Our objectives were to determine whether participating judges’ contribution rates for the 2008, 2009, and 2010 plan years funded 50 percent of the JSAS costs and, if not, what adjustments in the contribution rates would be needed to achieve the 50 percent ratio. To satisfy our objectives, we used the normal cost rates determined by actuarial valuations of the system for each of the 3 plan years and determined the judges’ normal cost share of the plan’s total normal cost rate. The normal cost rate is the level percentage of future salaries projected to be sufficient, along with investment earnings and the plan’s assets, to pay the plan’s benefits. The normal cost for a plan year is the normal cost rate multiplied by the participants’ salaries for that year. The plan’s actuary, using the plan’s funding method—in this case, the aggregate cost method—determines the plan’s normal cost rate for each plan year. We also examined participants’ contributions, the federal government’s contribution, and other relevant information in each plan year’s JSAS actuarial valuation report. An independent accounting firm hired by AOUSC audited the JSAS financial information, and the plan’s actuary certified the actuarial information included in the JSAS actuarial valuation reports. We discussed the contents of the JSAS actuarial valuation reports with officials from AOUSC and the plan’s actuary for the 3 plan years (2008 to 2010). During the course of our review, we identified errors in the actuarial valuation report for plan year 2010, which resulted in the reissuance of the report. We used this reissued actuarial valuation report to conduct our analysis and reviewed AOUSC’s revised procedures for the preparation of the actuarial valuation reports to determine if planned actions were sufficient to address the errors we found. In addition, we discussed with the plan’s actuary the actuarial assumptions, methodology, and plan provisions used to project future benefits of the plan. We did not independently audit the JSAS actuarial valuation reports or the actuarially calculated cost figures. However, because we had to rely on the work performed by the plan’s actuary, we reviewed the qualifications of the plan’s actuary who prepared the JSAS actuarial valuation reports for plan years 2008 to 2010 and found that the actuary met relevant qualification standards. We conducted this performance audit from January 2012 through February 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. We provided a draft of this report to the Director of AOUSC for review and comment. Depending on the circumstances, judicial participants may be eligible for some combination of five retirement systems, including the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System. Three other separate retirement systems, described in appendix I, apply to various groups of judges in the federal judiciary, with JSAS being available to participants in all three of these other retirement systems to provide annuities to their surviving spouses and children. JSAS was created in 1956 to help provide financial security for the families of deceased federal judges. Generally, it was established to provide benefits to surviving eligible spouses and unmarried dependent children of judges who participate in the plan. Judges may elect coverage within 6 months of taking office; 6 months after getting married, if they were not married when they took office; 6 months after being elevated to a higher court; or during an open season authorized by statute. Upon a judge’s death, the surviving spouse is to receive an annual annuity that equals 1.5 percent of the judge’s average annual salary, including retirement salary, during the 3 highest consecutive paid years (commonly known as the high-3) times the judge’s years of creditable service. The annuity may not exceed 50 percent of the high-3 and is guaranteed to be no less than 25 percent. JSAS also provides survivor annuity benefits to unmarried dependent children under age 18 or age 22 if they are full-time students. JSAS annuitants receive an annual adjustment in their annuities at the same time, and by the same percentage, as any cost-of-living adjustment (COLA) received by CSRS annuitants. Spouses and children are also eligible for Social Security survivor benefits, provided the judge was an insured worker under the Social Security system. Since its inception, JSAS has been amended several times. Because of concern that too few judges were participating in the plan, Congress made broad reforms effective in 1986 with the Judicial Improvements Act of 1985. The 1985 act (1) increased the annuity formula for surviving spouses from 1.25 percent to the current 1.5 percent of the high-3 for each year of creditable service and (2) changed the provisions for surviving child benefits to relate benefit amounts to judges’ high-3 rather than the specific dollar amounts provided in 1976 by the Judicial Survivors’ Annuities Reform Act. In recognition of the significant benefit improvements that