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* Sun-Times…
A Sangamon County judge stopped Illinois’ state pension overhaul law from taking effect Wednesday, issuing a stay on the law until the court can rule on its constitutionality.
Two lawyers representing plaintiffs in the case said that Circuit Judge Jon Belz issued the order to stop the pension law that reduces retirees’ benefits and increases their contributions from taking effect this summer. […]
The House author of the changes, Rep. Elaine Nekritz, noted that none of the savings officials expect to reap from the changes are factored into the state budget for this year.
“I would have been shocked had there not been a stay,” the Northbrook Democrat said. “It should have been stayed and we should wait to see frankly what the Supreme Court tells us.”
* SJ-R…
“I do think it has led to great confusion … almost across-the-board confusion,” Belz said in a Sangamon County courtroom as he issued a temporary restraining order and preliminary injunction blocking implementation of the law until further action of the court or resolution of the case. “There’s just too much uncertainty.” […]
The attorney general’s office had reached a proposed agreement that was much more limited — to delay for a year implementation of the law for university and community college employees.
But Belz’s ruling went further than that proposed agreement.
Aaron Maduff, a lawyer for the State Universities Annuitants Association, said the proposed agreement had been just “half a loaf” compared to the preliminary injunction issued by Belz.
* Tribune…
Judge John Belz recognized the retirees and others in the pension systems could suffer “irreparable harm” if the law is allowed to go forward while the constitutionality issues is still being fought out in the courts, according to his order. The case is expected to wind up in the Illinois Supreme Court. […]
Rep. Elaine Nekritz, a Northbrook Democrat and a pension expert, said she did not think the judge’s ruling would slow down attempts by Cook County to overhaul its retirement systems. But many at the Capitol are feeling what is being called “pension fatigue” following reforms approved for state plans, which the governor signed into law, and some of the city of Chicago plans, which Quinn has not yet said whether he will sign.
* Reuters…
Maura Possley, a spokeswoman for Illinois Attorney General Lisa Madigan, who is defending the law, said the ruling was under review.
“The goal of the pension reform law is to stabilize the pension systems. Unfortunately, this decision will likely further burden the systems and hurt taxpayers,” Possley said.
* Full react from the governor’s budget office…
We believe this law is constitutional. This landmark law was urgently needed to resolve the state’s $100 billion pension crisis.
It was also urgently needed to ensure that teachers, university employees and state workers who have faithfully contributed to the pension system have retirement security.
We’re confident the courts will uphold this critical law that stabilizes the state’s pension funds while squarely addressing the most pressing fiscal crisis of our time by eliminating the state’s unfunded pension debt, a standard first set by Governor Quinn.
Today’s stay was not unexpected and will have no impact in this or next year’s budget.
* From We Are One Illinois…
This stays the legislation in its entirety so that the pension systems and other defendants are enjoined from implementing or administering any provisions of the act until further order of the court or the court issues a final ruling on the merits of the act’s constitutionality.
The court found that plaintiffs have shown a likelihood of success on their contention that Public Act 98-599 violates the Pension Protection Clause of the Illinois Constitution.
“This is an important first step in our efforts to overturn this unfair, unconstitutional law and to protect retirement security for working and retired Illinois families,” said Michael T. Carrigan, president of the Illinois AFL-CIO, on behalf of the coalition. “We are pleased the court prudently chose to halt implementation of these sweeping changes, which have caused so much fear and uncertainty and are likely to be overturned.”
Discuss.
posted by Rich Miller
Thursday, May 15, 14 @ 8:24 am
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Thank you Judge Belz for your first step in upholding the constitution.
Comment by PublicServant Thursday, May 15, 14 @ 8:30 am
Hooray
Comment by Sir Reel Thursday, May 15, 14 @ 8:39 am
Just the beginning!!
Comment by SURS Member Thursday, May 15, 14 @ 8:43 am
Thank you Your Honor.
Comment by SO IL M Thursday, May 15, 14 @ 8:43 am
Regardless about how you feel about pension reform, it seems to me putting a hold on it until the courts are done is a good idea.
Comment by OneMan Thursday, May 15, 14 @ 8:44 am
We Are One overstates the implications of the judge’s ruling.
He found that a stay was appropriate due to apparent confusion and uncertainty — since the “likelihood of success” that the law will be found unconstitutional is greater than zero.
Everybody spins.
