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Hall v. Elected Officials' Retirement Plan

Supreme Court of Arizona

November 10, 2016

The Honorable Philip Hall et al., Plaintiffs/Appellees/Cross-Appellants,
Elected Officials' Retirement Plan et al., Defendants/Appellants/Cross-Appellees, State of Arizona, Intervenor-Defendant/Appellant/Cross-Appellee.

         Appeal from the Superior Court in Maricopa County The Honorable Douglas L. Rayes, Judge (retired) The Honorable Randall H. Warner, Judge No. CV2011-021234.


          Ron Kilgard (argued), Alison E. Chase, Keller Rohrback, L.L.P., Phoenix, Attorneys for Philip Hall and Jon W. Thompson et al.

          Bennett Evan Cooper, Steptoe & Johnson, LLP, Phoenix, Attorney for Elected Officials' Retirement Plan and the Members of the Board of Trustees of the Public Safety Personnel Retirement System

          Mark Brnovich, Arizona Attorney General, Charles A. Grube (argued), Senior Agency Counsel, Phoenix, Attorneys for State of Arizona

          Colin F. Campbell, Osborn Maledon, PA, Phoenix; and Robert D. Klausner, Adam P. Levinson, Klausner Kaufman Jensen & Levinson, Plantation, FL, Attorneys for Amicus Curiae National Conference on Public Employee Retirement Systems

          JUDGE HOWE [*] authored the opinion of the Court, in which JUDGE BUTLER* joined, JUDGE CATTANI* joined and specially concurred, and JUSTICE BOLICK and JUDGE TREBESCH* dissented in part and concurred in the judgment in part.


          HOWE, JUDGE

         ¶1 In 2011, the Arizona Legislature enacted Senate Bill 1609, which made certain changes to the Elected Officials' Retirement Plan. The Bill changed the formula for calculating future benefit increases for retired Plan members and increased the amount that employed Plan members must contribute toward their pensions. Retired members of the Plan challenged the provision changing the formula for calculating future benefit increases. They argued that the change violated the Pension Clause of the Arizona Constitution, article 29, section 1, which provides that "public system retirement benefits shall not be diminished or impaired."[1] We agreed, holding that this provision was unconstitutional as applied to the Plan's retired members. See Fields v. Elected Officials' Ret. Plan, 234 Ariz. 214, 320 P.3d 1160 (2014).

         ¶2 Employed members of the Plan also challenged the Bill. First, they argued that the unilateral changes to the benefit increases formula and to the amount they were required to contribute toward their pensions violated the Pension Clause for the reasons set forth in Fields. Second, relying on our long-standing decision in Yeazell v. Copins, 98 Ariz. 109, 402 P.2d 541 (1965), they argued that because their pensions were part of their employment contracts that vested when they began employment, the Legislature could not unilaterally change the terms of their pensions to their detriment. The trial court granted the employed members summary judgment, invalidating the provisions at issue. The court denied the members' request for attorneys' fees and prejudgment interest, however. The court also denied the members' request to have the judgment run against the State, which had intervened in the case. EORP and the State appealed and the members cross-appealed.

         ¶3 Upon transfer from the court of appeals, we affirm the granting of summary judgment to the employed Plan members. As we held in Fields, the Bill's change to the benefit increases formula violates the Pension Clause because it "diminishes and impairs" the employed members' pension benefits. The Bill's changes to the benefit increases formula and the contribution rate also violate our holding in Yeazell because the Legislature cannot unilaterally change the terms of the members' pension contracts once their rights to those terms have vested at the beginning of the members' employment. Contrary to the trial court's ruling, however, we find that the employed members are entitled to attorneys' fees and prejudgment interest and that the judgment must run against the State as well as the Plan.


