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RNUG’s latest pension thoughts

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* From our revered commenter RNUG (aka Retired Non-Union Guy)…

I was chatting with a friend the other night who has a bit of insight into how judges tend to think. We were kicking around what we think the Illinois Supreme Court might do on SB-1 and came up with three plausible scenarios.

1) The Supreme Court rules that the pension clause means what it says, period, and the pension is not subject to a “police powers” claim.

2) The Supreme Court rules that the pension clause could be subject to a “police powers” claim if a “fiscal emergency” was clearly demonstrated but, based on the bill itself only negating one class of Illinois debt (the pensions), was found that no “fiscal emergency” existed to make the claim.

3) The Supreme Court rules that the pension clause could be subject to a “police powers” claim if a “fiscal emergency” was clearly demonstrated but the court, based on the information presented in the appeal, was unable to determine if a “fiscal emergency” exists and remands it to the originating court to determine if a “fiscal emergency” as defined in the “reserved sovereign powers act” actually exists.

I think we get #2 but my friend, who argues persuasively that judges avoid a decision whenever possible, favors #3.

It’s all speculation, of course, but what are your own thoughts about RNUG’s e-mail?

posted by Rich Miller
Wednesday, Feb 11, 15 @ 9:17 am

Comments

I think that the Supreme Court has telegraphed its position and, as a result, will find SB 1 null & void.

Comment by Nick Naylor Wednesday, Feb 11, 15 @ 9:24 am
1. Means what it says. Consistent with prior rulings and constitutional convention. Punts funding issues back out of the courts, back to the political branches where they belong.

Comment by Anonymous Wednesday, Feb 11, 15 @ 9:25 am
My thoughts remain that #1 is the only logical choice.

To me a fiscal emergency is something that is created by unexpected circumstances beyond anyone’s control. This situation was created by the legislature themselves by not making scheduled pension payments. Using that logic, fiscal emergencies could be created at will by failure to provide adequate funding.

Comment by Stones Wednesday, Feb 11, 15 @ 9:26 am
The problem with 2 or 3 is that either encourages the State to continue on the path of self-destruction. If they have no choice but to fund the pensions, then the State (might) actually do so. If they are given an emergency out, the State can keep trying again and again to reduce pensions until the court finally says they’ve reached the point of emergency. I think the court will take option 1 which hopefully moves the State to take practical steps to live up to its obligations.

Comment by Demise Wednesday, Feb 11, 15 @ 9:28 am
#1. I got my Kanerva notice yesterday. I can see the court saying “what part of Kanerva didn’t you understand”.

Comment by prisoner of cook Wednesday, Feb 11, 15 @ 9:29 am
After all the judicial bashing from the new Gov, they go with #1 and send it back to BR and say “YOU FIX IT “!!

Comment by Secretariat Wednesday, Feb 11, 15 @ 9:30 am
If the court is going to give any guidance, which some seem to think it will, the court will find that the state has other powers, which should be exercised before police powers. And that is the power to increase taxes to fulfill its pension obligation.

Comment by Cheswick Wednesday, Feb 11, 15 @ 9:30 am
I go with option 1. The SC has already given a fairly firm statement to show its thinking in the Kanerva case. Also how can any state claim a fiscal crisis as they have the power to allocate funds and the taxing power to alleviate a crisis. If they don’t exercise the taxing power, then they have the authority to make budget allocation changes to meet constitutional obligations and cut elsewhere.

Comment by illlinifan Wednesday, Feb 11, 15 @ 9:31 am
The supremes climbed so far out on a limb with their “plain-language-of-the-Constitution” decision in Kanerva they would be radically reversing themselves if they did anything but option #1.

Comment by Tony T. Wednesday, Feb 11, 15 @ 9:31 am
The Supreme Court tends to decide legal issues based on a plain reading of the Constitution and legislation. It has repeatedly refused to look at other indicators of “intent” if the words on paper can be enforced as written.
The problem with scenarios 2 and 3 are that they invite undefined standards and the Court will not be willing to fill in the blanks as to what constitutes a “fiscal emergency” — words that do not appear in the Constitution’s pension clause.
RNUG has some great insight and had access to good facts. On this issue, however, I disagree that options 2 or 3 will be considered. Instead, we are likely to see a ruling that either cuts a bright line holding that the pension clause means what it says or that it does not prevent changes by legislation. The second ruling on that analysis would have to overturn all of the precedent relied on in Kanerva.
I predict a clean ruling that the pension clause prohibits reductions in pension benefits for any person already in the pension system.

Comment by SkeptiCal Wednesday, Feb 11, 15 @ 9:32 am
I used to agree with the general idea that “this will make the state of Illinois get its act together, finally.”

Then I reconsidered the actual history of IL, and I had a good laugh at myself. Not tomorrow, certainly, but if we continue with the pension clause and even no fiscal emergency escape hatch, a future generation of Illinoisans will most likely end up right back in this mess.

Comment by ZC Wednesday, Feb 11, 15 @ 9:32 am
If police powers could be used but the state hasnt met that criteria yet that plays right into rauners hand.Look for him to lobby skipping the pension payments in his term

Comment by foster brooks Wednesday, Feb 11, 15 @ 9:34 am
- ZC -

History is definitely on your side. The more or less good news is the State has managed to stumble along and pay the actual pensions for longer than our lifetimes.