Comment by Walker Thursday, May 15, 14 @ 8:45 am
The co-author of the bill says even she didn’t think the bill should take effect until the Illinois Supreme Court ruled on it. Now there’s some confidence! Look, you either believe that there’s an independent state judiciary or that the supreme court judges are going to do their party’s bidding. If it’s the former, this bill is toast. If it’s the latter, it may be toast, it may not be toast, but you can easily envision a scenario where either scenario benefits the Dems. Either they see the state budget crisis as so dire that doing something on pensions was innevitable and this law goes as easy on the unions as they could while pushing back the day of reckoning, or they wanted to show that they were prepared to do the “responsible thing” and not get tarred as puppets of the union but DARNT the state supreme court won’t let them so they’ll just have to do something else (after the election).
Comment by lake county democrat Thursday, May 15, 14 @ 8:46 am
Please, let’s avoid drive-by comments like “Thanks,” or whatever. If you don’t have anything substantial to add to the discussion, then please don’t comment.
Comment by Rich Miller Thursday, May 15, 14 @ 8:49 am
July 1st the sum of 4% of my gross pension payment will be deducted and set aside waiting for a ruling by the Supreme Court on insurance co-payments. I can’t help but think the the court will ultimately rule in favor of the State on this case and rule the pension reform as unconstitutional. If it plays out like that then I doubt it’ll take long for the legislature to tweak the insurance provision and gut the COLA system. Something along the lines of a progressive increase in the percentage of insurance premium co-payments. Hopefully I’m all wet on my thinking…
Comment by Mouthy Thursday, May 15, 14 @ 8:53 am
To be decided by the courts on Nov 5, 2014.
Comment by Stuff happens Thursday, May 15, 14 @ 8:54 am
This is round one. No one can say for sure how it will turn out in front of the Illinois Supreme Court. But, here’s some questions to ponder??? Does those who are expecting pensions worry that there may come a time when there’s no more money to send out pension checks? Are retired government workers planning on a judge to raise taxes for their pensions at a certain date? Because it has been done before for schools.
http://articles.latimes.com/1987-11-06/news/mn-12884_1_kansas-city
Comment by Steve Thursday, May 15, 14 @ 8:57 am
Steve
I am ok with my retirement pension being taxed. I will still be receiving state services such as good roads, good schools to train the people I come in contact with, and so forth.
I am also ok with having to pay for health insurance. I am not going to have 20 years in, so always knew I would have to pay something. I have always seen retiree health insurance as a separate benefit from the pension benefit. I don’t think retiree health insurance is covered by the constitution clause that discusses pensions. I am grateful to have access to retiree health insurance at all.
I will go farther and say that retiree health insurance should only be available to those who retire and immediatey start collecting their pension…no coming back after 10 years someplace else and getting back on the state health insurance plan.
Comment by mythoughtis Thursday, May 15, 14 @ 9:05 am
I think this was the obvious move to make; it’s unfair to leave so many potential retirees in limbo.
Comment by Wensicia Thursday, May 15, 14 @ 9:08 am
@ - Steve - Thursday, May 15, 14 @ 8:57 am:
= Does those who are expecting pensions worry that there may come a time when there’s no more money to send out pension checks?+
This running out of money idea is a “straw man”.
The state does not run out of money. It brings in billions of dollars and has the authority and power to make huge changes in budget, tax, policies effecting busines climate etc. It is where the state wishes to spend that money is the key. You don’t get to spend billions from the pension system on other programs and them claim the system is broke and we need those already retired to give up billions to make it solvent. The idea that we might want to let the state get by with diminishing pensions because what if some day they ran out of money makes no sense. The state can and perhaps should negotiate with current employee unions and make huge changes or lay off thousands etc. The state has many options, but one of them should never be to change the rules after the game is complete and diminish pensions of those already retired. Given enough years, the Tier II system will bring in more dollars to the state than they pay out. The state can restructure it’s pension debt if it wished.
Comment by facts are stubborn things Thursday, May 15, 14 @ 9:09 am
@Steve - Thursday, May 15, 14 @ 8:57 am:
=This is round one. No one can say for sure how it will turn out in front of the Illinois Supreme Court. But, here’s some questions to ponder??? =
Totaly agree. This ruling has little to bear on any final ruling. A good ruling yes, but in no way predicts the future.
Comment by facts are stubborn things Thursday, May 15, 14 @ 9:11 am
Many people forget that even if the Illinois Supreme Court rules against pension reform, this is far from over. Illinois workers could go into federal court because this deals with contracts: at least that’s what I’ve been told. We maybe several years away from any sort settlement of this issue.
Comment by Steve Thursday, May 15, 14 @ 9:13 am
One of the problems you are seeing with the Illinois college prepayment program is people have no confidence that the state will uphold it’s end of the contract. If the state welches on pensions when the IL Const. clearly states it can not, what is stoping the state from saying saying to parents in 15 years, sorry we just don’t have the money. You must be a land of laws! Contracts matter and are part of a good busines climate. There must be faith in our legal system and our rule of law.
