr. Kiermaier presented a graph depicting a history of recent General Fund appropriations for Personal Services and the number of authorized positions; Mr. Kiermaier noted that the table shows that while the number of authorized positions has slightly declined in recent years, total Personal Services costs has steadily increased. Mr. Kiermaier further noted that increasing benefit costs for state employees explains much of the increase and that this particular table may not be of much use to the commission due to the significantly different nature of the total state employee population and the relatively small number of judges;
· Second, Mr. Kiermaier presented a table which listed by year, for comparison purposes, salary actions taken by the Legislature for the Executive Branch and for Judicial salaries. For example, in fiscal year 1999-2000, the Legislature approved a 3% across the board increase for state employees and increases in merit step pay. During that same year, judicial salaries experienced a 1.6% COLA increase. In general, the comparative data shows that in some years state employees appear to have been granted larger salary increases than those granted to judges and that in other years the reverse is true;
· Third, Mr. Kiermaier presented a table with an accompanying series of graphs which depict the following: current salaries paid to judges and justices, a scenario which shows what the salary levels would be had all COLAS been granted and a scenario which shows what the salaries would be if the base salaries had been increased to the level recommended by the commission in fiscal year 1998-99 and if all COLAS had been granted. In general, the table and graphs illustrate a pattern common to each salary level paid to judges and justices in which judicial salaries would be approximately $5,000 to $6,000 higher in each succeeding scenario. Chair Featherman pointed out that the calculations for projected salaries in the first scenario for fiscal year 2005-06 were incorrect and need to be revised. (A corrected version of the table has been completed and mailed to commission members with this draft of commission minutes.)
After reviewing this information, Chair Featherman asked that commission staff prepare a calculation of what the total costs would be to increase judicial salary levels to the amounts projected in each scenario.
Supreme Court Justice Robert W. Clifford then made a presentation to the commission. Justice Clifford’s presentation was supplemented by several pieces of written material, copies of which he submitted to the commission:
· First, Justice Clifford submitted a quote from the National Center for State Courts which spoke to the high work load of Maine’s courts and suggested that current Maine caseloads justify the creation of 11.6 additional judges and that the courts are currently operating at a resource deficiency of about 20%. Justice Clifford also stated that the current workload is immense and that Maine has the lowest number of trial judges in the nation; and
· Second, Justice Clifford submitted a copy of a Boston Globe article dated 10/15/05 which reports that judges in Massachusetts may be receiving a pay increase of 15% or about $17,000 to increase salaries to approximately $130,000.
In response to Justice Clifford’s presentation, Chair Featherman asked that commission staff provide the commission with the most recent salary report from the National Center for State Courts and to calculate the average salary increase granted to judges across the nation for the past several years.
The commission then heard from Ms. Gail Drake Wright, Executive Director of the Maine State Retirement System, who had been invited by the commission to appear at this meeting and to discuss judicial retirement issues. Ms. Wright, who was accompanied by Ms. Kathy Morin, Manager, Actuarial and Legislative Affairs, made the following points in her discussion with commission members:
· Like other state retirement plans, the judicial retirement system includes many options for judicial retirement; i.e. individuals have considerable flexibility in how they may chose to have retirement benefits paid out and to what beneficiary;
· Judicial retirement compensation is capped at 70% of the AFC paid to the judge prior to retirement;
· Judicial retirement compensation is calculated at a 3% annual accrual rate for service earned after 6/30/98 and a 2% accrual rate for service earned before 7/1/98; this compares to the 2% annual accrual rate (without a cap) that applies for all service to substantially all other state employees;
· Current judicial retirement is predicated on a 7.65% contribution from each individual; the balance of retirement costs are funded by the state; prior to 1984 the Judicial Retirement System was non-contributory for individuals;
· As of June 2005, the Judicial Retirement System had total assets of approximately $42,000,000; funding is predicated on an assumed rate of return of 8% on invested assets;
· At the present time, the “portability” of judicial retirement is limited to time spent as a state employee; judges are not currently authorized to “port” any years of service as a former legislator, members of the Judicial Retirement System are permitted to “port” time as a State employee into the judicial plan;
· There are two circumstances in which portability can be of significance to a member. Under “limited” portability provisions, service “ported” can be used to meet qualification requirements for retirement (i.e., 25 years of service); however, the member receives a prorated portion of the retirement benefit based on AFC in the plan from which the member is retiring and another prorated portion based on the AFC in the plan from which service is being ported. This is known as a “split” retirement benefit. “Full” portability allows a member to have a unitary benefit as if all service has been earned in the plan from which the member is retiring and therefore on a single AFC in the judicial plan. A unitary retirement benefit is almost always better for the member.
· Estimating the cost of making prior legislative service portable can only be accomplished through the use of the services of the contracted actuary. Because of the significant expense associated with actuarial estimates, the Maine State Retirement System only engages its actuary for estimates in response to specific requests by the Legislature’s Joint Standing Committee on Labor;
· Ms. Wright was asked by commission members to provide them with a citation of the statutory requirement that the retirement system must be conducted on an actuarially sound basis;
· Ms. Wright will provide the commission with an informal calculation of the portability costs for one judge to import previous years of service as a legislator into the judicial retirement plan; Ms. Wright emphasized that the System cannot simply calculate the future costs of this type of portability- these calculations are the province of actuaries and the System does not employ an actuary on staff; and
· Ms. Wright will provide a list of the assumptions used by the actuary in calculating the liabilities of the judicial retirement plan; Ms. Wright cautioned that because the assumptions work together as a whole the commission should be cautious in focusing on any one assumption in isolation.
Chair Featherman then asked commission staff to prepare comparison of Maine judicial salaries to other New England states using measures of median income, calculated on both an individual basis and by household.
As a final order of business, commission members established a tentative schedule for future commission meetings:
· December 13, 2005;
· December 20, 2005; and
· January 23, 2006.
This schedule assumes that the new member, Mr. Hildreth will be able to attend.
Since this meeting was adjourned, commission staff has learned that most of these dates are inconvenient for Mr. Hildreth to attend. Commission members have scheduled a conference call on December 12, 2005 at 3 PM to discuss mutually acceptable future meeting dates. As a result of that conference call, the following meetings have been scheduled:
· December 20, 2005;
· January 13, 2006; and
· January 20, 2006.
Each of these meetings is scheduled to run from 11:00AM to 1:00 PM in Room 334 of the State House with lunch to be provided for commission members.