Comment by RNUG Wednesday, Feb 11, 15 @ 9:36 am
I could see the court getting hung-up on what constitutes a “fiscal emergency”. I haven’t seen anything that would support an argument that this is a fiscal emergency but this may very well be a case of first impression with no established precedent.

Having said that the reason that the pension liability hasn’t been fully funded was not due to unforeseen or unexpected circumstances. It was either due to a lack of revenue or a desire to direct the intended revenue towards other programs and initiatives.

There’s nothing to suggest that another fiscal emergency prevented the GA from funding the pension program. More importantly even if this is a “fiscal emergency” there seems to be a logical but politically unpopular solution - raise taxes.

Comment by pundent Wednesday, Feb 11, 15 @ 9:38 am
Regarding Scenario #2, I don’t think a pension-only, single-class “fiscal emergency” could plausibly be declared unless annuitants were in imminent danger of not getting their pension checks. The “call us when someone is about to miss a pension check” approach could be the way the Court sidesteps this land mine. Broadening the analysis beyond pensions, one wonders why the judiciary would even entertain the question of a “fiscal emergency” when the income tax hike has been allowed to expire with no immediate plans to hike it back up. In order to make the case that a broad-based fiscal emergency exists, it would seem to me that the State would have to convince the court that the Legislature had maxed out its ability to tax, and that there are no other alternatives but to break the contract with pensioners. Until that happens, it would seem the issue of a broad-based fiscal emergency is not ripe for adjudication.

If you’re anything like me, and you’re cynical about judges and you’re apt to view them as politicians in robes, then also consider that they’re likely very hesitant to give Rauner any type of “emergency” tools to work with. That might be the overriding factor in all of this. If you’re a betting person, bet on the Court re-hashing the reasoning in Kanerva and upholding Judge Belz’s ruling in its entirety.

Comment by The Elderly Man You Used to Love Wednesday, Feb 11, 15 @ 9:40 am
Frankly, I think the Supreme Court will rule closer to option 1 due to its curt language that was used in reversing Kanerva. I realize that police powers was not argued, but I don’t think police powers applies since the state’s profligate spending was a conscious choice on its part, which is the main reason the state finds itself in its CURRENT situation.

If the Supremes rule that the Pension Clause could be subject to a police powers argument due to a CURRENT fiscal emergency, then not only would all classes of creditors have to be treated equally, BUT the remedy for a CURRENT crisis would have to be temporally related. How would reducing COLAs way into the future deal with the state’s CURRENT fiscal emergency? If they do remand to determine whether a CURRENT fiscal emergency actually does exist, how does SB1 with its drastic future reductions to retirees’ pensions address the current crisis?

Comment by PublicServant Wednesday, Feb 11, 15 @ 9:43 am
Don’t see how the Supremes turn their back on their health insurance decision. they ignored the financial situation then, so I don’t see how they recognize just a few months later.

Comment by Anonymous Wednesday, Feb 11, 15 @ 9:43 am
IMHO, a fiscal emergency exists when the government has taken ALL possible steps that it can to solve the funding problems in the state. IL clearly has not. They can raise taxes, and that is what they should do. Our state income taxes are below our neighboring states, and have been too low for a long time. I believe that a fiscal emergency has not been reached because IL has not tried everything to alleviate it’s revenue problems.

Comment by Big Joe Wednesday, Feb 11, 15 @ 9:43 am
Had the Court not already ruled in Kanerva, I could see how they might see option 2 or 3 being an opportunity to punt. But they saw SB1 coming and (unlike Seattle) they decided to run with the ball with the number 1 option.

Comment by BigBob Wednesday, Feb 11, 15 @ 9:46 am
I lean toward 1. Four years ago, the G.A. proved that they had a method to make pension payments when it raised the income tax. You don’t have to like that solution, but it is a solution.

Comment by SAP Wednesday, Feb 11, 15 @ 9:46 am
I eventually see another Rauner Executive Order freezing current workers pensions and placing them into 401(k) type plans, regardless of how the Supreme Court rules on SB1. And somehow he will use the SB1 decision as rationale for his EO.

Comment by Joe M Wednesday, Feb 11, 15 @ 9:47 am
1) Seems to me the term “emergency” implies “Immediate irreparable harm” like, for example, a fire, or a tornado heading toward you, or a heart attack. In fiscal terms, I’d think of it more like “we were just invaded by Martians” (ok, not Martians, but you get the idea) or “The entire corn crop failed” or something.

2) I think cloning of RNUG should be legal and ethical. We need more of people like him.

Comment by Skeptic Wednesday, Feb 11, 15 @ 9:47 am
Wouldn’t the ‘police powers’ argument — if successful — freak out vendors? Who want to do business with the state if anytime there’s a real or imagined fiscal issue the state would simply say, “We can’t pay this. We’re broke. Sorry.”

It seems that *that* would put the state in the even worse shape — the sort of thing that would be, essentially, unfixable.

Comment by Frenchie Mendoza Wednesday, Feb 11, 15 @ 9:49 am
RNUG, the State’s brief must have persuaded you. While it was a creative piece, I still see the SC doing option 1. I’m confident that our reply brief will address the misdirections and misinterpretations put forward by the AG.

Comment by Norseman Wednesday, Feb 11, 15 @ 9:49 am
The SC will rule that the Constitution is perfectly clear on what the law is on pensions. The run up to this decision can be explained as being “The Year of Magical Thinking.”

