Sunday, March 31, 2013

Just Not Fast Enough

I tied a league ball in it,
roped it around twice with jute twine
after greasing the pocket with Vaseline,
and stuffed it in between
my mattress and box spring
each fall.

By spring, my Wilson A2020
“Nellie” Fox baseball glove
was primed for another season.

Through May and June,
the days rang with Hey, batter, batter.
Swing batter, swing!
I swung a Duke Snyder Adirondack,
but I was Louis Aparicio at the plate—
a singles hitter and fast—
a sure steal on the base paths.

In one game, the rain fouled up
my fifth stealing attempt,
as second base became a buoy.

The game was called,
and my father and I
navigated out of the bog
in his new ’64 Oldsmobile Starfire,
until he asked about my muddy spikes.

We torpedoed across traffic
and slid across shoals.
He popped open the trunk
and hurled my baseball spikes
high into the air.

I watched them descend—
the long, mucky laces twisting
in slow-motion, my mitt tied to them—
then hit the street with a dull splash.

I held my breath for an eternity;
as if dreaming, I dodged
the gloom of headlights
bearing down Dempster Street
with quick resolve
to swipe one last time,
‘til I watched the entire season
disappear suddenly beneath
a semi-trailer’s tires
five times. 


“Just Not Fast Enough” was originally published by Lake Shore Publishing.

Thursday, March 28, 2013

Meet and talk to your legislators


Focus on the solutions for the problems legislators have created and perpetuated in Illinois: the state’s structural revenue deficit and pension debt. (Focusing on the legislators’ proposed “pension reform” keeps their message of challenging constitutionally-guaranteed benefits and on cutting teachers’ earned pension benefits in the forefront and reinforces their skewed conversation).

Change your legislators’ discussion from the "pension reform" focus to their need to “reform” the existing pension ramp, to eliminate tax loopholes for “Tax Increment Financing Districts” and for large corporations, to tax services and to broaden the tax base, to establish a graduated income tax (by 2015), to increase taxation on the wealthy, and to make the required payments to the pension systems instead of shifting the normal costs to school districts and colleges, to name a few solutions. In other words, legislators need to honor their contract with public employees and pay the state’s debts. Emphasize that “pension reform” will violate both the State and U.S. Constitutions that all legislators have sworn to uphold; moreover, “pension reform” will hurt the working middle class and not only negatively impact the state’s economy but increase unemployment. Tell your legislators your solutions are legal and moral and will help solve the pension debt and revenue debt problems that they have created.
    • Do not give your legislators’ insistence for “pension reform” any response; instead, turn your legislators’ attempt to discuss “pension reform” to ethical and legal solutions that will address the causes of the budget crisis and will not penalize public employees.
    • If your legislators bring up the Civic Committee’s "Illinois is Broke and its flawed argument, for instance, say, “Yes, Illinois is “morally and ethically broke” and, with your proposed pension reform, the state will be “legally broke” too.
    • If your legislators say, "Something must be done..." – Tell your legislators that every proposed bill, thus far, is seriously flawed and will have dire consequences; that pension reform will not resolve the state’s revenue and pension debt problems.
    • If your legislators say, “But we have to reform pensions to fix the state budget,” shift the conversation to the causes of the state budget's structural deficit and pension debt. Emphasize the decades of fiscal mismanagement, irresponsibility and incompetence that caused Illinois' continuing structural budget problem that led to the current budget "crisis." Emphasize that legislators who continue to ignore the factual problems by advocating the passage of “pension reform” will hurt middle-class workers who didn't create the problem and the people they serve; tell them how “pension reform” will make things worse for the Illinois economy; how legislators in Springfield who give tax breaks to corporations earning millions of dollars in profits will inevitably lead to cutting public services and laying off workers to pay for them.
Legislative Solutions instead of “Pension Reform” or Breaking a Constitutional Contract
·         The current “Pension Ramp” does not work for the five public pension systems. The “Ramp” entails larger payments today as a result of the 1995 funding law – Public Act 88-0593 – to pay the pensions systems what the state owes. The pension debt needs to be amortized for a longer frame of time (a flat payment) “just like a home loan that is amortized.” Though the initial payment will be greater in the beginning, over the long term it will become a reduced cost and a smaller percentage of the overall Illinois budget as it is paid off throughout the years;
·         Make the 2011 income tax hike permanent. Designate the additional 2% in income taxes (approx. $7 billion per year) solely for paying down the unfunded liability… Secure enough funding through sale of pension bonds to erase the entire unfunded liability at a suitable rate ($100 billion at 6.5%). This will turn “soft” debt into hard debt and a guaranteed payment for (let’s say) 25 years in an amortized and consistent method to pay back bondholders… Bond companies will now have a commitment to timetables and repayments they do not have currently from Illinois. They may also be willing to assist in this re-amortization of expenses. The annual payment will be known and unchanging as the state moves forward. The economy in Illinois (5th highest GDP in all 50 states) will gear up, and there will be a lessening of expense and a growth in revenue. There will be no constitutional fight, and public sector employees’ contributions and good works would be honored…;
·         Raise revenue to pay the state’s debts. With a constitutional amendment, “given an appropriately designed graduated-rate structure, Illinois could cut the overall state income tax burden for 94 percent of all taxpayers—on average providing a tax cut to every taxpayer with less than $150,000 in base income annually, raise at least $2.4 billion more in revenue, and keep the effective individual income tax rate for millionaires well below five percent… Illinois taxpayers with the bottom 94 percent of base income collectively would receive an annual tax cut of $1.06 billion… [T]he combined effect of this policy would be a stimulus to the economy from tax cuts and additional state spending (assuming that the additional revenue is used to fund current public services that would otherwise not be funded) that would create at least 36,000 private sector jobs in communities across Illinois…” (Executive Director Ralph Martire, Center for Tax and Budget Accountability, CTBA);

