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*** UPDATED 1x *** SERS seeks to delay state pension reform implementation

Tuesday, Apr 15, 2014

Posted by Barton Lorimor (@bartonlorimor)

* Check out this resolution that was recently approved by the SERS Board of Trustees…

(1) express our concerns about the serious implementation issues SERS faces as we struggle to prepare for the effective date of the new pension law and for the burden SERS will face if the law is implemented and then found unconstitutional,
(2) request that the Attorney General seek or agree to a stay of the new law’s implementation until the lawsuits that challenge the new law’s constitutionality are finally completed, and
(3) if the Attorney General will not comply with point (2), request that the Board of Trustees be allowed to select its own counsel to defend SERS and the Board in the lawsuits that name them as defendants so that SERS and the Board are able to express their position in the lawsuits and seek or agree to a stay of implementation of the new law until the lawsuits that challenge the new law’s constitutionality are finally completed.

The resolution passed unanimously.

H/T to a regular reader who brought this matter to our attention yesterday afternoon.

*** 12:43 p.m. - *** From comments below, an update from resident pension expert RNUG…

This is old news. I did hear that the lawyers for Kanerva / Maag filed additional information / arguments immediately after the favorable AZ ruling but that was a while back. Truthfully, I had expected we would have known something by now. Right now it’s anybody’s guess; maybe the AZ decision has the ISC rethinking their unpublished opinion.

- Posted by Barton Lorimor        


49 Comments
  1. - vttk17a1 - Tuesday, Apr 15, 14 @ 8:00 am:

    The house of cards called “pension reform” begins it’s slow inevitable collapse.


  2. - RNUG - Tuesday, Apr 15, 14 @ 8:11 am:

    Smart move by SERS since a lot of people believe “pension reform” will not survive the legal challenges, especially the portions directed at the already retired.


  3. - Jimbo - Tuesday, Apr 15, 14 @ 8:17 am:

    It makes sense. I can’t imagine the nightmare that would be implementing the law and having it declared unconstitutional. It has already caused irreparable harm though, as many folks signed irrevocable decisions to retire based on this law. But hey, so long as the lege got to pat itself on the back for a year or so…


  4. - Pensioner - Tuesday, Apr 15, 14 @ 8:24 am:

    Pension “reform”: Fools parade and folly. Egregious waste of time and resources.


  5. - PublicServant - Tuesday, Apr 15, 14 @ 8:25 am:

    RNUG, have you heard anything lately regarding Maag, and/or scheduling for the pension lawsuits?


  6. - RNUG - Tuesday, Apr 15, 14 @ 8:41 am:

    - PublicServant - Tuesday, Apr 15, 14 @ 8:25 am:

    I hadn’t checked this month but nothing yet.

    This is old news. I did hear that the lawyers for Kanerva / Maag filed additional information / arguments immediately after the favorable AZ ruling but that was a while back. Truthfully, I had expected we would have known something by now. Right now it’s anybody’s guess; maybe the AZ decision has the ISC rethinking their unpublished opinion.


  7. - RNUG - Tuesday, Apr 15, 14 @ 8:51 am:

    - PublicServant - Tuesday, Apr 15, 14 @ 8:25 am:

    Re scheduling … it’s being moved quickly, or at least quickly for the ISC. There was a request to consolidate the 5th lawsuit. Without going and looking it up, I believe there were some conferences scheduled and dates set for certain paperwork.


  8. - Excessively Rabid - Tuesday, Apr 15, 14 @ 8:57 am:

    ==“pension reform” begins it’s slow inevitable collapse==

    Maybe just maybe they will quit trying to do things they clearly have no right to do - pension “reform,” graduated income tax, etc., and do something they DO have the power to do: base the income tax on federal taxable income. That would make the system much more progressive and would still get the pensioners to help pay the freight. And they could go back down to 3% or so and still increase revenue. Fat chance.


  9. - VanillaMan - Tuesday, Apr 15, 14 @ 9:10 am:

    We are reaching a point in our daily governing crisis when it is every bureaucrat for themselves.

    Odd how it is that we start jailing governors and other officials and pretty soon no one has any respect for government decisions they don’t want to enact anymore.

    Everyone remembers when during the Great Depression, the county sheriffs who wouldn’t enforce the bank’s farm foreclosures - it is a part of the whole Depression myth. Well, it seems that we might be seeing something similar breaking out, right?

    No one wants to be the first lemming over a cliff created by a legislator now serving time for corruption.


  10. - Soccertease - Tuesday, Apr 15, 14 @ 9:21 am:

    “Point 2″ hints at political shenanigans the trustees expect. Remember Mike Madigan’s comment about ISC judges he appointed? Lisa s/n/b involved at all in this matter.