         ¶4 In 1985, the Legislature established the Plan to provide pension benefits for elected officials, including judges. A.R.S. §§ 38-801(15), -802, -804. The Plan has four funding sources: employer contributions, employee contributions, court filing fees, and investment proceeds. A.R.S. § 38-810. The employee contribution rate was set by statute initially at 6%, with the employer being responsible for contributing the remaining amount necessary to fund a defined benefit upon retirement. See A.R.S. § 38-810(A) (1985). In 1987, A.R.S. § 38-810(A) was amended to increase the employees' contribution to 7%. See 1987 Ariz. Legis. Serv., ch. 146, § 4, codified at A.R.S. § 38-810(A) (1987).

         ¶5 During the 1990s, the Plan generated investment returns that far exceeded the actuarially assumed rate of return. See PSPRS Plan's Funding Status Report with Options for Improving Funding and Reducing Required Contributions, at 2 (2010). During the same period, however, the Plan's financial health was being "seriously compromised" because the Plan was gradually concentrating its investments in securities of high technology and telecommunications companies. Id. In March 2000, the prices of technology and telecommunications securities began to "decline rapidly." Id. This made the Plan vulnerable to major financial shocks in 2000, 2008, and 2009. By fiscal year 2011, the Plan's funding ratio -the actuarial value of the Plan's assets divided by its actuarial accrued liabilities - was 62.1%, a drop from 121% in 1998 and 101.9% in 1985. Accordingly, the State's contribution level necessarily increased, while the employee contribution rate remained constant, as set by statute.

         ¶6 In 2011, attempting to address continued rising costs, the Legislature enacted the Bill, making several unilateral changes to the Plan to be applied retroactively from June 30, 2011. See 2011 Ariz. Legis. Serv., ch. 357. One change the Bill made was to the statutory formula for calculating permanent benefit increases under A.R.S. § 38-818. The Bill amended A.R.S. § 38-818.01 to prohibit the transfer of any investment earnings that exceed the rate of return to the reserve fund and changed the formula used to calculate the permanent benefit increases, increasing the rate of return necessary to trigger a benefit increase. See A.R.S. § 38-818.01(B).

         ¶7 We resolved whether the Bill's change to the statutory formula for calculating permanent benefit increases was constitutional with respect to retired members in Fields, 234 Ariz. at 221 ¶ 34, 320 P.3d at 1167. We held that the formula was a "benefit" for purposes of the Pension Clause and that the Bill's change to the formula violated the clause because it diminished and impaired the retired members' retirement benefits. Id. at 220-21 ¶¶ 29, 34, 320 P.3d at 1166-67. Because the Bill retroactively prevented the transfer of funds to the Plan's reserve, the Plan could not fund expected benefit increases, and retired members' benefit increases consequently were reduced or eliminated in 2011, 2012, and 2013. Id. at 221 ¶ 35, 320 P.3d at 1167. The Bill also made it less likely that retired members would receive future benefits increases because of the raised rate of return required to fund an increase. Id. at ¶ 36, 320 P.3d at 1167.

         ¶8 The Bill made another change that was not at issue in Fields, but is here. The Bill amended the employee contribution rate structure by increasing the rate to 10% for fiscal year 2011-2012 and to 11.5% for fiscal year 2012-2013. A.R.S. § 38-810(F)(1)-(3) (2011). It also set the rate for fiscal year 2013-2014 and each fiscal year thereafter to the lesser of 13% of the member's gross salary or 33.3% of the sum of the member's contribution rate from the preceding fiscal year and the normal cost plus the actuarially-determined amount required to amortize the employer's unfunded accrued liability. A.R.S. § 38-810(F)(4) (2011).

         ¶9 In November 2011, Judges Philip Hall-who has since retired -and Jon W. Thompson, on behalf of themselves and as representatives of a class of employed Plan members and beneficiaries as of July 20, 2011, the Bill's effective date (collectively, "Class Members"), sued the Plan and the Board of Trustees of the Public Safety Personnel Retirement System (collectively, "EORP"). The Class Members alleged that the Bill violated Yeazell, the Pension and Judicial Salary Clauses of the Arizona Constitution, and the Contract Clauses of the Arizona and United States Constitutions. The State intervened to defend the Bill. After the State intervened, the Class Members notified the trial court and the parties that they would seek relief, including attorneys' fees, expenses, and taxable costs, not only from EORP but also from the State.