Comment by Tom Joad Wednesday, Feb 11, 15 @ 9:50 am
I still think the pension clause is two parts. First, it grants contract status to pensions. Second, it prohibits diminishment or impairment of benefits. The latter is additional to contract status and cannot be touched by the State’s police power. The State can, however, alter the contract unilaterally (using police power) as long as that alteration does not diminish or impair the benefits of that contract. For example, the State could alter the administration of the benefits, the collection method of employee payments, the distribution method of benefits, etc. These may be contractually spelled out in the pension code - the State could exercise police power and change them. However, they cannot reduce benefits or prevent someone from receiving benefits.

This would be consistent with the Arizona ruling. It would still preserve the State’s police power to alter contracts. On a practical basis, it would mean any significant $ savings could not be done unilaterally by the State by exercising police power.

If the Supremes go with #3 they are guaranteeing it will come right back to them no matter the decision of the lower court (pro or con for the State).

If they go with #2, I see the State coming back with another bill - maybe spelling out the emergency and better linking the cause and effect of pensions to this emergency (at least by language used, if not by reality).

Comment by archimedes Wednesday, Feb 11, 15 @ 9:52 am
==Wouldn’t the ‘police powers’ argument — if successful — freak out vendors? Who want to do business with the state if anytime there’s a real or imagined fiscal issue the state would simply say, “We can’t pay this. We’re broke. Sorry.”==

Same would go for potential bond purchasers - and for people thinking about coming to work in Illinois - especially as state employees, teachers and university professors. Some of that is already happening with potential teachers and professors.

Comment by Joe M Wednesday, Feb 11, 15 @ 9:52 am
Doesn’t the tax rollback make options 2 and 3 impossible conclusions. Where is the emergency? We can cut taxes and deal with our problems.

Comment by BigBob Wednesday, Feb 11, 15 @ 9:52 am
BTW — I agree with Joe M.

No matter what the court rules, Rauner will use the ruling as the basic for EO forcing employees into a 401K.

He’ll also use an EO to bust any statewide strike that occurs.

Essentially, he’s going to govern via EO. It doesn’t matter if they’re legal or not. He’ll leverage the fact that the legality of any given EO will take time to resolve. In the meantime, agencies will be instructed to do whatever the EO says — including immediately firing any striking workers. Legal or no — that’s the plan given Rauner’s previous comments.

Comment by Frenchie Mendoza Wednesday, Feb 11, 15 @ 9:53 am
=== I got my Kanerva notice yesterday. ===

Did it address how the legal fee would deducted?

Comment by Norseman Wednesday, Feb 11, 15 @ 9:56 am
RNUG’s position # 2 (“police powers” claim theoretically viable but not viable in this case) is a strong one for at least three more reasons:

First, the State can’t reneg on some creditors (pensioners) but not all creditors (bond investors and State contractors who are still owed money) without impacting the pensioners’ right to equal protection.

Second, the State can’t demonstrate a “fiscal emergency” while simultaneously spending money education funding, capital projects, etc.

Third, the Court could say that a fiscal emergency is theortically possible, but it is valid only if the deadbeat debtor (the State) didn’t do anything to create the so-called fiscal emergency. In other words, a real economic depression might create a legally viable “fiscal emergency.” But if the State is in a bind simply because it failed to sufficiently contribute to the pensions for many many years, that would be a “self-created emergency,” and thus not one that is legally viable.

By the way, there’s one other position that the Court could take, which is that the State is estopped from trying to reneg on its pension promise, in part because (1) the State, in not revising the pension code, continually promised that certain pensions would be paid; 2) the State, through the Court’s decision in McNamee, assured pensioners that they would get their pensions whether or not the pension systems were sufficently funded; and (3) the pensioners relied on these promises to their detriment. This approach could be attractive to the Court because it would allow the Court to avoid issues of constitutional law through other equitable principles at its disposal. On the other hand, this approach also would require that the Court acknowledge that its cowardice and imprudence in the McNamee decision played a big part in where we are today. Had the Court ruled differently in McNamee, public pensions across Illinois would be adequately funded.

Comment by ChiTown Seven Wednesday, Feb 11, 15 @ 10:00 am
Don’t get EO happy folks. I’m sure Indy would prevent such a clearly illegal EO.

Comment by Norseman Wednesday, Feb 11, 15 @ 10:00 am
“#1 is the only logical choice”

This is the same as saying “clearly” to a judge.

You’re essentially saying that a judge that’s sitting at 1.25 (that is, bt 1 and 2, and leaning toward 1, but seriously considering both sides) is being illogical. That’s no way to influence a judge.

Comment by Chris Wednesday, Feb 11, 15 @ 10:01 am
Stones -
“This situation was created by the legislature themselves by not making scheduled pension payments.”

Actually, it was more likely caused by governors not properly funding pensions in their introduced budgets. The last time a General Assembly tried to increase funding for pensions, the FY 1986 budget (Madigan and Rock), Thompson vetoed it back to 60% of payout. (And no, there are no 1985 editions of Illinois Issues available online.)

Comment by Anyone Remember Wednesday, Feb 11, 15 @ 10:01 am
== Did it address how the legal fee would deducted? ==

Not in detail.