  11. - Demoralized - Tuesday, Apr 15, 14 @ 9:25 am:

    @Soccertease:

    You seriously think the fix is in? That this is a big Madigan conspiracy? Please. That is absolute nonsense. Try again with a non-conspiracy argument.


  12. - redleg - Tuesday, Apr 15, 14 @ 9:29 am:

    Regardless of the outcome of point 2, I would still like to see the Board(s) be able to select their own counsel. Being represented in court by the fox makes us hens and roosters more than a little nervous.

    I would like to see SURS get on board with this. Time to start calling and sending emails again.


  13. - Dirt Diver - Tuesday, Apr 15, 14 @ 9:29 am:

    =Egregious waste of time and resources=

    Well said. All for a press pop to appease the Tribune and others. Sad thing is the systems will be in worse shape 2 years from now after the SC rules it un-Constitutiona. The legislature once again taking foolish actions to further decimate the funding levels of it’s retirement systems.


  14. - DuPage - Tuesday, Apr 15, 14 @ 9:33 am:

    In that Quinn/Rauner debate at the IEA, Quinn indicated he would go along with a stay. He said it legally should be requested by the plaintiffs and the state would not fight it. So they appear to be doing just that. Now lets see what the state AG response is.


  15. - Juice - Tuesday, Apr 15, 14 @ 9:33 am:

    @Dirt Diver- What exactly is the legislature doing to further decimate funding levels?


  16. - Soccertease - Tuesday, Apr 15, 14 @ 9:51 am:

    Demoralized, I would never think there would be any undo influence exercised in Illinois. Shame on me for suggesting that.


  17. - foster brooks - Tuesday, Apr 15, 14 @ 10:21 am:

    I believe the pension clause states membership,not actives or retired


  18. - A guy... - Tuesday, Apr 15, 14 @ 10:26 am:

    There’s domino one. Look for a few more. Remembering that anyone with standing can go to court for just about anything, this kind of approach could make law making even worse than sausage making. I know it’s extreme (but I’m sure it will be pointed out repeatedly hereafter) but what if an Illinois Taxpayer goes to court to say it’s unjust his temporary income tax was made permanent? Does the state just stop withholding until the court gets around to hearing it? The legislators went through this with the Governor with their salaries. Reparations were made with interest. There is a mechanism to correct things if the Illinois Supreme Court agrees with SERS.


  19. - wordslinger - Tuesday, Apr 15, 14 @ 10:31 am:

    Pretty standard stuff to seek a stay until the courts rule.


  20. - A guy... - Tuesday, Apr 15, 14 @ 10:36 am:

    Not so sure about this one WS. We spend a lot of time and ink talking about the balance of power and checks and balances. I’m not so sure the ISC is looking to preempt the Legislature and the Executive on this one. I could be wrong. We’ll see.


  21. - wordslinger - Tuesday, Apr 15, 14 @ 10:44 am:

    –I’m not so sure the ISC is looking to preempt the Legislature and the Executive on this one.–

    I have no idea what the Supremes will do. I’m saying that it’s common for an effected party, in this case, SERS, to seek a stay until courts have ruled.


  22. - wordslinger - Tuesday, Apr 15, 14 @ 10:48 am:

    –Everyone remembers when during the Great Depression, the county sheriffs who wouldn’t enforce the bank’s farm foreclosures - it is a part of the whole Depression myth. –

    Neither the Depression nor some sheriff’s refusal to foreclose on farms are myths. Both really happened.

    “Myths” generally involve some supernatural element, or are just widely held but false beliefs.


  23. - Cassandra - Tuesday, Apr 15, 14 @ 11:07 am:

    I’m sure Quinn would be happy with a stay. A group of pensioners looking forward to a smaller cola in two months (assuming there is no decision and the law is implemented w/out a stay) would not be a happy group in the voting booth.


  24. - AFSCME Steward - Tuesday, Apr 15, 14 @ 11:09 am:

    A guy

    “There’s domino one. Look for a few more. Remembering that anyone with standing can go to court for just about anything, this kind of approach could make law making even worse than sausage making. I know it’s extreme (but I’m sure it will be pointed out repeatedly hereafter) but what if an Illinois Taxpayer goes to court to say it’s unjust his temporary income tax was made permanent? Does the state just stop withholding until the court gets around to hearing it? The legislators went through this with the Governor with their salaries. Reparations were made with interest. There is a mechanism to correct things if the Illinois Supreme Court agrees with SERS.”

    Generally, a court will only issue a stay if they believe the petitioning party has a good chance of winning. It is unlikely that your argument would stand water since it is highly unlikely a constitutional tax increase would be overturned.


  25. - wordslinger - Tuesday, Apr 15, 14 @ 11:12 am:

    – but what if an Illinois Taxpayer goes to court to say it’s unjust his temporary income tax was made permanent? –

    What’s the Constitutional question? There isn’t one.

    I’m sure you were joking.


