* Remember this Tribune story from 2011?…
All it took to give nearly two dozen labor leaders from Chicago a windfall worth millions was a few tweaks to a handful of sentences in the state’s lengthy pension code.
The changes became law with no public debate among state legislators and, more importantly, no cost analysis.
Twenty years later, 23 retired union officials from Chicago stand to collect about $56 million from two ailing city pension funds thanks to the changes, a Tribune/WGN-TV investigation found.
Because the law bases the city pensions on the labor leaders’ union salaries, they are reaping retirement benefits that far outstrip the modest salaries they made as city employees. On average, their pensions are nearly three times higher than what the typical retired city worker receives. […]
Pension experts from around the country say they’ve never heard of such a perk for union leaders. They warn that it not only creates opportunities to scam the system but also robs the city of its ability to control pension costs. The city doesn’t set union salaries, the most important ingredient in determining the size of the leaders’ pensions.
What’s more, none of the labor officials retired in the traditional sense. Even as they collected their inflated city pensions, they held on to their high-paying union jobs. A decade ago, those public pension funds were flush, but they’re now in such deep financial trouble that they threaten to burden taxpayers and dues-paying union workers alike.
* The General Assembly quickly passed a law to rein in those pensions, but the Illinois Supreme Court struck it down today…
The State concedes that a statutory right to union service credit was created but argues that the right is not one entitled to constitutional protection because the framers of the constitution did not intend it to be entitled to such protection. In so arguing, the State merely relies upon the general justification for a public pension system, which is to reward past public service, to provide a form of compensation for past public service, and to encourage continued public service.
We find nothing in the case law, in the text of the pension clause, or in the constitutional debates on the clause that would support the State’s argument that the particular benefit conferred here is not entitled to protection. Kanerva held that the text of the pension clause places no limits on the kind of “benefit” that is protected by the clause so long as the benefit is part of the contractual relationship “derived from membership” in the retirement system. The participants at issue here are members of their retirement systems entirely due to their government employment. Each plaintiff was either working in his public job when the option to earn union service credit was added as a benefit or started public employment and joined the retirement system after the benefit was already in place. The benefit was clearly a “benefit” within the meaning of the pension clause, and the State’s argument must therefore be rejected. […]
(W)e hold that the ambiguous statutory framework prior to the amendment of Public Act 97-651 must be construed as allowing the right to use a union salary from a leave of absence under section 8-226(c) or 11-215(c)(3) to calculate the highest average annual salary. The amendments effected by Public Act 97-651 necessarily changed the law and thereby diminished plaintiffs’ retirement system benefits in violation of the pension-protection clause of the Illinois Constitution. […]
Plaintiffs next raise an issue of statutory construction unrelated to the two constitutional issues resolved above. They argue that the circuit court erred in denying their motion for summary judgment with respect to counts X and XI of their complaint, which sought a declaration that the “any pension plan” language of section 8-226(c)(3) of the Pension Code does not apply to defined contribution plans. In that regard, section 8-226(c)(3) provides that an MEABF member may receive service credit for time spent on a leave of absence working for a local labor organization, provided “the participant does not receive credit in any pension plan established by the local labor organization based on his employment by the organization.” […]
Because the term “pension plan” in section 8-226(c)(3) is ambiguous in this respect, it must be liberally construed in favor of the rights of the pensioners so as to apply to a defined benefit plan only and not to defined contribution plans. See Kanerva, 2014 IL 115811, ¶ 55. Accordingly, we reverse the circuit court and hold that the term “receive credit in any pension plan” as used in section 8-226(c)(3) does not include defined contribution plans.