JUDICIAL BRANCH SALARY STRUCTURES

JUDICIAL BRANCH SALARY STRUCTURES REPORT TO THE GENERAL ASSEMBLY FROM THE STATE JUDICIAL COUNCIL May 19, 2005

INTRODUCTION AND EXECUTIVE SUMMARY This report, with extensive supporting data, documents that the salary set for the Office of Chief Justice of North Carolina is woefully below salaries paid to governmental and other lawyers in North Carolina and far below salaries paid to Chief Justices in southeastern states. The Office of Chief Justice is at the apex of the court system. When the salary set for that office is too low, the salaries of other judges and court officials will also fall below adequate levels for those positions. This is the situation in North Carolina and, as a result, justice suffers. For the good of our state it should not be and cannot be sustained. For some examples, the Chief Justice in North Carolina is paid approximately 25% less than the average for the university counsel of North Carolina s two public universities with law schools, about 55% less than their law school deans, 41% less than the university counsel at the state's three largest universities, about 19% less than the median salary of chief justices in southeastern states, about 34% less than a federal district court judge, and 23% less than a federal bankruptcy court judge. Justice cannot be administered and carried out as our citizens expect and deserve unless the Judicial Branch of Government can attract and retain the most experienced and able lawyers to serve as judges and other officials. The decisions that judges make every day directly affect the safety of our citizens, the care and custody of children in the most difficult situations, the estates and financial affairs of our citizens, the conduct of business and thus the prosperity of our state, and the precedents that support the fundamental rights, liberties and stability of our society. Yet private lawyers representing criminals are paid alarmingly more than the prosecutors they face, the public defenders who represent indigent accused individuals, and the judges who decide the cases. The business community faces the prospect of having important financial matters decided by judges who make a fraction of what the lawyers who argue the cases are paid. For our system of justice, it is not possible to overstate the importance of providing salary levels in the Judicial Branch sufficient to attract and retain a judiciary from among the most experienced and accomplished members of the legal profession. The state faces a fiscal shortfall that makes it very difficult to remedy the seriously poor condition of judicial salaries. Unfortunately, the difficulty of providing the resources does not in any way diminish the imperative need to do so. In this report the Judicial Council recommends a specific salary structure to be provided for judicial positions and urges the General Assembly to consider and act on these recommendations during the current legislative session. The Judicial Council also recommends that to help ensure adequate Judicial Branch salaries in future years, a salary study be conducted by the AOC before each biennial legislative session, and that the Judicial Council consider those studies and make appropriate recommendations to the legislature for each biennial budget. The General Assembly should amend the statutory duties of the Judicial Council to codify this ongoing review of Judicial Branch salaries. Judicial Branch Salary Structures, Report of the NC State Judicial Council to the General Assembly May 2005 --- Page 1 of 5

BACKGROUND: Prior and Current Studies In April 2004, as requested by the General Assembly, the Offices of State Personnel and State Budget and Management submitted to the Governor and the Legislature a "Study of Compensation of Certain High-Level Officials." Among other state government positions, that study reviewed the salaries of judges in North Carolina. The report cited data raising the concern that judicial salaries in North Carolina are significantly below the salaries of city attorneys for populous cities, legal counsel for state universities, law professors, and judges in other southeastern states. The report recommended further study by the State Judicial Council. The State Judicial Council was established by the General Assembly effective January 2000 as an advisory and oversight body for the efficient and effective operation of the Judicial Branch of Government. The Judicial Council is chaired by the Chief Justice and has 17 other members consisting of Judicial Branch officials from every court component, plus lawyer and non-lawyer members designated by the Governor, Chief Justice, Speaker of the House, and President Pro Tempore of the Senate. A membership list is attached as Appendix A. Among the duties of the State Judicial Council in G.S. 7A-409.1(a) are to: "(4) Study and recommend to the General Assembly the salaries of justices and judges; "(5) Recommend to the General Assembly changes in the expense allowances, benefits, and other compensation for judicial officials... " In fall of 2004, the AOC contracted for an independent expert to study the compensation of key Judicial Branch officials. In April 2005, the expert consultant provided a report to the Judicial Council with extensive data documenting that the salaries of court officials in North Carolina are significantly low compared to lawyers in our state in the public and private sectors and salaries paid to court officials in southeastern states. The consultant's report is attached as Appendix B. Recommendations for how to set Judicial Branch salaries are included in that report. The remainder of this report gives data focused on the salary of the Office of the Chief Justice of the Supreme Court. The salary for that office must be increased for the state to maintain an ability to attract the quality of people our state should have for its court system. Because the salary for the Office of Chief Justice is too low, all other Judicial Branch salaries, falling below that of the Chief Justice, face what in compensation parlance is known as "compression" salary levels that cannot be competitive with market forces, or equitable in relation to each other, because the organization's top salary is capped at an inappropriate, non-competitive level. The data that follow provide the basis for the Judicial Council's specific recommendation for the salary of the Office of the Chief Justice. This recommendation provides the starting point for the structure of all other judicial salaries, which should be set in accordance with options described in the independent expert's report. Judicial Branch Salary Structures, Report of the NC State Judicial Council to the General Assembly May 2005 --- Page 2 of 5

