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Was it constitutional for Proposition 124 to replace PSPRS' permanent benefit increases with a capped 2% COLA?

In this blog I and multiple commenters have broached the subject of the suspect constitutionality of PSPRS' replacement of the old perma...

Friday, February 19, 2016

PSPRS members: Watch the oral arguments before the special panel of judges deciding the Hall case

If you would like to view the oral arguments before the special panel of judges in the Hall case, you can find the video here.  The video is from February 18, 2016 and lasts about 55 minutes.  For more about the legal issues and arguments in the Hall case, see this post, "What the Hall is going on?  Legal issues surrounding the Hall and Parker cases against EORP and PSPRS" from July 2015.

Neither side in the case dealt with the COLA issue, which should be decided for the plaintiffs under the same reasoning as the Fields case, and will be a dead issue soon anyway when the May referendum is approved and permanently changes the COLA formula.  All the arguments and questions from the judges dealt with the constitutionality of raising employee contribution rates.  The attorneys' arguments are interesting, as are the judges' questions, but there seems to be no clear indication how this case will be decided or how each judge will vote.

There was no firm date on when a decision will be reached, though the plaintiffs' attorney asked that the panel decide the case itself and not send it back to a lower court for reconsideration.  I believe from the past that the only notice that the case has been settled is a 24-hour advance warning that a decision will be announced the next day.  We will be stuck waiting until then.

19 comments:

  1. Any updates or anywhere else to follow this case?

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  2. Unfortunately, there will likely be no updates until the court panel has reached a decision, and that will only be 24-hour advance notice that a decision has been reached and is ready to be presented. I check the Arizona Supreme Court webpage everyday, but I have seen nothing to indicate when they will be letting us know how they have ruled. You can check here:

    http://apps.supremecourt.az.gov/aacc/asc/asccase.htm

    Go to Active Civil Cases (CV), and it is the fifth case on the list or you can search the page for "Hall." This is the only place to get information, and it is unlikely that any information will be given until the decision is ready to be released to the public.

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  3. Thanks, Drop Zone

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  4. Can we expect an answer before they recess for summer?

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    Replies
    1. I can only speculate, but since this is a special panel with only the one case on its docket, it will not have a formal recess like the actual Supreme Court. Of course, the new Supreme Court Justice Bolick and the other four judges are still responsible for their normal duties, so I do not know how that affects their timeline. I would hope that work on the Hall case will continue without any recess until a final decision is reached.

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  5. If the case is decided in favor of the plaintiffs and the increase in the contributions needs to be refunded, how much time will PSPRS be provided to refund this? This seems like it would be a massive undertaking and there could be members receiving amounts in the thousands.

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    Replies
    1. I checked back and it was about 4 months between Fields decision in February 2014 until retroactive COLA's were paid in June 2014. I suspect that it would take them at least that long to calculate how much members are owed in overpaid contributions.

      If you remember the 4% contribution increases was done in 5 steps that decreased each year over a 5-year period: 1%, 0.9%, 0.8%, 0.7%, and 0.6%. As just a quick calculation for some perspective, a member whose pensionable pay was $70K/year over the 5-years would be owed $2,800 (700+630+560+490+420) in overpaid contributions. The current fiscal year is the first year we have been paying the full 4% extra.

      If you multiply this by several thousand members, it is a large amount that will have to be paid back.

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  6. You stated what I copied below in a previous article... I think you forgot to add the percentages together for each year? correct me if I misinterpreted but it should be much more than 2,800 owed.

    "If Mr Hall is successful and, for example, you made $60,000 of pensionable income per year in the five fiscal year between July1, 2011 to June 30, 2016, you would be owed a refund of excess contributions of $7,800 ($600 + $1,140 + $1,620 + $2,040 + $2,400) due to the annually increasing employee contribution rates (1.0%, 1.9%, 2.7%, 3.4%, and 4.0%) during those years. "

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    Replies
    1. Thank you very much for the correction. You are absolutely right. The refund due just for this current fiscal year on a $70k salary would be $2,800. So to correct what I wrote earlier the total refund of excess contributions on that $70K would be $9,100, not $2,800. Quite a difference. Thanks again for the correction.

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  7. Now that Prop 124 passed, what happens? Do you think the Court decision will soon follow?

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  8. We are still stuck waiting. They are on their own timetable for reaching the decision. I checked back on the Fields case from 2 years back. The Arizona Supreme Court heard arguments on June 4, 2013 and didn't announce a decision until February 20, 2014, which is over 8 months. The arguments before the panel in Hall were only about 3 months ago, so if they take as long as in Fields, we could be waiting until October for a decision. Furthermore, Hall is dealing with the issue of contribution rates, an issue that is not as clearly protected by the Arizona Constitution, so if they take longer than in Fields, I would not be surprised.

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  9. What is immediate impact of the passing of 124?

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  10. I cannot give you any concrete numbers, but sometime in the near future retirees should be getting some type of COLA, assuming there is inflation over the current fiscal year. For the 12-month period ending April 30, the national rate of inflation was 1.1%. PSPRS will have to determine the cost of all the COLA's based on the total amount to be paid and figure this into employers' contribution rates, so employer contribution rates will likely increase. Also, retirees will see a COLA based only on their own benefit, not the average normal benefit. This means that retirees with lower benefits will no longer see higher percentage COLA's than retirees with higher benefits.

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  11. Do the retirees get a COLA the first year after they retire or do they have wait for specified amount of time?

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  12. Here is a link to what PSPRS is saying about Proposition 124:

    http://www.psprs.com/Temporary%20Announcements/Proposition%20124.htm

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  13. This is taking forever to get a ruling on this. Do you think they are waiting for the new law to go into effect in August before they come out with their decision?

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    Replies
    1. No, I think this is just how slowly the wheels turn there. I am not an attorney, but I do not believe that the new law can factor into their decision since it was not passed at the time of oral arguments nor was it relevant to the constitutional issue of contribution rates being changed after someone is already entered the system. The new law changed contribution rates for new hires, but that has always been permissible. The Fields decision took 8 months to reach, and it has only been 5 months since oral arguments were made in Hall. I suspect it will take at least as long as it took to reach the decision in the Fields case, so I am not expecting any decision until the fall or winter.

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  14. Still no update?

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    1. Unfortunately, no. The only thing that I heard was that PSPRS is planning for a plaintiff victory and getting ready to issue refunds of excess contributions, but even they know nothing about how close the judges are to a decision or when it will be issued. PSPRS will get 24-hours notice before a decision, but that is all the advance notice they will get. I added a link on the sidebar to the Arizona Supreme Court. If you click on it and go to active civil cases, you will see that the Hall case is the oldest undecided case listed at the top. There is a date for last update, which has not changed since April 14, 2016. I try to check everyday to see if that changes, but other than doing that, we are stuck waiting.

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