Comment by RNUG Wednesday, Feb 11, 15 @ 10:01 am
The Legislature’s involvement in the pension problem and their attempt at emergency powers makes me think of an Alaskan Reality show I saw. Two salt of the earth Alaskans were in a small rowboat in the middle of a large, frigid bay. They caught a huge fish, even by Alaskan standards, and managed to haul it into the boat. The fish was thrashing around threatening to capsize the small boat. The resident Brain Surgeon on the boat solved the problem by getting out his revolver and shooting the fish. Problem solved…except the bullet also went through the bottom of the boat, causing the boat to fill with water. No matter which option is picked we’re going to see a lot of Brain Surgery and thrashing.

Comment by Past the Rule of 85 Wednesday, Feb 11, 15 @ 10:02 am
The more Rauner Team comes up with other steps (real or imaginary) to attack the fiscal emergency, the less likely #2 or #3 would result in a favorable result for the reform bill.

#2 is logical, but they sure have telegraphed an immediate disposal. Kinda like SCOTUS and Alabama marriage restrictions.

Comment by walker Wednesday, Feb 11, 15 @ 10:03 am
He doesn’t have to fire all state workers for his plan to work, just Tier 1 workers.

Comment by Demise Wednesday, Feb 11, 15 @ 10:03 am
@Big Bob, 9:52 ==Doesn’t the tax rollback make options 2 and 3 impossible conclusions.==
I don’t think that issues like the tax rollback and the State’s ability to make other cuts come into play at all unless the ILSC goes for option 3. Then the lower court we be asked to decide whether there is a sufficient fiscal emergency to justify ‘police powers’. (And I suspect it would say: ‘No Way’, based on the tax rollback among other things.) After that, the case would of course have go back to the ILSC for a ruling on that issue.

I was pretty confident that the ILSC decision would be 1. But RNUG, and the person whom he respects so much, have sown some doubts. So I’m hoping for the best, and trying to plan for the worst.

Comment by UIC Guy Wednesday, Feb 11, 15 @ 10:04 am
Granting police powers to those who committed the original infraction (failure to fund pension systems) is akin to making the victim (those vested in pensions) liable for the perpetrators’ actions or in-actions.

Comment by s k hicks Wednesday, Feb 11, 15 @ 10:05 am
“I’m sure Indy would prevent such a clearly illegal EO.”

Clearly illegal to fire everyone, and offer them their jobs back, but only with a 401k, no future pension earning? Keeping in mind that that is going to be the union contract offer–no more pension? (and yes, obv clearly illegal to just say “you’re Tier 2 starting…now”)

Sure, as to some positions, problems. So he excludes them, or buys them out.

Sure, there’s the *enormous* issue of the current funding shortfall, but how long would the present pension funds (w/ $0 in future contribs) pay for current year benefits?

If they last ~8 years (which would be stretching SERS, which looks to have *maybe* 7, unless investment returns are *great*), then it becomes someone else’s (ie, the next Guv, or the Guv *after* the next Guv) problem.

Comment by Chris Wednesday, Feb 11, 15 @ 10:11 am
The income tax roll back pretty much kills the police powers argument. Remember it has only been invoked once in US history and then it only delayed action rather than change or alter actions.

As to the police powers, any ruling in favor or recognition would open the flood gates to years of litigation. There are issues with contract law as well as others that make this the worst choice for all involved, including the state. It would certainly alarm bond holders and everyone else holding state contracts or debt. I don’t see it. It is not necessary under the circumstances since there is no emergency……

Comment by Old and In the Way Wednesday, Feb 11, 15 @ 10:16 am
Walker:

“#2 is logical, but they sure have telegraphed an immediate disposal.”

Seems to me that #2 *IS* an immediate disposal.

They say “sure, there could be a circumstance in which the ‘fiscal emergency’ trumps the guarantee, but you guys ain’t nowhere close. Here are some criteria for a real emergency [1-27], and you ain’t shown *ANY* of them, nor do we have any reason to believe even one exists, and MOST would have to to prove an emergency. No emergency, Law is UNConstitutional.”

Is what I would *definitely* expect from a Fed Ct, not as sure about IL SCT.

Comment by Chris Wednesday, Feb 11, 15 @ 10:18 am
We get #3, it’s clearly correct that under some circumstances pension rights might have to give way. But on the facts, the State’s materials so far do not prove that point sufficiently to deny people a constitutional right, so SB1 gets overturned.

Plus, there is nothing anywhere to ensure that having once not funded pensions (once, for decades), the State won’t do it again and then be back for another round of cuts. If the current pension clause doesn’t prevent that, what would? That will be something the courts will have to weigh, and the State has said nothing to help them get past that.

Comment by Harry Wednesday, Feb 11, 15 @ 10:19 am
1 because as long as the state can raise revenue through various means or cut spending in any number of areas there can be no police emergency. If that’s the only thing to hang a hat on they’ll have a hard time finding the hook..

Comment by Mouthy Wednesday, Feb 11, 15 @ 10:21 am
- UIC Guy -

I’m positive the IL SC will kill SB-1 in the long run. The only question is what path they take to get there and if they leave a crack somewhere in their eventual ruling. My friend’s feeling is the court may remand just to stall another year or two. I think they kill SB-1 without providing guidance and sit back, waiting to see what the legislature tries next.

Comment by RNUG Wednesday, Feb 11, 15 @ 10:23 am
Plus, a bit off-topic, but I think a Constitutional Amendment will be a very expensive and time-wasting dry hole because even if enacted it would unilaterally change a current contract, to the disbenefit of the other party, and that would fail under the US Constitution’s contracts clause (and maybe the IL Constitution, as well). As long as the pension clause is taken to be a contract, short of 1932 all over again there really is no way out.