SALARY COMPARISONS TO THE OFFICE OF CHIEF JUSTICE Current Salary Chief Justice s salary in Comparison Chief Justice, NC Supreme Court $121,391 Other State of NC Positions Public Univ. Law School Deans: mean $188,653-55.4% UNC-CH $246,421-103.0% NCCU $130,884-7.8% University Counsel at universities with public law schools: mean $152,392-25.5% UNC-CH $220,000-81.2% NCCU $84,783 30.2% University Counsel at the three largest universities (UNC-CH, -41.2% NCSU and ECU) mean (2004 mean was $165,594) $171,410 UNC-CH $220,000-81.2% NCSU $164,229-35.3% ECU $130,000-7.1% Utilities Commission, Chair $119,315 1.7% Attorney General $107,136 11.7% Industrial Commission, Chair $105,288 13.3% Chief Legal Counsel to Governor $98,500 18.9% Chief Administrative Law Judge $94,207 22.4% General Counsel Senate / House $89,739 26.1% NC City Attorney Median over 100,000 population $133,581-10.0% NC County Attorney Median over 100,000 population $96,257 20.7% Southeastern States Chief Justice Florida $155,000-27.7% Alabama $153,000-26.0% Delaware $153,000-26.0% Georgia $153,000-26.0% Maryland $151,000-24.4% Virginia $144,000-18.6% Kentucky $129,000-6.3% South Carolina $125,000-3.0% Tennessee $124,000-2.1% Mississippi $115,000 5.3% West Virginia $95,000 21.7% Federal Judges Chief Justice, US Supreme Court $208,100-71.4% Associate Justice, US Supreme Court $199,200-64.1% US Circuit Court of Appeals Judge $171,800-41.5% US District Court Judge $162,100-33.5% US Bankruptcy Court Judge $149,132-22.9% US Magistrate $149,132-22.9% Judicial Branch Salary Structures, Report of the NC State Judicial Council to the General Assembly May 2005 --- Page 3 of 5

The table above illustrates that the Chief Justice is paid approximately 25% less than the average for the university counsel of NC s two public universities with law schools, about 55% less than their law school deans, and about 41% less than the university counsel at the state's three largest universities. The Chief Justice s salary is about 18.6% less than the median salary ($144,000) for other Chief Justices in southeastern states and lags far behind the salaries of federal judges. The North Carolina Chief Justice is paid 71% less than the Chief Justice of the U.S. Supreme Court, about 34% less than a federal district court judge, and 23% less than a federal bankruptcy court judge. The table in Appendix C shows that the increase in the salary of the Office of Chief Justice has been well below the pace of increase in the Consumer Price Index, meaning that this Office is not only low compared to the positions in the table above, but has been losing ground in terms relevant to maintaining the same standard of living. No doubt, the salaries shown above for county attorneys, city attorneys, law professors and others reflect the reality that to hire experienced and highly able counsel, these public entities must attract attorneys from the private sector to apply for these jobs. It is not clear what historic or other set of assumptions justify the pattern of low judicial salaries. Judges are expected to provide service to the state at rates of pay much, much lower than their colleagues in private practice, and much lower than what cities and counties find it necessary to pay their attorneys. To serve in the judiciary, a successful lawyer must decide to run for office in a contested, uncertain election, face the uneven job security of reelections, and accept a substantial reduction in pay for a job that in the legal profession carries the most in complexity, stress, and responsibility. The eventual alternative to increasing judicial salaries to an adequate level is for only the independently wealthy, the less experienced members of the bar, or marginal lawyers to seek judicial office. The court system, no less than a law firm or a law school, must attract the most able people in the profession, and for this to happen, the gap between the salaries of private lawyers and judges must be closed. Judicial Branch Salary Structures, Report of the NC State Judicial Council to the General Assembly May 2005 --- Page 4 of 5

