Wednesday, March 4, 2015

“Long Line of Legal Precedent Defeats Any Defense of the Act”

“…The asserted defense of the Act has been expressly rejected in cases interpreting the Pension Protection Clause.

“A long line of Illinois authority defeats the defendants' argument that the Pension Protection Clause contains an implied exception for the exercise of the State's police powers. The principal question presented in this appeal was first resolved by the appellate court in Kraus v. Bd. of Trustees of Police Pension Fund of Village of Niles, 72 Ill. App. 3d 833, 850-51 (1979).

“In that case, the appellate court recognized that a ‘Pension Code modification changing the basis upon which pension benefits are directly determined cannot be applied to diminish the benefits of those who became members of the system prior to the statute's effective date.’ Id. at 850. The appellate court noted that the defendant and the Attorney General ‘nevertheless assert that the legislature should retain a reasonable power of modification, even to diminish the benefits to be received by prior members of the pension system.’ Id. at 851.

“The appellate court rejected that argument and observed that ‘the Pension Laws Commission attempted to have language allowing a reasonable power of legislative modification added to the section or read into the debates to establish intent, but no such action was taken during the convention.’ Id. (citation omitted). ‘While it might have been wise to provide for such a power,’ the court concluded, ‘there is no suggestion in the wording of the provision or in the debates to support the existence of one.’ Id. (internal citation omitted).

“This Court rejected precisely the same argument in Felt v. Bd. of Trustees of Judges Ret. Sys., 107 III. 2d 158 (1985), when it held unconstitutional an amendment to the Pension Code that modified the formula for calculating the pensionable salaries of Judges Retirement System members so as to reduce their pension annuities.

“Before it analyzed the plaintiffs' separate claim that the amendment violated the Contract Clause of the federal and state constitutions, this Court squarely held that the statutory ‘change in the basis of computation’ of judges' pensionable salaries ‘clearly effects a reduction or impairment in the retirement benefits of the plaintiff members of State retirement systems in violation of the constitutional assurance of section 5 of article XIII.’ Id. at 162-63.

“Near the end of its opinion, this Court rejected the defendants' argument that Illinois should fall in line with other ‘jurisdictions which permit a reduction in retirement benefits.’ Id. at 167-68. This Court explained: ‘[The defendants] note that in at least three States, Alaska, Hawaii and Michigan, there are constitutional provisions relating to pensions. As was observed in Kraus v. Board of Trustees (1979), however, in those constitutional provisions, unlike ours and that of New York, there is restrictive language that has permitted modifications in benefits. In order to accept the defendants' argument we would have to ignore the plain language of the Constitution of Illinois’   Id. at 167-68 (internal citation omitted).

“Amazingly, the defendants argue that Felt held the opposite of what it actually said. They argue that while Felt held a pension diminishment unconstitutional and denied that the General Assembly had any power to reduce pension benefits for current State retirement system members, it implicitly acknowledged a legislative power to diminish pensions. (Def. Br. at 35-37.)

“To support this argument, the defendants take a snippet of Felt dramatically out of context. Alter holding that the pension diminishment was an unconstitutional violation of the Pension Protection Clause, the Court addressed the plaintiffs' separate argument that the pension diminishment additionally violated the Contract Clause of the federal and state constitutions. See 107 III. 2d at 165-66.

“With respect to that Contract Clause claim, the defendants argued that the pension diminishments were ‘within the State's police power.’ Id. at 165. The Court made the offhand observation that ‘[p]resumably the defendants would offer a similar contention regarding’ the Pension Protection Clause, and then promptly rejected the defendants' argument as ‘not convincing.’ Id. at 166.

“The Court proceeded to explain why the defendants' argument failed even on its own terms (see Id. at 166-67), but the Court never said that there was a police-powers exception to the Pension Protection Clause. In fact, the Court held that it ‘would have to ignore the plain language of the Constitution of Illinois’ to recognize a legislative power to reduce pension benefits. Id. at 167-68. In short, the defendants' interpretation of Felt cannot withstand any careful reading of that opinion.

“In the three decades since Felt, this Court and the appellate court have consistently held pension reductions unconstitutional where they affect currently employed or retired members of State retirement systems. In 1987, this Court held unconstitutional a statutory amendment that merely created a new deadline by which a pre-existing pension benefit had to be claimed, explaining that ‘the legislature cannot divest the plaintiff of these rights.’ Buddell v. Bd. of Trustees, State Univ. Ret. Sys. of 118 III. 2d 99, 106 (1987).

“In doing so, this Court made no mention of any police power to diminish pension benefits, nor did it subject the diminishment to any sort of balancing test. Summarizing the state of the law almost a decade later, this Court observed that it ‘has consistently invalidated amendments to the Pension Code where the result is to diminish benefits.’ McNamee, 173 Ill. 2d at 445 (citing Felt and Buddell).

Indeed, since the 1970 Constitution came into effect, no Illinois court has held any amendment to the Pension Code constitutional under the theory asserted by the defendants. Likewise, in this Court's most recent interpretation of the Pension Protection Clause, it recognized that ‘[w]e may not rewrite the pension protection clause to include restrictions and limitations that the drafters did not express and the citizens of Illinois did not approve.’ Kanerva, 2014 IL 115811, 1141. That holding necessarily defeats the sole defense in this case. As this Court correctly recognized in Kanerva, pension benefits are ‘insulated from diminishment or impairment by the General Assembly.’ See id., ¶ 48; see also id., ¶ 57 (General Assembly was ‘precluded’ from diminishing or impairing benefits to which the Pension Protection Clause applied)…”

from Brief of ISEA RSEA Heaton and Harrison Plaintiffs-Appellees

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