Comment by facts are stubborn things Thursday, May 15, 14 @ 9:14 am
Good ruling, as withholding less would really cripple the pension systems if the SC rules the pension law as unconstitutional.
Comment by nicky Thursday, May 15, 14 @ 9:24 am
Is there a link to the judge’s order?
Comment by prisoner of cook Thursday, May 15, 14 @ 9:43 am
That implementation can be deferred for a few years while constitutionality is determined would seem to undermine any emergency-powers justification for diminishing pensions given that apparently the State can make full pension payments and have a balanced budget during this period.
Extending the income tax rates is a key component. This ruling provides additional incentive to unions and others to support the permanent extension. Is it time for them to show the Speaker some love?
Comment by east central Thursday, May 15, 14 @ 9:54 am
Here’s what is currently listed under case 2014-MR-000001 (partial selection):
“… Arguments heard on Motion of We Are One Illinois Coalition Plaintiffs’ for a Temporary Restraining Order and Preliminary Injunction; all other parties join in the motion. The Court grants the motion and signs a preliminary Order Granting Motion for Temporary Restraining Order and Preliminary Injunction. Parties are to submit a cleaned up order. Matter remains set for hearing on May 22, 2014 at 1:30 PM in front of the Honorable Judge JOHN W. BELZ. …”
Comment by RNUG Thursday, May 15, 14 @ 9:56 am
AG spokesperson talking about “goals” and “burdens” seems strange, whiny and unprofessional. Why gig the Court and why offend part of the public at this point ?
Why not: “The Court has Ruled on a Procedural question; The Status Quo has been Maintained ; The Attorney General’s Office Looks Forward to Litigating this Matter and to a Final Decision on the Merits of this Pension Legislation “.
Comment by x ace Thursday, May 15, 14 @ 9:58 am
In order to secure the entry of a temporary restraining order, it is necessary for the plaintiffs to demonstrate a likelihood of prevailing upon the merits in terms of the overall result of the litigation (i.e. winning and obtaining an injunction). This is a high bar and the plaintiffs met their burden.
While everyone agrees that Illinois needs to put its finances in order, this hastily assembled legislation passed and enacted on the premise that “Well, we had to do something,” appeared unconstitutional on its face. Even the State Senator Biss has been distancing himself from elements of the law that he sponsored, claiming that he was not aware of some of its provisions.
In Illinois colleges and universities, instructors and employees are making sudden decisions to retire because the law contains language that would seem to reduce their years of service credits if they stay put. Elsewhere community colleges are issuing letters to part-time instructors who are receiving SURS payments while teaching one or two classes per semester and informing them that they are no longer eligible to teach in the Fall due to the pension law. Of course, the law does not actually say that, but the colleges do not want to track the earnings of part-time faculty to see that none of the instructors has violated the earnings cap. Too much paperwork and why risk possible penalties for mistakes, so hundreds of adjuncts are being kicked out in the name of expediency.
It is a mess.
Comment by Upon Further Review Thursday, May 15, 14 @ 10:03 am
Regardless of your position on the “pension reform” law or this specific ruling, it is a necessary step one in the process. It also means that, should the State eventually win (unlikely IMO), the ISC will have to specify an effective date for the law to take effect.
The one thing that did surprise me a bit was the speed of the ruling; I pretty much expected any action to be part of any orders on May 22.
And as far as the health insurance / Maag / Kanerva, I still believe that was also a contract since it had an offer (free health insurance on retirement if you work 20 years) and an acceptance (people worked the 20 years and retired). I also think it may not be protected under the constitution’s “pension clause”. I suspect the court is still wrestling with the issue of retroactive modification of it being both a written and implied contract … and that’s why we haven’t seen an opinion.
Lastly, on both issues, it is not a slam duck that the retirees could get it into federal court. Unless the state ruling is something blatant like “no contract exists, period” (ala the Nardulli ruling), I suspect the Feds will lean towards a hands off approach. There is some federal precident for that when it comes to state’s as employers dealing with their employees.
Comment by RNUG Thursday, May 15, 14 @ 10:09 am
RNUG
What is your HO on the health care ruling as far as the following: If overtunred, will it be for all those who had 20 years when the law attempted to change things or for those who retied under the 20 year law etc. If ruling goes against the state, for whom can they make health care retirment changes.
Comment by facts are stubborn things Thursday, May 15, 14 @ 10:18 am
A possible judicial outcome to the pension case is that the courts will exempt retirees from any changes but will permit some modification to benefits for those not yet retired.
Thus there may be a mass exodus over the next couple of years ahead of a final ISC ruling on pensions.
The ruling in the health insurance case may reinforce this if the court protects this benefit for retirees only.
