Saturday, January 26, 2013

Modification of Contract Principles (and what many petitioners want their unions to do)

Why doesn’t the Illinois Education Association join our efforts and post our public employees’ petition on its website? Perhaps it is because the Illinois We Are One Coalition is planning a “summit” with a few, thus far, unsuspecting legislators (like Elaine Nekritz, for example, “who [said she] had not heard about the union summit”) slated for February 11 and because “unions have said they’re willing to have members pay more toward their pensions” in exchange for “ending a series of business tax breaks…” (State unions propose pension summit).  

Perhaps it is also because IEA president Cinda Klickna and her coterie are wary of a possible court battle; thus, they are willing to modify a contract as a sort of offering or appeasement, hoping legislators will forgo a constitutional challenge of Article XIII, Section 5 (“Pension Clause”). 

Nonetheless, many of us believe there will never be enough placation to satisfy any unscrupulous legislator with a mania for so-called “pension reform.” Too many legislators are dependent on the Civic Committee of the Commercial Club of Chicago’s campaign money and influenced by the Committee’s collective ill-will toward public employees.  

Eric M. Madiar, Chief Legal Counsel to Illinois Senate President John J. Cullerton and Parliamentarian of the Illinois Senate, states it this way: “Pension benefits are under siege for two reasons: opportunity and political motives” (Defending and Protecting Public Employees’ Pensions against the Legislative Siege).  

Many public employees (read the comments on our petition online) argue that unions should not bargain away any of the public employees’ “constitutionally-guaranteed,” earned rights and benefits. Why? Because “a public employee obtains ‘vested rights’ in the Pension Code provisions relevant to pension benefits when the employee becomes a member of a pension system by making his or her initial employee contribution to the system.

In addition, the ‘Pension Clause’ protects pension benefit rights as an enforceable contractual relationship” (Madiar, “Is Welching on Public Pensions an Option for the State of Illinois…”). Cullerton knows this is true. Perchance this is why he has sponsored a bill (it passed the senate) that will attempt to circumvent the “Pension Clause” by giving retirees and public employees a “choice” to impair their own contract for a state guarantee (really?) to fund the pension systems hereafter (here’s another related question with a built-in answer: who will guarantee this funding when the state’s “normal costs” are shifted to school districts and taxpayers?). Cullerton’s bill also provides a supposed failsafe, just in case the Civic Federation and Civic Committee of the Commercial Club of Chicago’s (or the Nekritz-Biss) pension reform bill that Cullerton says will be found “unconstitutional” is, indeed, found unconstitutional.

All the same, John Stevens, the Legal Consultant for the “We Are One” Labor Coalition, stated “To take away the Cost-of-Living Adjustment [COLA] for [current and future] retirees is not a free and fair choice. It is a coercive choice under duress.” 

In other words, Illinois legislators will be breaching a contract by forcing public employees to make a choice to diminish their originally-vested and paid-for guarantee. Legislators will be attempting to break an enforceable contractual promise, one that is bilateral and emphasizes an agreement between the State of Illinois and its retired and current public employees as to their future rights and benefits.

It is a diminution of the public employees’ contract to receive less than what the original vested right and benefit guaranteed. A choice between the COLA and precarious state-sponsored health care, for example, offers public employees and retirees no ethical and lawful alternatives except to consent to the General Assembly’s demands to make an illicit choice.

Consider that “A contract is a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty (Professor of Law, Emeritus, Claude D. Rohwer and Professor of Law, Emeritus, Anthony M. Skrocki, Contracts in a Nutshell).

Based upon both past and current legislators’ dereliction of duty to pay for the public employees’ constitutionally-guaranteed pensions, it should be found in a court of law that the Illinois General Assembly has been and will be currently in “violation of any standard of good faith and fair dealing.” Regarding the guaranteeing of payments to the public employees’ pension systems, “there is no way to avoid the conclusion that [it] is a ‘constructive’ condition to [the General Assembly’s] duty to pay,” (Rohwer & Skrocki), and a “diminishment and impairment” to the contract or “expressed condition” of the “Pension Clause.”

Any modification of the “Pension Clause” should be seen as “the result of a violation of fair dealing,” as an accommodation for “only” the General Assembly who have stolen money from the public pension systems for decades and are, thus, “avoiding a pre-existing duty rule” (Rohwer & Skrocki). 

In other words, state legislators were dishonest. “[They] had a duty to perform [and] didn’t perform [for decades] and, therefore, [they have] breached [their] contract [with public employees]” (Rohwer & Skrocki).

