***CLICK HERE FOR THE FULL OPINION***
* Here it is…
A Sangamon County Circuit Court judge ruled Friday that Illinois’ pension reform law passed last year is unconstitutional.
Judge John Belz sided with employee and retiree organizations that argued that the law, passed Dec. 3, 2013, violates the state’s constitutional clause that pension benefits “shall not be diminished or impaired.”
The state is expected to appeal Mr. Belz’s decision to the Illinois Supreme Court.
…Adding…
* 3:10 p.m. - From the Attorney General…
“We plan to immediately appeal the decision to the Illinois Supreme Court so that we can obtain a final resolution of these important issues and allow the Governor and General Assembly to take any necessary action. We will ask the Court to expedite the appeal given the significant impact that a final decision in this case will have on the state’s fiscal condition.”
* 3:46 pm - Leader Durkin…
“Today’s ruling is not unexpected. I strongly urge both parties to seek an expedited review of today’s decision before the Illinois Supreme Court. The legislature needs certainty on this important issue sooner rather than later.”
* Civic Committee…
Statement of Ty Fahner, President of the Civic Committee of The Commercial Club of Chicago:
The finding of any lower Court is significant, however, only the determination of the Illinois Supreme Court will resolve the constitutionality of the pension reform law.
* Bruce Rauner…
“Today’s ruling is the first step in a process that should ultimately be decided by the Illinois Supreme Court. It is my hope that the court will take up the case and rule as soon as possible. I look forward to working with the legislature to craft and implement effective, bipartisan pension reform.”
* We Are One Illinois…
“We are gratified by the court’s ruling today, which makes clear that the Illinois Constitution means what it says. The court held today, as our unions have long argued, that the state cannot simply choose to violate the Constitution and diminish or impair retirement benefits if politicians find these commitments inconvenient to keep.
“This is a victory for every Illinois resident who believes in the integrity of the Constitution. It is a victory for a basic principle of fairness, that working people and retirees who earned modest pensions and always paid their share should not be punished for politicians’ failures. And it is a victory for the members of our unions, who work hard every day in every Illinois community to teach kids, protect public safety, care for the most vulnerable and much more. Today they are more secure in the knowledge that their life savings can’t be taken away from them.
“Going forward, our union coalition repeats our longstanding commitment to work with anyone of good faith to develop a fair and constitutional solution to fund the state’s retirement systems.”
* Leader Radogno…
“As always expected, the issue of pension reform will be decided by the Illinois Supreme Court. I remain hopeful the high court will find the comprehensive pension reform legislation constitutional. At the very least, the Court will be called upon to provide guidance. In my opinion, the sooner the better.”
* Senate President Cullerton…
Cullerton: The rule of law is absolute
SPRINGFIELD - Senate President John J. Cullerton today issued the following in response to the Sangamon County Circuit Court ruling regarding pension litigation:
“I have long believed there is a constitutional way to confront Illinois’ pension challenges. Today’s ruling confirms that, while the need for reform is urgent, the rule of law is absolute. I remain committed to working with all parties to address our budget pressures and pension problems in a manner consistent with the Illinois Constitution”
* Sen. Kwame Raoul…
Today’s ruling sends yet another signal that – as I have always maintained – our constitution does not allow state government to run roughshod over contractual rights, even in times of great financial hardship. The judicial evaluation of last year’s compromise pension reform plan is far from complete, and I await the guidance of the Illinois Supreme Court. I stand ready, once we receive that guidance, to continue the process of negotiating constitutional reforms that protect public employees as well as core services, such as education and health care.
* Gov. Pat Quinn…
We have always anticipated legal challenges to this critical law and urge the Illinois Supreme Court to take the matter up as soon as possible.
This historic pension reform law eliminates the state’s unfunded liability and fully stabilizes the systems to ensure retirement security for employees who have faithfully contributed to them.
We’re confident the Illinois Supreme Court will uphold this urgently-needed law that squarely addresses the most pressing fiscal crisis of our time.
* From our pension expert RNUG…
Judge Belz quoted Kanerva and a number of the earlier ISC decisions (Kraus, Felt). Not only did he slam the door shut on the State, he double-locked and barricaded it.
Game, set, and match to the retirees and current employees.
The language used in the opinion is short (for a judicial ruling), strong and clear:
“The Act without question diminishes and impairs the benefits of membership in State retirement systems, Illinois Courts have consistently held over time that the Illinois Pension Clause’s protection against the diminishment or impairment of pension benefits is absolute and without exception. The Illinois Supreme Court has “consistently invalidated amendment to the Pension Code where the result is to diminish benefits.” McNamee v. State, 173Ill. 2d433, 445 (1996)”
And here are the lines that matter:
a. The Plaintiffs’ Motions are granted. The defendants’ cross-motion for summary judgment is denied, with prejudice, because the Court finds that there is no police power or reserved
sovereign power to diminish pension benefits. Pursuant to 735ILCS5/2-701,the Court enters a final declaratory judgment that Public Act 98-0599 is unconstitutional and void in its entirety;
b. The temporary restraining order and preliminary injunction entered previously in this case is hereby made permanent, The defendants are permanently enjoined from enforcing or implementing any provision of Public Act 98-0599;
c. Pursuant to Illinois Supreme Court Rule 304(a),the Court finds that there is no just reason for delaying either enforcement of this order or appeal or both.
The “denied with prejudice” is a nice touch; basically slams the door shut on future attempts.
The ISC may decide to take the appeal just to eliminate any uncertainty, but I don’t see where they need to. Judge Belz was extremely clear on this.
- Roadiepig - Friday, Nov 21, 14 @ 2:48 pm:
Laws matter. Just skipping the payments because it was easy didn’t make it ok to claim police powers. And now- on to the Supreme Court ?
- foster brooks - Friday, Nov 21, 14 @ 2:49 pm:
That includes 301ks bruce
- sparky791 - Friday, Nov 21, 14 @ 2:50 pm:
I could see the Supremes not even hearing the case.
