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Thursday, November 9, 2017

Injunction, injunction, what's your function: Some speculation as to why there is not a final judgment in Parker v. PSPRS

PSPRS had its annual information seminar on November 7, 2017. The only update given on the Parker case were these bullet points on a Powerpoint slide:
  • Two of the three parties have informally agreed as to the form of judgment, the ball is in the third party’s court.
  • Formal agreement is done through legal documents and court filings, which have not happened yet.
PSPRS does not say which party has not agreed to the form of judgment.  The minute entry of the last status conference on September 22, 2017 said this:
The plaintiffs in the Hall case have decided not to appeal the trial court’s ruling regarding prejudgment interest.  Phoenix Law Enforcement Association (PLEA) has also decided to abide by the same prejudgment interest rate.  PSPRS has already paid members for the permanent benefit increases (PBI), except to the few members  ho are deceased.  PSPRS is also working with each employer to return the excess contributions to their employees.  There are many employers, each with its own issues. The parties will be discussing whether the issuance of a declaratory judgment will be sufficient to resolve the case.
So it certainly appeared at that time that a final judgment was imminent, as neither the plaintiffs nor PLEA were going to challenge the interest rates already set in the Hall case.  The only other outstanding issue would be attorneys' fees, and that issue would have no bearing on a final judgment on interest rates.  However, not being an attorney, I did not note the significance of the term "declaratory judgment."

I am speculating here, but it appears that one party does not agree with the final decision being in the form of a declaratory judgment alone, and not including an injunction.  You can follow the links if you are interested in reading more about those legal terms, but an injunction (i.e. injunctive relief) legally requires some type of action pertaining to the resolution delivered by the declaratory judgment.  You can get a little insight into this issue from this minute entry from Hall.  So in this case, the declaratory judgment would legally settle the interest rate question, as no parties object to the 4.25% pre-judgment/5.25% post-judgment interest rates set in Hall, but an injunction would be a further legal mandate on PSPRS to achieve final resolution.

Based on our experience of PSPRS' deliberate slow walking of the excess contribution refunds, my guess is that the third party (most likely PLEA) wants a definite deadline this time around when it comes to the payment of interest, which would include a penalty if PSPRS does not meet that deadline.  PSPRS spent months continuing to withdraw excess contributions after it was already declared unconstitutional by the Arizona Supreme Court, then they dragged out the process of paying refunds.  All the while PSPRS was earning interest well in excess of the 4.25% pre-judgment interest rate assigned in Hall.  It has been exactly a full year since the Hall case was decided on November 10, 2017 and the Russell 3000 has returned 21.80% in that time.  Even PSPRS' own annualized rate over the five years ending June 30, 2017 was 7.95%.

I suppose someone might ask why continue to litigate when the litigation itself is acting to prolong the delay in paying interest, but the response to that is why would there be any objection to setting an exact date on when the interest will be paid.  PSPRS has known that these payments were required for a year now, and it seems unlikely that there are anymore outstanding excess contribution refunds to be made.  This means interest is ready to be paid today, but of course, why should PSPRS be in a hurry to pay members if PSPRS benefits financially from dragging its feet?  Only a strict deadline with a penalty for non-compliance will force PSPRS to act ethically and for the benefit of its members.

The next status conference in Parker v. PSPRS is January 22, 2018.


  1. I wonder how this affects those of us who have already been refunded? One County has already paid the refunds, and a separate payment for interest. If there is no final judgement on the "post" interest, how could they have paid it out? Unless they only paid the pre-judgement interest to limit the amount of post-judgement interest due.

    And I agree that it's obscene and maybe criminal for them to earn minimum 7.95% on OUR money and refund us a paltry 4.5-5.5%.

    1. The post-judgment interest period will not begin until the final judgment is issued, so there is no post-judgment currently accruing. I would think that most members have already received their refund. They would only be waiting on pre-judgment interest payments.

  2. It is sad. PSPRS Does not work for the retiree/member, they work for the board and themselves. Check the pay the board and employees make! Check the bonuses!
    Do members get that? Hell no, why should they? Just questions.

    1. PSPRS has still not updated its members' website so that members can see their contribution record or get estimates of their retirements. This was supposed to be done 7/1 but it is now the middle of November with it still not updated. This is just another example of the poor customer service culture that permeates PSPRS.

  3. So what you are saying is although we have already received our refunds and a seperate interest check, we are still due a pre interest check?

    1. I cannot vouch for what every employer may have done, but I know of no PSPRS member who has been paid any interest. AS of 9/22/17, the parties in Parker had not even agreed upon the pre- and post-judgment rates, and until there is an actual judgment, PSPRS cannot authorize employers to pay members interest. It is possible that some employers have already paid pre-judgment interest, but I don't know how that could have been done without a final judgment listing the mandated interest rates. The only individuals who should have been paid interest are EORP members, as the Hall case has had a final judgment since June 2017.

    2. I received 2 checks. One for the amount of base refund, as stated on PSPRS website, (minus taxes/withholding, etc) and 2nd check (with no withholding) simply headed "Retire Refund" and the date. I presume that the 2nd check would be the interest.

      I don't have the ability to break down the interest, as it would be spread out on amounts from the time first contributed until I retired and stopped contribution. Those of us in a retired status don't have the ability to go into our accounts on PSPRS website to a breakdown of contributions over the years, as we could while active.

    3. Depending on when you retired, you may have been entitled to a retroactive PBI. Did your monthly retirement benefit also increase? If so, that might account for the second check, which would be all the PBI amounts you had not received since you first retired. Otherwise, I am not sure what that second check could be. I would still find it highly unlikely that an employer already paid interest, but it is certainly possible.

  4. I believe the final judgement has been entered today. Drop Zone is that correct?

  5. Any idea of refunds? From today's judgement? Time frame? Thanks


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