Comment by east central Thursday, May 15, 14 @ 10:21 am
I know this is big news, but from a legal perspective this was a pretty straightforward call. An Injunction is issued to maintain the status quo. To get it you need to show irreperable harm, and that you have a likelihood of success on the merits. The likelihood part is actually a lot lower threshold then it sounds, it basically mean you need a colorable cliam that if your argument is correct, you would win.
Give the impact to retirees the irreperable harm is easy, this would be a nightmare to unwind if it was struck down. The consitution give clear langauge, so likelihood of success is also pretty clear. The Gov and general Assembly as basically asking the court to break new territory and for the firts time ever, use a States Police Power to set aside its own constituion as-well-as said constituions provisions for altering or ammending it.
In short, if this is successful we can ammend the State consitution at will, with a simple majority of the GA and a declartion of a neew to use the State police powers. This should firghten people more then the pension issue. We designed our State constitution to have a significant process to be followed if we want to alter it; this bill sets aside that entire process. No more consitutional conventions, majorities or need to vote on changes.
Comment by Ghost Thursday, May 15, 14 @ 10:25 am
RNUG,
Your observation is correct that a TRO could be entered and the defendant could later win during the case in chief, but the odds are against it.
Comment by Upon Further Review Thursday, May 15, 14 @ 10:26 am
RNUG - You posed a question and partial answer to a question that has been on my mind. This is a temporary restraining order and preliminary injunction. Assuming the ISC rules at least part of the new pension law constitutional, couldn’t they also rule those parts are retroactively applied back to the original effective date June 1, 2014. For example, an employee 50 or older who is working on or after June 1, 2014 is subjected to one skip in a cola. But if she retired prior to June 1 she would not be subject to a cola skip. I could use other examples but this was the easiest to explain.
Comment by Capo Thursday, May 15, 14 @ 10:33 am
I have been retired almost four years now. I hope we can get some answers from the court in the next year on this. The uncertainty is the worst part of all of this. If this goes past the first of the year will we receive our annual raises compounded or will the state want to place this money in an escrow account in case they win? I have lost 4 percent of my total pension effective July 1,2014 due to the forced payment of my healthcare that was supposed to be free after 20 years. When I started working it was free after 8 years.
Comment by Nieva Thursday, May 15, 14 @ 10:35 am
Upon Further Review I am not sure why you sya that. Something like 70% of TRO’s end up with the “Defendent” prevailing. Statistically, without focus on the merits of a case, most TRO’s cases end in a loss.
Comment by Ghost Thursday, May 15, 14 @ 10:40 am
Given the long wait for a Maag decision and the general slow pace of our courts, those who predict (tongue in cheek) a decision after the fall legislature elections are rosy in their “optimism”. Does anyone really see this issue being resolved in the courts before mid-2016?
Comment by Diogenes in DuPage Thursday, May 15, 14 @ 10:40 am
@Ghost:
I said it because this is a very poorly constructed law. I cannot envision any outcome where this law is upheld in its entirety.
Comment by Upon Further Review Thursday, May 15, 14 @ 10:45 am
==I also think it may not be protected under the constitution’s “pension clause”. I suspect the court is still wrestling with the issue of retroactive modification of it being both a written and implied contract … and that’s why we haven’t seen an opinion.==
I don’t think that would be a problem. The pension clause is written the way it is to say “the contract clauses of the federal and state constitutions apply.” If the court has determined that the retiree health insurance provision is a contract, it would have the same contract clause protection whether the pension clause applied or not.
Comment by Anon. Thursday, May 15, 14 @ 10:47 am
=== It also means that, should the State eventually win (unlikely IMO), the ISC will have to specify an effective date for the law to take effect. ===
RNUG, that would make sense, but we don’t know that for sure. During the whole debate on a stay to prevent university exodus, I’ve wondered if the law were upheld by the SC what guarantee the folks who stay in their jobs pending a ruling would have that some new effective date would be ordered that would give them sufficient time to retire as they had planned. I’m not hearing any lawyer saying that these folks will be ok. I’m thankful that I’m already out. Had that not been the case, I think I would still retire by June 1st.
Comment by Norseman Thursday, May 15, 14 @ 10:59 am
I wonder, on May 22, whether the judge could say that if the law, or any parts of it are upheld, the effective date of implementation will be 3 months after the ISC decision. This would eliminate the worry that people might have about being on the wrong side of an adverse ruling, otherwise causing many of them to retire early.
Comment by PublicServant Thursday, May 15, 14 @ 11:00 am
=== If this goes past the first of the year will we receive our annual raises compounded or will the state want to place this money in an escrow account in case they win? I have lost 4 percent of my total pension effective July 1,2014 due to the forced payment of my healthcare ===
The insurance payments have been put into an escrow account because no stay was granted by the judge. If the state loses Maag, the we will receive money back from that escrow.
