04/12/1995 03:30 PM Senate FIN

                                                                               
       SENATE BILL NO. 151                                                     
       "An  Act placing  the  administrative  director of  the                 
  court     system   in   the  public   employees'  retirement                 
  system."                                                                     
                                                                               
  Art  Snowden, Administrative Director  for the  Court System                 
  stated that the Supreme  Court has asked that he  testify in                 
  opposition to the legislation. He offered background, noting                 
  that   the   office   of  Administrative   Director   is   a                 
  constitutional   office  within  this  state.  In  1980  the                 
  Administrative   Director   was  put   under   the  judicial                 
  retirement system.  It is the  only retirement system with a                 
  10-year vest.  This  legislation updates  changes that  have                 
  been made since statehood.  At statehood, the chief  justice                 
  served  forever.    The voters  of  the  state  changed that                 
  constitution  some  years later  to  say, the  chief justice                 
  serves for  three years  at which  time it  goes to  another                 
  elected  member  of  the  court  and  they  may not  succeed                 
  themselves.    At  this  time,  the  court  felt  it  needed                 
  continuity specifically in administration  because the chief                 
  justice  was  changing.    The  position  of  administrative                 
  director, is a profession.  There are 50 in the country.  It                 
  requires special training. The ten year vest was put on this                 
  bill  for  the  purpose of  making  sure  that  there was  a                 
  longevity in the office.                                                     
                                                                               
  Co-chair Halford inquired as to the retirement system.   Mr.                 
  Snowden  informed the  committee  that  an employee  working                 
  their way  up to  administrative director  would fall  under                 
  PERS and  remain there  in the first  9 years  of being  the                 
  administrative  director.    On  the  10th year,  the  state                 
  employee is then  able to buy  into the judicial  retirement                 
  system, receive  their PERS contribution back (which is a 3%                 
  contribution, and pay  7 to 7-1/2% for  the JRS retirement).                 
  It is  not a free system.   The court and legislature wanted                 
  continuity.  He informed the committee of the administrative                 
  director's responsibilities.  He emphasized to the committee                 
                                                                               
                                                                               
  that  the   American  Bar  Association  standards  on  court                 
  organizations say  in part,  the level  of compensation  and                 
  retirement benefits  of the  director of  the administrative                 
  office  of courts  should be  no less  than  a judge  of the                 
  intermediate court  of appeals. The  administrative director                 
  for almost 40% of our states are under a judicial retirement                 
  system.  The  Supreme Court wants  this in place to  attract                 
  highly professional people who have been trained to  do this                 
  function.                                                                    
                                                                               
  Senator  Sharp  asked  what  the   contribution  is  of  the                 
  administrative director for the first 9 years?   Mr. Snowden                 
  responded  that the administrative director contributes 7 to                 
  7-1/5%  into  the  judicial  retirement   system.    If  the                 
  administrator elects to leave prior to 10 years, they revert                 
  to PERS.   Under PERS, the  administrator would be  refunded                 
  from  the  judicial  system  and  then  pay  into  PERS  the                 
  appropriate amount that it would have cost over those years.                 
  Or, there is the  option to take the money and  elect not to                 
  take retirement.   Under five years, there  is no retirement                 
  benefits.  After 10 years there is still an option.                          
                                                                               
  Robert  Stalnaker, Director,  Retirement  & Benefits  stated                 
  that  it is a zero cost  bill to the system because whatever                 
  system  is  chosen,  there are  contributions  to  pay.   He                 
  explained the process. A court administrator would start out                 
  in the judicial  system, make the  appropriate contributions                 
  and if their  longevity is  less than 10  years, they  could                 
  refund out of the judicial  system and buy into PERS.   This                 
  option is available after 10 years as well.                                  
                                                                               
  Senator  Zharoff  MOVED  to  adopt  SB 151  with  individual                 
  recommendations and  two zero  fiscal notes.   No  objection                 
  being heard, SB 151  was REPORTED OUT of committee  with two                 
  fiscal notes  from the  Dept of  Administration and  Courts.                 
  Trial Courts fiscal notes has a cost of $25.4 in 2001.   Co-                 
  chairs  Halford  and  Frank  recommended  "do  pass",  while                 
  Senators   Rieger,   Phillips,   and   Sharp   signed    "no                 
  recommendation", and Senators Zharoff and Donley recommended                 
  "do not pass".                                                               
                                                                               
  The meeting adjourned at approximately 3:45 p.m.                             
                                                                               
  The meeting reconvened at approximately 5:05 p.m.                            
                                                                               
  PRESENT                                                                      
                                                                               
  Co-chair  Halford, along with Senators Phillips, Donley, and                 
  Sharp were present.  Senators Zharoff and Rieger joined  the                 
  meeting shortly after it  began.  Co-chair Frank was  unable                 
  to attend.