SUMMARY AND RECOMMENDATIONS With extensive data from North Carolina and other states, this report explains and documents that judicial salaries in our court system are severely low compared to the salaries for legal positions in North Carolina and judges in other states. For the system of justice that our citizens deserve and expect, it is imperative for salary levels in the Judicial Branch to be high enough to attract and retain a judiciary from among the most experienced and accomplished members of the legal profession. The recommendations of the State Judicial Council are as follows: (1) The salary for the Office of Chief Justice should be raised to a competitive level. At the apex of the North Carolina court system is the Office of Chief Justice. Since all other Judicial Branch salaries are below that level, a system for adequate Judicial Branch salaries must start there. This report focuses on data regarding the salary of that Office, and develops a specific recommendation for what that salary ought to be. Based on the foregoing data, the Judicial Council's recommendation for the Chief Justice's salary is $155,000. This rate is between the average salaries paid to the university counsel of North Carolina s two public universities with law schools, and their law school deans, is on par with salaries paid by other southeastern states, and is the average between the salary of U.S. Bankruptcy Court and U.S. District Court Judges. (2) The salaries for other Judicial Branch officials should be set at appropriate and equitable levels below the salary of the Office of Chief Justice. The State Judicial Council contracted for an expert, independent study of Judicial Branch salary structures. The report from that study is attached to this report as Appendix B. The salaries of Judicial Branch officials below the Office of Chief Justice should be set in accordance with Options 1 or 2 in that report, based on the salary of the Office of Chief Justice of $155,000, as recommended in this report. (3) The Judicial Council respectfully asks the 2005 Session of the General Assembly to take the immediate steps necessary to providing adequate salaries for the Judicial Branch of Government and specifically to adopt and provide funding for the salaries recommended in this study. (4) Appropriate steps should be taken in future years to ensure adequate Judicial Branch salaries. Before each biennial legislative session, the AOC should conduct a study of Judicial Branch salaries. The Judicial Council should consider these studies and make appropriate recommendations to the legislature for each biennial budget. The General Assembly should amend the statutory duties of the Judicial Council to codify this ongoing review of Judicial Branch salaries. Judicial Branch Salary Structures, Report of the NC State Judicial Council to the General Assembly May 2005 --- Page 5 of 5

APPENDIX A STATE JUDICIAL COUNCIL MEMBERS AS OF APRIL 2005 Judicial Branch Officials Honorable I. Beverly Lake, Jr. Chief Justice, N.C. Supreme Court Chair Honorable Robert Hobgood Senior Resident Superior Court Judge Mr. Peter Gilchrist District Attorney Mr. Angus Thompson Public Defender Honorable John C. Martin Chief Judge, N.C. Court of Appeals Honorable Beth Keever Chief District Court Judge Honorable Warren Hughes Clerk of Superior Court Mr. Todd Tilley Magistrate Other Members Appointed by the Chief Justice: Appointed by the Governor: Appointed by the General Assembly, on recommendation of the... Speaker of the House: President Pro Tempore of Senate: Appointed by the Indigent Defense Services Commission: Appointed by the State Bar Council: Dr. Melvin Swann Jane Gray* Mr. John Medlin Ms. Althea Williams Mr. Dumont Clarke Mr. Jack Olsen vacant Ms. Jane Griffin Professor Rhoda Billings (Chief Justice, Retired) Mr. Gary W. Thomas * Judge Jane Gray is holding over pending a new appointment.

APPENDIX B SALARIES OF COURT PERSONNEL IN THE STATE OF NORTH CAROLINA MARCH 2005 Report Prepared for the Salary and Benefits Committee of the State Judicial Council by Fox Lawson and Associates, LLC

APPENDIX C The chart below illustrates that over the past decade the salaries of the Chief Justice and District Attorneys have not kept up with the Consumer Price Index, and that would be true for Judicial Branch salaries in general. 1.45 Comparison of Salary Increases to the Consumer Price Index (CPI)* 1.4 1.35 1.3 Index 1.25 1.2 1.15 1.1 1.05 Consumer Price Index (CPI) Chief Justice - Supreme Court Chairman - Utilities Commission District Attorney 1 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Year *The Consumer Price Index reflects changes in the prices of goods and services that are directly purchased in the marketplace.

Salaries of Court Personnel in the State of North Carolina March 2005 1 F

INTRODUCTION The North Carolina Administrative Office of the Courts (AOC), under direction of the State Judicial Council, engaged Fox Lawson & Associates LLC, to conduct a salary study of 18 positions in the North Carolina Judicial Branch. The intent of this study is to conduct a comprehensive review and analysis of the compensation levels currently offered to key elected and appointed Judicial Branch officials, in comparison to other comparable positions both in and out of the state. The result of the study is a set of recommendations from Fox Lawson for the State Judicial Council to consider in making recommendations of compensation that would be appropriate for each of the positions covered by the study. The ultimate purpose of the study, as explained by the AOC, is to ensure that the citizens of North Carolina receive the quality of justice they deserve and expect from experienced and competent judicial employees. 2 F

WORK PROCESS AND METHODS In order to accomplish these outcomes, the following tasks were performed: o We collected and verified the compensation data of similar judicial positions in other states, with a special focus on the states in the southeastern section of the country. o We collected salaries and historical salary movement for other high-ranking positions in the State of North Carolina, including the Governor of the State. o We determined the competitiveness of each of the judicial positions where good market comparison data were available. o We reviewed the longevity and retirement plans of the Judicial Branch. o We recommended market competitive compensation levels for each of the 18 job classifications under study to ensure the competitiveness of judicial pay within its external labor market and considering the complexity and difficulty of the jobs in relation to each other. 3 F

