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*** UPDATED 1x - Raoul responds *** Quinn, Lisa Madigan respond

Thursday, Jul 3, 2014

* Tribune

(A) spokeswoman for Attorney General Lisa Madigan said the decision “has no direct impact” on the pension litigation.

“While this decision is very clear on the fact that the pension clause covers health care benefits, the arguments in the pension reform litigation are different than the ones in this healthcare case,” attorney general spokeswoman Maura Possley said in an email. “We will continue to vigorously defend the pension reform law.”

Supporters of the pension reduction law say those legal issues revolve around the question of whether the legislature essentially has emergency powers to modify the benefits in order to deal with a funding crisis and ensure the stability of the pension funds.

“This landmark law was urgently needed to resolve the state’s $100 billion pension crisis,” Quinn spokesman Grant Klinzman said in an email. “It was also urgently needed to ensure that teachers, university employees and state workers who have faithfully contributed to the pension system have retirement security.

“We’re confident the courts will uphold this critical law that stabilizes the state’s pension funds while squarely addressing the most pressing fiscal crisis of our time by eliminating the state’s unfunded pension debt.”

* But

John Myers, an attorney who represents plaintiffs in both cases, said the attorney general’s office was “whistling past the graveyard.”

“A strong signal has been sent by the Supreme Court that is going to affect the outcome of that other case,” Myers said.

* 3:27 p.m. - From Kwame Raoul…

State Senator Kwame Raoul (D-Chicago 13th) issued the following statement on the Illinois Supreme Court’s decision in Kanerva v. Weems that a 2012 law altering state retirees’ health insurance benefits violated the Pensions Clause of the Illinois Constitution. Raoul chaired the conference committee that produced last year’s compromise pension reform law, which is now the subject of pending litigation, and negotiated a reform plan for City of Chicago retirement systems.

During the years-long debate over various pension reform proposals, I have consistently cautioned that we must align our actions with the constitution’s protections of state workers and their benefits. However, while we could examine previous decisions and discuss the legal precedents, there was no sure way to obtain guidance from the courts on this matter aside from passing a law and waiting for them to react.

Today, we begin to glimpse the nature of this reaction.

The Illinois Supreme Court has handed down a forceful decision, backed by six of its seven justices. Its powerful affirmation of the constitution’s protection of contractual rights and promised benefits may serve as a predictor of how this court will handle challenges to Senate Bill 1 and similar reform measures.

Today’s ruling did not speak directly to the “police powers” argument that in times of fiscal emergency, the state may be justified in taking extraordinary steps to balance its responsibilities and carry out its duties to all residents. But the court did clarify that in addition to protecting contractual rights, the Pensions Clause insulates public employees from the diminishment of their benefits by the General Assembly.

We must wait for the specifics of future opinions to firmly establish the parameters of a constitutional approach to meeting our obligations and setting our state on a firm financial footing. No matter what those specifics are, I remain committed to a long-term solution that improves our state and protects the rights of our valued public employees.

- Posted by Rich Miller        

48 Comments
  1. - McLean Farmboy - Thursday, Jul 3, 14 @ 1:54 pm:

    Not specifically to this post, but a couple of stories have collided in my mind today. I’m not a lawyer (nor do I play one on tv), but it seems to me that the Supremes decision could be used to justify the re-instatement of pensions of anybody that was denied a pension benefit due to their actions on the job (like a couple of former governors, police officers, etc.) that got them fired and their pensions taken away. If benefits cannot be diminished, essentially at all, is removing someone from membership all together, even for cause, not allowed either? If I am missing something here, please feel free to enlighten.


  2. - Oswego Willy - Thursday, Jul 3, 14 @ 1:56 pm:

    Agree with Myers.

    If it makes you feel better thinking the link between the two is different, than feel better, but the signals are quite clear and the road map as to how the ILSC might see the latter is paved with an extra coat with today’s ruling.


  3. - Walter Mitty - Thursday, Jul 3, 14 @ 1:58 pm:

    Quinn should have released nothing… By releasing that, he just sealed his fate. Yeah, we know PQ it’s bad… And the resolution you proposed just got pounded.. Huh, it’s technically Friday.. I suggest the closing song is anything from Neil Finn’s “Try Whistling This” …seems right Rich…


  4. - ChinaTown - Thursday, Jul 3, 14 @ 2:00 pm:

    Even the language in Burke’s dissent suggests the other bill is dead. She says once you touch retirement income or any term on which it’s been acquired, you’re toast:

    “The [pension protection clause] was designed to protect a public retiree’s right to collect post retirement income in the form of an annuity and to ensure that the terms under which an employee acquired that right could not be altered to his or her detriment.”