·         “The State shall provide for an efficient system of high quality public educational institutions and services… The State has the primary responsibility for financing the system of public education (Article X, Section 1 Constitution of the State of Illinois). There needs to be a required annual payment from the state to the pension systems;

·         Tax services. Broaden the sales tax base to include selected consumer services. Illinois is one of five states with sales taxes on fewer than 20 services (The Center on Budget and Policy Priorities);

·         Eliminate the tax loophole for “Tax Increment Financing Districts”;

·         Eliminate “Edge Tax Credits” and other tax loopholes for large corporations in Illinois;

·         Increase taxation on the wealthy: Illinois is in the top 10 of regressive state tax systems where the wealthiest taxpayers do not pay as much of their incomes in taxes as the poorest and middle-income wage earners (The Institute on Taxation and Economic Policy);

·         Implement a more timely system of payments (cash management practices are greatly affected by budgetary practices in relation to deferred liabilities which place additional pressures particularly in the first and second quarters of the year to pay those expenses; timing of tax payments also affects the state's cash flow and should be adjusted accordingly);

·         Shifting the state’s “normal costs” for the public pension systems to school districts will have negative consequences. “Property tax bases would not be sufficient to absorb any shift in the employer normal cost for teacher pensions… School districts are demographically and financially varied, and it would be difficult to impose a uniform normal cost shift on them… Illinois ranks last in terms of state spending on K-12 education, and school districts are already relying heavily on local property taxes… While shifting the state’s normal cost obligations onto school districts may provide some relief to the state’s budget, it will not mitigate these financial obligations and will instead push them onto school districts that, on average, already derive the majority of their revenue from local sources” (CTBA). The state should continue to pay the normal costs for the five "public pensions";

·         Create a Speculation Sales Tax: a $1 per transaction on contracts traded on Chicago derivative exchanges (Dr. William Barclay);

·         Examine and improve the efficiency of the state’s government. This includes establishing term limits for Illinois legislators.

Wednesday, March 27, 2013

On Daniel Biss’ Wishful Thinking and Disregard for the Illinois Constitution














 “…The debate over Biss' [pension reform] bill seemed to turn on the question of constitutionality because the bill imposed a reduced COLA as well as increased employee contributions and raising the retirement age incrementally for any employee younger than 45. Biss admitted he was pinning his hopes on the fact that the courts would take Illinois' fiscal crisis into account and 'balance' the pension protection language in the Illinois Constitution against the other obligations of state government under the constitution…” --IASA Capitol Watch, March 20.