Comment by Harry Wednesday, Feb 11, 15 @ 10:24 am
I think #1, going back to “plain language of the Constitution.”

How do you have a “fiscal emergency” when you just cut taxes? That’s the action of a legislature that clearly believes it is flush with revenues to fund its obligations.

Comment by Wordslinger Wednesday, Feb 11, 15 @ 10:24 am
@RNUG:
Thanks; it’s encouraging that you think so, and of course I hope (and expect)that you’re right. The point of my post was really that lots of people posting here seem to be conflating the different reasons for killing it, reasons that you helpfully distinguished.

Comment by UIC Guy Wednesday, Feb 11, 15 @ 10:27 am
#2 seems most likely. Not only because it is a single area of debt, but also the claimed “fiscal emergency” was not external, as described in the brief (examples of plague etc.), but the so-called emergency was self-created by refusal or inability to legislate what they already had in their control. The Pension Funds won’t run out of money for 20 more years at worst if they do not do anything, which counters any claim of a real emergency. If they grant #3, it allows the state to perhaps lose now, continue to underfund pensions, and then re-claim the self created emergency in a couple of decades.

Comment by Bobbysox Wednesday, Feb 11, 15 @ 10:28 am
Although I have read Capitol Fax for a long time, this will be my first post. Since I have commented on the pension situation publicly in the past (I am a law professor at the University of Illinois), I thought it was time to weigh in here, and I hope to contribute in the future when I have something useful to say, (which probably won’t be often!).

My own view is that #2 is likely. No constitutional provision is absolute; in the right set of circumstances (think World War II), courts will give a legislature very wide berth in passing laws to manage a grave emergency. I find it difficult to believe that the ILSC would adopt an approach that says that there are NO set of circumstances that could justify overruling the pension clause, which is essentially what Judge Belz’ ruling does (as an aside, I wish he had simply taken the case to trial and made findings of fact, which then would have avoided some of the problems the case faces in its current posture).

But I also find it unlikely the court would adopt #3, because I think Kanerva signaled that the Justices have little patience for what is going on in the Legislature pension-wise (they read the news just like you and I do, after all), and #3 would result in simply extending the litigation on an issue that I think the Court is not sympathetic to and drag things out on what I think is a foregone conclusion.

That leaves #2. I could imagine an opinion that said something like this.

“No constitutional provision is absolute; in times of grave emergency, what seem to be absolute protections in the constitution may need to give way to reasonable measures to preserve public safety and welfare. However, the circumstances in which reserved police powers can override a constitutional provision are extremely limited. The emergency alleged must truly be “grave” – the examples of World War II or the Great Depression, for example, capture the extremity of circumstances in which police powers might be used to overcome constitutional provisions that seem absolute on their face. Moreover, the grave emergency must be the result of external forces and not have been created by the Legislature’s own acts. There is an old saying in the law that one cannot murder one’s parents and then request mercy from the court because the murderer is now an orphan. Similarly, the Legislature cannot create a crisis and then claim use of the police powers to override constitutional provisions aimed precisely at controlling the legislative behavior that created the crisis in the first place.

Because this case was resolved below without trial, ordinarily the Court would remand the case to the trial court for findings of fact concerning whether a grave emergency of the kind we have outlined above exists. In this case, however, we can resolve this issue on the basis of the state’s complaint, which on its face fails both our criterion for the circumstances that may permit police powers to override constitutional protections. The allegations do not rise to a level of grave emergency similar to World War II or the Great Depression, nor do they allege that whatever emergency exists was created by forces external to the Legislature’s own decisions. When Illinois must mobilize its militia to defend against an invasion by foreign forces or soup lines akin to those of the Great Depression appear, or when the state’s finances are in such dire condition that it must renege on obligations to its bondholders as well as to state employees, we may hold differently. These are not the circumstances alleged by the State in its complaint, however, and accordingly the decision of the trial court that the legislation at issue is unconstitutional is affirmed.”

At least we won’t have to wait long to find out how this all goes.

Comment by JDColombo Wednesday, Feb 11, 15 @ 10:28 am
===Demise=== Just offer Tier 1 a 5 and 5 and we’re gone. You don’t have to fire us.

Comment by LongTerm Wednesday, Feb 11, 15 @ 10:29 am
@ Wordslinger:
==How do you have a “fiscal emergency” when you just cut taxes? That’s the action of a legislature that clearly believes it is flush with revenues to fund its obligations.==
Well not so much an act as a failure to act, as the income tax decline was built into the law. This may seem like a trivial distinction but to people concerned with re-election I suspect it’s not.

Comment by UIC Guy Wednesday, Feb 11, 15 @ 10:29 am
The “emergency” defense won’t hold water. As was said before, taxes could be raised and other spending cut to fund these pensions. I could see the plaintiffs identifying hundreds of grants and frivolous spending items approved by the GA and ask, “if there’s an emergency, how can the state spend money on such unnecessary and imprudent projects and programs?”

SB-1 is just a dead bill walking.

Comment by Arizona Bob Wednesday, Feb 11, 15 @ 10:30 am
What would be great would be if the Supremes would have the cajones to define what the legal extent and limitations of “diminish or impair” are.

