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Another view on the pension lawsuits

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Illinois

* Jacob Huebert at Illinois Review looks at the three lawsuits filed to overturn the new pension reform law…

All three suits allege that the law violates the Pension Clause because it makes modest reductions to annual increases in retiree benefits, commonly referred to as COLAs. The Cook County suit also alleges that the law’s increases in retirement age for some workers and its (generous) cap on pensionable salaries violate the Pension Clause.

The lawsuits’ claims don’t have merit. The COLA reduction doesn’t touch the benefits workers have already earned, but only limits increases going forward. COLAs are a way for the Illinois General Assembly to help retirees keep up with changes in the cost of living, which may fluctuate over time; by their nature, they’re not written in stone.

As for the higher retirement age, the Illinois Supreme Court has already held that the Pension Clause allows a change in workers’ retirement age even if it indirectly affects the benefits they will receive. And the pensionable salary cap – which, at more than $110,000 for participants in the Teachers’ Retirement System in 2014, is unlikely to leave anyone destitute – doesn’t violate the Pension Clause because it only affects benefits workers will earn for work done in the future, not benefits they’ve already earned.

Discuss.

posted by Rich Miller
Tuesday, Jan 14, 14 @ 9:41 am

Comments

The pension benefit protections are clear. No diminishment. Before the Gospels, before Moses brought down the 10 Commandments from Mt. Sinai, there was the pension guarantee. They cannot but touched except to increase them. Period.

You will have to repeal the Holy Spirit from the Trinity before you can touch my pension.

Deal with it

Comment by state worker Tuesday, Jan 14, 14 @ 9:44 am
When members of the public retirement systems actually direcly contribute towards the COLA (which is the case for TRS/SURS members), also known as the Automatic Annual Increase, then it is hard to support the claim that AAIs are not part of the benefit.

Comment by Dirt Diver Tuesday, Jan 14, 14 @ 9:47 am
Is this guy a lawyer? The COLA argument might make more sense if it were actually a COLA. But since it is an AUTOMATIC Annual Increase, it is as fixed in amount as any other part of the pension formula. And the impact is anything but “modest”. Most folks who work the numbers are looking at cuts of $100s of thousands of dollars over their lifetimes.

Comment by Anonymous Tuesday, Jan 14, 14 @ 9:52 am
It is not a COLA it is an automatic annual increase. My contractual agreement was to receive a stream of payments that increase by 3% each year; not an unchanging amount that might be increased at the whim of the politicians.

Comment by another rnug Tuesday, Jan 14, 14 @ 9:52 am
I don’t understand why the IPI is so hostile towards state employees. The cuts are anything but modest. In my case it’s tens (if not hundreds) of thousands of dollars less than I would have been entitled to without the changes. I don’t consider that a “modest” cut. How about we come after their pensions and see if they are as giddy about seeing them cut.

Comment by Demoralized Tuesday, Jan 14, 14 @ 9:53 am
Yes continue the confusing discussion over exactly what is the AAI in a modest and generous way that has no merit.

Comment by Makandadawg Tuesday, Jan 14, 14 @ 9:55 am
I miss - RNUG -.

I’ll leave it there.

Comment by Oswego Willy Tuesday, Jan 14, 14 @ 9:56 am
The problem with this analysis is that the pensions are a contract that governs payment terms in the future, which have an actuarial present value. The present value of those future payments are vested and are clearly documented in the terms of the pension contract. If you provide x years of employment to the state as a member of the pension system, you will receive these benefits in the future. Period. This was settled in the ISC decision in Jorgensen vs Blagojevich in 2004 as follows in this snippet:

“The salaries, including their COLA component, were provided by law in the manner described earlier in this opinion, Now that those salaries have been implemented, the constitution commands that they be paid. No principle of law permits us to suspend constitutional requirements for economic reasons, no matter how compelling those reasons may seem.”

Comment by PublicServant Tuesday, Jan 14, 14 @ 9:57 am
That retirement age lawsuit that he cites doesn’t say what he thinks it says. It wasn’t talking about a change in the Pension Code; it was saying that the municipality could change their age requirements in their HR policies, even if it would have an indirect and negative impact on pensions. They weren’t saying anything about whether the pensions themselves could be changed.

Comment by Katiedid Tuesday, Jan 14, 14 @ 9:58 am
And I miss RNUG too. Hope he chimes in today.

Comment by PublicServant Tuesday, Jan 14, 14 @ 9:59 am
If you agree with this line of reasoning, then the State can change the interest rates going forward on bonds that it has issued. A bondholder hasn’t earned next year’s interest yet, just like an annuitant. However, if the State unilaterally lowered interest rates, I imagine the bondholders would be screaming bloody murder.

Comment by Anon Tuesday, Jan 14, 14 @ 10:00 am
It’s always interesting to read about how much people THINK public employees are worth, whether in employment or retirement. I don’t think a lot of people are actually earning what they take home and it’s many multiples of what any public employee can ever dream about earning. Let’s open up a dialogue about what everyone earns and discuss their value and worth. Isn’t that uplifting?