Daniel Biss:

“… [There are those among us who want to abandon] the fundamental principle that the rules of the game for contracting parties are not to be changed midstream… This is especially hard to comprehend when public employees have diligently and faithfully paid their contributions while their government employers have failed to pay their required share. Indeed, for decades, states have treated pension systems as a credit card to pay for government services and avoid tax increases or service cuts (p. 194)... For lawmakers, it is simply politically more palatable to unilaterally cut pension benefits for public employees and retirees than to raise taxes, cut services, or both…” (Eric M. Madiar (2012). Public Pension Benefits under Siege: Does State Law Facilitate or Block Recent Efforts to Cut the Pension Benefits of Public Servants? ABA Journal of Labor & Employment Law, V. 27, no. 2, 179-194. Retrieved December 7, 2012 (Also reprinted in Defending and Protecting Public Employees’ Pensions against the Legislative Siege). 


“…One thing we cannot do… is ignore the Constitution of Illinois… No principle of law permits us to suspend constitutional requirements for economic reasons, no matter how compelling those reasons may seem…” (from Ann B. Jorgensen et al., Appellees, v. Rod R. Blagojevich, Governor, et al., Appellants). (Also reprinted in COLA: a Guarantee for Illinois Judges).

“… [T]he Supreme Court would most certainly reject Sidley [Austin’s] public policy argument that the State somehow retains a reserved police power to abscond on its obligations to pension recipients should a pension system default. (565) …Illinois courts have concluded that the Clause affords the legislature no such reserved power. (566) Relying on Kraus [v. Board of Trustees of the Police Pension Fund of the Village of Niles (1979], the Supreme Court explained in Felt [v. Board of Trustees of the Judges Retirement System (1985)] that to accept the Attorney General’s argument ‘we would have to ignore the plain language of the Constitution of Illinois, reject the New York decisions on the constitutional provision which was the model for section 5 of article XIII, and overrule this court’s decision in Bardens [v Board of Trustees of the Judges Retirement System (1961)].’ (567) As a New York court noted, ‘although fiscal relief is a current imperative, an unconstitutional method may not be blinked.’ (568) (from 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, pg. 69). (Also reprinted in What happens if the Illinois public pension funds are “on the verge of bankruptcy?”)

Illinois citizens are tired of those members of the Illinois General Assembly who lack ethical responsibility and moral courage; they are also tired of those members who are willing to challenge the State and U.S. Constitutions. These “so-called” representatives and senators are incompetent cowards.

Every article, every interview, and every legislative session about Illinois public pension reform should begin with these statements: The public pension systems were not, and are still not, the cause of the state’s budget deficits. The state’s budget deficits were triggered by past policymakers’ corruption, arrogance and irresponsibility: the main reasons why the State of Illinois has revenue and pension debt problems.

Past Illinois General Assemblies have created the severe unfunded liability for the five public employees’ retirement systems over several decades. The legitimacy of the current Illinois General Assembly is dubious. The current state government is attempting to isolate and sacrifice one group of people for hardship and, for many of these public employees, create a dispossession by way of intentionally-diminishing laws while perpetuating special exceptions and windfalls for the wealthy elite. This is a mockery of justice, Daniel Biss.

It is critical that today’s policymakers protect legitimate expectations and concerns for all the state’s citizenry, especially for people who must be defended against those with excessive economic clout and inequitable schemes to pass prejudicial legislation that benefits the financial elite at the expense of everyone else.