         ¶10 After intervening litigation, the parties each moved for summary judgment. The Class Members maintained - as relevant here- that the Bill violated Yeazell by unilaterally modifying their interests in their pensions, which had vested at the outset of their employment with the State, and violated the Pension Clause by diminishing their entitled benefits. EORP and the State responded that the Class Members' rights had not yet vested and therefore the Legislature could modify the pension plan as it saw fit. EORP and the State noted that in 2000, the Legislature had enacted A.R.S. § 38-810.02 ("the vesting statute"), providing that EORP benefits vest at the time the employee applies for benefits or retires. EORP and the State argued that because the statute applies retroactively, it has become part of the Class Members' employment contracts with the State, and accordingly, their rights do not vest until they retire.

         ¶11 The trial court granted the Class Members' motion for summary judgment and denied EORP's and the State's cross-motions for summary judgment. The court held that the Pension Clause protected the benefit increases formula and the 7% prior contribution rate because they constituted "benefits" that were always part of the members' contractual relationship with the State. The court rejected EORP's argument that the vesting statute preempted the members' contractual rights and their rights under the Pension Clause. The court concluded that the statute applies only to "ordinary" vesting, meaning that a member has no right to receive retirement benefits until the member fulfills specific conditions and retires. The court thus granted the Class Members the relief they sought.

         ¶12 The parties then asked for a stay pending our decision in Fields, which the trial court granted. After considering the effect of Fields, the court denied the Class Members' request for attorneys' fees under A.R.S. § 12-341.01 because it concluded that the action arose out of constitutional and statutory-not contractual- obligations. The court also denied the Class Members' request for prejudgment interest because it found that EORP was not unjustly enriched and should not be charged interest on money it legally could not pay. The court further denied the Class Members' request that relief run against the State because it found that the State had intervened only to defend the Bill's constitutionality and the Class Members' notice seeking relief against EORP and the State was insufficient to assert claims against the State.

         ¶13 EORP and the State timely appealed the summary judgment in the Class Members' favor, and the Class Members timely cross-appealed the judgment denying attorneys' fees, prejudgment interest, and relief against the State. We granted the parties' joint petition to transfer the case under Arizona Rule of Civil Appellate Procedure 19(a). The funding of public pensions raises issues of statewide importance, and we have jurisdiction pursuant to article 6, section 5(3) of the Arizona Constitution.


         ¶14 EORP and the State argue that the trial court erred by finding that the Bill violates the Pension Clause and Yeazell.[2]We review de novo the constitutionality of statutes and, if possible, construe them to uphold their constitutionality. State v. Glassel, 211 Ariz. 33, 51 ¶ 65, 116 P.3d 1193, 1211 (2005). We presume that a statute is constitutional, and the "party asserting its unconstitutionality bears the burden of overcoming the presumption."[3] Eastin v. Broomfield, 116 Ariz. 576, 580, 570 P.2d 744, 748 (1977). As discussed below, we hold that (1) the Bill's change to the benefit increases formula provision violates the Pension Clause by diminishing and impairing a benefit to which the Class Members are entitled and (2) its changes to the benefit increases formula and the contribution rate provisions are unconstitutional under Yeazell because it unilaterally modified the Class Members' employment contracts with the State to the Class Members' detriment.

