“The lawsuit names Quinn, Illinois Comptroller Judy Baar Topinka and the Illinois Teachers' Retirement System's (TRS) board of trustees as defendants and seeks preliminary and permanent injunctive relief. It was filed as a class action, representing retired and active members of TRS, who are not currently members of any teachers' labor union” (Reuters).
It’s the way the law
works: IRTA is suing TRS Board. Why? The Board will become administrators
of the law.
Is the fact that Klickna
is both president of IEA and a TRS trustee a conflicting and disadvantageous
set of circumstances for herself, as well as for members of both the IEA and
TRS?
“[It is stated] the
primary duties in Illinois law that apply to pension fund trustees are
prudence, loyalty, and avoiding conflicts of interests. The prudence and
loyalty standards are taken directly from the Federal Employee Retirement
Income Security Act statute. These standards establish that trustees must ‘protect
the overall actuarial soundness of the fund,’ but do not extend to a protection
of particular benefits for members.
"Trustees owe no duty to the legislature, organized labor, the governor, retired teacher associations or contributing employers… While trustees are entitled to fill multiple roles, they ‘cannot wear more than one hat when sitting at the table as a trustee…’ A trustee’s fiduciary duty does not require opposing benefit reductions… Trustees must keep in mind that benefit reductions improve the fiscal soundness of a fund. This fact highlights the potential conflict of interest for a trustee who is also a member…” (Ian Lanoff, fiduciary counsel for Groom Law Group in Washington, DC, “Comments on Fiduciary Duty,” Illinois TRS Board Meeting, August 4, 2011).
"Trustees owe no duty to the legislature, organized labor, the governor, retired teacher associations or contributing employers… While trustees are entitled to fill multiple roles, they ‘cannot wear more than one hat when sitting at the table as a trustee…’ A trustee’s fiduciary duty does not require opposing benefit reductions… Trustees must keep in mind that benefit reductions improve the fiscal soundness of a fund. This fact highlights the potential conflict of interest for a trustee who is also a member…” (Ian Lanoff, fiduciary counsel for Groom Law Group in Washington, DC, “Comments on Fiduciary Duty,” Illinois TRS Board Meeting, August 4, 2011).
Fred,
ReplyDeleteI need to think about this some more (already past my bedtime) and talk to a “real lawyer” but I’m wondering aloud if the correct TRS defendant, if there needs to be any for the suit to be complete, is the Executive Director (no offense intended Director Ingram) instead of the Board of Trustees. Article 16 states that the ED, not the BOT, is responsible for the “detailed administration of the system.”
The TRS Board will have to possibly promulgate rules with JCAR implementing some aspects of the law, but that is a staff-driven process carried out in collaboration with major stakeholder groups. The buck stopped with the ED’s recommendations to the BOT. Although the relationships are apples to fruit salad, IRTA’s suit also names IRTA member, friend of retirees, my friend, and TRS Trustee Bob Lyons as a Defendant, unfortunately. Not right.
Good work from Glen.
- Jon Bauman
Jon Bauman is the former Executive Director of the Teacher Retirement System.