Comment by AnonymousOne Tuesday, Jan 14, 14 @ 10:00 am
If what it is going to cost me is a “modest” change I hope I never see a drastic change.

Comment by Leave a Light on George Tuesday, Jan 14, 14 @ 10:01 am
Mr. Huebert.
I realize that you are an attorney so what I suggest is that you pick up a copy of Eric Madiar’s research” Welching on public pensions”. Madiar,unlike you Sir has actually researched the issue from an academic and legal viewpoint,whereas your assertion is clearly partisan. Please tell me, what does MY contract with the state have to do with you? Tell me sir, if you know that the State is incorrect in the savings and the way the money will be spent,why would you argue MY contract is bad?
Please search your soul for the answers,but first and foremost……..READ!!!!!

Comment by the troop Tuesday, Jan 14, 14 @ 10:01 am
Is the AAI considered part of a retiree’s pension? If so, doesn’t the Illinois Constitution Pension Clause also protect enhancements made to a retiree’s pension?

Comment by Where will it end Tuesday, Jan 14, 14 @ 10:05 am
If the Automatic Annual Increase was actually a COLA it would have been tied to an inflationary index. Huebert sounds pretty confident. Too bad he’s dead wrong.

Comment by Soccertease Tuesday, Jan 14, 14 @ 10:11 am
What a surprise conclusion from IR!

Follow the game plan here: cut the minimum wage for poor people, end SNAP, boot folks off Medicaid and steal from pensioneers — that will make the world a better place for all of us.

Comment by wordslinger Tuesday, Jan 14, 14 @ 10:12 am
The AAI IS protected under Article XIII, Section V of the Illinois State Constitution. Employees contributed one half of one percent of their salary throughout their career, specifically funding their AAI

Comment by Anon Tuesday, Jan 14, 14 @ 10:16 am
Huebert is an Illinois Policy Institute employee, and his “analysis” is typical IPI propaganda in which facts are misstated or omitted to produce a conclusion that fits the group’s extreme right-wing agenda.

IPI’s Huebert cites the Peters case in the third graf above. But that decision permitted MUNICIPALITIES to REDUCE the retirement age. It does not allow the state to raise the retirement age, as SB1 would do.

The only other point IPI attempts to argue is that somehow the constitution permits the reduction of benefits “going forward.” This is false, and directly contradicted by not only debate during the constitution’s framing but also numerous court decisions including McNamee, Felt, Buddell and Sklodowski.

In short, IPI and Huebert are all hogwash, and you don’t have to be an attorney or even an amateur expert in Illinois pension litigation to know it. Simply read Eric Madiar or Gino DiVito.

Comment by Reality Check Tuesday, Jan 14, 14 @ 10:18 am
The 3% Compounded AAI tracks the rate of inflation almost exactly when averaged over the last 30 years. So the actuaries were right on the mark when they suggested that a fixed 3% AAI would protect the pension payments against inflation, which was the intent when the AAI was enacted into law. Furthermore, it became vested from that point forward.

Comment by PublicServant Tuesday, Jan 14, 14 @ 10:20 am
Demoralized

From the perspective of a multi-millionaire, they are modest. These people are so far out of touch.

“The cuts are anything but modest”

Comment by AFSCME Steward Tuesday, Jan 14, 14 @ 10:22 am
He calls emasculating the AAI modest, yet the IR crowd says the cuts are inadequate and favor much deeper ones. I bet he won’t pledge to oppose the Rauner-style slashing.

Comment by Anon Tuesday, Jan 14, 14 @ 10:22 am
Anon 10:00

You have to understand there is a different set of rules for the insiders & multi-millionaires. A “modest” reduction in our pensions is no big deal. But mess with what they think is their’s, big issue. The main problem is that they want more of what we got, that’s why they are so adament in sticking it to us.

“If you agree with this line of reasoning, then the State can change the interest rates going forward on bonds that it has issued. A bondholder hasn’t earned next year’s interest yet, just like an annuitant. However, if the State unilaterally lowered interest rates, I imagine the bondholders would be screaming bloody murder.”

Comment by AFSCME Steward Tuesday, Jan 14, 14 @ 10:26 am
Jacob Huebert states, “The COLA reduction doesn’t touch the benefits workers have already earned” in arguing the lawsuits have no merit. It strikes me that his statement is built on the underlying assumption that what is constitutionally protected is accrued benefits (i.e. benefits already earned to date), and not future earnings (hence the COLA, in his view, is not protected). However, I think that assumption may be incorrect, and the question of what is protected is at the heart of the lawsuits. Past history has indicated that in Illinois both earned and future benefits are protected. Also, the case cited, from 1974, is one in which the retirement age was lowered, not increased (as is what is required by the new pension law).

Comment by PensionResearcher Tuesday, Jan 14, 14 @ 10:29 am
Please take it easy on the right wingers. No one is to the right of me and I’m absolutely opposed to violating the provision of the state constitution which I referenced above. Public employee pensions cannot be reduced, unless you are talking about future hires. Period.

Comment by Anon Tuesday, Jan 14, 14 @ 10:31 am
I’ve mentioned this before, but one of the reasons it is a fixed AAI as opposed to a variable COLA is that the State was looking for certainty when they implemented the increase. A fixed percentage AAI is much easier to project and budget.

