ILLINOIS PENSION LITIGATION/ BRIEF OF ISEA, RSEA, HEATON AND HARRISON PLAINTIFFS-APPELLEES

Opening Statements from Oral Arguments:

The Nature of the Action

“…The plaintiffs allege that Public Act 98-0599 diminishes the pension benefits of members of State retirement systems in violation of the Pension Protection Clause (Article XIII, §5) of the Illinois Constitution, which provides that such benefits ‘shall not be diminished or impaired.’ The defendants admit that the Act diminishes pension benefits. Their sole defense is that the Pension Protection Clause contains an implied or unstated exception that would allow the General Assembly to diminish pension benefits as an exercise of its police powers or reserved sovereign powers. The parties tiled cross-motions for summary judgment on the issue of whether the Pension Protection Clause contains such an implied or unstated exception. Ruling on those dispositive motions, the circuit court held that the Pension Protection Clause contains no such exception. The circuit court held that the Act is unconstitutional, found the Act inseverable, and awarded judgment to the plaintiffs. The issue of whether the Pension Protection Clause contains an applicable exception is raised on the pleadings… 

Introduction

“When the drafters of the Illinois Constitution adopted a stand-alone clause specifically protecting public pensions, they had this very sort of case in mind. They wanted to ensure that public workers would receive promised pension benefits, regardless of fiscal circumstances. To that end, the drafters included within the Pension Protection Clause a provision prohibiting the legislature from diminishing pension benefits. 

“Public Act 98-0599 would diminish public pension benefits in disregard of that constitutional limitation on legislative power. The defendants nevertheless seek to justify the Act on the ground that it will save the State billions of dollars. According to the Act's plain terms, those billions of dollars will come from the pockets of the plaintiffs and other public sector employees and retirees.

“That particular method of managing the State's finances is expressly prohibited by our State's Constitution. This appeal thus raises an issue of fundamental importance: the primacy of the Illinois Constitution over considerations of political expediency. 

“The Pension Protection Clause of the Illinois Constitution prohibits the unilateral diminishment of pension benefits: ‘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’ (Illinois Constitution Art. XIII, §5). 

“The Pension Protection Clause was specifically designed to prohibit the diminishment of pension benefits based on precisely the claim of fiscal necessity that the defendants now advance. The drafters of the Constitution knew that the State had historically failed to adequately fund its pension systems, and they were concerned that fiscal exigencies would be used as a justification for reducing pension benefits unless those benefits received constitutional protection. The delegates who supported the Clause recalled that ‘civil service employees who retired never had their pension altered or amended, even during those trying times during the days of the Depression,’ and explained that the Clause was intended to protect pensioners ‘irrespective of the financial condition of a municipality or even the state government.’ Record of Proceedings, Sixth Illinois Constitutional Convention, Verbatim Transcripts (July 21, 1970) ("Record of Proceedings"), at 2926 (SA 7) (remarks of Delegate Kemp). 

“This Court has repeatedly recognized that the Pension Protection Clause means what it says. As stated by this Court, the Pension Protection Clause makes it ‘clear that if something qualifies as a benefit of the enforceable contractual relationship resulting from membership in one of the State's pension or retirement systems, it cannot be diminished or impaired.’ Kanerva v. Weems, 2014 IL 115811, ¶ 38. The language of the Pension Protection Clause is ‘plain’ and may not be rewritten ‘to include restrictions and limitations that the drafters did not express and the citizens of Illinois did not approve.’ Id., ¶ 41. In light of the Clause's plain meaning and intended purpose, ‘this court has consistently invalidated amendments to the Pension Code where the result is to diminish benefits.’ McNamee v. State, 173 III. 2d 433, 445 (1996). 

“The defendants concede, as they must, that the Act diminishes pension benefits. (See, e.g., R. C1349, ¶ 43.) Nevertheless, the defendants argue that the Act should be upheld as an exercise of the State's ‘police powers.’ This attempt to justify the Act has no valid legal basis because the Pension Protection Clause contains no exception for an exercise of ‘police powers.’ Indeed, the Act represents exactly what the drafters of the Clause intended to foreclose by adopting a stand-alone constitutional provision to safeguard public pensions against diminishment. To accept the defendants' ‘police powers’ exception would directly undermine that constitutional purpose. 

“In a tacit concession that their interpretation of the Pension Protection Clause is meritless, the defendants alternatively suggest that the Clause itself is an unconstitutional relinquishment of the State's sovereignty. (Def. Br. at 40-45.) That novel claim fares no better. Contrary to the defendants' extreme position, the Pension Protection Clause does not compromise the State's sovereignty. Rather, the Clause is a valid limitation on the General Assembly's authority. Like other constitutional limits on legislative power, it cannot be overcome by the defendants' claim of fiscal necessity. 

“In the final analysis, this case does not present, as the defendants argue, a balancing ‘between individual contractual rights and the State's sovereign duty to provide for the general welfare.’ (Def. Br. at 5.) Rather, it presents a straightforward conflict between a constitutional limitation on legislative power and a legislature that deems the limitation inexpedient. It falls to this Court to uphold the promise of the Pension Protection Clause and, with it, the supremacy of the Illinois Constitution over legislation, however well-intentioned or politically expedient, that exceeds the constitutional bounds of legislative power…”