  26. - anon - Tuesday, Apr 15, 14 @ 11:21 am:

    Has the State even answered yet in the consolidated lawsuits? I am very curious which defense they will choose. Police powers? Consideration? Is there anything else which would even remotely be arguable?


  27. - Norseman - Tuesday, Apr 15, 14 @ 11:38 am:

    === Has the State even answered yet in the consolidated lawsuits? I am very curious which defense they will choose. ===

    No. It’s my understanding that the AG is to respond by mid-May.


  28. - A guy... - Tuesday, Apr 15, 14 @ 12:11 pm:

    You don’t really have to go back to the Depression to find cases of Law Enforcement not executing foreclosures. Tom Dart did so lately in Chicago with foreclosures. Doesn’t make it right, but it’s a situation with more recent precedent. Heck, he sent out a press release saying he wasn’t doing it.
    On the ISC case. My point was a person can go to court, establish standing, regardless of how viable the case is, and attempt to get a stay. I disagree with Cassandra. I do not think Pat Quinn would be happy with a stay. He’s walking a tight rope here. Apparently some union membership and leadership are willing to accept another date from the guy who stood them up and jilted them. These are emotional times. AKA, the worst time to make important decisions.


  29. - A guy... - Tuesday, Apr 15, 14 @ 12:16 pm:

    - AFSCME Steward - Tuesday, Apr 15, 14 @ 11:09 am:

    ===A guy
    Generally, a court will only issue a stay if they believe the petitioning party has a good chance of winning. It is unlikely that your argument would stand water since it is highly unlikely a constitutional tax increase would be overturned.===

    Afsme, I just don’t believe this to be true. Whether it has a good chance or not to be overturned is conjecture at best. It’s a political decision that they may or may not make. Guessing what the court will or won’t do in arbitrary. I don’t think that’s the threshold. I don’t know how it could be in this or other cases.

    It may happen. It’s a legal maneuver. Let’s watch.


  30. - wordslinger - Tuesday, Apr 15, 14 @ 12:19 pm:

    – My point was a person can go to court, establish standing, regardless of how viable the case is, and attempt to get a stay.-

    A stay on what? The General Assembly passing tax legislation? You have to assert some reasonable Constitutional concern.


  31. - PolPal56 - Tuesday, Apr 15, 14 @ 12:25 pm:

    Norseman @ 11:38, you are correct, and there is a case management meeting with the ISC scheduled for May 22.


  32. - Jack Handy - Tuesday, Apr 15, 14 @ 12:31 pm:

    A stay will probably be granted due to irreparable harm that may come to those that decide to retire prior to the law taking effect.

    The state might also ask for a stay due to the 1% reduction in the pension contribution. Not for sure how they would undo that if someone gets the increased pay for a while and then leaves government prior to the suit being settled.


  33. - RNUG - Tuesday, Apr 15, 14 @ 1:24 pm:

    If both (loosely speaking) parties agree to a stay, it’s more likely a stay would be approved.

    Or there could be a compromise like in Kanerva / Maag where the health insurance fees are being collected but are being placed in escrow pending the court’s final ruling. But that would be a bit more complicated for the pension case with it’s various parts; a straight stay would be cleaner and much simpler.


  34. - RNUG - Tuesday, Apr 15, 14 @ 1:26 pm:

    While I always appreciate (and am sometimes surprised) when my comments are highlighted, I want to make clear it is slightly out of context as highlighted above. I was answering a question about Kanerva / Maag when I said ‘this is old news …’


  35. - Late to the Party - Tuesday, Apr 15, 14 @ 1:48 pm:

    I just wish they would make a decision so I can plan what flavor dog food I’ll be eating. I really prefer the more expensive ones, but if the ruling goes us state retirees I will have to switch to generic dog food. Please, make a decision and let me plan my menu.


  36. - RNUG - Tuesday, Apr 15, 14 @ 2:02 pm:

    - Late to the Party - Tuesday, Apr 15, 14 @ 1:48 pm:

    It really is unfair to the retirees who only have their State pension. Unless they also saved and invested on their own, they don’t have any way to recover from whatever happens.

    Unfortunately, the General Assembly and Gov Quinn have put all of us in this position. And we will have to wait, probably (at least) close to a year before we will know the outcome of pension “reform”. The legal process takes a certain amount of time and we’ll just have to wait for it to play out.


  37. - Lincoln (b)logger - Tuesday, Apr 15, 14 @ 5:04 pm:

    Anyone miss the Cullerton plan that was negotiated in good faith? And the legal argument for consideration?


  38. - Arthur Andersen - Tuesday, Apr 15, 14 @ 6:00 pm:

    I agree that asking for a stay is a good move. Kinda surprised that one of the parties hadn’t done so before-perhaps legal issues above my comprehension.