WORK PROCESS AND METHODS The following positions were reviewed: o o o o o o o o o o o o o o o o o o Chief Justice of the Supreme Court Justice of the Supreme Court Chief Judge of the Court of Appeals Judge of the Court of Appeals Senior Resident Superior Court Judge Resident Superior Court Judge Chief District Court Judge District Court Judge District Attorney Assistant District Attorney Public Defender Assistant Public Defender Clerk of Superior Court Assistant Clerk of Superior Court Deputy Clerk of Superior Court Magistrate Director of the Administrative Office of the Courts Assistant Director of the Administrative Office of the Courts 4 F

WORK PROCESS AND METHODS For the most part, staff of the Administrative Office of the Courts collected salary data on the positions where they could find comparable data. They collected data from existing surveys, called nearby states, cities and counties and collected data that would provide reasonable comparisons to these jobs. Fox Lawson & Associates LLC verified these data. In any survey, the matching process is the most critical. The process involves comparing responsibilities of each job to the job responsibilities of the jobs in other organizations. The process of matching jobs is more of an art than a science, although there are some guidelines. These are as follows: 1. They should be well represented in the market. 2. Generally, they should represent multiple incumbents in each organization. 3. The purpose of the job should be similar. 4. Approximately 60-70% of the responsibilities of the job should be similar. 5. The type of organization that the job works for should be similar. 6. The jobs should be in a similar organizational hierarchy. 5 F

WORK PROCESS AND METHODS In the process of identifying jobs that match those in the study, it was discovered that for some positions it is very difficult to find good matches in other state court systems. Generally, the reason that good comparison data could not be found in the other states relates in large part to court organization. In North Carolina, the Judicial Branch is a "unified" system, funded and administered totally at the state level, with uniform jurisdiction, job duties and salary systems across the state. In comparison, in most other states, at least some positions are funded variously at the state, county, and/or municipal levels. Within a state, there can be much variation in duties and pay systems, and statewide data may not be available at all. As a result, we were unable to find sufficient, comparable and reliable data for the following judicial jobs: 1. Chief District Court Judge 2. Senior Resident Superior Court Judge 3. Clerk of Superior Court 4. Assistant Clerk of Superior Court 5. Deputy Clerk of Superior Court 6. Magistrate 7. Assistant Director of the Administrative Office of the Courts In these cases, we used a simple form of job ranking, based on a review of the job difficulty and complexity, to identify the recommended rate of pay for these jobs. Professionals in the compensation field use this standard technique. This approach is explained in more detail later in the report. 6 F

WORK PROCESS AND METHODS For North Carolina salaries, we used the most recent salaries set by the legislature or as established in applicable pay plans for each respective job. The data are effective for July 1, 2004 for the fiscal year July 1, 2004 through June 30, 2005. We compared North Carolina salaries to those of similar jobs in states in the southeastern region (as defined by the National Center for State Courts and other publications) of the United States. The southeast region includes the following states: o Alabama o Delaware o Florida o Georgia o Kentucky o Maryland o Mississippi o South Carolina o Tennessee o Virginia o West Virginia 7 F

NATURE OF THE ISSUE In the State of North Carolina, several approaches govern how salaries are set for judicial jobs. These are as follows: Salaries for the following positions are specifically set in budget bills enacted by the General Assembly for each biennium. o Chief Justice of the Supreme Court o Justices of the Supreme Court o Chief Judge of the Court of Appeals o Judge of the Court of Appeals o Senior Resident Superior Court Judge o Resident Superior Court Judge o Chief District Court Judge o District Court Judge o Director of the Administrative Office of the Courts o Assistant Director of the Administrative Office of the Courts. Salaries for District Attorneys are by statute tied to the salaries set above in budget bills (at the midpoint amount between the salary of a Senior Resident Superior Court Judge and the salary of a Chief District Court Judge). 8 F

NATURE OF THE ISSUE The relatively new Indigent Defense Services Commission sets Public Defender salaries. Historically and to date, Public Defender salaries have been the same as District Attorney salaries. Salaries for Assistant District Attorneys (with approval of AOC) and Assistant Public Defenders (with approval of the Indigent Defense Services Commission) are set by the District Attorney and Public Defender, respectively, for each district. Each District Attorney and Public Defender is provided a salary budget that is the statutory average salary times the number of allocated positions in each office. This salary budget is established in budget bills enacted by the General Assembly for each biennium. Within this budget allocation, each District Attorney and Public Defender is allowed to adjust the salaries of their Assistant District Attorneys and Assistant Public Defenders based on their needs, so long as they stay within the allocated salary budget and follow other salary guidelines, such as the minimum salary which is set by the General Assembly in each year's budget bill. The salary of the Clerk of Superior Court is set by statute, based on the population of the county in which the Clerk is elected. The Administrative Office of the Courts (AOC) determines the salaries of an Assistant Clerk of Superior Court and a Deputy Clerk of Superior Court. By statute the AOC is required to establish, and has established, an incremental salary plan with pay steps, and subject to minimum and maximum salaries set by statute. 9 F