Comment by RNUG Tuesday, Jan 14, 14 @ 10:31 am
I really hope these are the arguments the State relies on. That 2 years of experience as an attorney are really paying off

Comment by Generation X Tuesday, Jan 14, 14 @ 10:33 am
“by their nature, they’re not written in stone.” No, but the annual 3% increase is written into the pension code.

As someone who is retired, I have earned all of my benefits - and it is clear the “COLA reduction” (really a reduction in the AAI) reduces benefits already earned.

Comment by archimedes Tuesday, Jan 14, 14 @ 10:42 am
Jacob Huebert lost his last shred of credibility after claiming the ISC has already ruled a higher retirement age can be imposed even if it indirectly affects retirement benefits. It was just the opposite. The ISC ruled a LOWER retirement age can be imposed even if it indirectly affects retirement benefits. Typical spin just taking bits and pieces of court rulings to substantiate your position. Taken in totality all of the court rulings Huebert subtly references support the unconstitutionality of the vast majority of new pension law.

Comment by Capo Tuesday, Jan 14, 14 @ 10:44 am
Both sides are way too confident that they are so obviously correct.

This could go either way, IMHO.

Comment by walker Tuesday, Jan 14, 14 @ 10:53 am
If the courts abandon all prior precedent, sure.

Comment by anon Tuesday, Jan 14, 14 @ 10:59 am
==The COLA reduction doesn’t touch the benefits workers have already earned, but only limits increases going forward.==

The fact that the pension is scheduled to go up doesn’t mean the increase has not already been earned. If that were true, someone who has left state employment, but not yet retired, could have his pension cut to zero because the increase when he reaches retirement age hasn’t been earned. Also, adjustable-rate mortgages and bonds with baloon payments are valid contracts that call for increases in payments.

Comment by Anon. Tuesday, Jan 14, 14 @ 11:02 am
I agree with walker. And courts have abandoned prior precedent and have found convoluted ways around prior precedent.

I submit that if any part of the law is found constitutional it will be a pinhole that the GA can then drive a truck through.

GA: Oh, you are allowing us to raise the retirement age 4 months for every year under 46? Then we now will make it one year for every year under 50.

GA: Oh, you are allowing us to take AAI holidays? We now will have an AAI holiday for the first 10 years after retirement.

Comment by Jack Handy Tuesday, Jan 14, 14 @ 11:04 am
I have to chuckle, when I read comments by retirees drawing a pension, many starting at 55, and whining about not getting a guaranteed 3% increase.

Comment by Downstater Tuesday, Jan 14, 14 @ 11:05 am
i think the pension reforms are unconstitutional, but i am not entirely convinced the supremes will rule that way. however, the devil we know may be better than the devil we dont know.

in other words, while i dont like the current bill, i fear the cullerton approach even more. if we go that route–pick health care or AAI (you wanna be shot or hung?–my self serving hope is that the SC and GA will screw around long enough that i get one or two more AAIs, and i make it to 65 before the cullerton approach takes effect, so the choice is easy.

Comment by langhorne Tuesday, Jan 14, 14 @ 11:08 am
@Jack and Walker: Anything can happen. I’m more confident in my position, than I believe you should be in yours. Finding “convoluted ways around prior precedent” is a much more rare occurance than upholding prior precedent is. And the ramifications regarding the full faith and credit of the state are at stake.

Comment by PublicServant Tuesday, Jan 14, 14 @ 11:13 am
@downstater - He who laughs last, laughs best.

Comment by PublicServant Tuesday, Jan 14, 14 @ 11:14 am
The law has been changed often to increase the pension benefit; why can’t the law be chagned to reduce pension benefits? I’m way to the left, but the politicing that went on to increase pension benefits and those costs are not sustainable. There are other provisions of the constituion which will allow the supreme court to uphold these changes.

Comment by Jim'e' Tuesday, Jan 14, 14 @ 11:15 am
walker - Tuesday, Jan 14, 14 @ 10:53 am:

Not confident, but law is all about historical intent and prior rulings. Historical intent is pretty unambiguous when you read the minutes of the 1970 Con Con; the Pension Clause was written specifically to address what is being attempted with PA 98-0599.

I honestly expect the IL SC to try to find a way to thread the needle and reach a compromise ruling that is both politically and legally acceptable. Maybe something along the lines of the retirees are fully protected (hence no savings there) while the current workers could have current benefits frozen but benefits going forward altered (minor savings). The problem the IL SC has is past precedent; way too much in writing by both their predecessors and themselves to easily reverse course on the legal issues. Especially tough to disagree with opinions you either wrote or concurred with.

If the IL SC result is unacceptable to the retirees, I expect to see a federal contract law case filed before we see the end of this. The federal courts won’t want to touch it with a 100 foot pole, but if the IL SC ruling appears to be a blatant violation of contract law, the feds may be forced to take it up.

Unless the IL SC issues a blanket ruling quickly, I expect to see many, many years of litigation, enough to let a few lawyers fully fund their retirements!

