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Wednesday, January 19, 2022
HomeNewsLocal governmentSenate May Worsen GERS Unfunded Liability Again

Senate May Worsen GERS Unfunded Liability Again

Pension contribution increases for judges, justices and magistrates enacted in 2011 and 2015 will be rolled back, worsening the Government Employee Retirement System unfunded liability, if a bill approved in committee Thursday is enacted into law.

The measure sponsored by Sens. Kenneth Gittens, Neville James and Sammuel Sanes would roll back contribution increases the Legislature authorized GERS to impose on the Judiciary and eliminate the higher contribution Tier II category for the judiciary. It would leave higher Tier II contributions in place for the rest of the government.

The bill also corrects some ambiguous language in the law about vesting of judicial pensions and increases magistrate judge terms from four to six years.

The GERS board and GERS Administrator Austin Nibbs sent a letter saying they were unable to attend the hearing due to a board meeting. They sent a written statement urging against changing the law, citing a report from their actuary.

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"It will create additional plan liability at a time when the plan can ill afford to take on more costs. Until sources for long-term plan funding are secured, we strongly recommend against adopting and further unfunded mandates," GERS actuary Leon "Rocky" Joyner wrote to the GERS board.

GERS is facing a roughly $1.8 billion unfunded pension mandate and is expected to have liquidated its entire trust fund by 2024. (See Related Links below)

Supreme Court Chief Justice Rhys Hodge, Superior Court Judge Robert Molloy and Superior Court Presiding Judge Michael Dunston all argued that because the judiciary paid GERS contributions in accordance with the law, there was no unfunded liability.

Sen. Tregenza Roach asked whether rolling back the contribution increases would create an unfunded liability.

Dunston said, "There is no period of time in which judges have not made at least an 11 percent contribution. In fact, since the passage of (Tier II judiciary contribution increases) that contribution has been higher on our part and on the employer end, so there is no unfunded liability there."

Hodge asserted that since contributions were made at some level, without any gap where no contributions were made, there was no unfunded mandate. "I really don’t see the unfunded mandates," Hodge said.

Molloy testified the GERS could not increase judiciary contribution rates because a section of V.I. law says a "judicial officer’s compensation cannot be reduced during his/her term of office without his/her consent."

He said the V.I. law is similar to a section of the U.S. Constitution that forbade reducing federal judges’ pay during their term in office, as well as laws and constitutional provisions in several states doing the same.

"The prohibition on reducing a judicial officer’s compensation during his/her term is not there so much to protect the justice, judge, or magistrate, but rather to protect the public," Molloy said,

"As stated by the Supreme Court of New Jersey, No-Diminution Clauses serve the purpose to maintain the separation of powers and promote true judicial independence. The power to reduce a judge’s [compensation] will leave the public uncertain whether judicial decisions are animated from a desire to seek favor or from fear of retribution. …" Molloy said, citing the case Depascale v. State of New Jersey (2012).

Roach later said someone could make the counter argument that pension contributions do not lower compensation because judges later get the pension.

"Yes and the Supreme Court of New Jersey, the Supreme Court of Illinois the Supreme Court of New York have all opined that a reduction in a judges take home pay is a reduction in his compensation," Molloy said.

Molloy did not mention that the Depascale case he cited produced outrage in New Jersey, causing its state legislature to overwhelmingly pass a bipartisan ballot proposal to change the state constitution. That same year, New Jersey voters voted 83 percent to 17 percent to change the constitution to make judges pay more into their pension funds. (See: Election results: New Jersey ballot questions in Related Links below)

That change to the constitution nullified the case Molloy cited Thursday. New Jersey was facing a much smaller unfunded pension liability than that facing the U.S. Virgin Islands.

Since the V.I. law in question is an ordinary statute, the V.I. Legislature could change it with a majority vote by, for instance, amending the same bill it approved in committee Thursday before enacting it.

Sen. Novelle Francis asked Molloy how much money the change to V.I. law would save judges.

Molloy said Superior Court judges make $152,000 per year, so reducing contributions from the current Tier II 14 percent back down to the original Tier I 11 percent would save judges $4,560 per year.

According to Molloy, although the bill would roll back recent increases to judicial contributions and forbid the GERS from changing them, the V.I. Legislature could still change judicial contributions at a later date, just not during the current term of office of a judge, magistrate or justice.

He argued only the Legislature and not GERS should be able to set compensation and contribution rates.

"Just as the Legislature is the only entity that can set the salary for officers and employees, we believe that retirement and other forms of deferred compensation should be determined by the Legislature as well," Molloy said.

When the Legislature approved GERS contributions for the Judiciary and Legislature in 2011, senators chastised GERS board members for coming to the Legislature instead of using the authority the Legislature had given them to raise rates themselves. (See: GERS Contribution Rates Could Soar for Some Government Employees in Related Links below)

Several senators said they supported the bill’s changes to judges terms and were largely persuaded by the judges’ arguments. Some said they wanted to hear from GERS before deciding whether it should be amended or approved when it comes to the Senate floor.

"I will approve it today but I will definitely follow up with GERS … I still need to hear from GERS," Sen. Janette Millin Young said. The committee voted to sent the measure on for final consideration on the Senate Floor.

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