Friday, March 22, 2013

Challenging Public Employees’ Earned Constitutionally-Guaranteed Benefits: 17 Antedated Illinois Court Cases



Article XIII, Section 5 of the Illinois Constitution states: “Membership in any pension or retirement system of the state or any local government, or any agency or instrumentality of either, shall be an enforceable, contractual relationship, the benefits of which shall not be diminished or impaired.”



Helen Kinney and Henry Green were the delegates who jointly “sponsored the pension clause proposal as an amendment to the proposed Legislative Article” at the 1970 Illinois Constitution. 

“The drafters intended to provide constitutional protection to the pension benefit rights in place when an employee started employment and became a member of a pension system. The Pension Clause serves as a bar against any unilateral legislative or governmental action to reduce or eliminate the pension benefit rights in place when an employee became a member of a pension system” (Eric M. Madiar, Chief Legal Counsel to Illinois Senate President John J. Cullerton and Parliamentarian of the Illinois Senate, IS WELCHING ON PUBLIC PENSION PROMISES AN OPTION FOR ILLINOIS? AN ANALYSIS OF ARTICLE XIII, SECTION 5 OF THE ILLINOIS CONSTITUTION).

To let the courts decide again is a reckless disregard of a senator’s and representative’s duty to uphold the State of Illinois and the United States Constitutions. Besides the datum that a State cannot pass any law “impairing the obligations of contracts” (Article I, Section 10, of the Constitution of the United States), “[any] attempt to denigrate the validity of decades of judicial precedents about the binding nature of legislation establishing pension commitments to government employees and to motivate state courts to overturn long-settled premises about these commitments would impose its own, unjustifiable costs. 

The State [of Illinois] and [its] instrumentalities have promised pension benefits to [its public] employees; those employees have relied on those long-standing promises; and as a result the citizens of the State have benefited from the services provided by those employees” (Greenfield, Douglas L., Lahne, Susan G. (2012). How Much Can States Change existing Retirement Policy? In Defense of State Judicial Decisions Protecting Public Employees’ Pensions. National Council of State Legislatures Legislative Summit).  


1974    Peters v. City of Springfield… firemen filed suit

Pension rights are “earned.” There is no distinction between “earned” and “unearned” pension benefits… “The Clause protects pension benefit rights as an enforceable contractual relationship that is subject to modification [only] through contract principles [valid consideration or mutual assent].”

1975    People ex. Rel. Illinois Federation of Teachers v. Lindberg

“While the drafters did not intend for the Clause to require the funding of the pension system at any particular funding percentage, they nonetheless intended to require that pension benefit payments be paid when those payments became due, even if a pension system were to default or be on the verge of default. Indeed, the drafters contemplated that an employee could enforce his or her right to benefit payments in court through a group action to compel payment… The Illinois Supreme Court concluded that the Clause guarantees that pension recipients will receive pension payments when they come due” (Madiar).  (See McNamee ’96 and Sklodowski ‘98).

1979    Kraus v. Board of Trustees… Police Pension Fund, Niles

Law existing at the time of “vesting” is incorporated into employee’s agreement… Pension benefits commence at the time employee contributions begin… General Assembly cannot modify benefits. “The Clause protects pension benefit rights as an enforceable contractual relationship that is subject to modification [only] through contract principles.”

1982    Village of Sherman v. Village of Williamsville

Record of proceeding of Constitutional Convention (21 July 1970)… Rights are fixed when an employee embarks upon employment.

1985    Felt v. Board of Trustees (Judges)

…Can’t diminish terms of contract with pension system… Pension based upon salary of last day of service or last year. “The Clause protects pension benefit rights as an enforceable contractual relationship that is subject to modification [only] through contract principles.”

1985    Taft v. Board of Trustees, Police, Village of Winthrop Harbor

Employees have contractual rights regarding increases in pension benefits.

1987    Carr v. Board of Trustees… Police (Peoria)

Vested Case Issue: an employee acquires a “vested” right when he or she enters the pension system.

1987    Buddell v. Board of Trustees State University Retirement System (SURS)

…Can’t diminish terms of contract with pension system… Pension Code allows employees to purchase service credit for time in the military. “The Clause protects pension benefit rights as an enforceable contractual relationship that is subject to modification [only] through contract principles.”

1988    DiFalco v. Board of Trustees… Firemen’s Pension of Wood Dale

Vested Case Issue: an employee acquires a “vested” right when he or she enters the pension system.

1991    Schroeder v. Morton Grove… Police

Vested Case Issue: an employee acquires a “vested” right when he or she enters the pension system.

1992    Hannigan v. Huffmeister

Vested Case Issue: an employee acquires a “vested” right when he or she enters the pension system.

1993    Barber v. Board of Trustees of Village of Barrington

Vested Case Issue: an employee acquires a “vested” right when he or she enters the pension system.