Comment by RNUG Tuesday, Jan 14, 14 @ 11:15 am
Jim’e’ - Tuesday, Jan 14, 14 @ 11:15 am:

You would have to ignore previous court recognition that the Pension Protection Clause applies to “… enhancements granted by the General assembly” as noted in a number of IL SC rulings.

Comment by RNUG Tuesday, Jan 14, 14 @ 11:20 am
The author, attorney Jacob Horst Huebert, was admitted to pracrice law in Illinois on Nov 29, 2011, according to the Illinois Attorney Registration and Disciplinary Commission. He lists his employer as the Liberty Justice Center in Chicago. From the Illinois Review copy of the full aricle, he is considered a Senior Attorney.
With all due respect to Mr. Huebert, the ink on his law license is barely dry. In maybe a few more years, he may have enough experience to begin understanding the case law and statutes he is reading.

Comment by Cook County Commoner Tuesday, Jan 14, 14 @ 11:33 am
To RNUG:
When you say ‘the current workers could have current benefits frozen but benefits going forward altered’ are you thinking of the AAI on the pension already earned as part of ‘current benefits’? (So that I’d get what I would have gotten under the old law if I retired as of June 1st 2014, plus whatever reduced benefit for subsequent years of work.) Or is it only those already retired who get the AAI? (Should I arrange to retire on May 31st, which I could just about manage?)

P.S. Like others here, I appreciate your analyses and good sense.

Comment by UIC Guy Tuesday, Jan 14, 14 @ 11:34 am
@ Jim’e’. The plain language of the pension clause prohibits only “diminishments” amd “impairments.” The constitution could have been, but was not, amended to prohibit “enhancements.”

Comment by anon Tuesday, Jan 14, 14 @ 11:35 am
@Jim’e’ - The “normal cost” of pensions is minimal and eminently sustainable, and the benifit enhancements account for, I believe, 8% of the unfunded liability. Even those backing the law acknowledge that the state’s skipping their annual pension obligation over the last 6+ decades accounts for the vast majority of the unfunded liability. That borrowing from the pensions allowed them to fund programs benefiting various constituencies on both the left and the right without needing to raise taxes to do so. They took the short-term easy way out, Jim. Any new employees, as of 2 years ago, receive a drastically reduced set of benefits. They are now trying to reneg after the fact, on current employees and amazingly on people who have already retired from the state and are on a fixed income. Most of those people don’t get social security because they get the pension. Not having to pay that 6.2 percent to the Feds every year was one of the main reasons the state implemented the pensions in the first place. If you and I borrow money from the bank, the bank doesn’t need reform, our method of borrowing does. Why do you think the state borrowed from the pensions in the first place? The meager, flat income tax that this state has, unlike any state around us, has not for decades been able to support all those state programs that our legislators enacted. Finally, the people of the state of Illinois voted to approve the constitutional amendment making pensions an enforceble contract who benefits shall not be diminished. You state that the pensions are “unsustainable”, but several legal ways to remedy the state’s current indebtedness have been laid out, and the legislature chose to ignore them, and pursue this illegal and unconstitutional route for political reasons. Who’da thunk, huh?

Comment by PublicServant Tuesday, Jan 14, 14 @ 11:38 am
@RNUG: Wasn’t thinking of you as part of any “too confident” side.

I suspect the dogs will be snarling as much over the “enforceable contract” phrase, as over the “shall not be diminished”. We’ll see.

Your comments are well appreciated.

Comment by walker Tuesday, Jan 14, 14 @ 11:38 am
Evidently we don’t need the supremes to take up the lawsuits as Mr. Huebert has already made his decree!

Comment by Kerfuffle Tuesday, Jan 14, 14 @ 11:52 am
UIC Guy - Tuesday, Jan 14, 14 @ 11:34 am:

I’m doing nothing but guessing here on how this will all turn out. I was thinking more in terms of the age modifications being allowed to stand than how the AAI might be addressed for employees. Also thinking along the lines that some courts have considered the already retired to be a “more special” class in need of additional protection. But this is just guessing.

Like a lot of us here, I think the previous rulings (to paraphrase) saying the terms in place at hiring plus enhancements is the contract and it should be upheld based on past rulings. But if the IL SC were to find a bit of wiggle room / loop hole, I think that is where they would draw the line.

I’d hate for someone to make the wrong retirement decision based on my guesses. Retirement is a really big decision with a ton of variables you need to consider. I retired under the 2002 ERI and I think I made a good decision, but I still find myself second-guessing it now and then. Also, back then, I told a number of people “… if you need to do x to retire now, you can’t really afford to retire …” It’s all about your personal situation that includes not only financial issues but also marital and health status.

However, there is a special situation for SURS “cash balance” participants that could affect your decision. If you are one of those people, be sure you understand all of those ramifications. I’ve been working on something along those lines to give to Rich, but it probably won’t be ready until tomorrow because I have some of the details at home on my desktop while I’m siting in a hospital room blogging with my laptop.

Comment by RNUG Tuesday, Jan 14, 14 @ 11:56 am
Looks from Huebert’s bio on the LJC/IPI website he’s been practicing a long time, clerked for a federal appellate judge, taught at several law schools, etc. I agree with Walker that it isn’t cut and dry. Courts do whatever they want.