  5. - facts are stubborn things - Thursday, Jul 3, 14 @ 2:00 pm:

    Expected nothing less.


  6. - Mason born - Thursday, Jul 3, 14 @ 2:06 pm:

    Wouldn’t Quinn be best just shutting his yap. I’ve thought all along BR really hurt his cause by going whole hog on the anti-union screed. Seems like putting Quinn on the record saying we can diminish your pention and we are doing it for your own good would help BR. If he didn’t manage to convince union members he was Freddy Krueger.


  7. - abc123 - Thursday, Jul 3, 14 @ 2:06 pm:

    Why didn’t she argue police power in this case? Clearly should have been back-up on the main issue.


  8. - Chicago Cynic - Thursday, Jul 3, 14 @ 2:10 pm:

    She just didn’t want to admit defeat…yet.


  9. - Steve - Thursday, Jul 3, 14 @ 2:11 pm:

    We may see a move to privatize some of the Illinois public universities. After all, that’s one way to get rid of pension problems in the long run but not the short run.


  10. - The Colossus of Roads - Thursday, Jul 3, 14 @ 2:12 pm:

    Maybe they should have read Cullerton’s response and plagiarized as his was quite good without giving in completely or saying I told you so.


  11. - RNUG - Thursday, Jul 3, 14 @ 2:14 pm:

    Lisa is blowing smoke; about all she can do at this point.


  12. - ChinaTown - Thursday, Jul 3, 14 @ 2:14 pm:

    Mitty’s correct. Another messaging fail from PQ. Effectively said nothing while saying something that will get slung back in his face.


  13. - ChinaTown - Thursday, Jul 3, 14 @ 2:17 pm:

    LM alluded to police power argument. No reason to specify, just note that it’s a different argument. “Police power” and “emergency power” don’t sound particularly good, and I wouldn’t want them next to my name in the Tribune either.

    That said, agreed that she’s basically blowing smoke.


  14. - PoolGuy - Thursday, Jul 3, 14 @ 2:24 pm:

    are these 2 responses a cursory plea to S&P/Moody’s/Fitch to give us a break for a couple weeks/months for crying out loud?


  15. - ivote - Thursday, Jul 3, 14 @ 2:27 pm:

    Reaction from Rauner yet?? Should be good!


  16. - Walter Mitty - Thursday, Jul 3, 14 @ 2:30 pm:

    Ivote… Nothing is better than the two responses..He should either let them stew… Or go all in and say I am for opening the constitution to save our state.. Now that PQ released this Seinfeld statement.. He has the two options!


  17. - PoolGuy - Thursday, Jul 3, 14 @ 2:33 pm:

    or Rauner could say the ISC is part of the culture of corruption in Springfield and needs to be taken down a peg or two…


  18. - Walter Mitty - Thursday, Jul 3, 14 @ 2:36 pm:

    This landmark law was urgently needed to resolve the state’s $100 billion pension crisis,” Quinn spokesman Grant Klinzman said in an email. “It was also urgently needed to ensure that teachers, university employees and state workers who have faithfully contributed to the pension system have retirement security.

    “We’re confident the courts will uphold this critical law that stabilizes the state’s pension funds while squarely addressing the most pressing fiscal crisis of our time by eliminating the state’s unfunded pension debt.”

    I am so busy doing nothing… that the idea of doing anything - which as you know, always leads to something - cuts into the nothing and then forces me to have to drop everything.

    Jerry Seinfeld


  19. - DuPage Dave - Thursday, Jul 3, 14 @ 2:40 pm:

    The police powers argument is baloney. That would only apply if there was no way to increase revenue in the state. The current political will is against any revenue increases, but it is the obvious answer to the pension system shortfall. To pretend that there is an end-of-the-world emergency requiring police powers is ridiculous.

    Illinois is one of the wealthiest states in the union and has a moderate level of taxes. We don’t need to double the income tax or sales tax to deal with the pension issue. There just needs to be responsible action for the state to live up to its constitutional obligations.


  20. - Mason born - Thursday, Jul 3, 14 @ 2:44 pm:

    Always thought that every time the GA proposed anything not mandatory spending (Obama Library, etc) undercuts the police power argument.


  21. - Michelle Flaherty - Thursday, Jul 3, 14 @ 3:00 pm:

    Quinn should have said: Whoops, looks like my work on this Earth isn’t done yet.


  22. - Bigtwich - Thursday, Jul 3, 14 @ 3:01 pm:

    McLean Farmboy

    Yes, you are missing something. You might look at People ex rel. Madigan v. Burge. It also was released today.


  23. - Yellow Dog Democrat - Thursday, Jul 3, 14 @ 3:02 pm:

    ===. Whistling passed the graveyard ===

    More like whistling in the graveyard while digging your own hole at gunpoint. Yeah, everything is gonna come up roses. But you’re the rose food, fella.


