Ives’ new pension legal theory
Wednesday, Nov 28, 2018 - Posted by Rich Miller
* Scott Reeder…
A new legal theory is being pondered by outgoing state Rep. Jeanne Ives, R-Wheaton, that she contends would get the state out from under the pension debt.
It goes like this:
The state entered into illegal contracts when it signed up employees for pensions over the last 40 years. While the state constitution says pensions of public employees cannot be diminished, the constitution also mandates that state legislators pass a budget that they believe to be balanced and the constitution also says Illinois cannot take on more debt unless three-fifths of lawmakers agree.
And yet, Ives contends lawmakers have been well aware that the budgets they have passed each year have not adequately covered anticipated pension obligations. Her contention is that this was a deliberate violation of the balanced budget clause of the state constitution and thus its “contract” with pensioners is void. She also says that promising payouts without funding them creates a debt obligation that should have received a super-majority vote of the legislature each year, but didn’t always.
Longtime statehouse observer Charles Wheeler III is quick to note that the state constitution doesn’t require a balanced budget only that lawmakers estimate it to be balanced. The late great state budget director Steve Schnorf, who served under Governors Jim Edgar and George Ryan used to call the practice: “playing make believe.”
I don’t see the Illinois Supreme Court having much of an appetite for taking up Ives’ legal argument. After all, the court unanimously ruled several years ago that the pension benefits cannot be reduced.
But if the case is somehow argued in the federal courts, this legal argument might prevail, especially with the conservative majority on the U.S. Supreme Court.
Discuss.
- 47th Ward - Wednesday, Nov 28, 18 @ 10:50 am:
===But if the case is somehow argued in the federal courts,===
If? More like when if you ask me. Liberty Justice Center was created for exactly this sort of thing.
- Demoralized - Wednesday, Nov 28, 18 @ 10:51 am:
So based on her argument she is saying that state employees might not be owed a pension at all? This goes way beyond reducing benefits. Based on her argument (or at least my understanding of it) she is saying state employees shouldn’t get any pension.
That Ives is a heckuva gal. Glad she is gone.
- ZC - Wednesday, Nov 28, 18 @ 10:53 am:
Re that last part … Huh? The federal courts are going to step in, and tell Illinois what the balanced budget provision in the IL Constitution means? Am I reading that correctly? On what planet will that last part happen?
That said, it has bugged me at times, the talk about the sacred status of the Pension Clause, while when it comes to the balanced budget provision and (especially) the responsibility of the state for education in the Constitution, many people sort of shrug their shoulders.
- Cheryl44 - Wednesday, Nov 28, 18 @ 10:53 am:
Once again, I am reminded why I don’t work for the government. No one can take my 403B away from me.
- LXB - Wednesday, Nov 28, 18 @ 10:54 am:
Wouldn’t that invalidate all state contracts made under these “unconstitutional” budgets?
- OneMan - Wednesday, Nov 28, 18 @ 10:54 am:
Interesting thought.
Have the federal courts every addressed the balanced budget question? If I recall the state courts have said basically balanced is whatever the legislature says it is.
Would be interesting if the federal courts have looked at the balanced budget question.
- Unconvinced - Wednesday, Nov 28, 18 @ 10:55 am:
Next Ives will be insisting that state employees shouldn’t actually be paid wages.
- Lucky Pierre - Wednesday, Nov 28, 18 @ 10:57 am:
As part of the budgeting process, Illinois’ state constitution requires a revenue estimate. Lawmakers in both chambers say it’s a must, but the House, led by Speaker Michael Madigan, hasn’t passed one in at least three years.
“Appropriations for a fiscal year shall not exceed funds estimated by the General Assembly to be available during that year.” That’s what the constitution says.
https://www.ilnews.org/news/state_politics/state-lawmakers-looking-for-elusive-revenue-estimate-for-coming-fiscal/article_cc948e50-0dcd-11e8-bf2f-1b33885ed9e2.html
- Keyrock - Wednesday, Nov 28, 18 @ 10:58 am:
Yeah. We’ll see what the bond holders think of that argument.
- Anotherretiree - Wednesday, Nov 28, 18 @ 10:58 am:
I saw the Kavanaugh appointment as a danger sign they might succeed with a federal State Bankruptcy angle to trash pensions. This is another creative idea to defraud. It would require the Supreme Court to ignore eqaul protection however. Bond debt somehow is still legal debt ? Selective defrauding.