-Glen Brown

Tuesday, March 26, 2013

Illinois Legislators to Thank for Upholding the State and U.S. Constitutions

These 16 Senators did NOT vote yes on SB 1 and SB 35:

Jason Barickman (R) (217-782-6597, Bloomington: 309-661-2788)
Tim Bivins (R) (217-782-0180, Dixon: 815-284-0045)
James Clayborne (D) (217-782-5399, East St. Louis: 618-875-1212)
William Delgado (D) (217-782-5652, Chicago: 773-292-0202)

Gary Forby (D) (217-782-5509, Benton: 618-439-2504)
Michael Frerichs (D) (217-782-2507, Champaign: 217-355-5252)

Linda Holmes (D) (217-782-0422, Aurora: 630-801-8985)
Kimberly Lightford (D) (217-782-8505)
 
David Luechtefeld (R) (217-782-8137, Okawville: 618-243-9014)
Andy Manar (D) (217-782-0228, Staunton: 618-635-2583)
Wm. Sam McCann (R) (217-782-8206, Jacksonville: 217-245-0050)
Kyle McCarter (R) (217-782-5755, Vandalia: 618-283-3000)
Dale Righter (R) (217-782-6674, Mattoon: 217-235-6033)
Chapin Rose (R) (217-558-1006, Champaign: 217-607-1853)

Martin Sandoval (D) (217-782-5304, Cicero: 708-656-2002)

John Sullivan (D) (217-782-2479, Quincy: 217-222-2295)

These 15 Representatives did NOT vote yes on 1154 (to cap current teachers’ pensionable salary), 1165 (to freeze and reduce the COLA for current teachers and retirees), and 1166 (to raise the current teachers’ retirement age). Apparently, there are only five democrats who are not controlled by Michael Madigan:

Mike Bost (R) (217-782-0387, Carbondale: 618-457-5787)
Dan Brady (R) (217-782-1118, Normal: 309-662-1100)
Rich Brauer (R) (217-782-0053, Springfield)
Adam Brown (R) (217-782-8398, Champaign: 217-607-5104)

Jerry Costello (D) (217-782-1018, Red Bud: 618-282-7284)


Norine Hammond (R) (217-782-0416, Macomb: 309-836-2707)

Chad Hays (R) (217-782-4811, Danville: 217-477-0104)
Naomi Jakobsson (D) (217-558-1009, Champaign: 217-373-5000)
Bill Mitchell (R) (217-782-8163, Decatur: 217-876-1968)

Donald Moffitt (R) (217-782-8032, Galesburg: 309-343-8000)


Brandon Phelps (D) (217-782-5131, Harrisburg: 618-253-4189)
Raymond Poe (R) (217-782-0044, Springfield)

Wayne Rosenthal (R) (217-782-8071, Litchfield: 217-324-5200)

Sue Scherer (D) (217-524-0353, Decatur: 217-877-9636)

Mike Smiddy (D) 217-782-3992, Port Byron: 309-848-9098)

 
How Illinois Senators Voted on SB 1 (Passed the Senate 3/20: only affects current TRS participants and no other systems or TRS retirees; includes choice system between health care and Cost of Living Adjustments).
How Illinois Senators Voted on SB 35 (Failed in Senate 3/20: changes retirement age and only applies COLA to first $25k of pensionable salary (Nekritz/Biss bill).

How Illinois Representatives Voted on HB 1154 (Passed the House 3/14: caps pensionable salary at Social Security Index ($113,700 in 2013).
How Illinois Representatives Voted on HB 1166 (Passed the House 3/14: raises retirement age for pension system participants under the age of 45).

How Illinois Representatives Voted on HB 1165 (Passed the House 3/21: freezes COLA until five years after retirement or age 67. After reaching a pensionable salary, a flat annual increase of $750 would be granted to annuitants; affects both current teachers and retirees).
 

Monday, March 25, 2013

Senate Bill 1 and Constitutionality

from the IEA

Senate Bill 1 (Cullerton/Madigan)
Pension-Reducing Choice Legislation Impacting Only TRS Tier 1 Actives

Over the past legislative session, Senate President Cullerton (D-Chicago) has advocated for the following position: If Tier 1 employees were given a choice to reduce their pension benefits, pension legislation would be able to withstand a constitutional challenge in the Illinois Supreme Court.  The IEA, along with the We are One Illinois labor coalition, believe that this specific coercive choice is not constitutional since it diminishes pension benefits that Tier 1 participants would have been entitled to receive no matter which option is chosen.  Article XIII, Section 5 of the Illinois Constitution clearly states pension benefits cannot be "diminished or impaired" for current participants in the retirement systems.