“Because there is already a contract relationship in existence which imposes a duty of good faith upon the parties, there is an issue of whether [this General Assembly will be] acting in bad faith [once again] in extracting a [coerced] consent to [a] modification [or impairment of a contract]…” (Rohwer & Skrocki).

The significance of any modification of the “Pension Clause” is “the extent to which [public employees] will be deprived of the benefit [they] reasonably expected; the extent to which [public employees] can be adequately compensated for the part of that benefit [COLA, for instance] of which [they] will be deprived; […and] the extent to which the behavior of the party [Illinois General Assembly] failing to perform or to offer to perform [or] comports with standards of good faith and fair dealing” (Rohwer & Skrocki).

The promise to honor commitments and pay for the public employees’ pension is of “sufficient importance” to ALL citizens of Illinois. To pass pension reform is “an unequivocal manifestation of intention not to perform… legal duties…under a contract… [To repeat,] when there is a duty of immediate performance of a promise, failure to perform in full is a breach” (Rohwer & Skrocki).

Many of us maintain that our unions should not diminish the constitutionally-guaranteed “Pension Clause” that “protects pension benefit rights as an enforceable contractual relationship” by “modification through contract principles.” 

Why? Because Cullerton, House Speaker Michael Madigan and his servile followers (Nekritz, Biss, and others) have made it obvious that they are willing to let “the courts decide” whether their pension reform bills are illegal or not, regardless of the myriad of upheld antedated cases on this matter and their oaths of office to uphold the State and U.S. Constitutions.

Though many legislators would rather dispute one of the Bill of Rights contained in both the Illinois and U.S. Constitutions instead of addressing the “real causes” of the state's budget deficits (the pension ramp, the resultant pension debt, and the state’s insufficient flow of revenue), legislators should reexamine the concept of justice and what lawfulness demands: that people must keep their covenants with one another. No justice is accomplished when diminishing public employees' earned benefits and rights because of decades of legislators' irresponsibility, corruption and incompetence.

Let’s not forget this essential understanding on how we have arrived in this economic predicament. The state’s unfunded liability has increased to $94 billion. Forty-six percent of that figure ($43.2 billion) was machinated by legislators of the State of Illinois. All citizens of the State of Illinois are in this fiscal morass primarily because of scheming Illinois legislators. 

Today’s calamity is not the result of a financial problem that was unforeseen at the time of the Illinois Constitutional Convention of 1970. To reiterate, the unfunded liability is a consequence of legislative negligence, dishonesty and ineptitude. There should not be any consideration (contract modification) of the public employees’ earned benefits. Thus far, 3,100+ petitioners are quite lucid and resolute about this conviction.

To respect a contractual promise as a legitimate right and moral concern is at stake for public employees and every other citizen in this state. Illinois pension reform is without legal and moral justification.  

-Glen Brown

To Illinois legislators: Stop Illinois pension reform!

To union leadership: Stand firm! Public employees have been victimized enough. They do not want to contribute more money to their pension fund (one of the highest in the nation), especially when considering the fraudulent intentions of past Illinois legislators.

Dear reader: Please sign our petition and pass it on to others.
Click here: Illinois Debt and Revenue Reform, Not Pension Reform

Thank you Gary Elmen, President of the Illinois Retired Teachers Association, for linking our petition to the IRTA website. Thank you Dan Montgomery, President of the Illinois Federation of Teachers, for signing our petition; thank you – public employees, retirees, and family and friends – for signing this most important petition to stop pension reform…


-Glen Brown


  1. What is the best means of getting this info out to IEA/NEA/SURS membership in order to have them apply pressure on the elected IEA/NEA/SURS officials to stand fast?
    All of us members should demand that they don't allow our pensions to be diminished even if it means a costly defense of our constitutionally guaranteed pension contract. It is the job of our unions to look out for the well being of its members who have paid our dues over the years.

  2. Why doesn’t the Illinois Education Association join our efforts and post our public employees’ petition on its website? Perhaps it is because the Illinois We Are One Coalition is planning a “summit” with a few, thus far, unsuspecting legislators (like Elaine Nekritz, for example, “who [said she] had not heard about the union summit”) slated for February 11 and because “unions have said they’re willing to have members pay more toward their pensions” in exchange for “ending a series of business tax breaks…” (State unions propose pension summit).

    This is exactly what I'm afraid of, that the IEA leadership will cave instead of speaking in favor of our legal rights. Actually they haven't asked us to do much so that also has me worried. And it has been some time since there has been a long strike where it was a real war so the I'm not certain the IEA leaders know exactly what they are up against.

