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Tuesday, March 3, 2015
What the drafters of the Pension Protection Clause intended
From “The Stated Intentions of the Drafters of the Pension Protection Clause Defeat Any Defense of the Act”:
“The drafters intended that the absolute protection of pension benefits would indirectly compel the .funding of the pension systems. Delegate [Henry] Green argued that a similar pension protection clause in New York's Constitution had caused that state's pension funds to be ‘fully .funded,’ and he suggested that a pension protection clause in the Illinois Constitution would ‘be a mandate to the General Assembly to do something which they have not previously done in some twenty-two years,’ i.e., to adequately fund the public pension systems. See Record of Proceedings, at 2925 (SA 6).
“Delegate Green added that ‘in lieu of a scheduling provision’ for funding the systems, the Pension Protection Clause would ‘at least put the General Assembly on notice that these memberships are enforceable contracts and that they shall not be diminished or impaired.’ Id. Citing these remarks, this Court has recognized that the Pension Protection Clause ‘was intended to force the funding of the pensions indirectly, by putting the state and municipal governments on notice that they are responsible for those benefits.’ McNamee, 173 III. 2d at 442.
“Accordingly, even where the State has chosen to forego actuarially sound funding of its pension systems, the Pension Protection Clause mandates that government employers pay pension benefits as promised. This purpose would be totally frustrated if the State could avoid the consequences of its underfunding of the State pension systems simply by diminishing pension benefits. In that event, the Pension Protection Clause would not even indirectly force the funding of the State pension systems. The State would have no incentive to adequately fund the State pension systems, since underfunding itself could be used to justify the diminishment of pension benefits.
“The defendants' interpretation thus would permit a downward spiral of chronic underfunding and periodic pension diminishment, which would end only when the benefits were reduced to almost nothing. That is emphatically not what the drafters of the Pension Protection Clause intended.
“Because the Pension Protection Clause ‘was based on a nearly identical provision of the New York constitution’ (Kanerva, 2014 IL 115811, ¶ 38), another strong indicator of the drafters' intent can be found in an opinion of New York's highest court which interpreted that state's pension protection clause a dozen years before the 1970 Illinois Constitutional Convention. See Birnbaum v. N.Y. State Teachers Ret. Sys., 5 N.Y.2d 1, 11-12 (N.Y. 1958).
“In Birnbaum, a New York state retirement system argued that it would be ‘plunged into bankruptcy’ unless it were allowed to diminish its members' pension benefits. Id. The New York Court of Appeals replied:
“‘If bankruptcy now threatens to overtake the Teachers Retirement System, the system must turn to the Legislature for financial assistance. It may not ask us to ignore the will of the people as expressed in their Constitution.’ Id. at 12.
“If the delegates to the Illinois Constitutional Convention in 1970 wanted to accomplish a different result, and to allow the General Assembly some power to diminish pensions, they could have done so. They chose not to do so. There is no legal basis to ignore that choice now…”
from Brief of ISEA RSEA Heaton and Harrison Plaintiffs-Appellees