Fields v. Elected Officials' Retirement Plan
234 Ariz. 214
Ariz.2014Background
- Plan established in 1985 to provide pensions for elected officials, including judges; funded by employer/employee contributions, fees, and investment proceeds.
- Statute § 38-818 created a statutory mechanism for permanent benefit increases, later modified; 1990 first statute, 1996 extended increases indefinitely with a cap, 1998 restored 4% cap; Article 29 later enacted.
- Funding ratio declined from 141.7% (2000) to 66.7% (2010); reserve allowed annual 4% increases until 2011.
- Senate Bill 1609 (2011) prohibited transfer of excess investment earnings to the reserve and redirected them to the basic plan, reducing expected increases; retroactive to May 31, 2011.
- 2011–2013: 2.47% increase in 2011 due to SB1609; no increases in 2012 or 2013; 2013 SB 1609.01/38-818.01 changed the formula and funding triggers for future increases.
- Fields, retired judges, sued the Plan and Board alleging SB1609 diminishes/impairs benefits in violation of Article 29, § 1(C); trial court found a violation and Fields sought fees; case transferred to this Court for review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SB 1609 violates the Pension Clause by diminishing or impairing benefits | Fields contends SB1609 diminishes benefits protected by Article 29, §1(C) | State/EORP argue changes affect only funding mechanics, not protected benefits | SB1609 diminishes and impairs retirement benefits under the Pension Clause |
| Whether the § 38-818 benefit-increase formula is a protected “benefit” | Fields argues the formula itself is a retirement benefit | State/EORP argue only the liquidated base benefit is protected | The formula is a protected “benefit” under Article 29, §1(C) |
| Whether retirement benefits vest and cannot be unilaterally modified | Public pensions vest at employment; future increases are part of the contract | Contract could be modified via legislation; future increases contingent | Future increases under § 38-818 are vested and not contingent |
Key Cases Cited
- Yeazell v. Copins, 98 Ariz. 109 (Ariz. 1965) (pension rights vest upon employment; later changes cannot retroactively impair)
- Thurston v. Judges’ Ret. Plan, 179 Ariz. 49 (Ariz. 1994) (pension benefits can be contractual; detrimental modification requires consent)
- Proksa v. Ariz. State Sch. for the Deaf & the Blind, 205 Ariz. 627 (Ariz. 2003) (public retirement benefits are an exception to general rule that statutes do not create contractual rights)
- Smith v. City of Phoenix, 175 Ariz. 509 (Ariz. App. 1992) (statutory salary provisions may not guarantee fixed increases absent contract terms)
- Energy Reserves Grp. v. Kans. Power & Light Co., 459 U.S. 400 (Sup. Ct. 1983) (Contract Clause analysis of impairment of contracts; not controlling here but referenced)
- Jett v. City of Tucson, 180 Ariz. 115 (Ariz. 1994) (interpretation of electorate intent and pension protections)
- Stagecoach Trails MHC v. City of Benson, 231 Ariz. 366 (Ariz. 2013) (mandamus fees and relief considerations; common fund discussion)