Controversial court leave policy scrapped; $1.7 million payouts survive

The heated dispute over a new paid leave system for state court employees has ended quietly, with the judiciary rescinding the generous benefit policy and the executive agreeing to pay more than $1.7 million in pending payouts.

More than 430 former state court employees will be paid under the now-withdrawn paid leave policy, which triggered a contentious legal battle that involved the state Department of Finance and Administration, the state Administrative Office of the Courts, a panel of retired Supreme Court judges and the state Attorney General’s office over the past year.

The agreement came after Gov. Michelle Lujan Grisham earlier this year line-item vetoed the state Legislature’s effort to adopt the payout plan as part of the state budget bill.

“We’re grateful to the Department of Finance and Administration for working with us and figuring out a way forward that we both can accept,” said Karl Reifsteck, director of the Administrative Office of the Courts. He said the judiciary agreed to return to the prior leave policy.

As it stands, the top beneficiary is the now-retired former director of the Administrative Office of the Courts, Artie Pepin, who will receive the balance of a total leave payout of $80,555, said AOC spokesman Barry Massey. Pepin, who retired last August after 18 years, had received an initial payout of $28,372 last October.

The next two highest payouts are: $52,391, to a retired special commissioner in the 13th Judicial District; and $46,220 to the retired director of the New Mexico Compilation Commission.

The judiciary back in 2023 changed the way it structured accrued sick leave and annual leave back for its eligible employees that was vastly different than all other state employees.

Without authorization from the Legislature, the judiciary did away with sick and annual leave and adopted a paid time off policy under which employees could use their PTO leave, essentially sick leave and annual leave lumped together, however they wished. The leave policy applied to about 2,000 employees, but judges were excluded.

The policy allowed PTO buybacks, and payouts for employees who retired or left the judiciary for a job elsewhere.

After processing the leave payouts for about a year, the state Department of Finance and Administration blocked further payouts in June 2024.

That came after a legal opinion from Attorney General Raúl Torrez’s office concluded the judiciary’s policy likely violated state law.

DFA officials contended that the leave program paid employees about 180% more than standard state payouts.

But the Administrative Office of the Courts ultimately challenged the DFA’s action as an “unconstitutional interference with the Judiciary’s authority over judicial employees and personnel policy.”

Reifsteck went to court, seeking an order to restore the payments, and last December a panel of retired Supreme Court judges held a hearing on the question but deferred action pending legislative action.

Judicial officials defended the new payout system as a way to reduce expenses, reduce employee turnover, retain good employees and improve recruitment

The change was initially proposed by the Court Executive Officer Council in September 2022, and ultimately was approved by the Supreme Court.

The Legislature this session added language to the state budget bill to appropriate more than $1.5 million for the “judicial branch to pilot a paid time off program for calendar year 2025.” But that provision was vetoed by Lujan Grisham in April.

As a result, Reifsteck told the Journal, “We ended up having more discussions with DFA that proved very productive.” The agreement, he added, “was a great way forward for everyone.”