Comment by Tabitha Tuesday, Jan 14, 14 @ 11:56 am
=== in other words, while i dont like the current bill, i fear the cullerton approach even more. if we go that route–pick health care or AAI (you wanna be shot or hung?–my self serving hope is that the SC and GA will screw around long enough that i get one or two more AAIs, and i make it to 65 before the cullerton approach takes effect, so the choice is easy. ===

Langhorne, I understand your concern, however, the General Assembly has set itself up so they can totally eliminate health care coverage. At least, we are looking at ever increasing costs for that coverage. Unless the Supremes rule in our favor in the Maag lawsuit. The Cullerton approach may be the only way to provide some certainty in our health coverage. If you recall, the 1 percenters were screaming bloody murder over the health care obligation that Cullerton would impose on the state.

Don’t get me wrong, I oppose all reductions because they violate the pension clause. If they find a way to do it now, they will repeat this exercise at some future date. Public sector pensions will be subject to the whims of irresponsible politicians.

Comment by Norseman Tuesday, Jan 14, 14 @ 12:21 pm
Interesting that everyone is arguing over one attorneys opinion from a right wing organization when this law was passed by a liberal house lead by Madigan, a liberal senate lead by Cullerton and signed by a liberal Gov. Quinn and will be decided by a liberal Ill Supreme Court.

Comment by Fed up Tuesday, Jan 14, 14 @ 12:27 pm
To RNUG:

Do you have any opinion on the viability of a 5th Amendment claim alleging the taking of a property interest(pension)without just compensation?

Comment by funny guy Tuesday, Jan 14, 14 @ 12:49 pm
There is an issue that has not been touched upon in this thread, namely that the 3% AAI is not an enhancement for many current retirees and those who will retire in the near future. The 3% AAI has been in place since 1980, and a compounded 3% AAI since 1989; many participants first joined the systems after the 3% AAI was already in place.

For example, I moved to Illinois and joined SURS in 1990, and recently retired. I had 2 other job offers in different states, and would never have taken the job in Illinois if I had known that I would be denied the 3% AAI I was contractually promised.

Comment by Andrew Szakmary Tuesday, Jan 14, 14 @ 12:58 pm
funny guy - Tuesday, Jan 14, 14 @ 12:49 pm:

No opinion re taking. I see it as a straight (and simple) contract law issue. The way I see it, the Pension Clause just reinforces the contract claim.

Comment by RNUG Tuesday, Jan 14, 14 @ 1:00 pm
How about if we open up the Il. Constitution to make changes so we can tax more to pay for the pensions we also look at changing the pension language so we won’t need the “progressive” tax at all. Seems fair. Let’s put them both out there for the people to decide.

Comment by Big Muddy Tuesday, Jan 14, 14 @ 1:01 pm
It seems to me that when I paid .5% for 30 years for the AAI it was a benefit I earned. Also, remember the Constitution says membership in the system is protected, the benefits of which shall not be diminished, not the annuity payment shall not be diminished. I paid for the 3%, it is a benefit I was allowed to receive because of my membership in the system, and paying it to me on a % of my annuity payment when I paid for it on my entire salary is clearly a diminishment.

Comment by Retired and Fed Up Tuesday, Jan 14, 14 @ 1:03 pm
RNUG: Thanks for the response. As you say, no one knows how it will turn out. The parts of the bill that seem to me most likely to survive the constitutional test are i) the change in retirement age, as you say; ii) the cap on pensionable income; and iii) the new way of calculating the cash balance rate of interest (which I think applies only to SURS). I don’t think any parts of the bill should survive, but those seem to me the most likely. So I’ve been calculating what my situation would be if that happened, and also if the whole bill survived, which really does require a lot of work in reinterpreting rather straightforward English words, or else an exaggerated view of ‘police power’. Compared with the second of these possibilities, I think I’d be better off retiring in May, if it meant keepng the AAI. But that must be true of a lot of people, and no one wants to see a ‘rush for the exit’.

Comment by UIC Guy Tuesday, Jan 14, 14 @ 1:06 pm
==How about if we open up the Il. Constitution to make changes so we can tax more to pay for the pensions we also look at changing the pension language so we won’t need the “progressive” tax at all. Seems fair. Let’s put them both out there for the people to decide.==

The trouble with this proposal is that the Illinois and federal constitutions both prohibit Illinois from enacting a law that impairs the obligation of contracts, so taking the pension clause out of our constitution would still not let you take away benefits already earned.

Comment by Anon. Tuesday, Jan 14, 14 @ 1:08 pm
If you can’t win on the specific provision applying to pensions, it’s unlikely the court would stretch to reach an argument such as takings. With due consideration for the ability of the court of last resort to change the law, I am not seeing why the Illinois Supreme Court would be itching to do so under these circumstances. Institutionally, they adhere closely to precedent. Where their own pension system is the only one exempted from the law, a decision departing from precedent to uphold pension reform will be greeted with howls that the Court took a bribe and that the justices are just Madigan puppets. If they strike it down, everyone will just shrug and say, well, it was questionable anyway and the court did its job by following precedent. Still have not heard any well-articulated rationale for the Illinois Supreme Court to uphold ANY part of this law.