- Da Big Bad Wolf - Wednesday, Nov 28, 18 @ 11:00 am:
If that is the case wouldn’t everything(not just pensions) included in the budget be invalid?
- JS Mill - Wednesday, Nov 28, 18 @ 11:01 am:
Legal arguement?
For starters, it isn’t. The contract (pension), per the state constitution, is not contingent on state funding.
Maybe she can explain the money that is paid to the pensions each year from the employees?
She cannot leave soon enough.
- JS Mill - Wednesday, Nov 28, 18 @ 11:03 am:
=many people sort of shrug their shoulders.=
Same thing they have been doing as per the statute that required the pensions be funded annually.
=If that is the case wouldn’t everything(not just pensions) included in the budget be invalid?=
Absolutely. It is an all or nothing argument.
For someone that has benefitted so much from government she seems to hate it too. They call that hypocrisy.
- Anonymous - Wednesday, Nov 28, 18 @ 11:05 am:
There’s nothing requiring the state to fund pensions as it incurs the obligation. Prepayment is cheaper because investment returns can offset the state’s duty. But it’s not necessary. And the state can pay current pensions.
They’ll also have to wrangle with federal law requiring pensions, since the state hasn’t been paying social security etc.
So let’s see if the Justice Center picks this as their next windmill. It’s about as baked as any of their ideas.
- JIbba - Wednesday, Nov 28, 18 @ 11:06 am:
Any lingering, mildly good feeling I had about Ives yesterday evaporated. Back to normal.
- Anotheretiree - Wednesday, Nov 28, 18 @ 11:08 am:
Cue Sue to champion this and rail against “redeculious” pensions in 3,2,1…
- Hamlet's Ghost - Wednesday, Nov 28, 18 @ 11:14 am:
== They’ll also have to wrangle with federal law requiring pensions, since the state hasn’t been paying social security etc. ==
The past due FICA obligations Ives plan would create is probably more than the pension debt currently owed.
- UIC Guy - Wednesday, Nov 28, 18 @ 11:16 am:
The same argument presumably applies to all state obligations—to bonds, in particular. Has the price of IL bonds fallen in response to the promulgation of this theory? s/
- Langhorne - Wednesday, Nov 28, 18 @ 11:16 am:
Wow, jeannie really thinks she is all that. Where was she hiding this brilliance all these years?
- A Jack - Wednesday, Nov 28, 18 @ 11:18 am:
So cannot State employees sue the state of Illinois for forcing us into an illegal contract? I will be happy for my suit to take the entire value of my pension over 50 years, including my 3% AAI plus one dollar, payable in one lump sum. I think the state of Illinois would get off more cheaply by just paying wwhat it owes to get to 90% funding.
Also wouldn’t the State of Illinois be on the hook for scamming the Social Security System for all those years?
- TominChicago - Wednesday, Nov 28, 18 @ 11:21 am:
I don’t see any federal question to give the federal courts’ jurisdiction. It is wholly a matter of state law. And in any event this is a crackpot theory.
- wordslinger - Wednesday, Nov 28, 18 @ 11:25 am:
What would be the federal issue here? I don’t think federal judges interpret and rule on state constitutional questions.
- lost in the weeds - Wednesday, Nov 28, 18 @ 11:29 am:
This “theory” would apply to any contract with the state? So when someone gets hired the state would say, oh by the way that pension is not going to be there. Same with any contract, oh by the way we may not pay you for services rendered.
Many fantasies exist.
- Duke of Normandy - Wednesday, Nov 28, 18 @ 11:31 am:
It never ceases to amaze me the cognitive hoops people jump through to avoid doing what needs to be done. If people spent as much time on a plan to pay it as they did trying to avoid it, we wouldn’t have to entertain wacky ideas like hers.
- Whatever - Wednesday, Nov 28, 18 @ 11:33 am:
The ILSC decided this issue decades ago, when they held that the State did not have to fund the pension plans at any particular level. That means that the State did not (and does not) have to appropriate anything for future payments of pensions, only whatever has to be paid during the current fiscal year. So the “anticipated pension obligations” do not enter into the determination of whether a budget is balanced.
- Anotheretiree - Wednesday, Nov 28, 18 @ 11:34 am:
As long as its a fantasy….Jan 2023..After defeating Gov Prtizker by tapping into voter anger over the progressive income tax……incoming Gov Ives promises to leave no option untried in undoing pension obligations….