  24. - Andrew Szakmary - Thursday, Jul 3, 14 @ 3:06 pm:

    Totally agree with DuPage Dave. Suppose the income tax rate goes up to 6% for 30 years to make up for the past underfunding of the pensions. Can anyone seriously suggest that this would cause massive emigration from Illinois? I mean the typical middle class taxpayer now pays a 37.65% marginal rate (25% federal income tax, 7.65% SS and Medicare, 5% state income tax), and if the Illinois tax rate goes to 6 % this would now go up to 38.65%. I can’t see more than 2-3% of taxpayers moving out of state in response, which means total tax collections still go up massively. The notion of a death spiral is simply laughable.


  25. - VanillaMan - Thursday, Jul 3, 14 @ 3:06 pm:

    In light of the constitutional debates, we have concluded that the provision was aimed at protecting the right to receive the promised retirement benefits, not the adequacy of the funding to pay for them.

    Adequacy of the funding is the problem today, so I believe today’s decision nixes attempts to jack with our rights using that excuse.


  26. - funny guy - Thursday, Jul 3, 14 @ 3:14 pm:

    Hey Rahm—when do you put the for sale sign on O’Hare and Midway? Neither of these assets provide one cent to the city’s budget–per federal law. I think we can conservatively net about $10 BILLION–which would put a nice dent in the unfunded liability.


  27. - concern1 - Thursday, Jul 3, 14 @ 3:17 pm:

    Its just another Madigan pumping up her chest and Quinn well theres not much left to say about him…dumb and dumber….


  28. - Hey There - Thursday, Jul 3, 14 @ 3:31 pm:

    A question I’ve often asked myself is why such strong language favoring public employees and their benefits was placed in our state’s constitution in the first place? It seems like we may have some of the strongest such protections of any state in the country. Perhaps this could be the subject of one of Rich’s upcoming articles.


  29. - Mason born - Thursday, Jul 3, 14 @ 3:31 pm:

    I may not always agree with Raoul but he does come across as one of the adults at the daycare.


  30. - kcjenkins - Thursday, Jul 3, 14 @ 3:35 pm:

    Actually, the Illinois Pension Clause is similar to those in several other constitutions around the country. The model is in the New York state constitution. There was a major court decision not long before the 1970 constitutional convention suggesting that pension systems like Illinois’ weren’t protected, and the clause was a response to that.


  31. - ArchPundit - Thursday, Jul 3, 14 @ 3:37 pm:

    Squeezy Strkes Back!


  32. - DuPage - Thursday, Jul 3, 14 @ 3:39 pm:

    Hey Lisa, win or lose, you get paid the same salary. At least the state is not spending a couple million hiring outside lawyers on this unwinnable defense of a clearly unconstitutional law. Or is it? How much time was diverted from other work that the AG office does?


  33. - kcjenkins - Thursday, Jul 3, 14 @ 3:40 pm:

    The “police power/emergency” argument likely has two principal problems to overcome - first, the emergency was created by the state, not by a third party (call it the “you can’t dig your own ditch” doctrine); and second, the state is suggesting an impairment of the right, not a time, place and manner type of redirecting of the right (similar to what happens with parade permits, etc.)


  34. - Archimedes - Thursday, Jul 3, 14 @ 3:43 pm:

    The police power may be used to modify contracts the state has entered into. However, it cannot be used to modify or ignore the constitution. That is why the State has argued that the SB1 changes impact “non core” benefits. They argue that the annual increase is not a core benefit protected by the pension clause.

    This ruling says that even health insurance is included, so good luck arguing the annual increase is not included.


  35. - Oswego Willy - Thursday, Jul 3, 14 @ 3:44 pm:

    ===I may not always agree with Raoul but he does come across as one of the adults at the daycare.===

    That is true. No matter how this has gone, good or bad, the star of Sen. Raoul is rising.


  36. - wordslinger - Thursday, Jul 3, 14 @ 3:47 pm:

    VMan, before you knock off work today, square for me the cognitive dissonance of your joy that your pension is protected and your constant calls for reducing taxes.

    Who’s going to get it, and how badly, in your mind?

    That is, if you’re not too busy at work.


  37. - Walter Mitty - Thursday, Jul 3, 14 @ 3:47 pm:

    OW… Seems like the statement he released may hurt him in the long run… Stepping out like this does not look unified… It takes friends to move up… I saw it as a bit of grandstanding.. Maybe not.


  38. - Rod - Thursday, Jul 3, 14 @ 3:48 pm:

    “Whistling past the graveyard” in relation to AG Madigan’s statement is really some shot. I thought State Senator Kwame Raoul’s statement while appearing statesman like betrays the fact that there is no plan B here.