Comment by anon Tuesday, Jan 14, 14 @ 1:10 pm
You’re kind of late to the party Big Muddy, but the difference between amending the Illinois Constitution to allow a progressive income tax, and changing the constitution to abolish, or change the pension clause to allow diminishment of pensions is that the former is not an ex post facto law change, while the latter is. Also, the people already decided on the pension clause back in 1970.

Comment by PublicServant Tuesday, Jan 14, 14 @ 1:12 pm
UIC Guy - Tuesday, Jan 14, 14 @ 1:06 pm:

As the law stands TODAY, we don’t get to keep the full 3% AAI. For some of us, with the years formula cap, we’ll only get 1% or 2% on our entire pension.

Comment by RNUG Tuesday, Jan 14, 14 @ 1:17 pm
Big Muddy - Tuesday, Jan 14, 14 @ 1:01 pm:

Here’s the problem in a nutshell: the State ALREADY OWES the money to the pension funds. It HAS TO BE PAID one way or another.

All the arguments are over WHO will end up paying:

* It will either be the state employee / retiree who has already paid twice (income taxes like everyone else and direct payroll deductions) having to pay a third time in the form of reduced benefits

or

* The taxpayers including state employees / retirees (income tax the General Assembly wasted) paying again.

Comment by RNUG Tuesday, Jan 14, 14 @ 1:25 pm
A three paragraph analysis of three challenges-that basically says it was modest and as far as the AAI goes it is not part of the retirement benefit–but he forgets that I as part of SURS paid for that AAI, each and every month since it became part of the retirement package. And lets not forget why it was adopted–retirees were literally trying to survive on annuity amounts from the 50s and 60s (just a couple of hundred dollars a month) and they were literally eating dog food.

Lets hope the states defense is three laughable paragraphs. I guess when you have no valid argument-just say it is ok.

Yes Judge, I did take his wallet, but it was only modestly full of cash–not really stealing.

Comment by SIUPROF Tuesday, Jan 14, 14 @ 1:40 pm
@ Downstater “I have to chuckle, when I read comments by retirees drawing a pension, many starting at 55, and whining about not getting a guaranteed 3% increase.” I guess someone held a gun to your head when you picked your career. I personally chose the career I have with a lower salary based on it’s benefits and the possibility of an early retirement. Plus, if you retire at 55, you will draw a pension of roughly 50% of your working salary (at least that’s my situation in the SERS).

Comment by beaten down Tuesday, Jan 14, 14 @ 1:42 pm
And one other point–that modest decrease in the AAI will cost me roughly $750,000 over 25 years. that may be modest to Mr. Huebert and Ty and his Civic Club brethren, but it is surely not modest to me.

Comment by SIUPROF Tuesday, Jan 14, 14 @ 1:44 pm
The new pension plan absolutely does represent a reduction in benefits. If it didn’t there would not be a future savings to the State. Simple as that.

Comment by Stones Tuesday, Jan 14, 14 @ 2:04 pm
The AAI it is NOT a COLA. It is an automatic adjustment that was contracted to me under specific terms and that I have paid for. If the State is going to change the terms of the contract, the money I paid should be prorated and returned. All of those long years of contributions. I need it for my private retirement fund.

That is, if the ISC upholds this theft.

Comment by PolPal56 Tuesday, Jan 14, 14 @ 2:24 pm
At the time I retired, I was required to make certain irrevocable choices affecting my retirement decision. Those choices were partially based on future value of benefits calculated through the date of retirement based on conditions, including COLA, provided by the state of Illinois. My decision to retire required an evaluation of many factors affecting my standard of living, including costs of healthcare and current and projected income.

Now the State wants to retroactively change their conditions upon which I was required, by them, to evaluate my decision to retire. All so they can spend that dollar already obligated to me, on some other worthwhile venture. They contend that their change is legally acceptable because I will be given a choice. Their choices are between which poisons to my future I wish to accept. All choices result in the same unacceptable future condition.

It must be understood that all savings to the state’s costs of retirement, whether one dollar or a hundred billion dollars, will be extracted from retirees. The average state employee does not simultaneously become a millionaire while in their service to the state as some involved with making these “reforms” have done.

Comment by Diminished Retirement Tuesday, Jan 14, 14 @ 2:32 pm
A Big THANK YOU To Rich, RNUG and the many intelligent commenters on CapitalFAX. This has been and is the best source for facts and comment on Illinois pensions.

Comment by another rnug Tuesday, Jan 14, 14 @ 2:37 pm
I almost choked to death at lunch when I saw Huebert’s name on this! Expert? Please. We have crossed paths before. The reason he is working where he works is because he has neither the experience nor ability to work anywhere else. He wouldn’t be considered an expert even if he lived at a Holiday Inn. Where do they find these guys? I can only surmise that the Review and IPI don’t pay enough to get real experts. His analysis is superficial and just plain wrong and we are paying way to much attention to it…….believe me there are stronger arguments. (Not that I agree with any of them.)