    I am a bit troubled as an SERS annuitant about the wording of their resolution. The fact that the law is proving difficult to implement is not by itself a reason to stay its implementation. TRS and SURS, with similar required changes, perhaps more for SURS, have not raised similar concerns. I also recall the recent OAG criticism of SERS’ IT project and wonder if they have bigger problems than SB 1. I hope not.

    Secondly, I believe SB1 mandates the funds use the AG in litigation regarding its provisions. If that’s correct, the second half of the resolution is, ah, “inoperative” in Nixonspeak. (I’m posting from phone and can’t check my work-apologies if I have this wrong)


  39. - RNUG - Tuesday, Apr 15, 14 @ 6:07 pm:

    - Arthur Andersen - Tuesday, Apr 15, 14 @ 6:00 pm:

    I’m pretty sure the RSEA suit requested a stay. Think they might have been the only group to do so.


  40. - Just The Way It Is One - Tuesday, Apr 15, 14 @ 6:38 pm:

    The bottom line is that the move by the SERS Board makes perfect sense and is legally sound. And, practically speaking, I agree, as a couple others above have pointed out above, that, frankly, I was surprised they hadn’t taken this vote or resolved to take this approach alREADY!

    And, olitically, I’m sure that Pat Quinn won’t mind or object in the slightest, either, because the Il. Sup. Ct. somehow NOT having the Pension Law’s Constitutionality resolved by Election Day probably helps him, on the whole, and certainly wouldn’t hurt him, except for losing the support of that minority of current or former Union members who feel so strongly about it that they resolved long ago that they won’t vote for PQ anyway–probably even if it’s overturned in part (or altogether)…!


  41. - Arthur Andersen - Tuesday, Apr 15, 14 @ 6:39 pm:

    RNUG, I was just reading a post on the always-reliable Fred Klonsky’s blog which summarizes the suits. As I read Fred, all the suits request an injunction. He also mentions that the SUAA suit was consolidated with the other 4 on April 8.


  42. - Just The Way It Is One - Tuesday, Apr 15, 14 @ 6:41 pm:

    Don’t know what “olitically” means! Hence, may I please clarify that the word in my Comment above was MEANT to have the letter p added to the beginning of that strange, yet interesting-sounding word…!


  43. - Arthur Andersen - Tuesday, Apr 15, 14 @ 7:00 pm:

    Just, I knew what you meant, bud.


  44. - RNUG - Tuesday, Apr 15, 14 @ 7:03 pm:

    - Arthur Andersen - Tuesday, Apr 15, 14 @ 6:39 pm:

    I’m sure you are right about the consolidation. I don’t check on it except once every couple of weeks since we are in early days on the suit and, as was noted above by -PolPal56-, the next significant action will be on May 22.

    I’m pretty sure that as originally filed, only RSEA of the four asked for a stay. The 5th one did include a stay request. But that doesn’t mean the other suits weren’t amended to include such a request. I;m sure the request was included when they were combined, and that may be where Klonsky picked it up.


  45. - Arthur Andersen - Tuesday, Apr 15, 14 @ 9:06 pm:

    RNUG, as always, you’re on point. That makes perfect sense.


  46. - Oswego Willy - Tuesday, Apr 15, 14 @ 9:18 pm:

    - RNUG - and - AA - …

    It’s such a pleasure to just sit back and have you both, and many others too, just bring pension issues to where even I can follow the bouncing ball.

    Thanks.


  47. - RNUG - Tuesday, Apr 15, 14 @ 9:41 pm:

    -AA-,

    Had time to go back and re-read some of it. I was wrong. My memory was a bit off; that’s what I get for not being at home on my desktop where I have all the details filed. All of the suits did ask for a stay. I’m going to blame it on CRS.

    What I was remembering about the RSEA suit being unique was their request, if there was no stay, to escrow everything that should have been paid to the retirees (ala Kanerva / Maag) until a final decision is reached. Makes sense; the same lawyer filed both the Kanerva and RSEA SB-1 suits.


  48. - kcjenkins - Tuesday, Apr 15, 14 @ 10:03 pm:

    Kanerva is a bit overdue. It’s been under submission for 209 days - the 2013 mean for non-unanimous civil opinions was 185.79 days. The numbers have drifted down in recent years - it was 204 in 2010 and 208 in 2009.


  49. - wordslinger - Tuesday, Apr 15, 14 @ 10:31 pm:

    - RNUG - and - AA - …

    It’s such a pleasure to just sit back and have you both, and many others too, just bring pension issues to where even I can follow the bouncing ball.–

    It is a pleasure conversing with informed, reasonable, intelligent, great public servant, , who, with a bonus, don’t think that the people are the enemy.

    I have nothing but respect for your admirable service.I’ve benefitted from it, greatly, as have my old timers and my children.

    And I’m with you til the last dog dies.

    Salud.


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