Case No. 2014 MR 207
"Membership in any pension
or retirement system of the State, any unit of local government or school
district, or any agency or instrumentality thereof, shall be an enforceable
contractual relationship, the benefits of which shall not be diminished or impaired" — THE PENSION CLAUSE (Ill. Const., 1970, Art. XIII, §5)
"No ex post facto law, or law impairing the
obligation of contracts or making an irrevocable grant of special privileges or
immunities, shall be passed" — THE CONTRACTS CLAUSE (Ill. Const., 1970, Art. I, §16)
"Private property shall not be taken or damaged
for public use without just compensation as provided by law. Such compensation
shall be determined by a jury as provided by law" — THE TAKINGS CLAUSE (Ill. Const., 1970, Art. I, §15)
COMPLAINT FOR VIOLATIONS OF THE
ILLINOIS CONSITUTION'S PENSION CLAUSE CONTRACTS CLAUSE. AND TAKINGS CLAUSE:
Plaintiffs, STATE UNIVERSITIES ANNUITANTS ASSOCIATION
("SUAA"), et aL, by and
through their attorneys, Aaron B. Maduff, Michael L. Maduff, and Walker R.
Lawrence of Maduff & Maduff LLC, and John D. Carr, for their complaint
against Defendants, STATE UNIVERSITIES RETIREMENT SYSTEM ("SURS"), et aL, allege as follows:
I. INTRODUCTION
1. The Plaintiffs in this case are
current and former employees of the University of Illinois at Champaign-Urbana,
and Parkland Community College. They are all members of the State Universities
Retirement System (“SURS”) who are vested in their pension rights (State Universities Annuitants’ Association (“SUAA”). [SUAA] is
an Illinois Corporation whose purpose is to promote the welfare of current and
retired employees of the Illinois State Universities System, who are eligible
to receive a pension upon their retirement from the system under the State
Universities’ Retirement System (“SURS”), and as a Plaintiff in this action,
represents its membership).
2. Upon joining the State University System, these
Plaintiffs entered into a contract with the State whereby they contributed (and
those who are current employees continue to contribute) a substantial portion
of their income to SURS and, in exchange, they were to receive a pension with
certain specified benefits upon their retirement. In addition, these Plaintiffs
entered into contracts with the State whereby they voluntarily contributed more
money and/or voluntarily relinquished certain rights available in one pension
plan for the benefits of another, benefits that are also subject to the
deprivations of PA 98-599. These individuals planned their retirement around
their pensions and for many it is (or will be) their only income.
3. The Plaintiffs have all paid their contributions
religiously. However, the State chose not to fully fund SURS and other State
pension systems in spite of lawsuits filed by pensioners asking that the State
be required to do so. The courts have repeatedly held that pensioners may have the
right to the fruits of their contractual bargains (i.e. the pensions), but not
until those rights come due, and they therefore cannot sue the State for
failure to fund the pensions. Taking advantage of those holdings, the State
continued to leave the pensions less than fully funded. The
State’s past failure to fund these obligations has now created a financial
crisis.
In an effort to resolve that crisis, on December 5, 2013, the
Governor signed Public Act 98‐599 into law. The purpose of that Act, however, is
not to resolve the underfunding but rather to shift the consequences of that
underfunding from the State to the SURS members. (Indeed, with few exceptions,
the Act shifts the burden to nearly all State employees and retirees resulting
in several similar lawsuits being filed across the state. The Plaintiffs in
this action, however, are limited to members of SURS, and their concerns regard
the effect of this legislation on SURS members.)
4. SUAA members, including the Plaintiffs, each face
having their vested pensions diminished, reduced and/or impaired. PA 98‐599
diminishes the Plaintiffs’ vested pension rights in six significant ways: (1)
PA 98‐599 reduces the basis on which Cost of Living Adjustments (COLAs) are
calculated; (2) PA 98‐599 deprives employees of the benefit of a compounding
COLA; (3) PA 98‐599 deprives certain employees of COLAs in certain years; (4)
PA 98‐599 caps the salary that may be used to calculate an annuitants’ annuity
thereby impairing the vested pension benefits; (5) PA 98‐599 increases the
years of service required to retire, thereby increasing the costs of benefits
and reducing the value of benefits; and (6) PA 98‐599 reduces the effective
rate of interest formula for members who have elected to participate in SURS’
portable retirement plan.
5.
By diminishing the Plaintiffs’ vested pension rights,
the Act violates the Pension Clause, the Contracts Clause, and the Takings
Clause of the Illinois Constitution. Plaintiffs bring this case asking the
Court to declare Public Act 98‐599 unconstitutional, void, and unenforceable.
6. Moreover,
by laying the burden created by its underfunding of the pensions on the members
of SURS themselves, the State puts many of them at substantial financial risk.
Many of these annuitants are on fixed incomes and have planned their retirement
around their pensions. Many SUAA members are likely to find themselves in
considerable financial straits as a result.
7. Because the Act will put a substantial financial
burden on many SURS annuitants (along with many other State retirees), efforts
were made to have the State stay implementation of the Act until the disputes
over its constitutionality are resolved. (Specifically,
the We Are One Illinois Coalition, attempted, and failed, to reach an agreement
with the State to stay implementation, which is currently set for July 1, 2014.
We Are One Illinois Coalition filed a complaint in Sangamon County, which
specifically alleges as follows: “10. Prior to initiating this lawsuit [the We
Are One lawsuit], We Are One Illinois Coalition sought to reach an agreement
with the State pension systems and the State that would stay implementation of
Public Act 98-0599 pending a decision on whether Public Act 98-0599 is
constitutional. We Are One Illinois Coalition believes that a stay would: [1]
alleviate the substantial administrative burden the pension systems face in
implementing by June 1, 2014 the changes Public Act 98-0599 requires; [2] avoid
the similar, if not greater, burden, expense and confusion that will ensue when
the pension systems must return their members to the status quo when Public Act
98-0599 is found unconstitutional; [3] afford the systems the time they need to
provide meaningful counsel to their members, a critical function the systems
presently are unable to satisfy; and [4] protect pension system members from
the irreparable harm that is a consequence of the State’s unlawful conduct. 11. The State, however, recently rejected We Are One Illinois Coalition’s
pre-litigation efforts” (Complaint 2014 CH 00048 filed in Sangamon County,
paragraphs 10 and 11.)
8. Those efforts failed and Plaintiffs herein may request
injunctive relief to preserve the status quo.
9. This Complaint for a declaration that Public Act
98-0599 is unconstitutional and seeking to have it held void follows.
II. PARTIES
10. Plaintiff STATE UNIVERSITIES ANNUITANTS’ ASSOCIATION
(“SUAA”) is an Illinois Corporation. SUAA members are members of the SURS
pension system in the State of Illinois. SUAA’s purpose is to promote the
welfare of current and retired employees of the Illinois State Universities System. As a
Plaintiff in this action, SUAA represents its members, all of whom are SURS
members…
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