History of JSAS

JSAS was created in 1956 to help provide financial security for the families  of deceased federal judges. It provides benefits to surviving eligible  spouses and dependent children of judges who participate in the plan. Judges may elect coverage within 6 months of taking office, 6 months after  getting married, or 6 months after being elevated to a higher court, or  during an open season authorized by statute. Active and senior judges  currently contribute 2.2 percent of their salaries to JSAS, and retired  judges contribute 3.5 percent of their retirement salaries to JSAS. Objectives, Scope, and Methodology

Our objectives were to determine whether participating judges’  contributions for the 3 plan years ending on September 30, 2004, funded at  least 50 percent of the JSAS costs and, if not, what adjustments in the  contribution rates would be needed to achieve the 50 percent ratio. Judges Paid More Than Half of JSAS’s Costs

For each of the JSAS plan years 2002 through 2004, participating judges  funded more than 50 percent of the JSAS normal costs. The judges’ contribution of JSAS normal costs shown in table 1 fluctuated  from approximately 75 percent in plan year 2002, to approximately 64  percent in plan year 2003, and to 78 percent in plan year 2004. The variance in  the federal government’s contribution rates was a result of the fluctuation  in normal costs resulting from several combined factors, such as changes  in assumptions; lower-than-expected return on plan assets; demographic  changes—retirement, death, disability, new members, and pay increases;  as well as an increase in plan benefit obligations. As shown in table 1,  the judges’ average contribution for JSAS costs for this review period was  approximately 72 percent, which exceeded the 50 percent contribution  goal for judges. In AOUSC’s view, this omission is not consistent with Congress’s  intent in enacting the Federal Courts Administration Act of 1992. Thus, for the 3 years covered by this review, we determined and  reported that judges’ contributions funded approximately 72 percent of  normal costs of JSAS, and therefore, an adjustment to the judges’  contribution rates was not needed under the existing legislation because  the judges’ contributions achieved 50 percent of JSAS costs. However, if one were to interpret the act as calling for an equal sharing of  the program’s costs between participants and the government, then, on the  basis of the information contained in the JSAS actuarial report as of  September 30, 2004, participating judges’ future contributions would have  had to decrease a total of 0.86 percentage points below the current 2.2  percent of salaries for active judges and senior judges and 3.5 percent of  retirement salaries for retired judges in order to fund 50 percent of JSAS  costs over the past 3 years.
Why GAO Did This Study

The Judicial Survivors' Annuities System (JSAS) was created in 1956 to provide financial security for the families of deceased federal judges. It provides benefits to eligible spouses and dependent children of judges who elect coverage within 6 months of taking office, 6 months after getting married, or 6 months after being elevated to a higher court, or during an open season authorized by statute. Active and senior judges currently contribute 2.2 percent of their salaries to JSAS, and retired judges contribute 3.5 percent of their retirement salaries to JSAS. Pursuant to the Federal Courts Administration Act of 1992 (Pub. L. No. 102-572), GAO is required to review JSAS costs every 3 years and determine whether the judges' contributions fund 50 percent of the plan's costs. If the contributions fund less than 50 percent of these costs, GAO is to determine what adjustments to the contribution rates would be needed to achieve the 50 percent ratio. GAO is not making any recommendations in this report. The Administrative Office of the United States Courts (AOUSC) believes that GAO should be recommending a reduction in the judges' contribution rate. GAO disagrees with AOUSC's interpretation of the act's requirements.

What GAO Found

During plan years 2002 through 2004, the participating judges' contributions funded more than 50 percent of the JSAS normal costs. The participating judges funded approximately 75 percent of JSAS normal costs during plan year 2002, 64 percent during plan year 2003, and 78 percent during plan year 2004. On average over the 3-year period, the participating judges funded approximately 72 percent of JSAS normal costs, while the federal government funded approximately 28 percent. The variance in the government's contribution rates was a result of the fluctuation in normal costs resulting from several combined factors, such as changes in assumptions; lower-than-expected rates of return on plan assets; demographic changes--retirement, death, disability, new members, and pay increases; as well as an increase in plan benefit obligations. For the 3 years covered by the review, GAO determined that an adjustment to the judges' contribution rate was not needed because their average contribution share for the review period was approximately 72 percent, which exceeded the minimum 50 percent contribution goal specified by law. In addition, GAO examined the annual share of normal costs covered by judges' contributions over a 9-year period and found that on average the participating judges funded approximately 55 percent of JSAS's normal costs.