Summary:

 House Bill 183 (HB 183) proposes amendments to the Magistrate Retirement Act by modifying investment sources, adjusting years of service credit requirements, and increasing certain service credit multipliers for magistrate judges. The bill also clarifies the structure of the Magistrate Retirement Fund and enhances administrative oversight of investments and benefit distributions. HB 183 takes effect on July 1, 2025. 

Legislation Overview:

 House Bill 183 (HB 183) revises provisions governing the Magistrate Retirement Fund, specifying that appropriations, docket fees, employer and member contributions, and all income from investments shall be credited to the fund. The bill restructures the minimum years of service required for magistrate retirement eligibility, setting thresholds at age 65 with five years of service, age 60 with 15 years of service, or any age with 24 years of service.

The legislation increases the service credit multipliers used in pension calculations, capping the maximum pension benefit at 100% of a magistrate’s highest average salary over a 60-month period. Member contribution rates are raised to 14.74% of salary, while employer contributions increase to 19.24%. The bill also updates penalties for late contributions and refines the investment allocation policies under the direction of the Public Employees Retirement Act.

Fiscal Implications

HB 183 is expected to increase revenue to the Magistrate Retirement Fund through higher contribution rates and redirected docket and jury fees. The overall impact on fund solvency depends on actuarial assessments and compliance with new contribution requirements. The state will likely incur administrative costs for implementing the revised investment oversight provisions, but long-term funding stability for magistrate pensions may improve as a result. 

Current Law:

 Under existing law, the Magistrate Retirement Act provides varying eligibility requirements based on a magistrate’s entry date into the system. Pension benefits are currently capped at 85% of an individual's highest 60-month salary average. Member contributions are 10.5% of salary, while employer contributions stand at fifteen percent. Investment allocation policies are managed under the Public Employees Retirement Act, but current provisions lack the explicit structure and financial safeguards introduced in HB 183. 

Amendments:

 Amended March 13, 2025 on House Floor

hfla/HB 183: The House Floor Amendment 1 to House Bill 183 introduces several key changes related to the magistrate retirement system, specifically addressing service credit calculations, pension benefit formulas, and applicability of new provisions. The amendment clarifies that only credited service is used in pension calculations, ensuring consistency in how benefits are determined. Additionally, the amendment modifies the pension formula for magistrates who became members on or after July 1, 2014, by introducing a split calculation method based on when the service credit was earned. Service credit earned between July 1, 2014, and June 30, 2025, remains subject to a 3% multiplier, while service credit earned on or after July 1, 2025, is calculated using an increased multiplier of 3.5%. The amendment also includes an applicability provision, stating that any credited service earned prior to the effective date of the act will not be recalculated or adjusted under the new provisions.

The amendment provides greater specificity and clarity in pension calculations, ensuring that service credit earned before the effective date is not retroactively adjusted. This protects magistrates who have already accrued pension benefits from unexpected reductions or recalculations. By explicitly differentiating between service earned before and after July 1, 2025, the amendment creates a phased approach to implementing higher service credit multipliers, allowing the state to gradually enhance magistrate retirement benefits while maintaining financial sustainability.

The amendment also ensures fairness and predictability in pension calculations by clarifying that only credited service is used to determine benefits. This avoids potential misinterpretations of how time in office factors into pension eligibility and ensures that all magistrates are treated consistently under the new system.

One potential impact of the amendment is that magistrates who have already accumulated significant service before July 1, 2025, will see smaller increases in their pension calculations compared to newer magistrates who serve longer under the 3.5% multiplier. However, this gradual transition prevents a sudden and disproportionate increase in pension liabilities, which could have placed a greater financial burden on the Magistrate Retirement Fund.

Implications

The amendments to HB 183 provide greater clarity and financial stability for magistrate pensions, while ensuring that new service credit multipliers are implemented in a structured manner. By maintaining existing benefit calculations for prior service, the bill protects magistrates from unexpected changes in their retirement benefits, reducing the risk of legal or financial disputes. The increase in the service credit multiplier for future years provides an incentive for magistrates to continue serving longer, helping to retain experienced judges within the system.

From a financial perspective, the amendment helps balance pension enhancements with fund sustainability, ensuring that the Magistrate Retirement Fund can support long-term obligations. However, the phased-in approach means that immediate fiscal impacts will be smaller, and the full benefits of the new system will only be realized in the long run.

One potential challenge is that newer magistrates entering the system after 2025 will have higher retirement benefits relative to those who retired before the increase in the multiplier. This could create disparities in pension benefits among different generations of magistrates, but the amendment’s clear distinction between past and future service credits minimizes disruption to existing retirees.