NATURE OF THE ISSUE The salary of a Magistrate is set by statute, in a step plan corresponding to years of service. 10 F

ANALYSIS Our analysis focused on several different comparisons to obtain a focus on the comparable market for the jobs that are being studied: o We compared the judicial jobs to other similar state judicial jobs in the southeastern region of the country. o We compared the judicial jobs to other high-ranking officials in the State of North Carolina to gauge the relative ranking of these jobs to others in the State. o We compared the judicial jobs (those that require the incumbent to be admitted to the Bar) with other attorneys in both public and private practice. o We compared the rate of pay increases of several key state jobs to the increase in the cost of labor, as measured by the United States Department of Labor, over the last 10 years. 11 F

ANALYSIS In these summary comparisons, the following pay relationships have been found: Position Similar Jobs in Comparison States Full Professor County Attorneys^ City Attorneys^ Private Attorney^^ Rate of Labor Market Increase Chief Justice of the Supreme Court Below Within +/- 10% Above Within +/- 10% Below Below Justice of the Supreme Court Below Within +/- 10% Above Below Below Below Chief Judge of the Court of Appeals Within +/- 10% Within +/- 10% Above Below Below Below Judge of the Court of Appeals Below Within +/-10% Above Below Below Below Senior Resident Superior Court Judge No data Below Above Below Below Below Resident Superior Court Judge Within +/- 10% Below Above Below Below Below Chief District Court Judge No data Below Within +/- 10% Below Below Below District Court Judge Below Below Within +/- 10% Below Below Below District Attorney Within +/- 10% Below Within +/- 10% Below Below Below Assistant District Attorney Within +/- 10% Below Below Below Below Below Public Defender Above Below Within +/- 10% Below Below Below Assistant Public Defender Within +/- 10% Below Below Below Below Below Clerk of Superior Court No data NA NA NA NA Below Assistant Clerk of Superior Court No data NA NA NA NA Below Deputy Clerk of Superior Court No data NA NA NA NA Below Magistrate No data NA NA NA NA Below Director, Administrative Office of the Within +/- 10% NA NA NA NA Below Courts Assistant Director, Administrative Office of the Courts No data NA NA NA NA Below See detailed charts for an explanation of the data. Salaries were judged similar if they were within 10% of each other. This is an industry standard for comparing salary data collected from surveys. Median salaries were compared. ^ Cities and counties in North Carolina over 100,000 population. ^^ Attorneys with 10 years experience working in a medium sized law firm of 10 15 attorneys. 12 F

ANALYSIS The table on the previous page and the tables on the subsequent pages reveal the following findings and conclusions: o Except for West Virginia and Mississippi, judicial salaries in the State of North Carolina are not competitive with the salaries of similar jobs in the comparison states. In fact, they are the lowest salaries for all positions in the comparison states where comparable data were available, except for these two states. o Judicial salaries have not kept pace with the rate of salary increases that other public organizations have experienced in the last ten years. o Judicial positions are among the lowest paid positions in the State of North Carolina that require admission to the Bar. The only exception is the pay of county attorneys in counties over 100,000 population in North Carolina. o The Chief Justice of the Supreme Court in North Carolina in relation to the Governor s salary in the comparison states is paid significantly below the standard of other states. In all states, the Chief Justice is paid, on average, about 20% above the Governor s salary in their respective states. Historically, the Chief Justice s salary in North Carolina has been the same as the Governor s salary. This cap causes pay compression problems for lower judicial positions. 13 F

ANALYSIS o The justices of the Supreme Court and the judges of the Court of Appeals are paid less than the Chair of the Utilities Commission, yet they hear cases that are appealed from the Utilities Commission. o A longevity pay plan is available for certain Judicial Branch employees, as listed on the next page. It consists of a 4.8% addition to pay at 5 years, 10 years, 15 years and 20 years of service. Based on our experience with government pay systems, we do not find that this pay program is unusual. It helps to reward long-term employees, and when pay is not competitive with the market, it can serve to narrow market parity differences. o The consolidated Judicial Branch retirement plan provides for a maximum 75% income replacement value for those covered (see chart on next page for a list of those who are covered) who have served for at least 24 years and are at least 50 years of age. Florida provides 100% replacement and South Carolina provides 85% replacement. The lowest replacement value found was Mississippi at 63%. When compared to other states in the comparison group, North Carolina is about at the average. 14 F