- anon - Friday, Nov 21, 14 @ 2:51 pm:
Quinn, both Madigans, and all the legislators who insist their handiwork is constitutional will have another comeuppance soon.
- Very Fed Up - Friday, Nov 21, 14 @ 2:51 pm:
Probably what Rauner wanted. If the unions are going to sue over even modest adjustments it’s time to play hardball when contracts are up.
- Carl Draper - Friday, Nov 21, 14 @ 2:52 pm:
Carl R Draper
Just now · Springfield, IL ·
.
In a short and well reasoned decision, the Circuit Court in Sangamon County ruled : “Under established and uncontroverted Illinois law, the State of Illinois cannot
break this promise..” This is a great ending to the ruling.
- Obamas Puppy - Friday, Nov 21, 14 @ 2:52 pm:
Good morning, good afternoon and good night! Next stop ballot box and the Bruce Rauner experience.
- Wensicia - Friday, Nov 21, 14 @ 2:55 pm:
I expect the Supreme Court will let this ruling stand.
BTW, I hope the clear language by the judge helps Rauner understand what unconstitutional means.
- Waffle Fries - Friday, Nov 21, 14 @ 2:55 pm:
Does Cullerton plan get scrapped or is that the new baseline for negotiating with a Republican Governor…compromise being they key to victory and all that…
- Apocalypse Now - Friday, Nov 21, 14 @ 2:55 pm:
Unions win and taxpayers lose.
- Formerly Known As... - Friday, Nov 21, 14 @ 2:56 pm:
So much for the AG’s claim Kanerva v Weems == “has no direct impact on the pension reform litigation arguments,” ==.
The Governor and both Madigans should have listened to Cullerton and Madiar. It was apparent then and remains apparent now.
- Roland the Headless Thompson Gunner - Friday, Nov 21, 14 @ 2:56 pm:
Looking forward to that Tribune editorial saying, “John Cullerton was right all along. We got it wrong.” I’m sure it will run in tomorrow’s paper. /snark/
- A. Nonymous - Friday, Nov 21, 14 @ 2:57 pm:
Too late to concede, Mr. Rauner.
Your “bad” finances just got worse.
- Not OW - Friday, Nov 21, 14 @ 2:59 pm:
Agree that the Supreme Court should refuse to hear this case. Plain language is plain language.
- pundent - Friday, Nov 21, 14 @ 2:59 pm:
The ILSC will probably take this up given the significance of the issue (and to remind the citizens that we have an ILSC). But the short and explicit nature of the circuit court ruling suggests that this isn’t the way to get pension reform.
- Wordslinger - Friday, Nov 21, 14 @ 2:59 pm:
Anyone heard from Ty? Phone must be dead.
Boy, did he sell his crew a bill of goods.
- Illinois taxpayer - Friday, Nov 21, 14 @ 3:00 pm:
Can a court order a tax increase to fulfill its ruling? Layoffs?
- Carl Draper - Friday, Nov 21, 14 @ 3:01 pm:
PART II
As to the calls for a “solution” there is little that can be done except finding a way to fund this behemoth. Offering a contribution plan (Like 401(k)) to new employees will take decades to have an impact. For many decades, the Gov’s and G.A’s have balanced budgets by shorting the pension contributions. This ruling says that the piper has come for payment. This will be a huge hole in future State budgets no matter what “fix” politicians can agree on.
- Formerly Known As... - Friday, Nov 21, 14 @ 3:01 pm:
Should have called the Senate bill for a vote in the House, Mr. Speaker, just as President Cullerton had the class and common sense to call both the House and Senate bills for a vote in the Senate.
While the Senate bill and the Cullerton plan has its own major flaws, we all must remember to say == thanks for nothing == to the Speaker on this particular issue.
- Dan Bureaucrat - Friday, Nov 21, 14 @ 3:02 pm:
Well, Rauner now has the excuse he needs to increase our state revenues with taxes.
Wonder what all those committees are gonna say about this.
- steve schnorf - Friday, Nov 21, 14 @ 3:06 pm:
After the health insurance ruling, there’s no news here
- Walter Mitty - Friday, Nov 21, 14 @ 3:07 pm:
Cullerton was right(er) I hope they don’t waste more money trying to appeal… Madigan(s) lost this… It may be the best shot a real solution and bipartisan solutions… Cost shift anyone?
- Norseman - Friday, Nov 21, 14 @ 3:07 pm:
Well said Carl
- AC - Friday, Nov 21, 14 @ 3:08 pm:
The man upstairs has a lot going on, and keeping track of the infinity is definitely a challenge, even though he has infinite resources to work with. So, it appears that message from the heavens went to the wrong governor, and it appears that Bruce Rauner was put on earth to solve the pension crisis instead. Bruce, you’re on a mission from God, it’s 217 miles to Springfield, you’ve got a full tank of gas, half a pack of cigarettes, it’s dark and you’re wearing sunglasses.
- Big Joe - Friday, Nov 21, 14 @ 3:08 pm:
Union members are taxpayers too. It is clearly not a unions win, taxpayers lose result.
- Go Bears - Friday, Nov 21, 14 @ 3:08 pm:
Rauner understands that the ISC won’t give him an advisory opinion, right? If the court hears the case, the court will rule on the law before it — it won’t say, “BTW, Governor, here’s how you can do this constitutionally.”
- sparky791 - Friday, Nov 21, 14 @ 3:09 pm:
Cost shift and higher employee contributions are coming imo.
- Very Fed Up - Friday, Nov 21, 14 @ 3:09 pm:
Same fate will happen to Cullerton fan. The unions have made it clear the state of finances in Illinois is of no concern and even modest changes they will sue. The judges deciding the cases are part of the same pension system. The only way forward to to negotiate much tougher deals for new employees and switch them over to a 401K that the rest of us live on.
- Oswego Willy - Friday, Nov 21, 14 @ 3:09 pm:
Constitution - 2
Politicians - 0
Thanks to all the experts here. Wish “some” would listen to those here who seem to be wiser then they..
