Default is the greatest threat by Rod Estvan

I doubt that the proposal for a Constitutional amendment will go anywhere fast. HJRCA0011 currently is stuck in the House rules committee, and I don’t expect it to get out of that committee. As some of you know, I am a registered lobbyist that works on education issues for students with disabilities, but the issue of pensions is so pervasive in Springfield that it comes up in relation to every appropriation, even HB 190 supplemental appropriation that just passed and was signed into law last week.

The Sosnowski amendment as of today does not have any co-sponsors and, since Joe Sosnowski is a Republican, his caucus lacks the constitutional three-fifths vote for this proposal to pass even the House. I also (at this time) do not believe Speaker Madigan would even consider supporting this proposal because even he could not get enough votes for this proposal to pass.

The greatest threat to Article XIII, Section 5 is likely to be a revisionist interpretation of the section by Illinois Courts in the situation of a default. Each of the separate pension funds has a different projected collapse date; one of the first to go will be the pension fund for members of the Illinois General Assembly itself. If it comes to the point of default, that body could determine not to fully honor its own pensions, and any former member who is a recipient could litigate to defend his or her payments. At that point, the Courts would have to determine whether or not to issue a direct order to the General Assembly and Governor to fully honor the pensions.

Currently, all bills seriously being considered in the General Assembly try to play with the language of the Constitution to reduce the overall pension debt. Most unions in the We are One coalition believe these proposals as currently drafted are unconstitutional and have stated they will litigate if the bills pass. I suspect in the abstract the Courts will agree with the unions and strike down the bills if it comes to that, and I think Speaker Madigan believes so too. This is why he is pressuring the unions to support a grand pension reform plan…

--Rod Estvan

Commentary
 

“…If the Illinois Supreme Court were confronted with a circumstance where a pension fund was on the verge of default and pension payments were diminished, then the court would most likely permit a mandamus action to proceed and resolve that action in the same manner as Jorgenson v. Blagojevich [2004]. In that case, the court held that where a constitutional or statutory provision ‘categorically commands the performance of an act, so much money as is necessary to obey the command may be disbursed without any explicit appropriation.’ The court applied this principal to compel the State Comptroller to pay judges from the State Treasury, without an appropriation, the cost of living increase that was part of their constitutionally-protected salaries under Article VI, Section 14 of the Illinois Constitution.

“As noted, that provision bars the diminishment of judicial salaries just as the Clause prohibits the diminishment of pension benefit rights. Accordingly, the Supreme Court would most likely grant pension participants the same relief provided in Jorgenson by compelling the Comptroller to pay the needed funds from the State General Revenue Fund, especially since the State Pension Funds Continuing Appropriation Act requires automatic appropriations be made from the Fund to the five State pension systems…” (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, Chief Legal Counsel to Illinois Senate President John J. Cullerton and Parliamentarian of the Illinois Senate).

What happens if the Illinois public pension funds are “on the verge of bankruptcy?”