         A. The Pension Clause

         ¶15 EORP and the State first argue that the trial court erred because the benefit increases formula and the prior contribution rate are not "benefits" and therefore not protected by the Pension Clause. Regarding the benefit increases formula, this Court concluded in Fields that permanent benefit increases and the benefit increases formula were "benefits" as used in the Pension Clause. See 234 Ariz. at 219, 220 ¶¶ 23, 26, 320 P.3d at 1165, 1166. The reasoning in Fields applies with equal force to the Class Members because the Bill's change to A.R.S. § 38-818's formula diminishes and impairs the Class Members' retirement benefits just as it does for retired members. See id. at 221-22 ¶¶ 34-36, 320 P.3d at 1167-68. The Bill's amendment regarding the benefit increases formula therefore violates article 29, section 1(C), of the Arizona Constitution. Regarding the prior contribution rate, however, because we hold that the prior contribution rate is protected under Yeazell, see infra § B, we need not decide whether it is also protected under the Pension Clause. See Three Affiliated Tribes of Fort Berthold Reservation v. Wold Eng'g, P.C., 467 U.S. 138, 157 (1984) ("It is a fundamental rule of judicial restraint . . . that this Court will not reach constitutional questions in advance of the necessity of deciding them.").

         B. A Binding Contractual Relationship

         1. Yeazell v. Copins

         ¶16 EORP and the State also argue that the trial court erred in applying Yeazell because "Yeazell enshrined the vesting statute as part of the [member's employment] contract, authorizing the Legislature as a matter of the express contract to make reasonable prospective changes like adjusting the contribution rate." Consequently, they argue, Yeazell does not "apply constitutional protections for pension rights" and also does not affect whether the Pension Clause protects the benefit increases formula and the prior contribution rate. The Class Members counter that the Bill violates Yeazell because it seeks to unilaterally and retroactively modify their pension terms as provided in their employment contracts when they began services.

         ¶17 Yeazell established that the State's promise to pay retirement benefits is part of its contract with the employee. See 98 Ariz. at 113-17, 402 P.2d at 544-47. By accepting a job and continuing to work, the employee has accepted the State's offer of retirement benefits, and the State may not impair or abrogate the terms of that contract without obtaining the employee's consent. Id. Yeazell involved a Tucson police officer's appeal of a local board's decision setting his pension benefits based on a 1952 amendment to the pension statute in effect at the time of his retirement, rather than on the statute in effect when he was hired in 1937. Id. at 111, 402 P.2d at 542. Yeazell argued that the 1937 statute, requiring him to contribute 2% of his salary and granting him a monthly pension equal to one-half of his average monthly compensation for one year immediately before his retirement date, was the applicable law from which to determine his retirement benefits - not the 1952 statute. Id. His benefit under the 1937 statute would have been $7.21 more per month than his benefit under the 1952 statute. Id.

         ¶18 The issue in Yeazell was whether the Legislature could unilaterally change statutorily-created retirement benefits that were part of the terms of an employee's employment contract when the employee began service. See id. at 111-12, 402 P.2d at 542-43. The majority rule in the United States at the time was that pensions - characterized as "gratuities" granted at the sovereign's benevolent will-could be modified because the employees had no vested right to them. Id. at 112, 402 P.2d at 543. Thus, pension plans could be amended or changed as a legislature saw fit. Id. Yeazell recognized, however, that treating retirement benefits as "gratuities" posed a problem in Arizona because of the state's Gift Clause, id. at 112, 402 P.2d at 543, which, as relevant here, prohibits state entities from giving or lending its credit "in the aid of, or mak[ing] any donation or grant, by subsidy or otherwise" to any individual, Ariz. Const. art. 9, § 7.

         ¶19 Yeazell acknowledged that under the Gift Clause, "[t]he state may not give away public property or funds; it must receive a quid pro quo which, simply stated, means that it can enter into contracts for goods, materials, property and services." 98 Ariz. at 112, 402 P.2d at 543. Thus, to uphold Arizona retirement plans under the Arizona Constitution, this Court concluded that pensions were not gratuities, but were, in the nature of contracts, viewed as deferred compensation for services rendered. Id. at 113-15, 402 P.2d at 543-45. We reasoned that a pension is a gratuity only when it is granted for services previously rendered, but when the services are rendered under a pension statute, "the pension provisions become a part of the contemplated compensation for those services, and so in a sense a part of the contract of employment itself." Id. at 113, 402 P.2d at 544; see also Proksa v. Ariz. State Sch. for the Deaf & the Blind, 205 Ariz. 627, 631 ¶ 21, 74 P.3d 939, 943 (2003) ("Put differently, in the retirement benefits area, given the Gift Clause of our constitution, this court effectively found an 'adequate expression of an actual intent of the State to bind itself, ' because any finding to the contrary would render the statutes unconstitutional.") (citation omitted).