That’s what responsible jurists would do to be proactive in solving this mess, but I highly doubt our political Supremes have the guts and character to do it.

Comment by Arizona Bob Wednesday, Feb 11, 15 @ 10:33 am
UIC, I’d call that a distinction without a difference.

Comment by Wordslinger Wednesday, Feb 11, 15 @ 10:34 am
Could the state ever say we don’t have the money to pay individual retirees, but we will give you the retiree an IOU and pay you someday? That would not be a diminishment since you are being told the payment is coming just not the date.

Comment by illlinifan Wednesday, Feb 11, 15 @ 10:36 am
Taxes weren’t just cut, the temporary increase just expired except the .75% permanent increase in the rate. You could say the rate went down 25% or is 25% higher than the original rate..

Comment by Mouthy Wednesday, Feb 11, 15 @ 10:37 am
Longterm - what does 5 in 5 mean?

Comment by southwest Wednesday, Feb 11, 15 @ 10:41 am
I beleive the ISC will find SB1 unconstitutional, but they will give the Legislators direction.

Being a retiree (State Police) I hate to consider that the ISC will say the deal you got when you were hired is what you receive. For me, that is 3% non-compounded. I believe Justice Burke made reference to the Sklodowski case in her Kanerva dissent.

Comment by Tsavo Wednesday, Feb 11, 15 @ 10:45 am
Why would any judges in their right mind cut pensions for the masses because they have been “left out” of the bill that cut them knowing that the legislature could turn and remove their pensions based on the fact that they said it was constitutional. Read: equal protection!!
I simply dont think any judge would be that shortsighted and/or downright dumb.
They will slam the door on this.

Comment by Trooper Wednesday, Feb 11, 15 @ 10:46 am
I have to believe the members of the Supreme Court have the nerve and the will to answer the question before them. I do not believe it is their role to go beyond that and write future guidelines regarding diminish/impair.

Comment by Optimist Wednesday, Feb 11, 15 @ 10:47 am
===What would be great would be if the Supremes would have the cajones to define what the legal extent and limitations of “diminish or impair” are.===
Sherrif Joe Arpaio - Most people already know what diminish or impair means since they are pretty straight forward words. Nice empty slam on the court that’s not going to do you bidding…

Comment by Mouthy Wednesday, Feb 11, 15 @ 10:47 am
Thanks to RNUG for his very thoughtful and thought provoking entry. It’s always worth reading and thinking about.

There’s still a little voice in the wilderness that reminds me that at the time of the passing of SB1, the Speaker said with some confidence, he believed it would pass ISC muster. I have no idea why he said or thought that. I just remember that he did. I could easily be sold on RNUG’s #2 or #3. But the little voice won’t be quashed until the ISC speaks.

Comment by A guy Wednesday, Feb 11, 15 @ 10:47 am
I agree with #1. I’ve never been convinced the police powers of the state extend to suspending provisions of the Constitution absent some sort of due process…or an amendment to the Constitution that clearly allows the power to exist.

Comment by Commonsense in Illinois Wednesday, Feb 11, 15 @ 10:48 am
http://pension-vocabulary.blogspot.com/2014/07/justice-burke-swears-in-gov.html

Excellent article on Justice Burke and the Sklodowski reference in the Kanerva case.

Comment by Tsavo Wednesday, Feb 11, 15 @ 10:49 am
Great respect here for RNUG, throughout this entire pension roller coaster ride and he’s usually right on the money. What I’m having trouble understanding is with the crystal clear ruling on Kanerva, why would we expect anything less on SB1? I would have thought any wiggle room would have shown up with Kaverva…….

Comment by Former Merit Comp Slave Wednesday, Feb 11, 15 @ 10:49 am
I vote #1. Since no case has been made for ‘emergency’ other than saying ‘We have an emergency’ the SC aren’t fools. They won’t see it’s their responsibility to do the work of the Executive and Legislative. So they punt it back to those entities, absent a demonstrable stated authentic emergency, and in essence say, ‘ Get your act together and we mean now!’

Who know what Rauner will do then?

Comment by IB Strapped Wednesday, Feb 11, 15 @ 10:51 am
I agree Rich.

What evidence do we have of an emergency? As you have pointed out(but I disagree), we have lower taxes than many other states. The state could simply raise taxes. Revenue is at an all time high, we just spend foolishly.

I think the Court says the political branches inability to make sound decisions does not in itself create an emergency.

I also have to ask are you looking for investors for the Fax? The fact you have angry union people on right to work issues, while the union supported AG tries to steal union pensions tells me anyone making money off the boondogle that is the IL politics is a sound investment for a while to come.

IPO!

Comment by the Patriot Wednesday, Feb 11, 15 @ 10:54 am
I think RNUG nailed it. No contract is absolute.

The IL Constitution elevated pub pensions to enforceable contracts. There are volumes of law books which specify circumstances wherein valid contracts may be modified or nullified without agreement of the parties.

I think the ISC will issue a ruling including #2 and #3. It may include a piece on the law on the law of contracts and how it is applied to contracts in the government sector.

This mess will probably go back to the trial court and further proceedings may resemble a federal bankruptcy squabble among competing debtors and creditors.

Based on the way courts typically work in IL, I suspect an unprecedented slow walk in the courts.