- facts are stubborn things - Friday, Nov 21, 14 @ 3:11 pm:
@Apocalypse Now - Friday, Nov 21, 14 @ 2:55 pm:
=Unions win and taxpayers lose. =
The rule of law wins which is a win for all.
- Formerly Known As... - Friday, Nov 21, 14 @ 3:11 pm:
While this was years in the making, it is incredible to think that our unfunded pension liability has ballooned from ==just== $15.6B in 2000 to over $100B in 2014.
http://cgfa.ilga.gov/Upload/1114%20SPECIAL%20PENSION%20BRIEFING.pdf
- Juice - Friday, Nov 21, 14 @ 3:12 pm:
Again Very Fed Up, a 401k for new employees would be more expensive than the Tier 2 plan that new employees are already in.
- Pelon - Friday, Nov 21, 14 @ 3:13 pm:
The Senate bill also would have been unconstitutional. It is hard to imagine how any bill the General Assembly crafts can accomplish a significant reduction in the pension obligation and still remain constitutional. My guess is the next thing they will try is to amend the constitution to change the pension clause. If successful, that change would apply to future employees, but it is unlikely that it would apply to current employees. If the state tried to apply it to current employees, the “contractual” language will come into play at the federal level. The people who put in the pension clause in the constitution were very wise. They were able to foresee that the state would try to renege on its obligations, and they crafted very strong language designed to prevent that from occurring.
- Stones - Friday, Nov 21, 14 @ 3:13 pm:
Definition of Insanity? Doing the same thing over and over again and expecting a different result.
With all do respect, our state leaders would be wise to abandon this course of action and try not to cut corners anymore.
- Walter Mitty - Friday, Nov 21, 14 @ 3:14 pm:
Cost shift and school funding is such a toxic mix for local taxpayers… This was not a shock as Steve points out… But it is the spark for the doomsday scenario. I don’t see how school funding is fixed. The only fix is cost shift… Which will hurt enough… No chance you can do SB 16 in any form close to what they want…
- Andy S. - Friday, Nov 21, 14 @ 3:15 pm:
New York has the exact same provision in its Constitution - indeed, the Illinois Pension Protection Clause in 1970 was copied verbatim from New York. However, unlike in Illinois, the courts in New York have ruled that the state must actually fully pre-fund the pensions, not just pay them when they come due. I can only hope that the Illinois Supreme Court takes this case, and in addition to reaffirming the ruling by Belz, acknowledges that it goofed in the past and requires the State to fully fund the pensions going forward. Otherwise, I fear the Rauner/Civic Fed/Fahner folks will simply underfund the pensions out of spite until the state is effectively bankrupt in 10-20 years, regardless of whether bankruptcy is legally possible or not.
- Dirty Red - Friday, Nov 21, 14 @ 3:15 pm:
Where are you, RNUG?
- Earl Shumaker - Friday, Nov 21, 14 @ 3:16 pm:
In response to Apocalypse Now, I am not sure if he and others on this blog are aware, but there are thousands of retirees who never belonged to a union. So this is a win for all state employees, both union members and non-members. So thankful that the judge rule in favor of the Constitution AND contract law. It is nice to know that there is at least one branch of our Illinois Government that has the integrity to uphold the Constitution and rule of law.
- facts are stubborn things - Friday, Nov 21, 14 @ 3:17 pm:
Rauner is looking for the ISC to give guidance. I think if they take the case the ruling will be short and sweet….the guidance is you can not diminish or impair pensions once promised. The solution is to continue with tier II for newly hired employees and make the payments. Change the ramp if you want to something else or the funding levels to something less then 100% do a cost shift to local districts etc. etc. but the only guidance Rauner will get is a promise is a promise. You could change new employees to a 401K I guess but that has many issues to include no more people paying into the pensions system and the matter of the state having to pay it’s side of the SS payment.
- Formerly Known As... - Friday, Nov 21, 14 @ 3:18 pm:
Dirty Red - iirc, he said earlier he is unavailable for most of the afternoon today due to work, iirc.
- Walter Mitty - Friday, Nov 21, 14 @ 3:20 pm:
New hires can’t do a 401 k style… Just like Tier 2 is not going to be enough… Wait till those folks realize they are paying the same amount as Tier 1 (Remember these are young people that are 30 years from retirement they are not even thinking of it!)and half the benefit… Gang, it’s called a Ponzi scheme…
- Snucka - Friday, Nov 21, 14 @ 3:21 pm:
Congrats, unions. The pension crisis still needs to be fixed and now a very wealthy version of Scott Walker will be a key player in working out a solution. Good luck, etc.
- facts are stubborn things - Friday, Nov 21, 14 @ 3:22 pm:
Powerful words from the decision below:
In
summary, the State oflllinois made a constitutionally protected promise to its employees concerning
their pension benefits. Under established and uncontroverted Illinois law, the State of Illinois cannot
break this promise.
- AC - Friday, Nov 21, 14 @ 3:23 pm:
A increase in the cost shift to state employees, which went from 0% to 4% under Blago is something a lot of people expect. Unfortunately, many people are short sided, and if they are given a choice between paying in an additional percentage, or even a reduction in their contribution in exchange for their retirement future, many will choose the option that saves them money up front. That’s where the savings are, primarily from short sided and financially strapped employees. Cullerton was on the right track when he suggested that employees needed to be given a choice, but also wrong in that it can’t be an unconscionable choice. Other employees might be able to be lured away with the thought that they will have control over their own money, and think that they might be more successful in a 401k type system.
- pundent - Friday, Nov 21, 14 @ 3:23 pm:
The problem (or beauty)of the constitution depending on which side of the fence your on is that it was written specifically to address this very problem. The drafters knew that left to their own devices the politicians wouldn’t be disciplined enough to fund the pension obligations and they wanted a really big stick to remind them of that.