ANALYSIS Consolidated Judicial Branch retirement and longevity program eligible positions. Position Consolidated Judicial Judicial Branch Branch Retirement Plan Longevity Plan Eligible Eligible Chief Justice of the Supreme Court Yes Yes Justice of the Supreme Court Yes Yes Chief Judge of the Court of Appeals Yes Yes Judge of the Court of Appeals Yes Yes Senior Resident Superior Court Judge Yes Yes Resident Superior Court Judge Yes Yes Chief District Court Judge Yes Yes District Court Judge Yes Yes District Attorney Yes Yes Assistant District Attorney No Yes Public Defender No Yes Assistant Public Defender No Yes Clerk of Superior Court Yes Yes Assistant Clerk of Superior Court No No Deputy Clerk of Superior Court No No Magistrate No No Director, Administrative Office of the Yes Yes Courts Assistant Director, Administrative Office of the Courts No Yes 15 F

ANALYSIS Salaries Set in Budget Bills: For the salaries of jobs that are set in budget bills, the following comparisons are made to similar jobs in the comparison states. 2004-2005 Market Pay Title Current Pay Median Difference Chief Justice - Supreme Court $121,391 $144,000-18.6% Justice - Supreme Court $118,219 $132,000-11.6% Chief Judge - Court of Appeals $115,236 $124,500-8% Judge - Court of Appeals $113,293 $121,500-7.2% Sr. Resident Superior Court Judge $110,215 Insufficient data Resident Superior Court Judge $107,136 $115,500-7.8% Chief District Court Judge $97,285 Insufficient data District Court Judge $94,207 $113,000-19.9% Director of the AOC $110,215 $114,000-3.4% Asst. Director of the AOC $100,671 Insufficient data Overall Average -10.9% 16 F

ANALYSIS Salaries Set in Relation to Above Salaries: 2004-2005 Market Pay Title Current Pay Median Difference District Attorney^+ $103,750 $97,326 6.2% Public Defender^^ $103,750 $88,121 15.1% Overall Average 10.6% ^Salaries tied to midpoint between Sr. Resident Superior Court Judge and Chief District Court Judge. ^^Salaries set by Indigent Defense Service Commission. Historically set at the same pay as District Attorney. + As far as we are aware, North Carolina is the only state in which prosecutors are placed in the same system as judges and other court employees. Most are placed in county organizations or other organizational structures. Thus, salaries in other states are likely to be set at the local level, based on local conditions. 17 F

ANALYSIS The District Attorney and Public Defender set the following individual salaries but not to exceed average salary increase set in budget bill. ^ 2004-2005 Market Pay Title Current Pay^^ Median Difference Assistant District Attorney $59,336 $57,812 2.5% Assistant Public Defender $58,887 $53,914 8.4% Overall Average 5.5% ^ Salaries for Assistant District Attorneys (with approval of AOC) and Assistant Public Defenders (with approval of the Indigent Defense Services Commission) are set by the District Attorney and Public Defender, respectively, for each district. Each District Attorney and Public Defender is provided a salary budget that is the statutory average salary times the number of allocated positions in each office. This salary budget is established in budget bills enacted by the General Assembly for each biennium. Within this budget allocation, each district Attorney and Public Defender is allowed to adjust the salaries of the Assistant District Attorneys and Assistant Public Defenders based on their needs, so long as they stay within the allocated salary budget and follow other salary guidelines, such as the minimum salary which is set by the General Assembly in each year's budget bill. ^^ Actual average salary of current personnel. This should not be confused with the statutory average salary used to calculate the permissible salary budget. 18 F

ANALYSIS Other Salaries: Current Pay Market Pay Title Median Difference Clerk of Superior Court^ $84,792 $82,409* 2.8% Assistant Clerk of Superior Court^^ $36,443 Insufficient Data Deputy Clerk of Superior Court^^ $29,674 Insufficient Data Magistrate^^^ $36,523 Insufficient Data Overall Average 2.8% *There was insufficient data to calculate an accurate median. However, because of the importance of this position, we felt that we should present the data that are available, for reference purposes only. Data based on two data points, thus we show this only for comparison purposes. We do not base any recommendations on the comparisons for this job. ^Salary is set by statute, based on population of the resident County. The salary reported is the midpoint between the lowest and highest salaries paid. ^^Salary is set by AOC, within the minimum and maximum established by the legislature. There is a step plan whereby employees advance in pay based on performance and time on the job. Salaries reported are the midpoint steps on a 15-step pay plan for Asst Clerk (step 7) and a 13-step pay plan for Deputy Clerk (step 6). ^^^Salary is set by statute, in a step plan based on years of service. Salary reported is the midpoint step on a 7-step plan (step 3). 19 F