Comment by Cook County Commoner Wednesday, Feb 11, 15 @ 10:54 am
A interesting note is if the Fiscal Emergency claim goes through, can OTHER parts of the Constitution cannot be subject to change (legislator pay/pension, etc.)? Also, if it does go through what prevents the the Governor/Legislators from spending like crazy (like they have) and declaring another “Fiscal Emergency” in the future?

Comment by He Makes Ryan Look Like a Saint Wednesday, Feb 11, 15 @ 10:57 am
“5 in 5″ most likely means “5 plus 5″ or another name for an Early Retirement Incentive program. Hard to see one coming together that is close enough to cost neutral and reasonably affordable for the eligible employees.

Great analysis, RNUG. I’m leaning toward Option 1 at this point fwiw.

Comment by Arthur Andersen Wednesday, Feb 11, 15 @ 10:57 am
The State’s challenge to get to options 2 and 3 is the Court would have to find a reserved police powers exception to the clause. The Constitutional Convention debates are clear - the delegates intended for the clause to speak to situations quite similar to this one, witness their desire to avoid a result like the 1964 Spina case in New Jersey. The AG’s best hope for result 2 or 3 is likely the argument that regardless of what the convention wanted to do, they CAN’T create an area which is immune from police powers as a matter of Federal constitutional law. If the Court finds a viable police powers exception, remand is quite likely, I would think.

Comment by kcjenkins Wednesday, Feb 11, 15 @ 10:58 am
Southwest: 5 and 5 is an Early retirement Incentive in which each retirement system member is treated as having 5 more years of service credit and 5 additional years of age which serves to increase pensions and bring eligibility for pensions sooner — providing the system member retires in a short window of opportunity.

This has zero chance of passing again (it did a decade or two ago) as it is meant to help reduce local government salary costs by getting senior employees to retire sooner, but it increases pension liability by increasing benefits and paying them at a younger age.

Comment by Bobbysox Wednesday, Feb 11, 15 @ 10:58 am
The sooner we can all agree that SB 1 was merely a tool to get Quinn et al through the election the better off we will all be. There is no way–no way–that the courts will uphold the law. The AG’s police-powers argument is laughable, easily defeated by a first-year economics student who would simply point out that the state’s take of the GDP is not huge or out of line compared with other states. Just because the state says it doesn’t have the money doesn’t mean that it cannot come up with the money. Ralph Martire could come up with a solution on the back of a cocktail napkin. It really is that simple.

Judges are no different than the rest of us. They don’t like to work if they do not have to work, and they do not like being told that they are wrong. Thus, they will always go with the simplest, easiest way out. In this case, it’s plain language. You don’t have to be a lawyer to read this clause in the constitution and understand it. Further, the supremes have also signaled, strongly, what they’re going to do–look at the health benefits case. The AG, understanding that it’s impossible to win this case based on the argument that didn’t work in the health benefits case, is now trying Plan B. Plan B’s are rarely better than Plan A’s.

Comment by It Was A Ploy Wednesday, Feb 11, 15 @ 10:58 am
Would it be a “fiscal emergency” if the gov raids all of the pension funds? I could see him doing that if the leaders decide to give him the power to fix the large budget pothole.

Comment by Mama Wednesday, Feb 11, 15 @ 10:58 am
Wouldn’t #3 just encourage the state to go deeper into debt to try to justify a fiscal emergency? It’s like advising someone not to pay any bills so they can get financial relief.

Comment by Soccertease Wednesday, Feb 11, 15 @ 11:14 am
I would expect a “We need not decide” dealing with the police powers issue, perhaps with a reference to the equal protection clause, and an affirmation of the trial court.

Comment by Bigtwich Wednesday, Feb 11, 15 @ 11:15 am
=== That’s what responsible jurists would do to be proactive in solving this mess, but I highly doubt our political Supremes have the guts and character to do it. ===

Except when they are proactive in an area you disagree with, right.

Get out of the sun Bob.

Comment by Norseman Wednesday, Feb 11, 15 @ 11:17 am
I vote for JDColombo to be our next Supreme Court Justice!
Nicely composed, JDC.

Comment by Bobbysox Wednesday, Feb 11, 15 @ 11:20 am
Seems to me that JDColombo called it right, along with some others here - I don’t see how the court will go beyond #2, where the “emergency” being claimed was created by the claimers. I would imagine most of us can see what precedent that would set, if the IL legislature were allowed to get around contracts and agreements by creating “fiscal emergencies”, since they are clearly experts at doing so already.

Comment by Kodachrome Wednesday, Feb 11, 15 @ 11:22 am
=== Author: southwest
Comment:
Longterm - what does 5 in 5 mean? ===

References giving employees credit for 5 years of age and 5 years of employment so they can retire early under the rule of 85 (which is years of age + years of employment = 85).

The problem is that this would exacerbate the pension underfunding problem and I doubt that all Tier 1 would benefit anyway.

Comment by Norseman Wednesday, Feb 11, 15 @ 11:23 am
The analysis is very good, but I think there is really a 1.5: The pension clause means what is says and that was the intent of the Constitutional Convention. The findings in the statute fail to establish that there is a police power argument because, if there is and this is a case where it would apply then the very reason the pension clause was included would be negated. Historically, the legislature would change pensions anytime they wanted. The State’s brief cites examples when there might be a serious need to exercise a police power such as mass disaster or medical plague. These circumstances are not those, but are result of self-inflicted “wounds” by the legislature in failing to make contributions and the taxpayers by benefiting from no tax increase over the years where the lack of pension contributions funded government operations. This “crises” could be addressed by increasing taxes while the other legitimate crises that might justify a police powers application involve forces far beyond the control. Consequently, I think the Court might acknowledge the possibility of a police power argument in the future w/o addressing it directly or applying it in this case and then strike the law.

