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Oregon judges ask Legislature for more pay, bigger pensions

By SAUL HUBBARD
Of The Register-Guard

SALEM — A contingent of Oregon's roughly 200 state judges visited the state Capitol this week on what has become a familiar quest: more pay and, indirectly, bigger pensions.

Since 2014, lawmakers have given elected state judges raises of between 17.4 percent and 18.6 percent, depending on the court they work in.

The Legislature has given judges three separate raises of $5,000 a year. And, in 2015, lawmakers also agreed to automatically give all judges the same annual cost-of-living raises that non-union state managers get into the future, usually 2 to 3 percent a year.

Today, a Supreme Court judge makes $147,560 a year, an appeals court judge $144,536, and a circuit court judge $135,776.

They want more.

This year, judges want lawmakers to pass a bill that would lock in another three years of raises between 2018 and 2020, increasing their pay by a further 12.7 percent to 14.2 percent. Those raises would cost the state around $11.2 million during the next four years.

Judges say the pay boosts are needed to attract quality young attorneys to serve on the bench.

But the raises would especially benefit the ranks of older judges who are just a few years away from retirement and from collecting Oregon Public Employee Retirement System pensions. The end-of-career pay boosts would sharply increase these judges’ annual PERS payouts, calculations by The Register-Guard show.

Oregon's judicial salaries remain low compared to other states — they rank around 40th nationally in aggregate, according to 2017 data from the National Center for State Courts.

Oregon Supreme Court Chief Justice Thomas Balmer told lawmakers this week that the new raises would bring Oregon in line with what other western states pay.

He acknowledged that the request is “a heavy lift” given that the state faces a $1.8 billion gap between expenses and revenues in its upcoming 2017-19 budget.

“We're not doing this for the money,” Balmer said. “But (Oregon) needs to pay (judges) appropriately for the kind of work that they do.”

The raises, Balmer said, would help attract “some of the best young lawyers, best young deputy district attorneys, and best young defense lawyers” to Oregon's bench.

But, at least initially, the healthy pay raises would a bigger boon for older judges nearing retirement — and a hidden cost to the state. The state has not calculated the potential financial impact on PERS, which is severely underfunded.

The pay and retirement boosts would not apply to the array of other Oregon government judges, such as municipal court judges or administrative law judges.

PERS calculations

Elected state judges in Oregon accumulate pension benefits under PERS at a rate much faster than any other state employee.

Their first 16 years of service are credited at 3.75 percent of salary per year. After that, the rate is 2 percent per year.

By contrast, most state employees hired today receive 1.5 percent of salary in retirement for each year of service.

(As a quirky trade-off for the higher rate, judges must work for 35 days a year for free for their first five years of retirement).

Under PERS, the percentage of salary is multiplied by the average of the final three years of salary. So, big late-career pay raises can be pension game changers.

According to Register-Guard calculations, a Supreme Court judge with 25 years on the bench would receive a base starting annual pension of $105,330, if she retired today.

With the proposed pay increases, a Supreme Court judge with the same 25-year service would receive a base annual pension of $125,803, if she retired in 4 years’ time, or of $131,157, if she retired in 7 years.

For a circuit court judge with 25 years in office, retiring today would mean a base pension of $96,513 a year. If lawmakers pass the raises, retiring in four years would mean a base pension of $114,783 and in seven years, $119,222.

Over a 10- to 20-year retirement, those annual $20,000 to $30,000 differences mean significant added PERS costs — particularly with the compounding effect of a yearly 2 percent cost-of-living increase on the bulk of those pensions.

Bigger benefits

Oregon judges’ pensions are typically larger than that formula-produced base benefit as well, records show, thanks to a variable account that judges can use to invest their pension funds in the stock market.

All 11 judges who retired between 2013 and 2016 with at least 20 years’ experience received a starting annual pension above 75 percent of their final salary, according PERS data, with one as high as 90 percent.

That's compared to an average starting pension benefit of 54 percent of final salary among all public employees who retired between 1990 and 2014.

That's due in part to the fact that the judges’ PERS plan wasn't affected at all by big reforms passed by the Legislature in 1996 and 2003, which have successfully brought down PERS costs for other state workers.

And the impact of the legally upheld 2013 reforms on judges’ retirement was minor, reducing their pension cost-of-living increases for work done after October 2013 only.

How pensions compare

Balmer acknowledged to lawmakers that the pay raises would help keep older judges on the job longer, although he didn't specifically mention their PERS accounts.

“We need to increase compensation to keep our aging judges on the bench. ... as we go through the inevitable transition of (the) baby boomer cohort moving on,” Balmer said.

Although the judges’ PERS plan is more generous than most other plans for Oregon government workers, it is in line with judge pensions in other western states, according to a 2013 outside accountant's report provided by the Oregon Judicial Department.

That report ranked the typical value of an Oregon judge's pension 13th out of 14 states, far behind those pensions in states like Alaska, California and Nevada, but ahead of Montana's plan.

But most judges in those states have to contribute a portion of their salary to their retirements — between 3 percent and 11.6 percent. Oregon judges do not.

Asked about the potential increased PERS costs due to the raises, Judicial Department spokesman Phil Lemman said, in a prepared statement: “The cost of paying judges for the value of the work that they do has been part of the legislative conversation in every salary increase (the department) has requested in good economic times and bad.”

“Total compensation for Oregon judges remains well below any comparators,” he added.

Few alarm bells

Once again this year, Oregon lawmakers are considering cost-curbing PERS reforms to deal with the system's $22 billion unfunded liability. Because of court rulings, reforms now have to overwhelmingly hit younger public employees.

When discussing reforms, legislators are quick to bemoan past decisions by the PERS board and lawmakers that they believe unsustainably drove up the cost of the system.

But the judges’ request for raises doesn't appear to be ringing many alarm bells in Salem.

A whopping 62 Republican and Democratic lawmakers — two-thirds of both chambers — have signed a letter of support for the proposal, contained in both Senate Bill 11 and House Bill 2636.

At twin hearings in the House and Senate judiciary committees this week, lawmakers almost universally blessed the pay increases.

“They are absolutely right on with what they're asking of us,” said Rep. Andy Olson, an Albany Republican.

In a subsequent interview, Olson acknowledged that the potential raise-induced PERS increases represent “a big pension package.” But he said that judges are typically paid less than the private sector and high-ranking government lawyers who argue before them.

“Judges have tremendous responsibility in our system,” Olson added.

Rep. Chris Gorsek, a Troutdale Democrat, also spoke in favor of the raises.

“You do important work and you deserve better compensation,” he told Balmer and his fellow judges.

Only one legislator voiced concerns. New state Sen. Dennis Linthicum, a Klamath Falls Republican, said he felt the automatic cost-of-living raises that the Legislature approved for judges in 2015 was sufficient.

“Everybody is up in arms in my constituent district with regard to the amount of money we're spending here in Salem,” he said.

Both bills were then approved, on a combined 15-1 vote, and sent to the Legislature's budget crafting committee.

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Information from: The Register-Guard, http://www.registerguard.com

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