With respect to the SB 1 challenge, it is my understanding that the TRO makes an escrow account a moot issue in that the state can’t decrease the AAI since the law doesn’t take effect while that order remains in effect.
Comment by Norseman Thursday, May 15, 14 @ 11:09 am
Rich, it was interesting to watch the tension develop between “We Are One” and SUAA and Lisa Madigan before the judges ruling. Is that a story you are going to tell?
Comment by Makandadawg Thursday, May 15, 14 @ 11:09 am
Public Servant, I see the effective date as an issue that has to be resolved by the SC. What I want to hear from Judge Belz on May 22nd is that SB 1 is unconstitutional. I can hope, can’t I.
Comment by Norseman Thursday, May 15, 14 @ 11:11 am
While in this instance I do think this ruling will foreshadow striking down the law, the other impact is that it should dispel the myth/bluff that Madigan has all the judges in his pocket. If so, that stay never would have been granted.
Comment by Cold Thursday, May 15, 14 @ 11:14 am
RNUG, thanks for your even-handed response and interpretation of the ruling. I realize you have skin in the game (honestly, we all do to one extent or another), so your response is even more appreciated. I think the judge did the reasonable and fair thing considering the pending law suit. If for no other reason than to keep everything in order until more certainty exists how to proceed. Nekritz said as much. I don’t know if it has any bearing whatsoever on what the ISC will or won’t do, but I do know people have to make very important life time decisions and deserve a level of certainty before making those important decisions. Clumsy as it is at times, the system is working with this stay.
Comment by A guy... Thursday, May 15, 14 @ 11:19 am
Norseman and PublicServant you are expressing my sentiments exactly. This being a temporary injunction by a circuit court judge, to paraphrase Hillary Clinton, “what difference does it make” to those with the ability to retire prior to June 1. If the ISC rules in favor of the law why couldn’t or even why wouldn’t they make the ruling retroactive to the original date of the law’s effect? This is why I still can’t understand how this affects someone on the bubble of deciding whether or not to retire before June 1. It seems to con-volute this decision, not ad clarity. Can anyone shed any light on this?
Comment by Capo Thursday, May 15, 14 @ 11:20 am
- Norseman - Thursday, May 15, 14 @ 11:11 am:
Don’t expect much May 22. That’s just a case management conference. Basically sort out paperwork, set up a schedule, etc.
Comment by RNUG Thursday, May 15, 14 @ 11:22 am
Isn’t today—May 15th—the day on which the State has to file its response to the suit? Will that give us a good idea of the arguments that the State will rely on? Or is it just pro forma, with the real argument to come later? (I’m pretty curious to see what argument the State thinks it can make against what seems, to the lay eyes, to be the plain sense of the words in the Constitution.)
Comment by UIC guy Thursday, May 15, 14 @ 11:29 am
- facts are stubborn things - Thursday, May 15, 14 @ 10:18 am:
I’d be guessing. My opinion is that those already retired and (previously) receiving the premium free health insurance should continue to receive it because they have fulfilled all the terms and conditions, both working 20 years and retiring. It becomes a bit more quesitonable if you have 20 years but are not retired, but I still think those people should prevail also. Then there are the people who don’t have the 20 years and are not retired; all we have as a guideline there is the previous ruligns about “rules at time of hire” but those decisions were (usually) under the pension clause as opposed to contract law. Long way of saying I think it’s about 60/40 on the retirees (eventually) winning the health insurance but only about 50/50 for those still working. One thing I want to caution about is the current Kanerva appeal likely will not be the final word; the court could just send it back with an order to determine of a contract exists and we pretty much start all over on the case.
Comment by RNUG Thursday, May 15, 14 @ 11:30 am
=== Isn’t today—May 15th—the day on which the State has to file its response to the suit? ===
Yes.
=== Will that give us a good idea of the arguments that the State will rely on? ===
Yes, but there will be additional briefs responding to plaintiff briefs and motions that may expand on some points. And then, there will be the verbal arguments before Judge Belz. I’d love to be there.
Comment by Norseman Thursday, May 15, 14 @ 11:33 am
- Capo - Thursday, May 15, 14 @ 10:33 am:
While you never know 100%, given that this court has chosen to maintain the status quo due to the possibility of irrepairable harm, we can assume the final ruling by the ISC would consider the court ordered delay and, I would expect, set a new implementation date.
One example of that (from the other side) was a court resetting the implementation date for CCW.
Comment by RNUG Thursday, May 15, 14 @ 11:39 am
- Anon. - Thursday, May 15, 14 @ 10:47 am:
Got to get a judge to say it is a binding contract first …
Comment by RNUG Thursday, May 15, 14 @ 11:40 am
- east central - Thursday, May 15, 14 @ 10:21 am:
I agree that is a possibility but it would fly in the face of most of the previous ISC pension clause rulings.