    Bruce Rauner has no plan B for revenue, since Quinn doesn’t have one either we are in just fine shape.


  39. - kcjenkins - Thursday, Jul 3, 14 @ 3:48 pm:

    McLean Farmboy - If you’re interested in a somewhat longer analysis of Burge (too long to copy into this comment) it’s here: http://bit.ly/ViSdiQ.


  40. - RNUG - Thursday, Jul 3, 14 @ 3:54 pm:

    Raoul made a good statement, probablky about the best way he can phrase it right now.


  41. - Anonymous - Thursday, Jul 3, 14 @ 3:59 pm:

    –Bruce Rauner has no plan B for revenue, since Quinn doesn’t have one either we are in just fine shape.–

    Quinn’s made full pension payments and proposed keeping current rates.

    I don’t know why he played ball with the Civvies on this pipe dream, but it’s over. But he hasn’t shorted pensions as governor.

    That’s a pretty short list.


  42. - Tom Joad - Thursday, Jul 3, 14 @ 3:59 pm:

    Spare me the crocodile tears shed for the Mayor. He just tapped the state budget for a free $50 million for the city pension problem.


  43. - Oswego Willy - Thursday, Jul 3, 14 @ 4:00 pm:

    ===OW… Seems like the statement he released may hurt him in the long run… Stepping out like this does not look unified… It takes friends to move up… I saw it as a bit of grandstanding.. Maybe not.===

    The fact he is in the discussion as to his opinion and what it means in the bigger picture speaks to his impact…

    - RNUG - sums the statement itself up really well;

    ===Raoul made a good statement, probably about the best way he can phrase it right now.===

    His words have weight. That is the takeaway.


  44. - G'Kar - Thursday, Jul 3, 14 @ 4:11 pm:

    Hey There @ 3:31–Here is a link to the article by Eric Madiar that looks at the Pension Clause in part wrt the 1970 Constitutional Convention. http://www.illinoissenatedemocrats.com/images/pensions/D/Pension%20Clause%20Article%20Final.pdf


  45. - Yellow Dog Democrat - Thursday, Jul 3, 14 @ 4:13 pm:

    For those of you who are stranded on vacation w/o your babel fish, Raoul translated:

    “I am not saying ‘I told you so.’ I will tell you that when the Court issues it’s opinion on SB 1. I just wanted to give you fair warning.”


  46. - RNUG - Thursday, Jul 3, 14 @ 4:23 pm:

    - Hey There - Thursday, Jul 3, 14 @ 3:31 pm:

    The entire pension debate can be found in the 1970 Con-Con transcripts. Google will find them for you.

    As others have noted, Illinois copied New York, and Arizona copied Illinois. Plus other states such as Hawaii and Alaska have strong language.

    Specifically to Illinois and the resulting Pension Clause, aside from the aforementioned court decision in another state, the IL pension funds were floating in the 50% - 60% funded range in the late 1960’s. It appeared the State / General Assembly did not have the political will to properly fund the pensions. Some of the 1970 delegates believed the Pension Clause, if enacted, would force the GA to meet their funding obligations. Nice idea in theory; failure in practice. As history tells us, the GA again started underfunding in 1974 which lead to the ISC case People ex rel. Illinois Federation of Teachers v. Lindberg where it was ruled that the pensions could be funded (or not) in any way the GA wanted to but the pensions had to be paid when due, which then provided the legal cover for underfunding the pension systems over the past almost 40 years.

    For the full history to put it in context, in depth analysis and specific citations, search for Eric Madiar’s analysis IS WELCHING ON PUBLIC PENSION PROMISES AN OPTION FOR ILLINOIS? Then read all the cases cited …


  47. - Carl Draper - Thursday, Jul 3, 14 @ 4:49 pm:

    I did not expect the Attorney General to throw in the towel on the day of this ruling. However, to suggest that arguments like, “This is a fiscal crisis” will fall on deaf ears with voters. Everyone knows that this is a self-created problem caused by re-electing the same people - of BOTH parties - who wanted to avoid hard fiscal decisions and deferred payments needed for a responsible level of funding the pension system.
    This time the bill collector has come and will not go away. Today’s decision alone is estimated to cost over $20 million. The stakes in the pending cases are astronomical by comparison.
    There will be no cheap fix this time and we taxpayers will pay the consequences of irresponsible politicians.


  48. - kcjenkins - Thursday, Jul 3, 14 @ 4:51 pm:

    True that Arizona’s clause is indistinguishable from Illinois. The Arizona Supreme Court unanimously struck down a similar pension reform package 4 months ago.


Sorry, comments for this post are now closed.


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