Comment by Old and in the Way Tuesday, Jan 14, 14 @ 2:57 pm
Old - Nice to see you’re back on the grid. Your legal insight is much appreciated.

Comment by Norseman Tuesday, Jan 14, 14 @ 3:16 pm
= I can only surmise that the Review and IPI don’t pay enough to get real experts. =

Real experts likely would not reach the conclusion that IPI desires, so they had to shop around for an attorney who would.

Comment by cover Tuesday, Jan 14, 14 @ 3:36 pm
To all of you government employee/retiree haters look at it like this. There’s a company (State of Illinois) and the Board of Directors and CEO(legislators and Governor) want to make things nice for the stock holders (tax payers) so they decide not to fully contribute to the pension fund in order to increase profits (pay for other services). When it’s employees retire and expect to get the pension benefits they were promised and may or may not have contributed to (State employees do oontribute) they say sorry but we didn’t put money in like we were required to and want to keep things nice for the stockholders (tax payers) and don’t want to actually do accurate acoounting and decuct all expenses from gross receipts (raise taxes to cover expenses and the money taken from the retirement fund) and costs have gone up so you get less than you should. Sorry. Does that put it in perspective. Also what do you thing would happen to the persons responsible, jail?

Comment by Retired and fed up Tuesday, Jan 14, 14 @ 3:54 pm
Interesting that so far there has been no IL SC decision on the healthcare issue. This seems to be taking a very long time since it was first heard in September.

This could be very important in how the judges might rule on the overall pension issue. While some might argue that they are rather different cases I would beg to differ.

SECTION 5. PENSION AND RETIREMENT RIGHTS
Membership in any pension or retirement system of the
State, any unit of local government or school district, or
any agency or instrumentality thereof, shall be an
enforceable contractual relationship, the benefits of which
shall not be diminished or impaired.

As can be seen from the language it includes reference to ‘pension or retirement system’ and specifically includes the word retirement. When I was hired by SURS in 1977 as a part of my retirement I was promised non-premium health insurance upon retirement. And since I was hired before April 1, 1986 and will never be Medicare eligible this is an important component of my retirement future.

Will the courts recognize or ignore this important reference to an overall retirement commitment? Again, I have no other health insurance nor will others who are older and in my same situation.

If the court decides to go for a very narrow interpretation on this matter it may well be a harbinger of any other decision to come later.

Also, how long before the SC will issue a final decision on all of the plaintiff pension lawsuits? Will it come before or after the November elections?

A long of interesting possibilities and politics involved. And while we may conjecture as to how they should proceed, many judges have their own personal opinions as well as any political considerations that may come into play in the great state of Illinois.

Comment by Federalist Tuesday, Jan 14, 14 @ 4:08 pm
Look for a February decision on the Maag (healthcare) lawsuit. I would be vey surprised if it is much later than that. I would also be surprised with a clear cut decision. There are several issues that may necessitate a rather narrow decision that results in the broader issue being back before the court again before a final decision is rendered. The issue the court appeared to be very inquisitive about is whether the healthcare benefit was indeed a contractual agreement. Which begs the question that if it was not a contract then what was it? The justices questioning has been interpreted as being hostile to the litigants but I believe that it offers little in the way of a clue to the courts thinking. Needless to say it will be very interesting to read the opinion. Whether it gives us any clue to the broader pension issues is another story altogether. I rather doubt it.

Comment by Old and in the Way Tuesday, Jan 14, 14 @ 4:21 pm
Old, welcome back. Good to read your opinions. I would agree that whenever Maag is handed down, it is not likely to be the last word on healthcare and also not going to tell us anything about pensions.

Comment by Arthur Andersen Tuesday, Jan 14, 14 @ 4:30 pm
To answer the question of when the pension lawsuits are finally decided……I can’t imagine it being less than two years if it is confined to state courts after oral arguments. We won’t see or hear these until Fall of this year. However, there are at least two issues that raise issues or questions with regard to US Constitutional guarantees……should these reach the Federal level, who knows? I am currently working on Civil Suits filed eight years ago and we are at least a year from the first verdict. A note to PQ and the GA…..don’t be in a hurry to spend the stolen loot!

Comment by Old and in the Way Tuesday, Jan 14, 14 @ 4:30 pm
Old, your thoughts on whether a stay of the law will be ordered while it proceeds through the courts?

Comment by PublicServant Tuesday, Jan 14, 14 @ 5:01 pm
dear diminished retirement –”all savings to the state’s cost of retirement” ? how can there be savings ? if you can’t belong to an organization , paid by the organization, managed by the organization, and paid by the organization to the organization - why should non- members pay for what have strangely become your “legal obligations”

Comment by Y Tuesday, Jan 14, 14 @ 5:01 pm
Anyone deciding to retire before the June 1st enactment of the new law should contact their respective retirement system. SERS told me that I had to be retired one month prior to any changes or I would fall under the new criteria. That is why I retired May 31st instead of June 30th. A new union contract was being negotiated which would go into effect on July 1st. I knew the new contract last year would have deep cuts. Please inform anyone retiring to follow my suggestion. Thanks.

