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This just in… Unions file motion to “gut” the state’s pension case

Friday, Aug 22, 2014

* From a press release…

Yesterday, the We Are One Illinois coalition, along with other plaintiffs, filed a motion in Sangamon County urging the Circuit Court to enter judgment in the plaintiffs’ favor on the State’s affirmative defense in light of the recent Supreme Court decision in the case of Kanerva v. Weems. The We Are One Illinois coalition and other plaintiffs assert that the Kanerva decision confirms that the Pension Protection Clause in the Illinois Constitution is absolute and without exception, even with respect to the fiscal circumstances alleged by the State in its defense.

The following quote may be attributed to We Are One Illinois:

    “The Kanerva decision confirms what we have always argued, that the state’s constitutional language guards against any diminishment or impairment of pension benefits that Senate Bill 1 imposes. We believe, then, that the State’s defense is without merit and so have asked the Court in this motion to rule in our favor on the State’s defense that seeks to justify Senate Bill 1. We maintain that the constitution protects the hard-earned and promised retirement savings of our members and remain ready to work with any legislator willing to develop a fair and legal solution to our state’s challenges.”

The full motion can be found here.

In a decisive 6-1 vote this July, the Illinois Supreme Court ruled in Kanerva v. Weems that the State’s provision of health insurance premium subsidies for retired state workers is a constitutionally protected pension benefit that the State is precluded from diminishing or impairing. The Court wrote:

    “[I]t is 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 … Giving the language of article XIII, section 5, its plain and ordinary meaning, all of these benefits, including subsidized health care, must be considered to be benefits of membership in a pension or retirement system of the State and, therefore, within that provision’s protections.”

Justice Charles Freeman, author of the Kanerva decision, noted:

    “We 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.”

* A reader sent me this brief explanation last night…

Here is the motion filed (in the Pension law case) by the plaintiff today asking that the State’s affirmative defense (i.e. the use of police power or “reserved sovereign powers”) be stricken.

Basically, the Kanerva ruling is used to plea for the striking of the affirmative defense. In so doing, this would gut the State’s defense. The judge would be saying, as the Kanerva decision has said, that the Pension Protection is absolute. That the State has no authority, be it reserved sovereign power or anything else, to disregard the Constitution by diminishing or impairing pension benefits. […]

There is no response from the State, yet, as this was just filed today. I can only imagine that they will try to argue:

    1. The reserved sovereign power is absolute and can alter constitutional provisions.
    or
    2. That those benefits that have been reduced (such as the annual increase , or COLA) are not protected by the constitution since - the State will claim - they are not “core” benefits of the pension code.

Neither argument is compelling.

Again, the full motion is here.

- Posted by Rich Miller        


34 Comments
  1. - Roadiepig - Friday, Aug 22, 14 @ 8:20 am:

    Good. This would save a bunch of wasted court time and would speed up the process of forcing congress to work on fixing the funding problem constitutionally. Why waste any more time defending this cynical ,dead on arrival bill?


  2. - OneMan - Friday, Aug 22, 14 @ 8:23 am:

    Seems like they have a logical argument to me…


  3. - Bourbonrich - Friday, Aug 22, 14 @ 8:27 am:

    This would also seem to bring closure to this attempt to balance the budget by negatively impacting current and former employees. Not sure there are any good solutions if additional and new revenue streams are not created.


  4. - The Colossus of Roads - Friday, Aug 22, 14 @ 8:36 am:

    You got to know when to hold’em and know when to fold’em. Time to fold and try a different plan of action.


  5. - RNUG - Friday, Aug 22, 14 @ 8:42 am:

    After Kanerva, “police powers” is the only defense the State has left. This is just one of the possible lines of attack against the State’s “police powers” argument, most of which have been previously discussed here.

    Be nice if the SB-1 case was resolved this quickly and easily but I suspect it will get a full hearing just to slam the door shut once and for all.