- VanillaMan - Wednesday, Nov 28, 18 @ 11:35 am:
It’s an embarrassing argument that won’t be argued before any courts or judges, let alone accepted by any Supreme Court.
- James Knell - Wednesday, Nov 28, 18 @ 11:45 am:
So because I knew I couldn’t afford to pay back the loan when I took it out, the contract is null & void? Surely, Ives was sorted into Slytherin House.
- Generic Drone - Wednesday, Nov 28, 18 @ 11:45 am:
So has Ives earned any or refused her pension? I guess she will also return any income the state has paid her?
- lost in the weeds - Wednesday, Nov 28, 18 @ 11:46 am:
I should have read all the comments. Seems my comment had been previously stated.
In addition the US Constitution has a contract clause. If a state is not obligated to meet contracts, then why have contracts or a state?
Is the Constitution and the states under it a contract with it’s people? The employees of the state are it’s people too.
It seems we need more education funding, especially civics.
- thoughts matter - Wednesday, Nov 28, 18 @ 11:47 am:
I wonder if this is a tactic to frighten people into retiring at the end of this year and take the accelerated pension AAI buyout?
- Anonymous - Wednesday, Nov 28, 18 @ 11:47 am:
Hysterical. Transfer pensioners not receiving pensions to the welfare/medicaid rolls. One way or another taxpayers have to pay for the services they received.
- Albany Park Patriot - Wednesday, Nov 28, 18 @ 11:48 am:
This is nutty. And it would make the cost of borrowing greater. This is just Ives in her typical “look at me, look at me” pose. Not a serious proposal on any level.
- Long Time R - Wednesday, Nov 28, 18 @ 11:48 am:
2-1 that bunch of garbage came from her hero and boss Dan Proft. And they will have the duo of Boulton and Peraica argue the case. Except no court let along the Supreme Court will hear it.
- Anonymous - Wednesday, Nov 28, 18 @ 11:49 am:
Ives would cut everyone’s pension but insist that hers was earned and therefore, valid. Yep, don’t we all know those kinds
- Anonymous - Wednesday, Nov 28, 18 @ 11:54 am:
Ives is wrong. The U.S. Supreme Court and other federal courts would not interfere with a decision of a State Supreme Court: 1. Federal courts do not usually review the decisions of state courts. 2. The Illinois Supreme Court decision regarding public pensions on May 8, 2015 was consistent with and did not violate the U.S. Constitution. 3. There are no constitutional questions for the U.S. Supreme Court to consider.
- Sisyphus - Wednesday, Nov 28, 18 @ 11:56 am:
Ives is wrong. The U.S. Supreme Court and other federal courts would not interfere with a decision of a State Supreme Court: 1. Federal courts do not usually review the decisions of state courts. 2. The Illinois Supreme Court decision regarding public pensions on May 8, 2015 was consistent with and did not violate the U.S. Constitution. 3. There are no constitutional questions for the U.S. Supreme Court to consider.
- Nick Name - Wednesday, Nov 28, 18 @ 12:07 pm:
===Her contention is that this was a deliberate violation of the balanced budget clause of the state constitution and thus its “contract” with pensioners is void.===
Voiding state employees’ pensions does not address the pension debt, Jeanne. Nice try, though.
- DougChicago - Wednesday, Nov 28, 18 @ 12:26 pm:
And there is no federal question here so the dream of Justice Kavanaugh riding to the rescue here is just a wet dream.
- Da Big Bad Wolf - Wednesday, Nov 28, 18 @ 12:34 pm:
I wonder what Ives plans to do come January.
- City Zen - Wednesday, Nov 28, 18 @ 12:34 pm:
==So has Ives earned any or refused her pension?==
Yes.
https://www.chicagotribune.com/opinion/ct-xpm-2013-02-11-ct-edit-pension-20130211-story.html
- @misterjayem - Wednesday, Nov 28, 18 @ 12:37 pm:
A “ringworm” is neither a ring nor a worm, it is actually a fungus.
Jeanne Ive’s new “legal theory” is neither legal nor a theory, it too is actually a fungus.
– MrJM
- PublicServant - Wednesday, Nov 28, 18 @ 1:00 pm:
So Ives argument is that the Pension Contract is illegal because one party to it, the state, allegedly violated another of their responsibilities, and thus, the contract is illegal? The words Ding and Bat come to mind.
Oh, and two other words: Go and Away.
- PublicServant - Wednesday, Nov 28, 18 @ 1:02 pm:
===Once again, I am reminded why I don’t work for the government. No one can take my 403B away from me.===
Give the tariff war a little time to work.