Comment by MIX_IT_UP Tuesday, Jan 14, 14 @ 5:10 pm
Try English. It helps…usually.

Comment by PublicServant Tuesday, Jan 14, 14 @ 5:13 pm
Public Servant, that’s my burning question, too. I believe the lawsuits filed so far have not requested a stay, but the We Are One lawsuit will include a request for a stay.

RNUG will correct me if I’m remembering incorrectly, but I believe the current filed lawsuits are all from retiree groups. That may be why they did not request a stay. It will be easier for WAO who has “retirement cusp” employed members to show that a stay is vital. The outcome of the case and the timing of any implimentation of law will impact the retirement decisions of those on the cusp, especially if the decision should come down split between those already retired and those not yet retired (those retired are secure, but those not yet retired can be stolen from).

Comment by PolPal56 Tuesday, Jan 14, 14 @ 5:24 pm
I forget the legal terminology, but it has to do with the fact that not issuing a stay will cause irreperable harm.

Comment by PolPal56 Tuesday, Jan 14, 14 @ 5:27 pm
Or, rather, has the potentional to cause irreperable harm due to making irrevocable decisions that might not be the optimal ones otherwise made.

Comment by PolPal56 Tuesday, Jan 14, 14 @ 5:31 pm
Old and in the Way - Tuesday, Jan 14, 14 @ 4:21 pm:

It’s strictly rumor but I’ve heard March after the primary for a Maag ruling …

Comment by RNUG Tuesday, Jan 14, 14 @ 5:39 pm
PolPal56 - Tuesday, Jan 14, 14 @ 5:24 pm:

They didn’t ask for a stay, but both the RSEA and ISEA-R suits did ask for the difference in the AAI be placed in escrow until a final decision is reached. From my viewpoint, it effectively freezes any savings to the State.

Comment by RNUG Tuesday, Jan 14, 14 @ 5:43 pm
Quite simply PublicServent, you need to be retired at least one month prior to changes enacted to be considered a participant of a class such as a retirees. The IL SC may support some aspects of the law. Retirees may be treated differently than those still working. As an example, when I first started working for the state, a retiree only needed to work 8 years to receive premium free insurance on retirement. That criteria was changed to 20 years later after union negotiations. Proof that criteria of retirement can be changed as long as you are working. It is your decision as to whether you want to continue to work for the state or not. You fall under the new criteria if you are still working at the time the changes are enacted.

Comment by MIX_IT_UP Tuesday, Jan 14, 14 @ 5:45 pm
MIX_IT_UP - Tuesday, Jan 14, 14 @ 5:45 pm:

You properly noted that the premium free health insurance criteria was changed via union contract. It was subsequently codified as a State statute.

It should also be noted that there were other things provided in that contract that counted as true consideration in exchange.

And it was only applied to current employees, not existing retirees, setting a clear precedent about an already earned benefit. That’s part of what the Maag case is all about.

Comment by RNUG Tuesday, Jan 14, 14 @ 6:01 pm
RNUG. I had not heard that but I have been tied up in Louisiana pretty much full time so it would not surprise me. However, if that is the case I suspect it is not good news for the state or GA.

As for a stay, I believe there will be some sort of limited stay and I believe that both the Speaker and President of the Senate have said as much.

Comment by Old and in the Way Tuesday, Jan 14, 14 @ 6:01 pm
Mix, my comment was directed towards “y” the commenter above you. Sorry for the confusion.

Comment by PublicServant Tuesday, Jan 14, 14 @ 6:13 pm
Old and in the Way, what do you mean by a “limited” stay? Thanks.

Comment by PolPal56 Tuesday, Jan 14, 14 @ 6:50 pm
So RNUG, what did we get in exchange for the year shift? I sure don’t remember.

Comment by MIX_IT_UP Tuesday, Jan 14, 14 @ 7:37 pm
My modest reduction under the current pension law is $783,000 over the next 30 years assuming a 3% inflation rate. That is not modest! Yes, for those with pensions not much above the new anuity formuala it might be ok to call it modest. Reducing the 3% annual AAI to the rate of inflation or to a 2.5% compounded annual might be modest. Anyone who would write that the new pension law was a modest change to the AAI is not informed.

Comment by facts are stubborn things Tuesday, Jan 14, 14 @ 8:15 pm
“the benefits of which shall not be diminished or impaired” - - I was at the Maag trial at the Circuit Court level - the State agruement was the word “benefits” in the pension clause has never been legally defined.

Comment by Mama Tuesday, Jan 14, 14 @ 8:17 pm
Mama: (“the benefits of which shall not be diminished or impaired” - - I was at the Maag trial at the Circuit Court level - the State agruement was the word “benefits” in the pension clause has never been legally defined.)
I was starting to miss the good times, when we didn’t know what the definition of ‘is’ is. It’s great to be back!

Every time I’ve been to court, this has meant the side using such arguments have no argument at all.

Comment by Anon Wednesday, Jan 15, 14 @ 6:00 am
Some blowhard with a blog, write him off as insignificant. Wishful thinking blowhard.

Comment by Chock Thursday, Jan 16, 14 @ 3:43 pm