* Lari A. Dierks takes a very long, but quite sound look at the pension “consideration” proposals currently under consideration. Her conclusion…
Illinois faces drastically increasing pension payments that will continue to strain the revenue available for other vital state services. While current employees’ retirement benefits could be modified through classic contract principles, the illusory proposals offered by Governor Rauner or Senate President Cullerton will likely fail in the courts. To successfully withstand a constitutional challenge, the consideration offered to employees must provide a true benefit that is not currently available to the employee. While this idea is generally inconsistent with the overall goal of pension reform, it may be possible to offer a new, subjectively greater, benefit to the employee that would result in monetary relief for the state.
At the end of the day, significant decisions must be made by the Governor and the legislature to ensure the fiscal health of the state and the pension systems. The Illinois Supreme Court established the boundaries of these potential decisions through its decisions emphasizing that pension benefits may not be unilaterally diminished or impaired. It is true that the court may entertain modification of pension benefits using the classic contract principles of valid offer, acceptance, and consideration. Still, the key to this caveat left by the court focuses on the validity of the consideration offered. The choice between two currently available benefits does not satisfy the test for valid consideration; thus, it is unlikely that the current “consideration” proposals would withstand the court’s scrutiny. Put bluntly, such a false promise of consideration does nothing to rectify Illinois’ growing pension payments and liabilities. Going forward, responsible debate should focus on true consideration, reform of the tax system, or modification of the state’s statutorily required contribution.
The article’s title is “A Lesson from Goodfellas: Why Current Illinois Consideration Based Pension Reform Proposals Still Fail.” I believe it refers to this video clip that you shouldn’t watch if you don’t like profanity or are at work.