“…The pension protection clause clearly
states: ‘[m]embership in any pension or retirement system of the State ***
shall be an enforceable contractual relationship, the benefits of which shall
not be diminished or impaired.’ (Emphasis added.) Ill. Const. 1970, art. XIII,
§5. This clause has been construed by our court on numerous occasions, most
recently in Kanerva v. Weems, 2014 IL 115811. We held in that case that the
clause means precisely what it says: ‘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.’
Id.¶ 38.
“This
construction of article XIII, section 5, was not a break from prior law. To the
contrary, it was a reaffirmation of principles articulated by this court and
the appellate court on numerous occasions since the 1970 Constitution took
effect. Under article XIII, section 5, members of pension plans subject to its
provisions have a legally enforceable right to receive the benefits they have
been promised. People ex rel. Sklodowski v. State, 182 Ill. 2d 220, 229-32
(1998); McNamee v. State, 173 Ill. 2d 433, 444-46 (1996).
“The protections
afforded to such benefits by article XIII, section 5 attach once an individual
first embarks upon employment in a position covered by a public retirement
system, not when the employee ultimately retires. See Di Falco v. Board of
Trustees of the Firemen’s Pension Fund of the Wood Dale Fire Protection
District No. One, 122 Ill. 2d 22, 26 (1988).
“Accordingly,
once an individual begins work and becomes a member of a public retirement
system, any subsequent changes to the Pension Code that would diminish the
benefits conferred by membership in the retirement system cannot be applied to
that individual. Buddell v. Board of Trustees, State University Retirement
System, 118 Ill. 2d 99, 105-06 (1987) (pension protection clause barred statutory
change in Pension Code which prevented current pension system member from purchasing
service credit for time spent in military); Felt v. Board of Trustees of the
Judges Retirement System, 107 Ill. 2d 158, 162-63 (1985) (amendment to Pension
Code adversely affecting base salary used to compute annuity impermissibly
reduced retirement benefits of existing retirement system members in violation
of pension protection clause); Kraus v. Board of Trustees of the Police Pension
Fund, 72 Ill. App. 3d 833, 844-48 (1979) (change in Pension Code’s method of
computing a police officer’s pensionable salary in a way that would reduce the
amount of the pension could not, under the pension protection clause, be
applied to persons who were members of the retirement system prior to the
amendment’s effective date); Miller v. Retirement Board of Policemen’s Annuity
& Benefit Fund, 329 Ill. App. 3d 589 (2001) (amendments to Pension Code
which reduced benefits of existing retirement system members with respect to
eligibility for automatic annual increases unconstitutional under pension protection
clause); Schroeder v. Morton Grove Police Pension Board, 219 Ill. App. 3d 697 (1991)
(finding invalid, as violation of pension protection clause, amendment to
Pension Code reducing pension benefits based on receipt of workers’
compensation benefits)…
“As this
opinion has previously observed, our economy is and has always been subject to fluctuations,
sometimes very extreme fluctuations. Throughout the past century, market forces
have periodically placed significant pressures on public pension systems. The
repercussions of underfunding those pension systems in such an environment have
been well-documented and were well-known when the General Assembly enacted the
provisions of the Pension Code which Public Act 98-599 now seeks to change.
“The
General Assembly had available to it all the information it needed to estimate
the long-term costs of those provisions, including the costs of annual annuity
increases, and the provisions have operated as designed. The General Assembly
understood that the provisions would be subject to the pension protection
clause. In addition, the law was clear that the promised benefits would
therefore have to be paid, and that the responsibility for providing the State’s
share of the necessary funding fell squarely on the legislature’s shoulders.
Accordingly, the funding problems which developed were entirely foreseeable.
“The
General Assembly may find itself in crisis, but it is a crisis which other
public pension systems managed to avoid and, as reflected in the SEC order, it
is a crisis for which the General Assembly itself is largely responsible…
“The United States Supreme Court has made clear
that the United States Constitution ‘bar[s] Government from forcing some people
alone to bear public burdens which, in all fairness and justice, should be
borne by the public as a whole [citations].’ (Internal quotation marks
omitted.) United States v. Winstar Corp., 518 U.S. 839, 883 (1996).