- pundent - Friday, Nov 21, 14 @ 3:25 pm:
Snucka - Keep in mind that Walker has a Republican legislature to deal with. Rauner has a veto proof Democrat led group. Big, big difference. He’s has no more power or influence on the outcome here than Quinn had.
- Frenchie Mendoza - Friday, Nov 21, 14 @ 3:26 pm:
—
Rauner is looking for the ISC to give guidance.
—
Then Rauner is a dope. I know he keeps hoping for guidance, but if he — or one of his braniac advisors could read — all the so-called “guidance” he needs is in a single sentence in the constitution.
What’s he’s looking for — and what he’s always looked for — is a loophole. He’s not looking for “guidance.” He’s looking for the ISC to hint him to the loophole.
Hopefully, they won’t — and probably they can’t — since judges keep referring to the constitutional language as “unambiguous” — which it is.
Next stop, a “semantic” loophole courtesy of the Rauner brain trust. This, too, will fail — but will cost the state millions on its way to failure.
- forwhatitsworth - Friday, Nov 21, 14 @ 3:28 pm:
What part of “diminish or impair” do Lisa Madigan, and soon-to-be ex-governor Quinn seem to not understand?
- 47th Ward - Friday, Nov 21, 14 @ 3:28 pm:
Cullerton’s consideration argument was always stronger in my opinion, but I’m not sure it operable any longer. One of the reasons Cullerton was able to get unions to agree on curbing COLAs was the threat of more draconian legislation diminshing other benefits. Now that this court has said the really really ugly path is illegal, it makes it difficult to see why unions would unilaterally agree to reduced or capped COLAs.
The cost shift is certainly still in play though, and probably more likely than ever to be included in any new legislation. If you thought Manar’s school funding bill was bad for the suburbs, wait until you see the cost-shift proposal.
- Rollo Tomasi - Friday, Nov 21, 14 @ 3:29 pm:
IS WELCHING ON PUBLIC PENSION PROMISES AN OPTION FOR ILLINOIS? AN ANALYSIS OF ARTICLE XIII, SECTION 5 OF THE ILLINOIS CONSTITUTION
By Eric M. Madiar
“There is no moral exemption for any man or body of men that breaks contracts. Nor is there any hope of public or private respect for a
contract breaker. A contract breaker is an utter misfit as a citizen or a
business man.”
—Franklin MacVeagh, former President of the Commercial Club of Chicago and U.S. Secretary of Treasury
SB1 was just a stop gap measure to get the elected official thru the election cycle nothing more.
Can anyone ever remember a sunset provision or termination of an entitlement program?
- forwhatitsworth - Friday, Nov 21, 14 @ 3:31 pm:
Apocalypse Now = unions win and taxpayers lose =
Aren’t union members also taxpayers?
- Formerly Known As... - Friday, Nov 21, 14 @ 3:33 pm:
Future headline
== ISC issues one-sentence ruling on pension reform: Pay the man, Shirley. ==
This ruling is clear. Like it or not, paying these pensions and meeting your obligation as a state is the only option available. Quinn, Rauner and the Madigans are wrong. Cullerton is semi-wrong, but more right than the others.
- Ducky LaMoore - Friday, Nov 21, 14 @ 3:33 pm:
Nothing like wasting a whole load of time on an issue that was a loser from the start. Please please please, Bruce, don’t waste more time on this when you are governor. Because you will lose.
- JoanP - Friday, Nov 21, 14 @ 3:34 pm:
@ Sparky & Not Ow:
I would be astonished if the ISC declined to hear this case. A major constitutional issue is involved, and for the ISC simply to let the lower court ruling stand without review, particularly when the issue is likely to arise again should the General Assembly pass further pension legislation of dubious constitutionality, would be quite surprising.
@ Illinois taxpayer: “Can a court order a tax increase to fulfill its ruling? Layoffs? ”
No, it cannot. Besides, there is nothing to “fulfill” here. The question before the court is whether or not the statute, as written, is constitutional. Nothing else. It is the job of the legislature, not the courts, to write legislation that conforms to constitutional mandates.
- JG - Friday, Nov 21, 14 @ 3:34 pm:
Way to go, AC and BIg Joe. Funny AND factual!
- Carl Draper - Friday, Nov 21, 14 @ 3:34 pm:
Part III Kanerva
Congratulations to Don Craven on Kanerva today where the class was certified and the process is underway to refund the insurance premiums to retirees.
- Oswego Willy - Friday, Nov 21, 14 @ 3:36 pm:
===Rauner is looking for the ISC to give guidance…Then Rauner is a dope. ===
Yes.
The guidance is really “simple”…
Follow. The. Constitution.
The rest us up to the legislature and the governor.
Like @StatehouseChick says - “Simple”
- Arthur Andersen - Friday, Nov 21, 14 @ 3:36 pm:
Thanks, Carl. In RNUG’s absence, I’ll try to answer questions.
- illilnifan - Friday, Nov 21, 14 @ 3:36 pm:
Here is the plan….Rauner helped purchase his election with $27 billion of his money and claimed he would not take a salary since his sole focus was repairing Illinois. Let his money speak. He can contribute some of his money, get his friends to donate money and use the money to shore up the pension fund. Problem solved and he could then focus on the repair. Altruism at it’s best.
- state worker - Friday, Nov 21, 14 @ 3:37 pm:
Not sure why Lisa Madigan is heading down a losing path. I thought her decisions were made on the basis of increasing her popularity.
This issue damages all politicians who wish to tackle it.
- Norseman - Friday, Nov 21, 14 @ 3:37 pm:
UIC Guy, I think we need to hear more about some type of refinancing of the debt to be repaid with a dedicated funding source. As I understand it, the debt is the issue. The Tier 2 changes will result in continually lower normal costs to the State.
The problem is that the legislators want to continue to go after existing employees for appearance purposes.
- Oswego Willy - Friday, Nov 21, 14 @ 3:41 pm:
- AA -, - RNUG -, - Norseman -, and the ringleader - steve schnorf -; invaluable right now…
All Stars.