The highlights of the proposal as it passed the Senate are as follows:

The proposal is only applicable for current actives in TRS.  At this time, current retirees are not impacted.  Additionally, current collective bargaining agreements that include salary increases are exempted from the legislation. Active Tier 1 members would be required to make their decision between January 1, 2014, and May 31, 2014. (The irrevocable choice would be in effect on July 1, 2014). The choices are:

1) Choose to keep the current 3% compounded post-retirement increase of their annuity (a.k.a., the cost-of-living adjustment or COLA), but choosing this would require that the member's pension would only be based on the members’ salary prior to the effective date of the decision (July 1, 2014) and the member would not be able to participate in a state health insurance plan in retirement.  Simply put, members in Tier 1 would lose the ability to have any future salary increases factored into their pension, and they would also lose their access to the Teacher's Retirement Insurance Program (TRIP) or a replacement state administered health plan in retirement.


2) Or choose to have future salary increases included in the calculation of their annuity and have access to an undefined state health insurance plan, but choosing this would reduce and delay their post-retirement increase of their annuity (a.k.a., the cost-of-living adjustment or COLA).  The new rules around the post-retirement increase would change it to a simple (non-compounded) increase that would be 3% or half of the rate of inflation (CPI), whichever is less.  This change alone would cut the value of a pension by one third after twenty years in retirement. In addition to the change in the calculation of the COLA, the COLA also would be delayed until age 67 or five years after retirement, whichever occurs first, further reducing the value of a member’s pension.  To be clear, members would be giving up their COLA for undefined access to a health care plan.  The legislation expresses that this could mean a health care plan that calls for members pay the total cost of their coverage. This type of plan is vastly different from TRIP.


Those who reduce their COLA also would be able to choose to pay an additional 2% of their salary into a cash balance account.  This account would be maintained by TRS, and members would receive a fluctuating rate of interest applied to their account balance annually.

Additional Components of the Legislation

Grants a guarantee of the state funding for TRS if 30% of active Tier 1 participants choose to reduce their COLA.  This would only be a guarantee of the current funding plan, a plan by which the state is struggling to abide.

Lastly, there would be additional state contributions to the five state pension funds beginning in Fiscal Year 2020.  These additional contributions are $1 billion annually.  However, as with the current funding plan, there is no certainty that this additional contribution to TRS would be made since it is still conditional on the election of 30% of the active Tier 1 members choosing to reduce their COLA.


Commentary on SB 1
“The significance of any modification of the ‘Pension Clause’[or choice 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” (Professor of Law, Emeritus, Claude D. Rohwer and Professor of Law, Emeritus, Anthony M. Skrocki, Contracts in a Nutshell).
It is an impairment of the public employees’ contract to receive less than what the original vested right and benefit guaranteed. A choice between the COLA and uncertain state-sponsored health care offers public employees and retirees no ethical and lawful alternatives except to consent to the General Assembly’s demands to make an illicit choice.
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).

Contracts supported by consideration are often one-sided, advantageous arrangements. In Illinois, we can imagine that any agreement with the General Assembly regarding a “guaranteed” funding to the pension systems, for example, would not be a “valid” consideration for public employees, especially since it would be in exchange for reductions of originally-vested benefits guaranteed by the Illinois and U.S. Constitutions for uncertain state health care.

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 pension debt, and the state’s insufficient revenue), legislators should reexamine the concept of justice and what lawfulness demands: that people must keep their covenants with one another. In particular, no justice is accomplished when diminishing public employees' earned benefits and rights because of decades of legislators' irresponsibility, corruption and incompetence.
 
glen brown

For more constitutional analyses, please also read:
“Defending and Protecting Public Employees’ Pensions against the Legislative Siege…” (excerpts from Eric M. Madiar) and “How Much Can States Change Existing Retirement Policy? In Defense of State Judicial Decisions Protecting Public Employees’ Pensions” by Douglas L. Greenfield and Susan G Lahne) (posted December 10, 2012)