  6. - Roadiepig - Friday, Aug 22, 14 @ 9:03 am:

    RNUG- do you think the defense by the state’s only reason to continue thru to the Supremes is to drag this out past the election? Takes away one of Quinn’s campaign points of “pushing thru pension reform” if it’s tossed before the November elections, and he was out on this earth to fix that problem, wasn’t he?


  7. - Andrew Szakmary - Friday, Aug 22, 14 @ 9:14 am:

    Since SB1 has been stayed by a circuit court, it is not currently hurting anyone. Thus, it might be better for the state if the Supreme Court rules on it around the turn of the year, and if it is overturned then, it might be easier to get much needed tax extensions/increases through a lame-duck legislature.


  8. - The Dude Abides - Friday, Aug 22, 14 @ 9:25 am:

    @RNUG, I agree. This process has been ongoing for several years. Let’s just be patient and let the court give it a full hearing so that once it is thrown out by the court the issue will be settled. It’s a shame that for the past couple years the Legislature basically just wasted their time on an illegal solution to the pension problem but that’s politics in Illinois.


  9. - maybe - Friday, Aug 22, 14 @ 9:39 am:

    Agree The Dude Abides-
    It would be great if we would not waste any more time or money on this issue.


  10. - Frenchie Mendoza - Friday, Aug 22, 14 @ 9:41 am:

    If it’s not settled decisively now, then we face this same thing again when someone like Rauner comes along and suddenly says, “Okay, everybody into a 401K because I’ve determined that it’s perfectly legal. And the citizens of Illinois want it.”


  11. - Norseman - Friday, Aug 22, 14 @ 9:52 am:

    === Since SB1 has been stayed by a circuit court, it is not currently hurting anyone. Thus, it might be better for the state if the Supreme Court rules on it around the turn of the year, and if it is overturned then, it might be easier to get much needed tax extensions/increases through a lame-duck legislature. ===

    That’s one reason it is important for Belz to rule in favor of this motion. That will get the issue to the Supremes quicker. Plus, dragging this thing out costs the plaintiffs and taxpayers additional and unnecessary legal costs.


  12. - Roadiepig - Friday, Aug 22, 14 @ 9:56 am:

    Amen Frenchie- we will find out early into his term as governor just how hard he wants to nail the retirees and present state workers. He has said he has a plan- if it follows his primary attacks on “union bosses” and “gold plated retirement plans” rhetoric it surely will be unconstitutional. Let the Supremes hammer the last nail into it and end the theft attempts once and for all.


  13. - lovecraft - Friday, Aug 22, 14 @ 9:56 am:

    I agree with Frenchie. I can see Rauner, ” the man of the people,” trying to do exactly that.


  14. - Phenomynous - Friday, Aug 22, 14 @ 10:19 am:

    A state 401k program is perfectly legal…for new hires after the effective date.


  15. - Anon III - Friday, Aug 22, 14 @ 10:28 am:

    Those provisions of the Constitution granting the GA the plenary power to make laws and the “Pension Clause” are inconsistent provisions both dealing with the legislative power. They must be interpreted harmoniously in a way to give effect to both.

    If the Pension Clause is “immutable”, not subject to interpretation in the context of an intended functioning State government, then the clause effectively places in the legislature the power to amend the constitution by addition each time another pension benefit is passed into law. Each Public Act adding to benefits supposedly becomes as exempt from legislative amendment as is the Constitution.

    It is a money ratchet. Supposedly, the GA can add benefits, but cannot reduce them. That is inconsistent with plenary legislative power.

    The legislative power of the GA is intended to be plenary. It has the power to legislate on pension benefits, as other entitlements, both the power to add and to subtract. To the extent that the Pension Clause restricts that plenary legislative power, it must be narrowly and strictly construed.

    The philosophical fallacy of the argument for supposed Pension Clause immutability is the proposition that a pension benefit is a right, in the same sense as the right to personal liberty or the right to speak freely. These latter true rights are inherent rights of human beings.