To the Ruling;
Looking at this as a “do-over”, appealing this pretty straightforward rebuke, even with the income tax possibly going back, the monies and their allocation will be even more scrutinized, given how Candidate Rauner campaigned, and Governor Rauner will have to lead and govern.
The Constitution, big winner today.
- Bob the Slob with a Cushy State Job - Friday, Nov 21, 14 @ 3:45 pm:
I am the elephant in the room. I will get my nice pension and you will pay for it.
- Bill White - Friday, Nov 21, 14 @ 3:45 pm:
== I think we need to hear more about some type of refinancing of the debt to be repaid with a dedicated funding source. ==
Maybe Bruce Rauner can accomplish the debt refinance Pat Quinn proposed
Recall the old Vulcan saying: “Only Nixon could go to China”
- Formerly Known As... - Friday, Nov 21, 14 @ 3:46 pm:
With the prior capital bill expiring, we had roughly $1B in revenue streams being freed up.
What did the ILGA decide to do with that money during the closing days of session? Pass a new, ==mini== capital bill for $1.1B.
But yeah, we’re broke. Police powers and all that.
- archimedes - Friday, Nov 21, 14 @ 3:46 pm:
Sb1 is unconstitutional. As Governor Edgar said when this whole thing started, “I think we just have to pay it.”
While the SB1 cost reduction to the State was $149 billion compared to the existing (no longer replaced by SB1), the reduction in cost through 2034 (the first 20 years) was about $1.3 billion a year. The savings after that (making up the bulk of the $149 billion) was due to no longer making payments to the unfunded liability - the benefit cuts and other changes allowed the State to pretty much pay off the unfunded liability in this time frame (source “Comparison of Required State Pension Contributions Under Existing Law and New Law, State of Illinois, Preliminary Official Statement, Bond Sale, Fed., 2014). In other words - the savings to the General Fund Budget was, realistically, $1.3 billion a year.
So - SB1 really only offset the income tax by about 3/10 of a cent.
I don’t see that as an insurmountable mountain to climb.
- Very Fed Up - Friday, Nov 21, 14 @ 3:48 pm:
It’s clear even the most microscopic of changes will get challenged and thrown out. The way forward is to win concessions from the unions by playing hardball when contracts are up. The only thing that should be of any relevance for new contracts should be to compare the pay/benefit package to that of the private sector.
- Angry Chicagoan - Friday, Nov 21, 14 @ 3:49 pm:
Rauner’s whistling in the dark when he’s calling for a bipartisan solution. That ship sailed when the Cullerton-passed, union-more-or-less-endorsed plan went down in the House and with Quinn. The judges are speaking, and speaking with a unanimous voice; settling up this problem is going to be very, very expensive, unless the state breaks with the habit of a lifetime and realizes that the best way under the circumstances to bail out the pension pot is to stop outsourcing and start bringing functions in-house. The result? Lots of Tier II employees making a huge net payment into the system for not a lot of return. No net change because Rauner and the unions fight each other to a tie in future contract negotiations.
- Angry Chicagoan - Friday, Nov 21, 14 @ 3:50 pm:
No net change to Tier II, that is.
- Under Further Review - Friday, Nov 21, 14 @ 3:50 pm:
A predictable decision since the legislature basically ignored the Illinois Constitution in crafting this statute because “Hey, we’ve got to do something!”
Back to the drawing board.
- pundent - Friday, Nov 21, 14 @ 3:51 pm:
I think 47th ward is spot on. The reason that Cullerton’s proposal had some appeal is that it was demonstrably better for the unions than the draconian competing bill. While the unions always felt the house bill was unconstitutional sometimes courts do wacky things. But now that it’s been established that the current attempt to fix this is a non-starter the pendulum has clearly swung in favor of the unions. I can’t believe that they simply take “door #2″ in the form of Cullerton’s bill.
- Oswego Willy - Friday, Nov 21, 14 @ 3:52 pm:
- Very Fed Up -,
These rulings, they strengthen the Unions, they have the leverage and the Constitution.
Thinking that the Unions will cave or be forced into anything is Folly
- UIC Guy - Friday, Nov 21, 14 @ 3:57 pm:
Thanks for the reply, Norseman. Refinancing I can live with!
- Tsavo - Friday, Nov 21, 14 @ 3:58 pm:
http://hosted.ap.org/dynamic/stories/I/IL_RETIREE_HEALTH_CARE_LAWSUIT__ILOL-?SITE=ILBLO&SECTION=HOME&TEMPLATE=DEFAULT
More good news, State to refund retiree healthcare funds.
- Dirty Red - Friday, Nov 21, 14 @ 4:01 pm:
= Not sure why Lisa Madigan is heading down a losing path. =
She has a choice?
- Yellow Dog Democrat - Friday, Nov 21, 14 @ 4:07 pm:
Angry Chicagoan raises a good point.
But also a dangerous one.
There is a strong argument to be made that the Tier II pension system is essentially a backdoor income tax increase on a particular subset of workers. Under the current constitution, similar schemes have been struck down.
- Formerly Known As... - Friday, Nov 21, 14 @ 4:07 pm:
== She has a choice? ==
She most certainly does. She has simple options such as speaking up privately during conference committee negotiations rather than clamming up and giving tacit support to the plan, drafting an informal private opinion that becomes publicly circulated like Eric Madiar, or even speaking up publicly.
She also has more drastic options such as refusing to defend the state or the law as written, much as she unilaterally decided concerning same-sex marriage. She clearly has a choice, as previously demonstrated by her own behavior in such situations.
- Tier II Help - Friday, Nov 21, 14 @ 4:12 pm:
I am Tier II in my 30’s and am actually working for the state to try and make a difference. Is Tier II a bad deal for my retirement? Would I be better off in a 401k plan or Tier II?
Anyone have any words of advice?
- Arthur Andersen - Friday, Nov 21, 14 @ 4:12 pm:
YDD, I agree. Tier 2 appears set to be the next domino to fall, and imho, it should.
