Administrative Office of the Courts sues DFA over interfering with paid leave policy
Sep. 30—Call it a state government showdown.
The Administrative Office of the Courts has made good on a threat to file a lawsuit against the Department of Finance and Administration, putting the judicial and executive branches further at odds over the legality of payouts under the courts' new paid leave policy.
In a Monday news release announcing the lawsuit, the Administrative Office of the Courts described the finance department's refusal to continue processing the high payouts as "unconstitutionally interfering with the Judiciary's authority to decide its own personnel matters as an independent branch of government."
The policy had been deemed impermissible in June by Attorney General Raúl Torrez. After his legal opinion was issued, the finance department stopped processing the payments.
The agency has said the judiciary overstepped its boundaries by implementing the new structure, which has made retirees and others who step down eligible for payouts tens of thousands of dollars higher than those of other state employees.
Representatives from the New Mexico Department of Justice did not respond to a request for comment Monday.
The Governor's Office also declined to comment, referring questions to the finance department.
In an August statement, Finance and Administration Secretary Wayne Propst said the judiciary agency was repeatedly cautioned by the finance department and the State Personnel Office the new policy gave retiring judiciary employees "significant payouts" beyond what they were eligible for without legislative approval.
The new policy, implemented in May 2023, applies to the judiciary's 2,000 employees but not state court judges. It combines judicial employees' annual leave and sick leave into one category of paid time off.
Whereas the previous plan erased an employee's annual leave above 240 at the start of each new year, under the court system's current policy, all unused hours in an employee's time off account roll over from year to year.
The policy also increased paid time off compensation to an employee's full pay rate, while sick leave buybacks previously had been limited to 50% of full pay. Upon retirement, unused time off will also be paid out at the full hourly rate rather than 50%.
In August, finance department spokesperson Henry Valdez said the new plan is compensating employees at a rate 2.47 times higher than is allowed by state statute. Before the agency halted payouts, they had been issued to 323 employees.
Torrez's legal opinion said the new policy will essentially create two classes of state employees due to the significant difference in payouts between employees of the judiciary and other branches of government.
The Administrative Office of the Courts defended the leave policy in its Monday news release, saying the policy provides an incentive for employees to work up to their retirement date instead of stopping work weeks before their actual retirement date and collecting pay from annual or sick leave. The release also argued the old system promoted heavy absenteeism near the end of the year as people went on leave to avoid losing time they couldn't roll over.
"The state court system adopted this approach to employee leave to better serve the public," Administrative Office of the Courts Director Karl Reifsteck said in a statement. "PTO helps courts recruit and retain talented employees. It also promotes a more efficient use of the taxpayer money that the Legislature provides to operate courts."
Halting the payments has led to uncertainty for all judiciary employees and "upended expectations" for those who retired or separated after the PTO payouts stopped being processed, the lawsuit states. It asks the New Mexico Supreme Court to order the Department of Finance and Administration to resume processing the payments and argues the agency is acting outside its authority by intervening.
"There is no room in this system for the Executive to tell the Judiciary how it may or may not use monies the Legislature appropriated for the courts," it states.
Valdez wrote in an email Monday the finance department has a responsibility to "ensure accountability for taxpayer funds," noting the courts' time off program paid employees an average of 180% more than standard state payouts.
"The lawsuit outcome could have severe consequences because it challenges and distorts New Mexico's constitutional checks and balances, especially the Legislature's role in approving spending and DFA's fiscal oversight of that spending," Valdez wrote.