    On the contrary, a pension benefit is not a human right, it is at best a privilege or entitlement granted by the State in a statute. The standing and protections of those granted privileges by statutes are well settled in the law.


  16. - dupage dan - Friday, Aug 22, 14 @ 10:30 am:

    Wouldn’t instituting a 401k program lock the state into timely, regular, mandatory contributions? No pension holidays? If true, I don’t see that happening.


  17. - palladio43 - Friday, Aug 22, 14 @ 11:00 am:

    The Kanerva vs Weems case was decided strictly on Pension Protection. Both Sangamon County and the ISC decided the case on that clause only. The plaintiffs never even argued Contract Clause,but also the State never got to argue Sovereign Poer, i.e., Police Power. It is unclear, since the ISC remanded the case back to Sangamon County Court, that these cannot or may not be argued now. The unions, retirees, et al may not wish it, but the State may want to argue Sovereign Powers in the (vain?) hope that the ISC will now look at that for Kanerva, let alone the pension law case.


  18. - WhoKnew - Friday, Aug 22, 14 @ 11:01 am:

    DD — not to mention that pesky FICA contribution!


  19. - Archimedes - Friday, Aug 22, 14 @ 11:06 am:

    The pension benefit is neither a privilege nor an entitlement. It is a contracual obligation between the State and pension members. To say it is a privilege or an entitlement is to say exactly what it was prior to the current Illinois constitution.

    That contractual obligation can be changed, even reduced, by the legislature if done through mutual consent with the pension members -but it cannot be dimished nor impaired by a unilateral act of the legislature. That restriction was placed on the legislature by the voters that ratified the constitution and that restriction is just as powerful as the protection of human rights. It is not as imprtant as the protection of human rights, but the constraint on legislative action is just as powerful.


  20. - facts are stubborn things - Friday, Aug 22, 14 @ 11:07 am:

    @Anon III - Friday, Aug 22, 14 @ 10:28 am:

    =It is a money ratchet. Supposedly, the GA can add benefits, but cannot reduce them. That is inconsistent with plenary legislative power. =

    Yes, the legislature does set pension benefits, and can enhance those benefits, but once set the constitution protects those benefits from being diminished. The legislature has the power to establish as they did in the Tier II system a whole new and less gracious pension benefit, but the constitution protects those in the system from the legislature coming back in and reducing or diminishing those benefits.


  21. - Anonymous - Friday, Aug 22, 14 @ 11:07 am:

    ===Not sure there are any good solutions if additional and new revenue streams are not created.===

    Illinois over the years has been spending more than its revenue and covering the difference by not funding the pension systems fully. A clear alternative solution to increased taxes is to reverse this relationship. That would mean increasing funding on pensions while reducing spending on everything else while taxes remain the same.

    From a mathematical point of view this is a very good solution to the pension funding problem. I should point out, however, that this solution is unattractive to many from a political point of view.

    Another mathematically good option is to combine some amount of increased taxes with some spending reductions except increased pension funding. Again one will find some people who will to object to this solution from a political point of view.


  22. - facts are stubborn things - Friday, Aug 22, 14 @ 11:39 am:

    @ Anonymous - Friday, Aug 22, 14 @ 11:07 am:

    Agreed. I have always thought the republicans should love the pension issue and see it as a way of shrinking government. Make the pension payments and keep taxes low. This provides less money to fund government and shrinks the pie. Just don’t provide the dollars and let the shrinking unfold.


  23. - Jechislo - Friday, Aug 22, 14 @ 2:00 pm:

    Roadiepig - “Amen Frenchie- we will find out early into his term as governor just how hard he wants to nail the retirees and present state workers.”

    Uh, wrong on nailing the retirees Roadiepig.

    During a July 30, 2014 speech to the Retired State Employees Association, Bruce Rauner stated “Regarding state retirees, he said that they should be left out of the solution for solving the State’s financial problems. He said it is not right to change/reduce a person’s retirement benefits after they have been earned; this includes the automatic annual increase in effect prior to the passage of Public Act 98-0599.”