- Anonymous - Friday, Nov 21, 14 @ 4:14 pm:
Tier II Help—-Stop working for the state trying to make a difference. This pension debacle should prove to you that no one cares about your efforts. Take care of yourself and your family’s future.
- archimedes - Friday, Nov 21, 14 @ 4:15 pm:
Regarding the Tier 2 pension. I doubt that Tier 2 is illegal or unconstitutional. Remember, the law was passed almost a year before any new hire/employee accepted employment.
Contract offer and acceptance with Tier 2 benefits and contributions known well in advance. Does not matter if the employee contributions exceed the normal cost of the pension - the employee agreed to it when they were hired.
- JS Mill - Friday, Nov 21, 14 @ 4:15 pm:
@Very Fed Up- I will gladly take a salary and benefits package comparable with the private sector.
- girllawyer - Friday, Nov 21, 14 @ 4:16 pm:
AC, what does “short sided” mean? Is that like “lopsided”? Or is “short sighted” the term you were looking for?
- Roamin' Numeral - Friday, Nov 21, 14 @ 4:16 pm:
==Is Tier II a bad deal for my retirement?==
Yes.
==Would I be better off in a 401k plan or Tier II?==
You need a Roth IRA and do deferred comp while you’re at it.
- LincolnLounger - Friday, Nov 21, 14 @ 4:17 pm:
I sincerely hope the Supreme Court declines to rule on Judge Belz’ very clear decision and forces the legislature and Governor-elect to hurry up and get to work with a clear mandate to quit looking for magic beans.
- Arthur Andersen - Friday, Nov 21, 14 @ 4:18 pm:
Norseman, I missed your comment above on debt refinancing. I would also agree that would be a step worth pursuing if (big if at this point) a funding source can be identified.
- Waldi1 - Friday, Nov 21, 14 @ 4:20 pm:
Illinois is in bad financial shape, but public employees shouldn’t be the only ones to pay the price to bail it out. I haven’t noticed any politicians suggesting that we only pay a percentage of State contracts to help reduce the debt. Why should a contract with a business be any different than the State’s contract with its employees.
- dupage dan - Friday, Nov 21, 14 @ 4:23 pm:
=== Apocalypse Now - Friday, Nov 21, 14 @ 2:55 pm:
Unions win and taxpayers lose ===
As others have pointed out, union members are taxpayers, too. In addition, taxpayers are the ones who elected, and then re-elected Rod Blagojevich, the person who engaged in some of the pension holiday shenanigans, with the official okey dokey from the GA. I don’t recall any taxpayers complaining about that at the time because it meant the state could spend spend spend without have to tax tax tax. I do recall some unions warning about the consequences and even attempting to force the state to pay up but were rebuffed by the courts.
You get the gov’t you deserve.
Signed, 25 year State Employee who made EVERY SINGLE payment to SERS that was required.
- Arthur Andersen - Friday, Nov 21, 14 @ 4:26 pm:
Archimedes, while that point is certainly valid as a matter of contracts and perhaps employment law, the IRC says quite succinctly that a tax-exempt employer may not collect a contribution for which a benefit is paid. Collecting contributions greater than normal cost repeatedly has been held to violate this statute. That would be Tier 2. Penalties include, but are not limited to, loss of tax-favored status for plan contributions and investment income.
- dupage dan - Friday, Nov 21, 14 @ 4:27 pm:
=== Rollo Tomasi - Friday, Nov 21, 14 @ 3:29 pm:
SB1 was just a stop gap measure to get the elected official thru the election cycle nothing more ===
BINGO - YAHTZEE ding ding ding
Give that man a cheroot.
- Enviro - Friday, Nov 21, 14 @ 4:27 pm:
Contract law is upheld by the courts. Everyone wins.
- Roamin' Numeral - Friday, Nov 21, 14 @ 4:28 pm:
What if we adjust the ramp? Instead aiming for 90% funding by 2045 (which won’t happen), let’s shoot for 90% funding by 2095. Or, would New York have a problem with this?
- Liberty - Friday, Nov 21, 14 @ 4:28 pm:
Rauner will want to tax everyone’s pensions to pay the pension bill.
- Mouthy - Friday, Nov 21, 14 @ 4:29 pm:
Retirees and state employees that paid into their retirement system are the winners. Past and present state lawmakers that reneged on their responsibilities to pay the state’s share of retirements costs lost. The constitution is clear and was upheld.
- DuPage Dave - Friday, Nov 21, 14 @ 4:29 pm:
Much thanks to Judge Belz for his common sense reading of the impairment language in the constitution. Given the Supreme Court’s ruling on the health insurance law, its support of Belz’s ruling is assured.
So Madigan, Cullerton and Rauner will have to acknowledge the law and find a way to pay for the state’s obligations. Pretty much Government 101, fellas.
- Tim Snopes - Friday, Nov 21, 14 @ 4:31 pm:
Keep the faith that the ISC will reverse the Circuit Jusge’s order. What Circuit Judge would ever risk his political hide in Sangamon County? Isn’t it obvious why the suit was filed in the county with the most state retires?
Postpone the Victory Dances.
- Ginhouse Tommy - Friday, Nov 21, 14 @ 4:31 pm:
I agree with Norsemen and Angry Chicago. The GA and other people in charge might want to listen to sound advice for a change. They tend to blame state employees, past and present, for the problem and rather than tackling it head on. It simply will not go away by ignoring it. The only problem that I see with a dedicated funding source is that it can’t a personal cash cow for the legislators get into whenever they want to.
- Sangamo Sam - Friday, Nov 21, 14 @ 4:32 pm:
= Anonymous - Friday, Nov 21, 14 @ 4:14 pm:
Tier II Help—-Stop working for the state trying to make a difference. This pension debacle should prove to you that no one cares about your efforts. =
Nonsense. Many of us care about clean drinking water and decent roads. We care about veterans and affordable education. We care about the elderly and protecting the young from abuse.
