Monday, July 6, 2015

Judicial Pay

Judicial pay makes the news periodically. Recently, the Providence Journal in Rhode Island reported that three judges there would soon retire. Two of them are workers' compensation judges in the nation's smallest geographic state.

The Workers' Compensation Chief Judge will retire at the end of July. His pension will be $200,642. He has served on the workers' compensation bench since 1991, almost 25 years. He will be 65 years old. The other workers' compensation judge retiring this year is 71, and has served since 1995 (20 years), first as a probate judge and since 1999 as a workers' compensation judge. He will receive a pension of $164,351.00.

It is said that it is expensive to live in the northeast. With no reason to dispute that cost of living may be high there, I wonder if it is more expensive than it is to live in large Florida cities such as Miami, Orlando and Tampa?

A curious point raised by the Journal article is the comparison of pension to the "base salary" for these positions. Judge Healy will receive a pension of $200,642 but the base salary for his position is $170,759.00. So his pension is about $30,000 higher than the base rate his successor will purportedly receive, that is about 17.5% above the base rate.

The math is similar for the other workers' compensation judge, who will receive $164,351.00. The "base rate" for his position is $149,410. So, he will receive about $15,000 above the base rate in pension, about 10%.

In May, WorkCompCentral reported that the Georgia Code links the salary for Georgia Workers' Compensation Board members to 90% of the pay for the Court of Appeals judges.  Under a bill passed this spring, "Supreme Court and Appeals Court judges will get a 5% raise to $175,600 and $174,500 respectively. Due to the link, "the legislation would also give members of the board a pay increase of up to $22,000, according to the Atlanta Constitution."

The idea of tying salaries to some figure is not new. Florida had a "tie in" for workers' compensation deputy commissioners and then judges of compensation claims. That was removed from the law in 1994. As reported in the 2012 OJCC Annual Report (page 35), the salary for judges of compensation claims has not kept pace with inflation since that time. In the 23 years prior to 2012, the JCC salary effectively decreased about 17%. 

In 1989, the JCC salary was $79,359. If that figure had kept pace with inflation, according to the U.S. Inflation Calculator, then the salary today would be $151.421.45. According to the Tampa Bay Business Journal, however, judges of compensation claims currently earn only $124,564.30, a difference of almost $29,000.00. Looked at a different way, using the same inflation calculator, what would that $124,564.30 have been worth in 1989? It would have been worth $64,235.15 compared to the actual salary in 1989, $79,359, a difference of $15,123.85, or 19% less than $79,359.

In June, US News reported that "pay growth, though improving, remains tepid." This describes an environment in which "average hourly wages rose at an annual rate of 2.3 percent," which was "slightly ahead of inflation." One employee quoted in the story says that he is in his third job since graduating in 2012 with a degree in computer science. He says "each job has paid me a little less than the one before it, which is not the trajectory that I wanted."

Wages are generally flat. The economy is strained and struggling. But the stagnation of judicial and coincidentally mediator salaries in the Florida executive branch (the OJCC) are notable. Even if the Judges were to receive a salary increase similar to the recent Georgia decision, of roughly $22,000, it would not restore the inflation adjusted salary of 1989, but admittedly it would be close. 

Retirement in Florida State employment will not be what the New Hampshire judges enjoy. Generally speaking, Florida's executive branch employee's retirement is calculated by formula. It is essentially 2% of the average salary earned in the five (or eight for those hired after 2011) highest fiscal years, multiplied by the years of employment. 

If New Hampshire Judge Healy earned the "base rate" of $170,759 in the last five years, remembering he was a state employee since 1991 or 24 years, then the math calculating his pension in Florida would be $170,759 x .02 x 24. The retirement would be about $82,000, about 41% of the $200,642 that New Hampshire will provide. 

The other New Hampshire judge who is retiring this year will receive a pension of $164,351. Assuming that he earned the "base rate" for his position, $149,410 over the last five years, and remembering that he has been a state employee for only 20 years, his Florida pension calculation would be $149,410 x .02 x 20, or about $60,000. That would be about 36% of the $164,351.00 pension that New Hampshire is providing. 

A salary adjustment similar to the Georgia action would not equalize the Florida executive branch judges with New Hampshire in terms of retirement, but it would significantly increase the base figure upon which the current retirement calculation is made. The OJCC Annual Report has highlighted the effective wage decreases associated with the Florida Judges of Compensation Claims. It illustrates a situation that likely affects many other state employees. It is worthy of consideration. 

Wage growth may be stagnant in the economy generally, but the "tepid" annual increase rate of 2.3 percent reported by U.S. News is far better than the aproximately 1% annual decrease illustrated for the OJCC. 

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