Do You Remember Senate Bill 2404? Rahm Emanuel says SEIU 73’s Boardman can bargain away employees' pensions. Fred Klonsky says, “I don’t think so”; I agree

“When city unions filed suit against Rahm’s pension cuts, Rahm said the cuts were good because he bargained them with city unions. Those unions included Bricklayers District Council, Carpenters Regional Council, IBEW 134, Iron Workers District Council, IUOE 150, IUOE 399, Laborers’ District Council, Pipefitters 597, Plumbers 130, Sprinkle Fitters 281 and Christine Boardman’s SEIU 73.

“The unions suing Rahm (because he has violated the pension clause of the Illinois Constitution) are the Chicago Teachers Union, AFSCME Council 31, IFT-AFT, Teamsters Local 700 and the Illinois Nurses Association.

“Boardman’s SEIU 73 is notorious for agreeing to concessions with the Mayor and is a donor to his re-election campaign. The legal question is whether union leadership can bargain away constitutional pension guarantees.

“Since no single union represents all of the members in the pension funds, the answer is no. This is in some ways similar to what took place between the state-wide coalition of public employee unions, the We Are One Illinois, and Senate President John Cullerton.

“We Are One, hoping that they could hold off a more draconian pension theft bill designed by Representative Elaine Nekritz and Speaker Madigan, bargained an alternative Senate Bill 2404.

“SB 2404 did steal less of our pensions, but it conceded on the principle of the constitutional promise that public employee pensions cannot be diminished or impaired.

“Pension members not represented by the We Are One Illinois coalition balked at the deal. The Illinois Retired Teachers Association said that no matter what deals were cut between union leaders and politicians in Springfield, they would go to court to protect the pension protection clause.

“The result was that SB2404 died. Senate Bill 1 passed. Judge Belz ruled it unconstitutional, and now we wait for an expedited ruling by the Illinois Supreme Court.

“What does not seem in doubt is that the kind of union leaders like Christine Boardman of SEIU 73 cannot bargain away constitutional rights with the Mayor. No matter how much money exchanges hands.”

From Fred Klonsky’s Blog

Remembering SB 2404:

SB 2404 was an attempt to circumvent the “Pension Clause” by giving retirees and public employees a “choice” or “new consideration” to impair their own contract for a precarious state guarantee. According to John Stevens, Legal Consultant for the “We Are One” Labor Coalition: “To take away the Cost-of-Living Adjustment [COLA] for [current and future] retirees is not a free and fair choice.”

The courts would have found the “illusory promise [of health care in exchange for a compounded COLA]… grossly inadequate and accompanied by unfairness because the employer [the state] is using its superior bargaining position to take undue advantage of the employee and substantially impair the employee’s exercise of free will” (250 Ill. App. 3d 423, 620 N.E.2d 1328, 1^st Dist. 1993: footnote to Is Welching on Public Pension Promises an Option for Illinois? An Analysis of Article XIII, Section 5 of the Illinois Constitution by Eric M. Madiar, pg. 62). 

Based upon both past and current legislators’ dereliction of duty to pay for the public employees’ constitutionally-guaranteed pensions, a court of law would have also found that the Illinois General Assembly had been and is currently in “violation of any standard of good faith and fair dealing” (Professor of Law, Emeritus, Claude D. Rohwer and Professor of Law, Emeritus, Anthony M. Skrocki, Contracts in a Nutshell). 

Modification of the “Pension Clause” would have been seen as a “result of a violation of fair dealing,” as an accommodation for “only” some members of the Illinois General Assembly who continuously steal money from the public pension systems and are, thus, “avoiding a pre-existing duty rule” (Rohwer & Skrocki). 

According to National University of Singapore Professor Mindy Chen-Wishart, “The consideration doctrine is a moving target… Different [understandings] yield different [interpretations]… Each conception can be contradicted by another… Courts have considerable latitude in determining whether to find consideration (or not), and hence whether to enforce a promise (or not)… A contract supported by consideration can still be set aside for… misrepresentation, duress, or undue influence or its contents may be supplemented by implied terms or [be] partially invalidated because of unfairness. In these cases, the presence of serious inadequacy of consideration will usually be the major, although not the sole, factor… It would be highly undesirable to allow public officials to extract benefits in return for the performance of their existing legal duties” (Contract Law).

Thousands of retirees would have been deprived of a contractually-guaranteed benefit that was earned at that time. These retirees were not represented at the table when Cullerton and the We Are One Coalition made their agreement. They were simply excluded from the process that affects them. The We Are One Coalition does not represent all retirees, especially non-members.

It is important to remember there is no “Shared Sacrifice” when a governor can roll back the billionaire’s and millionaire’s taxes and then lacerate the state’s school budget and diminish a public employee’s pension. There is no “Shared Sacrifice” when, for most teachers, their pension plan is their only retirement subsidy because they cannot receive Social Security benefits. There is no “Shared Sacrifice” when legislators who have perpetuated the fiscal morass in Illinois want to change an existing constitutional contract to one that forces the state's public employees to accept impairment and diminishment of their constitutionally-guaranteed pension and retirement benefits and rights.