ANALYSIS For most of the 18 positions studied, the incumbents must be a member of the Bar and be licensed to practice law in North Carolina. It is appropriate to review the salaries of attorneys in other public and private organizations. This provides a view of the employment choices of individuals as they examine the opportunities in the state s judicial system. We compared the selected judicial positions in the State of North Carolina with other legal positions in city and county government, private practice as well as in higher education within the State of North Carolina. 20 F

ANALYSIS Median Median Median Median Full Professor 1 County Attorney 2 City Attorney 3 Private Attorney 4 Title Current Pay $121,440 $96,257 $133,581 $206,430 Chief Justice - Supreme Court $121,391 0.0% 20.7% -10.0% -70.1% Justice - Supreme Court $118,219-2.7% 18.5% -12.9% -74.6% Chief Judge - Court of Appeals $115,236-5.4% 16.4% -15.9% -79.1% Judge - Court of Appeals $113,293-7.2% 15.0% -17.9% -82.2% Sr. Resident Superior Court Judge $110,215-10.2% 12.7% -21.2% -87.3% Resident Superior Court Judge $107,136-13.4% 10.2% -24.0% -92.7% Chief District Court Judge $97,285-24.8% 1.1% -37.3% -112.2% District Court Judge $94,207-28.9% -2.2% -41.8% -119.1% District Attorney or Public Defender $103,750-17.1% 7.2% -28.7% -99.0% Asst District Attorney $59,336-104.7% -62.2% -125.1% -247.9% Asst Public Defender $58,807-106.5% -63.7% -127.2% -251.0% 1 Data were collected in a telephone survey of five North Carolina law schools in March 2004. Four provided data (Wake Forest, UNC-Chapel Hill, Campbell and North Carolina Central). 2 Data were taken from the MAPS Group survey conducted in 2004 for the UNC School of Government. Of the 23 North Carolina counties with populations over 100,000, 12 reported salaries (Wake, Guildford, Forsyth, Cumberland, Durham, New Hanover, Pitt, Alamance, Johnston, Randolph Catawba, Wayne). Data were collected in the fall of 2003. 3 Data were taken from the North Carolina League of Municipalities survey as of July 2003 for cities with populations over 100,000 (Raleigh, Charlotte, Durham, Cary, Winston-Salem, Greensboro, Fayetteville). 4 Data was taken from the last known North Carolina Bar Association Economic Survey, 1988 page 33, Law firm size 10-15, with 10 years practice ($154,193) and aged to January 1, 2005. Data was for year end 1997 and was aged each year by the budget % inc 21 F

ANALYSIS The state has not kept up with the cost of employment over the last ten years. Thus, the relative pay of judicial salaries has not kept pace with the wages in the economy. Below is an analysis of the trend in pay to employees and the trend in pay to the Chief Justice and other selected state positions. Comparison of Salary Increases to the Employment Cost Index 160 140 120 Index 100 80 60 ECI for State and Local Government Public Administrators Chief Justice Chairman Utilities Commission District Attorney 40 20 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Year ECI is an economic cost index that measures the cost of labor on a monthly basis, similar to the cost of living index. It is maintained by the US Department of Labor, Bureau of Labor Statistics. 22 F

ANALYSIS In all but two of the comparison states, (one of which is the State of North Carolina) the Chief Justice s salary exceeds that of the Governor s. State Chief Justice Salary Governor's Salary Difference Florida $155,000 $124,575 19.63% Alabama $153,000 $96,361 37.02% Delaware $153,000 $114,000 25.49% Georgia $153,000 $127,303 16.80% Maryland $151,000 $130,000 13.91% Virginia $144,000 $124,855 13.30% Kentucky $129,000 $107,130 16.95% South Carolina $125,000 $106,078 15.14% Tennessee^ $124,000 $85,000 31.45% Mississippi $115,000 $122,160-6.23% West Virginia $95,000 $90,000 5.26% North Carolina $121,391 $121,391 0.0% Median without North Carolina $144,000 $114,000 20.83% ^ Tennessee s incumbent governor does not accept this salary. 23 F

ANALYSIS The consolidated retirement plans for Judicial Branch employees is comparable to the market as shown in the table below: Judicial Retirement Plans % of Salary at State Retirement Florida 100% South Carolina 85% Virginia 78% Georgia 75% North Carolina 75% Tennessee 75% Alabama 75% Mississippi 63% This chart assumes normal retirement for eligible individuals who have served for at least 24 years and are at least 50 years of age. 24 F