    The Villa Park Education Association went on strike in 1981 for five days. It was a successful strike that engaged our community. I can't remember if it was legal for us to strike back then because we did it anyway. That's how we got the legal right by doing it anyway illegally. They didn't try arresting us because it backfired on the Boards when they arrested the teacher leaders. Various locals paved the way.

    The second strike reminds me of what is happening now. Our second strike in 1986 was different in that we discovered it was not about education in our community, but fat cats making an investment to try to break our union and scare other local bargaining units. The terms offered in bargaining were so bad we had to go out. No choice. I don't think the Board members ever realized they and their community were being used for larger political purposes. Maybe at the end a couple understood what happened that they were used. We found out when we decided to follow the scabs home to see where they lived and to put flyers on the neighbor's doors, then we found out the scabs were in most cases the wives of wealthy executives. They lived in Oakbrook mansions, Glen Ellyn mansions. These were people who would never have dreamed of doing the kind of work we did, but they would be a scab to bust the union because they shared an ideology that included union busting. So this strike started in some "quiet room.". At the time it was one of the longest strikes in the state of Illinois. The superintendent was a lackey of the rich. At the end of 19 days out, the Board extended his contract for three years and at the next meeting they let him (Brizard?) go with over $200,000 a year for three years because he was so reviled in the community he couldn't lead. It was a high salary at the time. He was paid off with public money as an investment to those who had an ideology that held no respect for teachers.

    We are facing the same thing today. The ideology is Neoliberalism. The circumstances are Disaster Capitalism. We have to organize. We have to fight back. Only this time we have the law on our side. I'm worried our IEA leaders won't insist on our legal rights, and they will buy into some idea they need to compromise. The whole problem has been ginned up to bust unions, and privatize public schools. We have to put a stop to it.

    More importantly we also have the moral case on our side. I'm convinced the public doesn't agree it is moral to take money from old people. And people understand that reneging or welshing on an agreement is immoral. We need to call them out that their actions are wrong. And that they are deliberately ignoring feasible ways to ameliorate the real problem, a revenue problem.

    Pat Herrmann

  3. As an outsider looking at the issue, I say you are clinging to acceptance of brazenly phony numbers. Among the neutral, outside sources that say TRS currently has only about 18% of what it needs instead of the 38% the state claims are the following: The Center For Retirement Research at Boston College, the bipartisan Report of the State Budget Crisis Task Force co-lead by Paul Volker and Stanford's Prof. Joseph Rauh, quoted in this week's Economist story about the crisis. You were indeed defrauded by the legislators you elected, so why now accept their numbers and not the chorus of outside experts? Those experts say the total state unfunded liability of $96B you and the state always site is actually closer to twice that and that new accounting rules and rating agency guidelines will soon force the state to admit it. And no tax plan put forth so far comes close to fixing the problem.

    However unfair and whatever the causes, pensions will be cut because the numbers are now insurmountable.

  4. Dear Mark,

    This issue is complex for many reasons, one of which is the legal and ethical ramifications of pension reform; there are a myriad of perspectives regarding the validity of reliable and substantiated data. Peruse some of the in-depth articles posted in the "pension analyses" tab. You might find them relevant and interesting. They will challenge your point of view as well. Thank you for your comment.


  5. Hopefully, the summit planned by We Are One for Feb. 11th will yield fruit, if legislators will attend - as some of the "pension reform leadership" have yet to acknowledge interest or awareness.

    We all need be mindful that identifying our separate positions as extremist will not help, and Glen's response to the perceived issues surrounding his petition are revealing. The actual extremism is found in the latest bills - Nekritz's HB 6258 and Cullerton's secondary option in case the first is found unconstitutional.

    To ask We Are One to hold firm is to remind our leadership that contractual guarantees were made and broken by the same people who would come to the summit; to remind them that thus far the move to correct the unfunded liability is being placed on the very people from whom promised payments were stolen over nearly half a century.

    Indeed, IEA's response that to do nothing and simply await a court decision is also unthinkable; however, Glen's call to correct the revenue problem must be the primary focus if anything permanent and lasting is to be accomplished. Nothing in HB 6258 does anything to address the systemic, structural revenue failure in Illinois. Nothing in any proposed legislation put forward have yet to address the ridiculous pension ramp which "squeezes" the budget annually at ever-increasing rates.

    What We Are One and what the petition desires are not so very different: to call attention to serious long-term answers to the revenue crisis in Illinois, and to demand that the General Assembly address the problem without breaking the contractual agreements made to all in the public sector who have given what was asked - in work and in payment.