- Just saying - Wednesday, Nov 28, 18 @ 1:04 pm:
If the state cannot take on more debt unless agreed by state legislators, then that means they must fund the pension so no pension debt would be created in the first place; thus 100% fund it.
- 61820 - Wednesday, Nov 28, 18 @ 1:05 pm:
But the court has held that the non impairment clause doesn’t require the state to fully fund pensions. It just has to pay them. So Ives’ argument could only be valid if the state deliberately passed a budget that prevented them from paying current pensioners. That hasn’t happened.
- JC just saying... - Wednesday, Nov 28, 18 @ 1:08 pm:
Every time she opens her mouth in an attempt to remain relevant in this state just show this ad…
https://m.youtube.com/watch?v=sZwKZf2jtHI
- RNUG - Wednesday, Nov 28, 18 @ 1:09 pm:
IF the State pensions were still considered grants (as they were prior yo 1970), Ives might have a leg to stand on with her new theory. But they aren’t. The 2970 Constitution was explicit about the pensions being contracts. And, as others have already noted, the 1975 IFT decesion made it crystal clear the State can pre-fund or not pre-fund the pensions as long as the State pays the pensions.
The Federal courts won’t get involved in an issue where it is the State as employer dealing with their employees; there are precedents for the State’s having autonomy in that specific employer / employee relationship. And the IL SC would most likely slap such as idea down, probably by citing deferral to the General Assembly on budget policy.
- Steve - Wednesday, Nov 28, 18 @ 1:27 pm:
It shouldn’t wind up in the federal courts. This isn’t a federal issue.
- Archpundit - Wednesday, Nov 28, 18 @ 1:38 pm:
1) Will Troncers sign on to this inane theory? Probly.
2) I want to congratulate Governor Pritzker on his reelection in 2022 against Republican standard bearer Jeanne Ives who ran on a number of novel legal theories.
- anon2 - Wednesday, Nov 28, 18 @ 1:41 pm:
Ives admits the State has failed to adequately fund the pensions, even though employees never missed a payment. Now she would further punish the employees due to the State’s misfeasance. Is that how she defines “justice,” punish the victims twice?
- PublicServant - Wednesday, Nov 28, 18 @ 1:46 pm:
===Is that how she defines “justice,” punish the victims twice?===
Yes.
- Jocko - Wednesday, Nov 28, 18 @ 2:39 pm:
==the budgets they have passed each year have not adequately covered anticipated pension obligations==
Someone needs to tell Jeanne that voting “no” doesn’t exempt you from the decisions reached by the General Assembly.
- zatoichi - Wednesday, Nov 28, 18 @ 2:53 pm:
So does not having a balanced budget also void the ‘contract’ with vendors, universities, social services, road contractors, local government, health insurance. What a convenient idea.
- theq - Wednesday, Nov 28, 18 @ 2:58 pm:
Wow! and she almost beat Rauner. How embarrassing for him
- wondering - Wednesday, Nov 28, 18 @ 3:09 pm:
By her logic, if you can call it that, all contracts and bond obligations are null and void.I didn’t hear her squeaking when Rauner was tweaking.
- ISU Alum - Wednesday, Nov 28, 18 @ 3:42 pm:
Pension liability isn’t an actual debt in the true definition of the term. A specific bond or promissary note is a debt.
- jimmydean - Wednesday, Nov 28, 18 @ 4:17 pm:
right or wrong..at least ives is trying for a solution….cullerton went mute on his bill…jb thinks weed can pay it all, and if not toss in more taxes..either way a plan needs to be hatched and nobody seems to want one….sure all them mayoral candiates are screaming for a constitutional amendment..until they win..then crickets,
- Anoqn - Wednesday, Nov 28, 18 @ 4:28 pm:
Why single out pensions as the culprit? If the budgets were unbalanced, the deficit could be attributed to virtually any exoenditure, not just pensions.
- Anonymous - Wednesday, Nov 28, 18 @ 4:53 pm:
Ives’ “theory” is the type of thing that you think of in the middle of the night, write it up, put it in a drawer, and forget about it. And I thought Ocasio-Cortez was a little off the wall.
- Anonymous - Wednesday, Nov 28, 18 @ 4:54 pm:
@4:28: Because pensions are Jeanne’s hobby horse of the day. Try again tomorrow; maybe she’ll have another one.
