SENATE BILL REPORT
SHB 359
BYHouse Committee on Ways & Means/Appropriations (originally sponsored by Representatives H. Sommers, Silver, Locke, B. Williams, Braddock, Niemi, Patrick and Dellwo)
Revising provisions relating to the judicial retirement system.
House Committe on Ways & Means/Appropriations
Senate Committee on Ways & Means
Senate Hearing Date(s):March 30, 1987
Majority Report: Do pass as amended.
Signed by Senators McDermott, Chairman; Bluechel, Craswell, Deccio, Hayner, Kreidler, Moore, Owen, Rinehart, Talmadge, Vognild, Williams, Wojahn, Zimmerman.
Senate Staff:Charles Langen (786-7715)
March 30, 1987
AS REPORTED BY COMMITTEE ON WAYS & MEANS, MARCH 30, 1987
BACKGROUND:
Washington has two retirement systems for judges. The Judicial Retirement System (JRS, Chapter 2.10 RCW) for all judges first elected or appointed after 1971 and the Judges Retirement System (Chapter 2.12) for judges elected or appointed prior to 1971. These systems cover only superior court judges, and members of the Supreme Court and the Court of Appeals. All district court judges are members of the Public Employees Retirement System (PERS).
Chapters 2.10 and 2.12 RCW were designed in a manner to encourage judges to stay in service. In both, a judge may not withdraw his or her contributions upon separation from service and must stay in service for 12 to 18 years to receive a retirement allowance. The retirement allowance of a JRS (2.10) retiree may also be reduced to offset income from post-retirement employment.
The JRS (2.10) system provides a very generous retirement benefit: 3 percent of the judge's final compensation if the judge had less than 15 years of service and 3.5 percent if the judge had 15 or more years of service, up to a maximum of 75 percent of the judge's final compensation. The benefit also includes an annual cost-of-living adjustment tied to the CPI with a 3 percent maximum annual increase.
JRS provides a survivor benefit equal to 50 percent of the judge's retirement allowance (no actuarial reduction) but not less than 25 percent of the judge's final salary. However, this benefit is provided only to judges who have ten or more years of service and only when the surviving spouse has been married to the judge for at least two years. If the surviving spouse remarries her survivor benefits cease; if she is employed, her benefits may be reduced by the amount of her earnings.
Active members of JRS (2.10) contribute 7.5 percent of their compensation; the remaining cost of the system is paid by the state. JRS has been funded on a pay-as-you-go basis and as of 1985 had an unfunded liability of almost forty million dollars. The 1985 JRS actuarial evaluation indicated that a state contribution rate of 41.30 percent of compensation would be needed to fund both the normal cost and the unfunded liability of the system.
In the Public Employees Retirement System (PERS I and II) and other state retirement systems employee contributions may be withdrawn upon separation from service and members may receive a benefit after five years of service.
PERS allows the member, at the time of retirement, to choose an actuarially reduced allowance which continues through the lifetime of the member's spouse or other beneficiary. If a PERS member dies before being eligible for retirement, the member's contributions are paid to the surviving spouse or other beneficiary.
Most members of PERS I contribute 6 percent of their compensation and receive a benefit based on 2 percent of their average final compensation (2 year AFC); members who are state elected officials contribute 7.5 percent of their compensation and receive a benefit based on 3 percent of their AFC. Members of PERS II, TRS II, and LEOFF II contribute one-half the cost of their retirement systems (currently requiring a member contribution of 4.87 percent in PERS II) and receive a benefit based on 2 percent of their AFC (5 year average).
At the time the JRS system was created, the annual salary for a superior court judge was $22,500 ; the current salary is $60,000. In the future, the annual compensation for judges will be determined by the Washington Citizen's Commission on Salaries for Elected Officials.
Members of PERS first elected or appointed as judges after 1984 have the option of joining JRS or staying in PERS; members who became judges prior to 1984 do not have the option of receiving credit in PERS for their years of service as a judge.
SUMMARY:
The Judicial Retirement System (JRS; Chapter 2.10 RCW) is closed; persons elected or appointed to Superior Court, the State Supreme Court, or the State Court of Appeals after the effective date of the act have the option to become members of the Public Employees Retirement System (PERS).
Current members of JRS have the option to make an irrevocable choice to receive credit in PERS for their years of service as a judge. In order to exercise this option the member must file a written request with the department of retirement systems (DRS) by December 31, 1988. A member who transfers from JRS to PERS receives a refund for the difference between the amount of contributions made under JRS and the amount which would have been made under PERS.
Benefits provided under JRS are improved in two ways: 1) a judge who withdraws from service may receive a refund of the judge's accumulated contributions which shall consist of amounts deducted from the judge's salary plus interest, as determined by DRS, beginning on the effective date of the act; 2) a judge is allowed to chose, prior to December 31, 1987, between the survivor benefits currently provided by JRS and a new set of survivor benefits patterned after those provided in PERS. The surviving spouse of the judge who chooses the new survivor benefits does not lose the benefits upon remarriage nor are the benefits reduced by outside earnings.
A former judge who reenters service may restore the prior service by restoring any withdrawn contributions, plus interest, within five years of resumption of service.
SUMMARY OF PROPOSED SENATE AMENDMENT:
JRS is capped and all future new judges, including those of district courts, are to be under PERS II where they will contribute 150 percent of the employee contribution. These judges will utilize a 3 percent factor in calculating their retirement allowance.
The surviving spouse of a member of JRS who died in service with at least eight years of service shall receive a survivor's benefit.
The earnings limitation on retired members or surviving spouses under JRS is removed.
Fiscal Note: Attached.
Senate Committee - Testified: Justice Fred Dore; Justice James Anderson; Don Brazier