We need people like Tier II Help and we should treat them well.
- Harry - Friday, Nov 21, 14 @ 4:33 pm:
In 2010 when the Gov and leadership collaborated to ram through P.A. 96-0889, the State’s reported unfunded pension liability was $78B (CGFA report as of 6-30-2009). As of the 6-30-13 report, it was $98B. So, 3+ years of screwing around just cost us all about $20B.
Way to go!!
I blame the Civic Committee and the Tribune more than anyone else, because they created an atmosphere that made rational thought and cooperation almost impossible.
- Anonymous - Friday, Nov 21, 14 @ 4:35 pm:
== Tim Snopes ==
You’ve obviously not read Kanerva!
www.state.il.us/court/Opinions/SupremeCourt/2014/115811.pdf
- Arthur Andersen - Friday, Nov 21, 14 @ 4:36 pm:
Hey Snopes, on behalf of a) the Rule of Law and b) the loyal public servants who post here, Bite Me!
Put up an argument about why the Judge got it wrong instead of that insulting drivel. That, or stay on Facebook.
- DuPage Dave - Friday, Nov 21, 14 @ 4:40 pm:
The guarantees in the state constitution have nothing to do with unions. They protect all state workers whether they are members of a union or not.
The “contractual relationship” referred to in the constitution is between the state and each individual employee, not between the state and any union.
I am a non-union employee with 26 plus years of service. This ruling affects me as well as union members.
No union can negotiate with the governor or the legislature on my behalf.
- The Dark Horse - Friday, Nov 21, 14 @ 4:40 pm:
Anyone arguing that a deferred comp account or 401k is better than a tier 2 pension, at it relates to a typical employee, doesn’t know their math. As for those suggesting the Supreme Court may not consider this, you are wrong- the court basically has mandatory jurisdiction when a state law is struck down. Also, reminder to some of you, the judges are not directly included or implicated in the current pension reform statute.
- Tim Snopes - Friday, Nov 21, 14 @ 4:40 pm:
Lol. Art. Tell that to Lisa Madigan. Dufus.
- Just The Way It Is One - Friday, Nov 21, 14 @ 4:41 pm:
Whoa–ya just KNEW THIS was coming! It was just a Question of Time! BIG News–and, yet, the Supremes (IL. Supremes, that is) still might just uphold the Law in the end…(and then WILL Pat Quinn go down in the Annals of Illinois History AS the “Pension Governor,” the One brought into this Earth to CONquer that Mess, as he put it roughly??)but in any event, here’s more DRAMA that’s now been thrown into the Mix for us all to chomp on this Chilly Friday Afternoon, THAT’s for sure…!
- Anonymous - Friday, Nov 21, 14 @ 4:44 pm:
A first week law student could have told Quinn and Company this is what the result would be. But never let facts and reality get in the way of a political campaign. There is no easy way out of this mess. And the principal of the debacle (Madigan) get’s to CYA to clear the way for Daughter Lisa in 2018.,
- Oswego Willy - Friday, Nov 21, 14 @ 4:44 pm:
- Tim Snopes -,
Um the AG is the attorney for Illinois government.
This is the deep end of the pool, if you don’t know of what you speak, keep it to yourself before we all know you don’t know of what you speak.
The AG is not arguing the merits, the AG is doing the job as described in that same constitution.
- Norseman - Friday, Nov 21, 14 @ 4:45 pm:
Well said AA!
- Jechislo - Friday, Nov 21, 14 @ 4:49 pm:
Just the way it is one; I think you have a problem with the SHIfT KeY on your COmpUteR.
- Kimocat - Friday, Nov 21, 14 @ 4:50 pm:
Judge Belz — Four out-of-state retirees are drinking to your good health this evening.
- Arthur Andersen - Friday, Nov 21, 14 @ 4:52 pm:
Snopes, crawl back under the bridge, ok?
I think the Judge told Lisa all she needed to hear.
Now, for your counter-point?
- Federalist - Friday, Nov 21, 14 @ 5:03 pm:
About time Lisa Madigan step up and say she will not appeal this law.
If she does not do that she looks like any other politician.
- Andy S. - Friday, Nov 21, 14 @ 5:04 pm:
Here is a link concerning the court ruling in New York in the early 1990’s that required that state to make contributions certified by the pension systems each year:
http://www.empirecenter.org/publications/as-goes-illinois-so-goes-new-york/
It is high time for the ISC to make a similar ruling, and they have the perfect opportunity when the state appeals the Belz ruling. I do not see why this is impossible. After all, if something has already happened (in another state with similar constitutional language) then by definition it must at least be possible.
- dupage dan - Friday, Nov 21, 14 @ 5:09 pm:
Don’t feed the Troll Snopes, I mean Tim Troll - oh, never mind.
- Mouthy - Friday, Nov 21, 14 @ 5:15 pm:
Steak, one I don’t have to pound with a mallet, tonight..
- Sangamo Sam - Friday, Nov 21, 14 @ 5:16 pm:
+ Tier II Help - Friday, Nov 21, 14 @ 4:12 pm:
I am Tier II in my 30’s and am actually working for the state to try and make a difference. Is Tier II a bad deal for my retirement? Would I be better off in a 401k plan or Tier II?
Anyone have any words of advice?=
First of all, thank you for trying to make a difference. Second, see what Rauner does in the coming months. If you decide to stay, put every penny you can into the Deferred Compensation plan and at your age invest in the riskier investments. In 30 years you’ll be sitting pretty well.
- Reformed Public Servant - Friday, Nov 21, 14 @ 5:16 pm:
Madiar told everyone so…
http://www.illinoissenatedemocrats.com/index.php/component/content/article/108-public-information-brochures/1517-pension-debate
IS WELCHING ON PUBLIC PENSION PROMISES AN OPTION FOR ILLINOIS? AN ANALYSIS OF ARTICLE XIII, SECTION 5 OF THE ILLINOIS CONSTITUTION
By Eric M. Madiar
- Opa - Friday, Nov 21, 14 @ 5:23 pm:
Rauner will want to tax pensions? When Ty Fahner and all his buddies have to pay state income tax on their retirement income, I’ll gladly pay mine! I don’t expect to live long enough to see that happen.