- OldIllini - Wednesday, Nov 28, 18 @ 4:55 pm:
Anonymous at 4:53 is OldIllini
- Whatever - Wednesday, Nov 28, 18 @ 4:58 pm:
==right or wrong..at least ives is trying for a solution…==
No, she is looking for a way to cheat current and former state employees.
- Shevek - Wednesday, Nov 28, 18 @ 4:58 pm:
After reading Reeder’s entire column, it is clear he has absolutely no understand of the law and is just being silly. The end of the column goes through all sorts of promises the courts allow to be broken without any apparent understanding that his examples are apples to zebras.
- Norseman - Wednesday, Nov 28, 18 @ 5:31 pm:
Magic beans is a more serious approach than this silly scheme.
- wondering - Wednesday, Nov 28, 18 @ 5:53 pm:
Reeder has a long history of anti pension nonsense. He was a major proponent of the police power arguement….his is a major and debilitating case of pension envy.
- Anonymous - Wednesday, Nov 28, 18 @ 6:01 pm:
So, let’s assume this were to be a serious attempt at a “solution”. The state now gets to stop paying a penny to retired workers in the state pension plans.
And then what? Just poverty for……how many people?
Does this sound like a rational plan?
Just to provoke thoughts on consequences of this brainstorm………..
- Monique - Wednesday, Nov 28, 18 @ 6:04 pm:
That’s the whole problem the state hasn’t been paying the pension they allocate the money and then they spend it elsewhere they rob Peter to pay Paul and never pay Peter
- Anon - Wednesday, Nov 28, 18 @ 6:16 pm:
To add to the many reasons Ives is wrong, the state appellate court recently rejected her interpretation of the balanced budget estimate in the HB40 case with Breen.
- Old and In The Way - Wednesday, Nov 28, 18 @ 6:23 pm:
In my 40 plus years practicing law I have heard some pretty goofy ideas and theories. This is right up there at the top. It’s so wrong on so many levels it’s hard to know where to begin not just refuting it but ridiculing it. If it were allowed I’d insert an exclamation point here. It’s obvious that Ms Ives has no legal training or background and should perhaps stick to military matters which she hopefully is better versed in having graduated from the USMA at West Point. This would make a first year law student blush.
- Flapdoodle - Wednesday, Nov 28, 18 @ 7:24 pm:
@jimmydean 4:17 — Baloney. Ives isn’t trying to solve any problem with this pseudo-legal nonsense. She’s only interested in ducking the problem by wishing it away. Like a little kid with her eyes who believes if she can’t see it, then it doesn’t exist. Infantile.
- Legal Man - Wednesday, Nov 28, 18 @ 8:09 pm:
I don’t know who is dumber, Ives or Reeder.
As many others have stated, there isn’t a federal question for the Feds to ever look at the Ives Theory. Secondly, there are three people named Ives that are licensed to practice law in Illinois. Nobody should be surprised that Jeannie is not one of the three. Legal theories are based on deep thoughts by attorneys. Crackpot Theories are based on wishful thinking from people that want attention. Reeder’s spotlight on Illinois’ number 1 crackpot is a black eye for journalism.
- Anonymous - Wednesday, Nov 28, 18 @ 9:15 pm:
==ducking the problem by wishing it away==
True of everyone, it seems. After all, the Supreme Court ruled that pensions must be paid and that there are ways to address the debt. No one has done so to this day.
- Anonymous - Wednesday, Nov 28, 18 @ 10:01 pm:
I paid into the pension system all these years. I didn’t have a choice, it was automatically taken out of my check every paycheck. The legislature didn’t hold up their end. So she wants to take what I paid also
- amazed - Wednesday, Nov 28, 18 @ 11:35 pm:
The state pension system was designed to be self sustaining. In January 2003 there were around 12,400 active state employees go from contributors to receivers of the retirement bucket (about 1/5th the workforce). Since then the amount of contributors have been reduced by a few thousand more. No adjustments were made then. Then someone in the dome decided to “borrow” from the retirement bucket (which wasn’t theirs to touch) as a quick fix to some poor spending decisions that they made. Once that was allowed to happen, the cookie jar’s lid was left off. Right now the state owes the five different retirement systems 83 BILLION dollars (nine zeros). All of a sudden it’s the employees and retirees fault that the bucket is half empty. Put the blame where it belongs, on the elected officials who haven’t done their job. Maybe it’s time that every elected official who is placed in the capitol by the Illinoisans be reminded of the the State Motto: “State Sovereignty, National Union”.