RECOMMENDATIONS If it is the intent of the State of North Carolina to stay competitive with the market for similar positions, we recommend that the State increase judicial salaries to a level that is commensurate with salaries of similar jobs in similar states. This comparison is the best and most reliable comparison of competitive salaries. Since not all positions were found to have a similar match, we developed three options for consideration. Option 1: This option primarily uses the market data for the Chief Justice as the starting point. For the remainder of the salaries, we maintained the current rank order of jobs in making our recommendations. For example, since the District Attorney and the Public Defender salaries have been set as equivalent to each other, our recommendations have retained that relationship. Thus, current relationships have been maintained, and only the market competitiveness of the salaries has been adjusted. Option 2: This option also starts with the market data for the Chief Justice as the starting point. For the remainder of the salaries, we developed a 5% pay differential between the administrative judge (Chief or Sr.) position and the non-administrative judge position. In addition, we established a 10% difference between the Chief or Sr. judge of their respective courts and the next lower courts. These differences are minimal standard differences used by compensation professionals to establish internally equitable compensation structures. 25 F

RECOMMENDATIONS We believe these differences represent a starting point for resolving some internal equity problems with the current pay of judges. For the jobs that did not fit this pattern (starting at the Clerk of Superior Court and the remaining jobs in the chart on the next page, we used the pay recommendations from Option 1. For the District Attorney and the Public Defender, we used the current procedure of the midpoint between the (recommended) Sr. Resident Superior Court Judge and the Chief District Court Judge for setting their pay. Option 3: This option sets the salaries of all positions at the median rate of pay of the market. This establishes a benchmark for current pay recommendations and sets a model for future pay comparisons and adjustments. Further, it establishes internal equity relationships that have been established in other, similar court systems in the comparison states. Not all jobs could be priced in this option, because sufficient data were not available for adequate comparisons. Thus, this model is not a viable option for implementation in our opinion. We believe that if any of these optional recommendations are adopted, the State of North Carolina judicial salaries will be competitive with the average of the market in the comparison states, and will establish internal equity relationships within the Judicial Branch of state government. The recommendations are shown below: 26 F

RECOMMENDATIONS Position Current Recommended Salary Based On: Salary % Diff Option 1 % Change Option 2 % Change Option 3 % Change Chief Justice of the Supreme Court $121,391 100.0% $144,000 18.6% $144,000 18.6% $144,000 18.6% Justice of the Supreme Court $118,219 97.4% $140,237 18.6% $137,143 16.0% $132,000 11.7% Chief Judge of the Court of Appeals $115,236 94.9% $136,699 18.6% $130,909 13.6% $124,500 8.0% Judge of the Court of Appeals $113,293 93.3% $134,394 18.6% $124,675 10.0% $121,500 7.2% Senior Resident Superior Court Judge $110,215 90.8% $130,742 18.6% $119,008 8.0% NA NA Resident Superior Court Judge $107,136 88.3% $127,090 18.6% $113,341 5.8% $115,500 7.8% Chief District Court Judge $97,285 80.1% $115,404 18.6% $108,189 11.2% NA NA District Court Judge $94,207 77.6% $111,753 18.6% $103,037 9.4% $113,000 19.9% District Attorney $103,750 85.5% $123,073 18.6% $113,599 9.5% $97,326-6.2% Assistant District Attorney $59,336 48.9% $70,387 18.6% $70,387 18.6% $57,812-2.6% Public Defender $103,750 85.5% $123,073 18.6% $113,599 9.5% $88,121-15.1% Assistant Public Defender $58,887 48.5% $69,855 18.6% $70,387 19.5% $53,914-8.4% Clerk of Superior Court $84,792 69.9% $100,584 18.6% $100,584 18.6% NA NA Assistant Clerk of Superior Court $36,443 30.0% $43,230 18.6% $43,230 18.6% NA NA Deputy Clerk of Superior Court $29,674 24.4% $35,201 18.6% $35,201 18.6% NA NA Magistrate $36,523 30.1% $43,325 18.6% $43,325 18.6% NA NA Director of AOC^ $110,215 90.8% $130,742 18.6% $119,008 8.0% $114,000 3.4% Assistant Director AOC^^ $100,671 82.9% $119,421 18.6% $108,654^^^ 7.9% NA NA ^ Maintains current pay setting practices. Salary is equivalent to Senior Resident Superior Court Judge ^^ Maintains current pay setting practices. Salary is set at the midpoint between the Superior Court Judge and the District Court Judge. ^^^ Set at the same relationship to Director of AOC as is current. 27 F

RECOMMENDATIONS For jobs whose salaries are determined from a step plan, we recommend that the salaries shown in the previous chart be used as the middle step of a new plan, with either the same structure to the plan that exists or a consistent plan for all jobs. If you decide that a consistent plan is advisable, we recommend that it consist of 10 to 12 steps with a 3.8% difference between steps. The numbers shown here would be the 5 th step. We recommend that the current longevity schedule continue unmodified, unless there is no significant change in the judicial salaries as outlined above. If there is no significant change in judicial salaries (in other words, if adjustments in salaries do not equal 10% more than current salaries) then we recommend that the longevity program be extended to include steps at the 25 th and 30 th years at the 4.8% rate for each additional step. We recommend the retirement program remain the same. This plan is at the average for other comparison states. 28 F

APPENDIX 29 F