- redleg - Friday, Nov 21, 14 @ 5:25 pm:
As several others have mentioned I welcome the state’s appeal. Let’s get the definitive from the ILSC so this theft is finally put to rest.
And I more than back up the “bite me” that Arthur Andersen tossed out to a commenter.
- What is to be done? - Friday, Nov 21, 14 @ 5:26 pm:
All you need to know about how the real world works can be found in the book animal farm.
- efudd - Friday, Nov 21, 14 @ 5:29 pm:
FKA-you strike me as a person who sees losses for others as “modest”, however if you incur those losses they are anything but. State employees accepted the risks of working in prisons, mental health institutions, highways, and yes, even schools, for the assurance of a specific pension. Your portrayal of the changes SB 1 would have as “modest” speaks volumes about you.
- Anonymous - Friday, Nov 21, 14 @ 5:40 pm:
RE modest losses.
When previous discussion was held in past months about solutions to the pension liability, the idea of taxing those pensions was floated. Lots of support. When it was pointed out that you cannot tax a certain group of pensioners without taxing all retirement income, suddenly it wasn’t such a hot idea. Yes, let’s stick it to public pensioners ONLY
- RNUG - Friday, Nov 21, 14 @ 5:47 pm:
Sorry everybody. Like I said earlier in another thread, I didn’t expect to be back until about now. All I’ve read is the news stories. I haven’t even read the comments yet. Just read the opinion. Judge Belz quoted Kanerva and a number of the earlier ISC decisions (Kraus, Felt). Not only did he slam the door shut on the State, he double-locked and barricaded it.
Game, set, and match to the retirees and current employees.
The language used in the opinion is short (for a judicial ruling), strong and clear:
“The Act without question diminishes and impairs the benefits of membership in State retirement systems, Illinois Courts have consistently held over time that the Illinois Pension Clause’s protection against the diminishment or impairment of pension benefits is absolute and without exception. The Illinois Supreme Court has “consistently invalidated amendment to the Pension Code where the result is to diminish benefits.” M.cNameev.State, 173Ill. 2d433, 445 (1996)”
And here are the lines that matter:
“a. The Plaintiffs’ Motions are granted. The defendants’ cross-motion for summary judgment is denied, with prejudice, because the Court finds that there is no police power or reserved
sovereign power to diminish pension benefits. Pursuant to 735ILCS5/2-701,the Court enters a final declaratory judgment that Public Act 98-0599 is unconstitutional and void in its entirety;
b. The temporary restraining order and preliminary injunction entered previously in this case is hereby made permanent, The defendants are permanently enjoined from enforcing or implementing any provision of Public Act 98-0599;
c. Pursuant to Illinois Supreme Court Rule 304(a),the Court finds that there is no just reason for delaying either enforcement of this order or appeal or both.”
The “denied with predijuce” is a nice touch; basically slams the door shut on future attempts.
The ISC may decide to take the appeal just to eliminate any uncertainty, but I don’t see where they need to. Judge Belz was extremely clear on this.
- facts are stubborn things - Friday, Nov 21, 14 @ 5:55 pm:
RNUG,
Do you think this ruling puts pensions ahead of Illinois bond debt?
- Oswego Willy - Friday, Nov 21, 14 @ 5:58 pm:
Thanks - RNUG -, appreciate when you drop some knowledge
- facts are stubborn things - Friday, Nov 21, 14 @ 5:59 pm:
If the ISC does not take the case, does it carry the same weight as if they took it and agreed with Judge Belz. I wonder if the answer to this might not be why the ISC will take the case?
- sal-says - Friday, Nov 21, 14 @ 5:59 pm:
== - dupage dan - Friday, Nov 21, 14 @ 4:23 pm: ==
“Signed, 25 year State Employee who made EVERY SINGLE payment to SERS that was required.”
Agreed;
Signed, a 36 year State Employee who made EVERY SINGLE payment to SERS that was required.
- Michelle Flaherty - Friday, Nov 21, 14 @ 6:05 pm:
Reformed Public Servant,
That Madiar link keeps hanging.
Try this one:
http://www.illinoissenatedemocrats.com/index.php?option=com_content&view=article&id=1517:pension-debate&catid=108:public-information-brochures
- Carhart Representative - Monday, Nov 24, 14 @ 8:35 am:
Unlike most people in the private workforce who are in 401Ks, public employees with pensions are not eligible to collect social security. Their pension can even greatly impact their spouse’s ability to collect full social security payments. The risk of workers retiring right as the stock market has one of those big drops it has pretty regularly without a guaranteed income from social security could easily leave retirees in very difficult situations. I don’t want to impose these hardships on the teachers who taught me, the nurses who took care of my father, or the people who risk their lives everyday to keep our state safe.
- Anonymous - Monday, Nov 24, 14 @ 8:57 am:
It cannot be emphasized enough that for teachers, at least, all they get is the pension they saved for out of every single paycheck. No social security and most don’t have investment retirement accounts as they never made that much. Take away their pension, it’s dooming those professionals to poverty in their senior years.
- Del Clinkton - Monday, Nov 24, 14 @ 9:22 am:
@Anonymous:
Agreed. I have no clue why “conservatives” but not Republicans insist that this happen.
And it cannot be emphasized enough that Scottie up north did NOT take on the Police, Firefighters, or Prison workers unions. Only the teachers. He is a legend in his own mind.
- Formerly Known As... - Monday, Nov 24, 14 @ 1:20 pm:
efudd - You appear to be confused. Your comment ==speaks volumes about you==. You are mistaken.
I believe these pensions need to be paid in full. Try reading again. Slower this time. The term you quote, ==modest==, does not even appear in any of my posts.