         ¶20 Based on Yeazell and its Gift Clause underpinnings, the law in Arizona has been clear since 1965 that public employees are contractually entitled to the retirement benefits specified in their initial employment contract. See, e.g., Proksa, 205 Ariz. at 630 ¶ 16, 74 P.3d at 942; Norton v. Ariz. Dep't of Pub. Safety Local Ret. Bd., 150 Ariz. 303, 723 P.2d 652 (1986); Thurston v. Judges' Ret. Plan, 179 Ariz. 49, 876 P.2d 545 (1994). This protected relationship prevents the Legislature from changing the employee's pension terms at will after the terms have vested, see Yeazell, 98 Ariz. at 115-16, 402 P.2d at 545-46, and provides public employees reasonable expectations that their retirement benefits are protected by the law of contracts, see id. at 117, 402 P.2d at 546 (holding that a public employee "ha[s] the right to rely on the terms of the legislative enactment of the [pension plan] as it existed at the time he entered the service, " and that "subsequent legislation may not be arbitrarily applied retroactively to impair the contract"). The parties may subsequently agree to modify the contract, of course, but the State may not unilaterally change the contractual terms unless the change benefits the employee. See Thurston, 179 Ariz. at 51, 876 P.2d at 547 (recognizing that "when the amendment [to retirement benefits] is beneficial to the employee or survivors, it automatically becomes part of the contract by reason of the presumption of acceptance"). Under that circumstance, the employee is deemed to have ratified the beneficial change, which becomes part of the employment contract. Id.

         ¶21 For Yeazell, we concluded that the Legislature had unilaterally amended the 1937 statute, which had become a part of his employment contract-a contract that included the 2% contribution rate and a pension calculation based on his last year's earnings. Tucson therefore could not retroactively vary the pension terms without Yeazell's consent. Yeazell, 98 Ariz. at 116, 402 P.2d at 546. We explained that although an employee may not qualify to receive his pension benefits until he has performed the necessary condition-completion of the requisite years of service-this did not mean that from the moment Yeazell entered service as a Tucson police officer, a firm and binding contract did not exist between him and the City of Tucson. Id. at 114, 402 P.2d at 544.

         ¶22 Although acknowledging that Yeazell established a contractual relationship between the State and public employees regarding the employees' pensions, EORP and the State nonetheless assert that Yeazell provides only that "the employees' contractual relationship vested at the time they began services [and] does not automatically mean that specific benefits vested at that time, without regard to the contemporaneous terms of the contract." But the specific benefits - that is, the terms of the legislative enactment relating to the employees' pensions as they existed when the employees began their services -are exactly the type of benefits Yeazell protects:

The legislature amended the 1937 statute which was a part of appellant's contract of employment with the City of Tucson. Tucson now attempts to apply the changes retroactively to vary the terms of its contract with appellant. We hold the changes, if applied to appellant without his assent, would constitute an alteration, a modification of his contract. This Tucson may not do.

Id. at 116, 402 P.2d at 546. Yeazell thus protects the specific terms of a public pension contract from unilateral retroactive alteration. Even the dissent in Yeazell recognized this as the Court's holding. See id. at 118, 402 P.2d at 547 (Udall, J., dissenting) (stating that the majority's holding was based on the "erroneous premise that there was created upon employment an absolute binding 'contract' to a specific pension, " which meant that the majority was holding that "the legislature, by subsequent enactment, can modify the original pension terms only if the employee consents").