    Bruce Rauner differs greatly from Pat Quinn on trying to stick it to retirees. Quinn will keep trying to stick it to us, Rauner won’t.


  24. - Geronimo - Friday, Aug 22, 14 @ 2:24 pm:

    ==Rauner won’t…try to stick it to retirees===

    Not exactly correct. Should Rauner “leave retirees out of it” and move forward with 401ks for new hires, how will the payments for those retirees under the old system be sustained? Who would be contributing to that pot?


  25. - Norseman - Friday, Aug 22, 14 @ 2:32 pm:

    Jechislo, Raunervich has promised a lot of things to a lot of people. That’s why a favorable court ruling is needed to ensure we don’t have to depend on idle promises.


  26. - dupage dan - Friday, Aug 22, 14 @ 2:49 pm:

    === - WhoKnew - Friday, Aug 22, 14 @ 11:01 am:

    DD — not to mention that pesky FICA contribution!
    ===

    I forgot!


  27. - Jechislo - Friday, Aug 22, 14 @ 2:54 pm:

    “Jechislo, Raunervich has promised a lot of things to a lot of people. That’s why a favorable court ruling is needed to ensure we don’t have to depend on idle promises.”

    I 100% agree that we need a court ruling to stop the unconstitutional swipes at our pensions.

    Quinn has also made lot of promises to retirees - like signing SB1.


  28. - Jechislo - Friday, Aug 22, 14 @ 3:06 pm:

    “Not exactly correct. Should Rauner “leave retirees out of it” and move forward with 401ks for new hires, how will the payments for those retirees under the old system be sustained? Who would be contributing to that pot?”

    Not me. I would vote for making the ones who caused the problem pay for it - the State.

    I paid my portion every paycheck; the State didn’t.

    I know this sounds crass but I did not cause this problem. There would be no problem if the State had made their payments; and no need to move new employees to a 401K - the system would have continued just fine.


  29. - Federalist - Friday, Aug 22, 14 @ 3:21 pm:

    I would not be surprised that those advocating the 401k’s would try to make the contributions as little as they can legally get by with. And nothing like a 6.2% required (like SS) plus a matching 4-5% which is common for larger businesses and what many private universities offer.

    More than likely a 6% only. Strictly conjecture on my part, but I believe I have thier real goal.


  30. - RNUG - Friday, Aug 22, 14 @ 3:34 pm:

    - Jechislo - Friday, Aug 22, 14 @ 2:00 pm:

    Since I was also there, I agree that Bruce Rauner said it at the RSEA meeting. But given some of his previous statements, I don’t believe he means it.


  31. - RNUG - Friday, Aug 22, 14 @ 3:38 pm:

    BTW … I don’t think Rauner will get away with moving everyone still employed to a 401K, even if he attempts to fire everyone and then hire them back. I have a number of reasons for believing this, mostly due to various court rulings and some CMS regulations.


  32. - RNUG - Friday, Aug 22, 14 @ 3:40 pm:

    - Roadiepig - Friday, Aug 22, 14 @ 9:03 am:

    While it comes across as possibly being political, it really comes down to a couple of billion dollars are year in budget expenditures that, if not required, could help avoid a tax increase vote in the GA. What’s that old rule about reporting? Follow the money …


  33. - RNUG - Friday, Aug 22, 14 @ 3:41 pm:

    - The Dude Abides - Friday, Aug 22, 14 @ 9:25 am:

    That’s the way I feel also. Get it all decided and on record so there is no room for future mischief.


  34. - Jechislo - Friday, Aug 22, 14 @ 4:25 pm:

    RNUG - you’re my favorite poster and I rarely disagree with you. I have talked to Rauner face-to-face twice and I do believe him. I guess we’ll just have to agree to disagree on this one.


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