“Through Public Act 98-599, however, the General
Assembly addressed the financial challenges facing our State by doing just
that. It made no effort to distribute the burdens evenly among Illinoisans. It
did not even attempt to distribute the burdens evenly among those with whom it
has contractual relationships. Although it is undisputed that many vendors face
delays in payment, the terms of their contracts are unchanged, and under the
State Prompt Payment Act, vendors are actually entitled to additional
compensation in the form of statutory interest if their bills are not paid within
specified periods. 30 ILCS 540/3-2 (West 2012). In no sense is this comparable
to the situation confronted by members of public retirement systems under
Public Act 98-599, which, if allowed to take effect, would actually negate
substantive terms of their contractual relationships and reduce the benefits
due and payable to them in a real and absolute way…
“Given the history of article XIII, section 5, and
the language that was ultimately adopted, we therefore have no possible basis
for interpreting the provision to mean that its protections can be overridden
if the General Assembly deems it appropriate (see id.), as it sometimes can be
under the contracts clause. To confer such authority on the legislature through
judicial fiat would require that we ignore the plain language of the
constitution and rewrite it to include ‘restrictions and limitations that the
drafters did not express and the citizens of Illinois did not approve.’ Kanerva
v. Weems, 2014 IL 115811, ¶ 41. Indeed, accepting the State’s position that reducing
retirement benefits is justified by economic circumstances would require that
we allow the legislature to do the very thing the pension protection clause was
designed to prevent it from doing. Article XIII, section 5, would be rendered a
nullity…
“Article XIII, section 5, of the Illinois
Constitution (Ill. Const. 1970, art. XIII, § 5) expressly provides that the
benefits of membership in a public retirement system ‘shall not be diminished
or impaired.’ Through this provision, the people of Illinois yielded none of
their sovereign authority. They simply withheld an important part of it from
the legislature because they believed, based on historical experience, that
when it came to retirement benefits for public employees, the legislature could
not be trusted with more.
“As we discussed in Kanerva v. Weems, 2014 IL
115811, ¶ 45, and noted earlier in this opinion, delegates to the constitutional
convention were ‘mindful that in the past, appropriations to cover state
pension obligations had ‘been made a political football’ and ‘the party in
power would just use the amount of the state contribution to help balance
budgets,’ jeopardizing the resources available to meet the State’s obligations
to participants in its pension systems in the future.’
“They understood that steps were necessary ‘in
order to protect ‘public employees who are beginning to lose faith in the
ability of the state and its political subdivisions to meet these benefit payments’
and to address the ‘insecurity on the part of the public employees [which] is
really defeating the very purpose for which the retirement system was
established ***.’” Id. ¶ 46 (quoting 4 Record of Proceedings 2925 (statements
of Delegate Green)).
“And they wanted to make certain ‘that irrespective
of the financial condition of a municipality or even the state government, that
those persons who have worked for often substandard wages over a long period of
time could at least expect to live in some kind of dignity during their golden
years ***.’ (Internal quotation marks omitted.) Id…
“The financial challenges facing state and local
governments in Illinois are well known and significant. In ruling as we have
today, we do not mean to minimize the gravity of the State’s problems or the
magnitude of the difficulty facing our elected representatives. It is our obligation,
however, just as it is theirs, to ensure that the law is followed. That is true
at all times. It is especially important in times of crisis when, as this case
demonstrates, even clear principles and long-standing precedent are threatened.
Crisis is not an excuse to abandon the rule of law. It is a summons to defend
it. How we respond is the measure of our commitment to the principles of justice
we are sworn to uphold…
“Obliging the government to control itself is what
we are called upon to do today. The Constitution of Illinois and the precedent
of our court admit of only one conclusion: the annuity reduction provisions of
Public Act 98-599 enacted by the legislature and signed into law by the
Governor violate article XIII, section 5’s express prohibition against the diminishment
of the benefits of membership in public retirement systems. The circuit court was
therefore entirely correct when it declared those provisions void and
unenforceable…” (In re PENSION REFORM LITIGATION (Doris Heaton et al., Appellees,v. Pat Quinn, Governor, State of Illinois, et al., Appellants), 2015 IL 118585).
“…[A] contract right becomes vested when the employee has fulfilled all of the necessary qualifications and obligations for enjoyment of the right, [as in the case of retirees]. Lawrence, 152 Ill. App. 3d at 197-98 (quoting Kulins, 121 Ill. App. 3d at 525-27); see also Navlet v. Port of Seattle, 194 P.3d 221, 237 (Wash. 2008) (en banc)… Where all of the requisite specifications for the present or future enjoyment of a right have been achieved, the right is considered to be vested…” Black’s Law Dictionary 1699 (9th ed. 2009). (qtd. in Matthews v. CTA, 2016 IL 117638).
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