were made, the 1985 act increased the amounts that judges were required to contribute from 4.5 percent to 5 percent of their salaries, including retirement salaries. The 1985 act also changed the requirements for government contributions to the plan. Under the 1976 Judicial Survivors’ Annuities Reform Act, the government matched the judges’ contributions of 4.5 percent of salaries and retirement salaries. The 1985 act modified this by specifying that the government would contribute the amounts necessary to fund any remaining cost over the future lifetime of current participants. That amount is limited to 9 percent of total covered salary each year. In response to concerns that required contributions of 5 percent may have created a disincentive to participate, Congress enacted the Federal Courts Administration Act of 1992. Under this act, participants’ contribution requirements were reduced from 5 percent to 2.2 percent of salaries for active and senior judges and 3.5 percent of retirement salaries for retired judges. The 1992 act also significantly increased benefits for survivors of retired judges. This increase was accomplished by including years spent in retirement in the calculation of creditable service and the high-3 salary averages. Additionally, the 1992 act allowed judges to stop contributing to the plan if they ceased to be married and granted benefits to survivors of any judge who died in the interim between leaving office and the commencement of a deferred retirement salary. Prior to 2008, surviving spouses forfeited their JSAS annuity rights if they remarried before reaching age 55. In 2008, JSAS was amended to restore the judicial survivor’s spousal annuity upon the termination or dissolution of a subsequent remarriage by annulment, death, or divorce. Furthermore, after AOUSC conducted a study of JSAS to determine whether it was equitable in its coverage and cost when compared to other survivor benefit programs, Congress passed the Judicial Survivors Protection Act of 2009. The 2009 act authorized an open season, which covered the period from September 11, 2009, through March 10, 2010, for judges who previously opted not to enroll in JSAS. However, these judges were required to pay 2.75 percent of future pay instead of the 2.2 percent referred to in the 1992 act. The 2009 act also allowed judges to purchase, in 3-month increments, up to an additional year of service credit for each year of federal judicial service completed. According to AOUSC, during this open season, 279 judges enrolled in JSAS, increasing the participation rate from 60 percent to 71 percent. According to the JSAS actuarial valuation report for plan year 2010 issued on November 16, 2012, as of October 1, 2010, there were 1,542 active and senior judges, 268 retired judges, and 356 survivor annuitants covered under JSAS. JSAS is financed by judges’ contributions and direct appropriations of federal funds. Funds appropriated are in amounts estimated to be sufficient, together with judges’ contributions, investment earnings, and the plan’s assets, to fund the future benefits paid to survivors of current and deceased participants. The plan’s actuary, using the plan’s funding method—in this case, the aggregate cost method—determines the plan’s normal cost rate for each plan year. Normal cost calculations are estimates and require that many actuarial assumptions be made about the future, including, but not limited to, mortality rates, turnover rates, returns on investment, salary increases, and COLA increases over the life spans of current participants and beneficiaries. There are many acceptable actuarial methods for calculating normal cost. Regardless of which cost method is chosen, the expected total long-term cost of the plan should be the same; however, the allocation of these total long-term costs to particular years’ costs may differ, depending on the cost method used. The federal government’s actuarially recommended contribution is the product of the federal government’s normal cost rate and the participating judges’ salaries. The actual federal government contribution is through annual appropriations. To determine the actuarially recommended annual contribution of the federal government, AOUSC, which is responsible for the administration of JSAS, engages an enrolled actuary to perform the calculation of funding needed based on the difference between the present value of the expected future benefit payments to participants and the value of net assets in the plan. For the 3-year period under review, AOUSC’s Accounting and Financial Systems Division (AFSD) was responsible for gathering and transmitting relevant information, such as participants’ demographic data and economic assumptions, to the plan’s actuary to perform these calculations. Appendix II provides more details on the methodology used to determine the federal government’s contribution rate. For JSAS plan years 2008 to 2010, the participating judges’ share of normal cost was, on average, about 41 percent of the plan’s costs.