         ¶23 The Bill's changes to the Class Members' pension contracts are consequently invalid under Yeazell. When the Class Members were elected or appointed as judges, they entered a contractual relationship with the State regarding the public retirement system of which they became members. Their retirement benefits were a valuable part of the consideration the State offered upon which the Class Members relied when accepting employment. See Fields, 234 Ariz. at 220 ¶ 27, 320 P.3d at 1166 ("As in Yeazell, Fields has a right in the existing formula by which his benefits are calculated as of the time he began employment and any beneficial modifications made during the course of his employment."). Under their contracts, the Class Members received retirement benefits as terms of their contracts for which they agreed to share the cost with their employers. Thus, an increase in the Class Members' proportionate share of the contribution rate above 7% and the change in the statutory formula granting permanent benefit increases without the Class Members' consent are breaches of that contract and infringe upon the Class Members' contractual relationship with the State. See Thurston, 179 Ariz. at 52, 876 P.2d at 548 ("Where the modification is detrimental to the employee, it may not be applied absent the employee's express acceptance of the modification because it interferes with the employee's contractual rights."). By including in its scope Class Members who were Plan members at the time of enactment, the Bill retroactively, unilaterally, and substantially changed the contract terms that the parties previously agreed to. This violates Yeazell.

         ¶24 EORP and the dissent both argue that this is not the end of the analysis. They note that Yeazell commented that if a governmental entity shows that its pension plan is actuarially unsound, "the law governing mutual mistakes of fact" applies. See 98 Ariz. at 116, 402 P.2d at 546. They interpret this comment to mean that if EORP and the State could show that the parties to the Plan made a mistake about the Plan's financial viability, the Bill's retroactive changes would be permissible modifications of the Plan under Yeazell. But EORP and the dissent over-read Yeazell s comment. Although this Court indeed said that the law of mistakes of fact applied to a pension plan if it was actuarially unsound, we expressly and carefully declined to address the consequences of such an application: "We do not, however, mean to imply what rights or remedies might be available to either party in a situation where it is established that a retirement plan is actuarially unsound. This is a matter beyond the issues of the present litigation." Id. at 117, 402 P.2d at 546.

         ¶25 This Court's reticence was appropriate. While the defense of mutual mistake of fact applies in any contract dispute, EORP and the State are unable to prove that defense as a matter of law. That defense requires that the party seeking to void a contract prove that (1) the parties made a mistake about a basic assumption on which they made the contract, (2) the mistake had a material effect on the exchange of performances, and (3) the party seeking avoidance does not bear the risk of the mistake. Restatement (Second) of Contracts § 152(1) (1981); see also Renner v. Kehl, 150 Ariz. 94, 97, 722 P.2d 262, 265 (1986) (applying § 152 in resolving claim of mutual mistake of fact). EORP and the State cannot prove two of these elements.

         ¶26 First, EORP and the State cannot show that the parties made a mistake about a basic assumption of the Plan. They claim (and the dissent accepts, see infra ¶¶ 73, 104) that the mistake was the parties' shared assumption that the Plan was actuarially sound, meaning that the parties mistakenly believed that the Plan's investment returns would be sufficient to maintain the Plan's actuarial soundness without changing the benefit increases formula or the employee contribution rate. But disappointment about anticipated investment returns does not qualify as a mistake. See Restatement (Second) of Contracts § 152 cmt. b (noting that "market conditions and the financial situation of the parties are ordinarily not such assumptions, " and "mistakes as to market conditions or financial ability do not justify avoidance under the rules governing mistake").[4] Moreover, the Plan's actuarial soundness is within the Legislature's control. The Legislature is responsible for setting the amounts of the employer contributions and court filing fees, see A.R.S. § 38-810(B)-(D), and the Legislature may not "reduce the amount of the contributions to the fund if thereby the soundness of the fund is jeopardized, " Yeazell, 98 Ariz. at 116, 402 P.2d at 546. If the Plan is underfunded because of inadequate investment returns, the State may increase employer contributions and filing fees.