Comment by RNUG Thursday, May 15, 14 @ 11:45 am
“Does those who are expecting pensions worry that there may come a time when there’s no more money to send out pension checks? Are retired government workers planning on a judge to raise taxes for their pensions at a certain date?”
1) No and 2) if that is what it takes. As a pensioner I don’t care one whit where they get the money. IT IS and will remain LAW, not by legislation but by CONSTITUTION. GET… OVER… IT!
Comment by Pensioner Thursday, May 15, 14 @ 11:55 am
Can everyone agree that when a state, county, or municipalities promises in writing that they will put a certain amount of money away for a specific pension fund that they do it?? No more pension holidays?
Comment by Steve Thursday, May 15, 14 @ 11:56 am
Steve, people can agree that doing what you say you’re going to do is a good and honorable thing to do, but we’re talking about politicians here, so what’s your point?
Comment by PublicServant Thursday, May 15, 14 @ 12:05 pm
Steve,
I wish this were the case. Unfortunately the ISC ruled that the Pension Clause does not require the State to make the actuarially required payments on an annual basis.
Comment by east central Thursday, May 15, 14 @ 12:05 pm
=== Can everyone agree that when a state, county, or municipalities promises in writing that they will put a certain amount of money away for a specific pension fund that they do it?? No more pension holidays? ===
Steve, I can agree with your statement that government should do what they promise. I’ll go even further and say that government should do what is required in the constitution. The problem is that we have elected officials who didn’t follow through on that promise and constitutional protection and we’ll have future elected officials who will not agree. Contrary to the fertilizer that has been spread about SB 1, it doesn’t prevent future pension holidays. Future legislatures have and in my opinion will - if this law is allowed by the SC - change the law in the future to authorize such holidays.
Comment by Norseman Thursday, May 15, 14 @ 12:13 pm
- PublicServant -
My point is in all companies in the S&P 500 that have pensions, the SEC comes knocking at your door if you get under 80% funded. Now, I know, the SEC doesn’t regulate state and municipal pension funds but… how can a pension plan continue without the least bit of basic due diligence? If the ISC is so lax about this , I wonder about the outcome of this lawsuit.
Comment by Steve Thursday, May 15, 14 @ 12:17 pm
Steve, Private sector companies can declare bankruptcy, and regularly do to avoid pension liabilities, thus the need for very tight funding requirements. The state is a sovereign entity that exists in perpetuity and cannot declare bankruptcy. Employees have sued and asked the courts to force the state to make annual payments. The court stated that there is nothing in the constitution that specifies how the state can fund the pensions, but they said that they must be paid when due out of incoming revenues if the funds run dry.
Comment by PublicServant Thursday, May 15, 14 @ 12:25 pm
@ Steve. States and municipalities have the taxing power which they can use at any time to raise money. That is why they are not regulated in the same manner as a private business. And the same answer for why the state and municipalities still have to pay even if the pension funds run dry.
Comment by anon Thursday, May 15, 14 @ 12:25 pm
Cold you are mixing apples and oranges (pun intended)
The madigan influence has been over the Supreme court, where he helped a number of the judges get elected.
its not a Belz thing. The TRO decision does not really foreshadow anything, other then the relatively easy burden for a TRO has been met.
But as i have said before, we should all be very afraid of this maneuver to change the constituion with a bill, and bypassing the consitutions specific requriements for changeing or altering its contents.
if this bill is upheld, then our consitution is only as strong as the next bill the general assembly decides to push through. it becomes a weak document subject to change at a whim…
Comment by Ghost Thursday, May 15, 14 @ 12:28 pm
Also Steve, it’s not a matter of the ISC being lax. They just interpret the law, and rule on it’s constitutionality. The outcome of the suits filed against SB1 should be welcome. Once thrown out, maybe the state will finally consider constitutional ways, many of which have been discussed on capfax in the past that will right the state’s financial course.
Comment by PublicServant Thursday, May 15, 14 @ 12:29 pm
- Steve - Thursday, May 15, 14 @ 12:17 pm:
What the ISC basically said in the past was the pensions have to be paid when due … so the ISC acknowledges the pensions are a valid debt of the state. What the ISC has failed to do is specify EXACTLY how the pensions should be paid for, stating that is a political decision that falls within the power of the General Assembly and deferring to the GA due to seperation of powers.
So the GA has lots of choices including fully funding it, partially funding it, or not funding it and deciding it will be a “pay as you go” operation where the pension payments have to come out of General Revenue each year.