Illinois Pension Clause’s Convention Debates, Text and Historical Background (excerpts from Eric M. Madiar) (posted February 4, 2013)

Saturday, March 23, 2013

A Review of Pension Bills and Other Activity Last Week in Springfield

The following information is from Alliance Legislative Report

Several pension reform bills were acted upon last week. This week, more movement occurred as the momentum for final passage of a pension reform measure continues to build. The House of Representatives approved HB 1165 (Madigan, D-Chicago) Thursday which would limit the Cost of Living Adjustment (COLA) for the Teachers’ Retirement System (TRS). The COLA would be frozen until five years after the employee’s retirement or age 67. The COLA would be a flat 3% of the first $25,000 of the pension or $750 per year. The House has already approved other bills that would cap the pensionable salary amount and increase the retirement age on a graduated scale. The Senate has not acted on any of the bills the House has sent over.

The Senate this week approved an amended SB 1 (Cullerton, D-Chicago). The bill now only affects active Tier I members of TRS and would not force any changes to current annuitants of TRS. The bill would:

·         Require active TRS members to choose between keeping the compounding 3% COLA, or accepting a lesser COLA and remain eligible for health insurance upon retirement. This “election” would have to be made between January 1, 2014 and May 31, 2014. The changes would take effect on June 1, 2014

·         Exempt from the election TRS members who have signed an agreement with their school district on or before January 1, 2013 making an irrevocable decision to retire in the future

·          Freeze the salary, for pensionable purposes, of active TRS members who do not choose the lesser COLA

·         Offer TRS members who choose the lesser COLA participation in a new “cash balance” retirement plan operated by TRS that would supplement their Tier I annuity

·         Offer the Early Retirement Option (ERO) to those TRS members who choose the lesser COLA

·         Give TRS the right to sue if the State does not make its pension contributions on time. The bill, as currently drafted, does not contain provisions to shift pension costs onto local school districts.

Latest Action Synopsis

SB 1 Passed the Senate 3/20: only effects current TRS participants and no other systems or TRS retirees, includes choice system between health care and Cost of Living Adjustments (COLA).

SB 35 Failed in Senate 3/20: changes retirement age and only applies COLA to first $25k of pensionable salary (Nekritz/Biss bill).

SB 2404 Held in Senate committee 3/21: increases employee pension contributions 2% phased in over a 2-year period; guarantees funding from State of Illinois (A union proposal).

HB 1154 Passed the House 3/14: caps pensionable salary at Social Security Index ($113,700 in 2013).

HB 1165 Passed the House 3/21: freezes COLA until five years after retirement or age 67. After reaching a pensionable salary, a flat annual increase of $750 would be granted to annuitants.

HB 1166 Passed the House 3/14: raises retirement age for pension system participants under the age of 45.

HB 3411 Passed House committee 3/14: limits COLA to the first $25k; creates a Tier III retirement system with a hybrid plan similar to 401(k); shifts cost of hybrid plan to local school district.
 

The following pension-related bills also were discussed last week:

HB 1277 (Senger, R-Naperville), for the pension systems, changes the actuarial cost method from “projected unit credit” to “entry age normal.” The bill was approved by the House Personnel and Pensions Committee and was sent to the House floor for further consideration.

HB 1296 (Mitchell, C., D-Chicago) requires the State’s pension funds to divest from firearm manufacturing companies. The bill was approved by the House Personnel and Pensions Committee and was sent to the House floor for further consideration.

HB 2900 (Nekritz, D-Northbrook) provides that after July 1, 2013, TRS members are ineligible to participate in the Early Retirement Option (ERO), unless prior to July 1, the employee has notified their employer of their intent to retire under that program before that date. It otherwise terminates ERO after July 1, 2013. The bill was approved by the House Personnel and Pensions Committee and was sent to the House floor for further consideration.

HB 3372 (Senger), for the Illinois Municipal Retirement Fund (IMRF), the State University Retirement System (SURS), and TRS, prohibits “compensation” to include payments or reimbursements for travel vouchers, and service credit no longer available for unused sick leave. The bill was approved by the House Personnel and Pensions Committee and was sent to the House floor.

 

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.