         ¶27Second, even if unanticipated reductions in investment returns could qualify as a mistake, EORP and the State cannot show that the State did not bear the risk that this mistake might occur. The Legislature designed the Plan so that the State accepted the risk of variable investment returns. When investment returns are high, the State's funding obligation through employer contributions is reduced or eliminated, as happened from 1998 to 2001. But when investment returns are low, the State's funding obligation is necessarily increased. In either situation, however, the Class Members' contribution rate remains fixed. Thus, the Class Members are not permitted to obtain any cost savings from higher investment returns, but they likewise are not required to pay more because of lower investment returns. The reward and risk of investment returns falls on the State. This is simply the nature of defined benefit plans. See Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 439 (1999) (stating that in a defined benefit plan "the employer typically bears the entire investment risk" and "must cover any underfunding as the result of a shortfall that may occur from the plan's investments"). Because the State bears the risk of the claimed mistake, the State cannot rely on the defense of mutual mistake of fact to justify changes to the Plan.[5]

         ¶28 The dissent also maintains that the Bill's changes to the Plan may be upheld under the Contract Clauses of the United States and Arizona Constitutions. U.S. Const. art. 1, § 10; Ariz. Const. art. 2, § 25. See infra ¶ 107. As we have explained, however, the Bill's unilateral and retroactive changes to the vested terms of the Plan violate Yeazell and the Gift Clause. See supra at ¶¶ 19-23. Consequently, analyzing whether the Bill would pass review under the Contract Clauses were it not for Yeazell and the Gift Clause is unnecessary and violates the principle of judicial restraint. See Superintendent, Mass. Corr. Inst. v. Hill, 472 U.S. 445, 453 (1985) (stating that judicial restraint requires "avoid[ing] unnecessary resolution of constitutional issues").

         ¶29 The dissent's substantive concerns about our holding are, respectfully, not well taken. The dissent, however, raises one other concern that merits discussion. The dissent discusses at great length the perilous state of the Plan and this Court's need to defer to the Legislature's policy choices in making the Plan solvent, see infra ¶¶ 58, 64-66, 108, effectively asking this Court to get out of the way and let the Legislature fix the problem. This argument has been raised in other cases involving judicial pension reform, when state legislatures have run afoul of state constitutional provisions that preclude retroactive changes to judicial pensions. See In re Pension Reform Litig., 32 N.E.3d 1, 19-26 (Ill. 2015); De Pascale v. State, 47 A.3d 690, 693, 704-05 (N.J. 2012).

         ¶30 But this is not a matter of refusing to defer to the Legislature on an issue of public policy. It is a matter of requiring the Legislature to follow the Arizona Constitution in setting that policy. We recognize that the financial soundness of public pension systems is a matter of great public importance. We acknowledge that devising measures to guarantee the Plan's financial stability is difficult and fraught with unpleasant policy choices. But whatever measures the Legislature enacts to address the problem still must comport with the Arizona Constitution. See In re Pension Reform Litig., 32 N.E.3d at 19 (stating that "[n]either the legislature nor any executive or judicial officer may disregard the provisions of the constitution even in case of a great emergency") (citation omitted); De Pascale, 47 A.3d at 704 (noting that a legislature has the right to implement its policy choices in dealing with critical issues but that those choices "must be made within a constitutional framework"). In examining the Bill's constitutionality, we are not meddling in the Legislature's policy choices. We are fulfilling our duty to ensure that the Arizona's constitutional framework is respected and observed in making those choices. See Pool v. Superior Court, 139 Ariz. 98, 108, 677 P.2d 261, 271 (1984) (noting that interpreting the state constitution is this Court's responsibility). The provisions of the Bill at issue here are contrary to Arizona's constitutional framework and consequently invalid.

         2. The Vesting Statute

         ¶31 EORP and the State further assert that although Yeazell established a contractual relationship between the State and its employees regarding pensions, the vesting statute, enacted in 2000, is part of the employment contract for any employee hired after that date and allows the Legislature to modify the pension terms for members before they retire. The vesting statute provides:

A. Because the plan as enacted at a particular time is a unique amalgam of rights and obligations having a critical impact on the actuarial integrity of the plan, the legislature intends that the plan as enacted at a particular time be construed and applied as a coherent whole and without ...

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