Aside from some federal reporting rules (without any penalities to speak of) which are getting stricter and closer to private sector rules, the only constraint on how the state funds the various pension systems is the state’s desire to borrow money. The bond houses want to know for sure they will get repaid and don’t like huge unfunded debt (the pensions) hanging out there. The bond houses also go to every possible length to made sure their debt will get paid before the pensions. Depending on how different people interpert the current laws, the two debts are either co-equal or the bond houses have to be paid first. (Note: that bonds paid first language was also included in SB0001). If it ever gets to the point of the state having to choose to default on actual pension payments (not the prefunding payments today) or actual bond repayment, that will be a battle royal between the two parites, both of whom will have both contract law and constitutional protections on their side.
Comment by RNUG Thursday, May 15, 14 @ 12:39 pm
Steve - One other thing I should have noted. Unlike the private sector, government employees do not have a federal Pension Benefit Guaranty Corporation safety net should their employer go bankrupt. Quite a few of the retirees don’t even have Social Security. It’s the TRS/SURS/JRS/GARS/SERS pension or it’s nothing.
The one exception - as regular readers know, most SERS retirees also have SS but they get lower benefits from the state compared to non-coordinated (non-SS) members.
Comment by RNUG Thursday, May 15, 14 @ 12:55 pm
The fallout continues and it is not only full-time faculty and staff members being hit. Part-time instructors are being tossed under the pretext of compliance with the new law: Harper College has rewritten its contract with the adjunct faculty union to comply with the new law; the College of Du Page, Oakton and the City Colleges of Chicago are using the new law as a device to rid themselves of veteran adjuncts, who are also SURS annuitants, and replace them with newer instructors who will earn lesser wages.
It is cheap and shabby behavior on the part of the administrators who were the real targets of the legislation based upon their double dipping and platinum pensions. Of course, the administrators are claiming that the new pension law voids previous contracts.
Good luck to the judges who will have to sort through this mess.
Comment by Upon Further Review Thursday, May 15, 14 @ 2:30 pm
“Fitch Ratings issued a statement Thursday saying experts expected a strong legal challenge to the overhaul that became law last fall. And it pointed out that no one is counting on savings from the bill any time soon.”
Translation: We knew the law didn’t allow you to do what you did, but we wanted you to do it anyway. If the Supreme Court upholds the constitution, then we’ll go ahead and ding you.
Comment by Norseman Thursday, May 15, 14 @ 3:53 pm
Better translation:
“Try a Hail Mary; it might work …”
Comment by RNUG Thursday, May 15, 14 @ 3:58 pm
I am just a simple country lawyer, but I think the fact that Illinois continues on, despite the TRO, and without adding the projected savings to our budget, will eventually completely undermine the state’s police powers argument.
As a legal strategy, I would have argued for spending the projected savings…in fact, state law seems to require COGFA to do so.
Comment by Yellow Dog Democrat Thursday, May 15, 14 @ 4:15 pm
RNUG
Thanks you.
Comment by facts are stubborn things Thursday, May 15, 14 @ 4:22 pm
Facts,
You’re welcome … but it’s only a guess. We still have to get someone to rule in Maag / Kanerva that there was a contract.
There was a directed order in Marconi v Joliet to (more or less) assume a contract exists and make a determination but that has been on hold. If you haven’t seen this before, it will make interesting reading (16 pages):
http://www.state.il.us/court/Opinions/AppellateCourt/2013/3rdDistrict/3110865.pdf
After reading it, you’ll also understand why I think the current Kanerva appeal may not be the end of the health insurance lawsuit.
Comment by RNUG Thursday, May 15, 14 @ 4:44 pm
Norseman -
You use the term “verbal argument” when you should write “oral argument.” Get with the program, will you? Verbal communication means with words (written and spoken); oral communication means spoken; non-verbal communication means without words, like how you might roll your eyes when you read this.
Comment by Chicago Publius Thursday, May 15, 14 @ 4:45 pm
- Yellow Dog Democrat - Thursday, May 15, 14 @ 4:15 pm:
IMO, all the other proposed spending (Obama library anyone, tax relief, etc.) has already undermined any chance to present that dog with a straight face …
Comment by RNUG Thursday, May 15, 14 @ 4:48 pm
Chicago Publius, I guess Rich will have to lower my posters’ salary because of grammatical errors.
Comment by Norseman Thursday, May 15, 14 @ 4:49 pm
- Norseman - Thursday, May 15, 14 @ 4:49 pm:
If Rich lowers your salary, then I’m in real trouble with my typos …
Comment by RNUG Thursday, May 15, 14 @ 4:56 pm
Retroactive effective dates for any HR transaction that has monetary repercussions that must be determined by an arbitrary time limit is a human resource nightmare and is never taken under consideration by those that wield power to make these decisions. Ugh.