1996    McNamee v. State

Vested Case Issue: an employee acquires a “vested” right when he or she enters the pension system. Asks questions whether “the Pension Clause mandates that the pension system be funded at a particular funding percentage or according to a funding schedule.” The Pension Clause “creates an enforceable contractual relationship that protects only the right to receive benefits… A cause of action would exist if legislation diminished a person’s right to receive benefits or placed the pension system on the verge of default or imminent bankruptcy… The Illinois Supreme Court concluded that the Clause guarantees that pension recipients will receive pension payments when they come due” (Madiar).

1998    People ex. Rel. Sklodowski v. State

Vested Case Issue: an employee acquires a “vested” right when he or she enters the pension system. (See Lindberg ‘75/McNamee ‘96) “Clause does not create a contractual basis for participants to expect a particular level of funding… [However,] The Illinois Supreme Court concluded that the Clause guarantees that pension recipients will receive pension payments when they come due” (Madiar).


Continued employment does not constitute supporting unilateral modification of an existing employment contract.


…Can’t diminish terms of contract with pension system… “The Clause protects pension benefit rights as an enforceable contractual relationship that is subject to modification [only] through contract principles.”

2015   Public Employees, Appellees v. Governor Pat Quinn, State of Illinois, et al., Appellants

[Opinion filed May 8, 2015: "Justice Karmeier delivered the judgment of the court, with opinion. Chief Justice Garman and Justices Freeman, Thomas, Kilbride, Burke and Theis concurred in the judgment and opinion... The judgment of the circuit court declaring Public Act 98-599 to be unconstitutional and permanently enjoining its enforcement is affirmed."]


Most of this information was originally posted on May 18, 2011.

Sources: 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
and The Great Pension Debate: A detailed analysis of the Illinois Constitution’s pension clause

Please also review these posts, click here: lllinois Pension Reform Is Without Legal and Moral Justification and 12 pragmatic reasons to reject Illinois pension reform.


3 comments:

  1. Instead of protecting public pension rights and benefits, which have a legal basis under Illinois State Law; instead of restructuring the state’s revenue base to pay for the state’s growth in expenditures and its recklessly-accumulated debts and obligations, current policymakers have chosen to diminish the public employees’ constitutional rights and their benefits, even though revenue restructuring and pension debt re-amortization are the best legal and moral solutions.

    To defraud a person of his or her guaranteed rights and earned benefits violates a most significant interest in morality and ethics, and in basic legal principles of both the State and U.S. Constitutions that protect every citizen. Politicians’ attempt to find ways to renege on any citizen’s rights and benefits that are earned is a costly and dangerous effrontery and precedent to set in motion.

    The significance of any modification of Article XIII, Section 5 of the Illinois Constitution is “the extent to which [public employees] will be deprived of the benefits [they] reasonably expected; the extent to which [public employees] can be adequately compensated for benefits of which [they] will be deprived; […and] the extent to which the behavior of the [Illinois General Assembly] failing to perform or to offer to perform [or] comports with standards of good faith and fair dealing” (Claude Rohwer & Anthony Skrocki, Contracts in a Nutshell).

    Let’s not forget how this economic catastrophe was created. The state’s unfunded liability has increased to approximately $100 billion. Nearly 50 percent of that figure was machinated by Illinois legislators. Today’s fiscal predicament is not the result of a financial problem that was unforeseen at the time of the 1970 Illinois Constitutional Convention. The unfunded liability is a consequence of continual legislative negligence, dishonesty and ineptitude.

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  2. The legislature body of Illinois has done nothing to correct the errors continually committed in the past that caused this pension crisis. Now they want to violate its constitutional oath to protect and uphold the Constitution. Rather than addressing and enacting solutions to improve Illinois's financial overall well-being the legislators are choosing to break their oaths. Decimating public employee pensions will not solve the underlying financial woes of Illinois and will only allow the legislature to continue to repeat the errors of the past. Stripping pension benefits is not a solution, but an unconstitutional short term fix.

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  3. There is no financial "emergency" in Illinois. This is about power and politics, about theft and reneging on a constitutional contract with public employees. There is no justice in diminishing the benefits and rights of public employees and retirees; there is no justice in granting tax breaks for wealthy corporations and, at the same time, legislating cuts to public employees’ constitutionally-guaranteed compensation. It is legally and morally wrong to perpetuate the victimization of public employees and retirees, especially when Illinois legislators give “undeserved weight to highly-organized wealthy interest groups, [those groups] tending to ‘drain politics of its moral and intellectual content’” (Laurence H. Tribe, American Constitutional Law).

    We might assume the government of Illinois would not want to prove that its contracts are worthless, especially when the “most basic purposes of the impairment [of the contract] clause [Article XIII, Section 5] as well as notions of fairness that transcend the clause itself, point to a simple constitutional principle: government must keep its word” (Tribe).

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