Comment by persecuted Thursday, May 15, 14 @ 4:56 pm
rnug - Even if Kinerva wins, what would stop the State from giving we 20-year plus retirees premium-free insurance which becomes progressively more lousy each year to the point that no one would want it anyway? It seems like they are on that path even without a court decision.
Comment by Kimocat Thursday, May 15, 14 @ 5:20 pm
- Kimocat - Thursday, May 15, 14 @ 5:20 pm:
Nothing. Although I have to admit, after reviewing the Medicare Advantage programs some of us (like my mom) were forced in to, they acutally have some good points along with a few bad points.
FWIW, higher deductibles and co-pays are a fact of life everywhere, not just with the state plans. We SERS retirees still have a really good (at least gold plated) plan. A friend just got hired by the State and even though they already had insurance with HA, they were amazed at how much better the State’s HA plan is.
Comment by RNUG Thursday, May 15, 14 @ 5:33 pm
=A friend just got hired by the State and even though they already had insurance with HA, they were amazed at how much better the State’s HA plan is.=
My wife works at Carle Hospital and we have been on HA through my employment at the Univ. of Illinois and then in retirement because the plan is much better that what she could get through her job.
Comment by Retired UIUC Thursday, May 15, 14 @ 9:00 pm
- persecuted - Thursday, May 15, 14 @ 4:56 pm:
Even if a retroactive effective date is unlikely in the event that the Bentz court upholds SB1, what does past practice suggest about the choice of an effective date? Could it be immediate upon the court’s decision or a very short time beyond?
If yes, those that postpone retirement might not be able to retire before the effective date and would lose ability to recover excess contributions to the retirement system (this might be specific to SURS MP formula) and avoid AAI skip years. The SUAA tentative agreement, although limited and presumably now moot, had very specific language to protect against this scenario. I don’t see similar protection in the TRO.
I think the duration of the TRO has been overstated in the press and elsewhere. The TRO might not hold beyond Bentz’s decision if he decides to uphold. That’s not the same as “until constitutional challenges can be decided by the courts,” as claimed in U of I Pres. Easter’s email yesterday. The ultimate decision won’t happen until the ISC makes a final ruling.
Comment by X-prof Friday, May 16, 14 @ 2:02 am
State filed it’s response to law suits. Story in SJR. “In its response to lawsuits filed trying to overturn the pension reform law, the state said that “in light of the magnitude of the pension problem and all of the other efforts the state has made to date, the (reform law) represents a valid exercise of the state’s reserved sovereign powers to modify contractual rights and obligations.” The state acknowledge under funding, but claims a whole litany of reason why the pension systems are in the shape they are in. IMO their claims of under performing stock markets etc may be valid for the past 6 or 7 years but not the past 40 to 45 years of under funding. Weak argument in my non lawyer opinion
Read more: http://www.sj-r.com/article/20140515/News/140519571#ixzz31sEP1wQe
Comment by Pacman Friday, May 16, 14 @ 5:51 am
I think all the states arguments arguments are weak, certainly any stock market argument since 2008 anyway. No one can fail to fund retirement funds then say it isn’t my fault there is no money in the retirement fund.
http://www.macrotrends.net/1358/dow-jones-industrial-average-last-10-years
Comment by I B Strapped Friday, May 16, 14 @ 7:29 am
And the argument that “It’s your fault for not dying fast enough.”, so now we’ve got to starve you a bit while you’re alive is even more lame. There is very little general increase in lifespan. Lifespan has increased for the top 10% of income earners, however. But to use that as an argument that the average pensioner is living longer is an outright lie.
Comment by PublicServant Friday, May 16, 14 @ 7:36 am
RNUG
Great read…thanks for the link.
Comment by facts are stubborn things Friday, May 16, 14 @ 7:39 am
- Norseman - & - RNUG -,
Great work. Always learning.
To the Post,
The interesting part in all this might be the interpretation of the ruling, and not do much the ruling itself. The logic of this decision, either way, may dictate more how legislation is crafted for Pensions or Pension reform, which should have been the consideration in the first place…
Great stuff, all.
Comment by Oswego Willy Friday, May 16, 14 @ 8:02 am
I think an important factor in the TRO, as well as the ensuing court action, is that the Police Power has been used to modify contracts. It has not been used to modify a state constitution.
The recent Arizona decision pointed out the constitution language didn’t just say the pensions are a contractual obligation - it also says the benefits shall not be diminished nor impaired. This was also alluded to in Illinois in the Blago decision and the recent decision for Township officials.
While one might argue that the State can exercise police power to modify a contract, one can’t argue that the State can use police power to ignore specific language in the constitution.
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