Comment by D.P.Gumby Wednesday, Feb 11, 15 @ 11:26 am
Arthur Anderson and Bobbysoxers - Thanks for answering!

Comment by southwest Wednesday, Feb 11, 15 @ 11:29 am
They will rule the funding flexibility given to the legislature negates the police powers argument and the constitutional protection overrides the police powers argument the combination of which the convention delegates intended. They will not want the courts to determine how broke the state is.

Comment by Liberty Wednesday, Feb 11, 15 @ 11:29 am
Professor Columbo provides a clear path for the Supreme Court. While I sincerely hope for the first option, Professor Columbo’s option, based on past Constitutional actions, would appear to give the Supremes the ability to close the door but not lock it. In the end, I believe voters will vote to amend the Constitution, which the General Assembly approve resulting in a chance in the Constitution giving current Tier 1s and retirees security, but which will prevent the state from hiring the best and the brightest, like Professor Columbo, in the future, which will hurt all of the citizens of Illinois who will then continue to scream “why are students at our state universities taught by less qualified professors and graduate student?” And “why does the ranking of the University of Illinois continue to fall?” The answer will be…”you caused the problem yourselves.”

Comment by Illinilaw Wednesday, Feb 11, 15 @ 11:30 am
#2. The Court will dodge the police powers issue by a ruling that, even if police powers could be applied, the pleadings before the court were insufficient to state a claim for relief because they did not adequately allege any emergency. Would have to pull the original complaint but my recollection is that the entire argument is based on underfunding of the pension fund. Running your checking account down to zero cannot show that you are broke. In making that ruling, the Court will indicate that the bar for showing need for any police powers is so incredibly high that no way no how could the State make its case. BTW, got interested in the recent vaccination debate and looked up the 1905 U.S. Supreme Court case on that. Police powers and medical emergency supported mandatory vaccination law. So that explains why the State is arguing that goofy vaccination scenario.

Comment by anon Wednesday, Feb 11, 15 @ 11:31 am
I expect scenario 1. Anything else would make me suspect some improper influence has occurred. Money or threats. If they dig far enough they can find something or someone in a judge’s past and run nonstop TV ads until they resign, or lose re-election.

Comment by DuPage Wednesday, Feb 11, 15 @ 11:33 am
Jerry Brown has taken California from fiscal laughing stock to admired State with much improved bond ratings. He has brought a progressive tax to California and has defeated those 1983 tax rebels who held California back. Property taxes are down as a result, housing is recovering and building is on the rise. Poor Phil Mickelson’s taxes went up from 9% to 13% because he makes over one million per. Loved the comment earlier that Ralph Martire could outline a fix on a cocktail napkin. I think it was Lloyd Bentsen who once said, “I knew Ralph Martire and Jerry Brown, you are no Ralph Martire.” If Jerry can fix California, Illinois could be an easier fix. Pay your bills Illinois and watch the State take off!

Comment by Kooky in Kalifornia Wednesday, Feb 11, 15 @ 11:35 am
If the true role of the Supreme Court is to determine what the Constitution says / allows, it can’t be any clearer that option #1 is the slam-dunk.

Comment by forwhatitsworth Wednesday, Feb 11, 15 @ 11:45 am
I’d bet 1. The IL Supreme Court has ruled several times that they can not force the Governor and GA to fund the pensions properly - that is a legislative issue - the Court more or less said that they can only get involved if the State quits paying retirees their pension.

So perhaps the Court will not even consider police powers unless the State starts skipping payments to retirees? (I hope I’m not giving Rauner any ideas for another EO! - stop paying retirees their pensions)

Comment by Joe M Wednesday, Feb 11, 15 @ 11:46 am
=== A interesting note is if the Fiscal Emergency claim goes through, can OTHER parts of the Constitution cannot be subject to change (legislator pay/pension, etc.)? ===

The focus of the state’s argument centers around the pension clause’s use of the term contract. They argue that contracts can be modified by police powers. They even argue that Federal case law requires the ISC to accept that police powers is a legitimate power to modify contracts.

Comment by Norseman Wednesday, Feb 11, 15 @ 11:49 am
Arizona Bob @ 10:33
=What would be great would be if the Supremes would have the cajones to define what the legal extent and limitations of “diminish or impair” are.
That’s what responsible jurists would do to be proactive in solving this mess, but I highly doubt our political Supremes have the guts and character to do it.=
Ha!! What a joke of logic that is. Since when do such conservative a commentor as yourself even SUGGEST that a Jurist take an activist role and write the law, instead of just interpreting the language written by the legislative branch?
Absolutely ridiculous. You conservatives complain ad nauseum about activist judges, blah, blah, blah….Then all of a sudden expect them to judge the law AND write it when it suits your expectations? What a joke!

Comment by northernwatersports Wednesday, Feb 11, 15 @ 11:53 am
Tsavo, there are plenty of cases where the court has accepted the principle that additional benefits are included. SERS would explode if they had to determine benefits by the year a retiree entered service.

Comment by Norseman Wednesday, Feb 11, 15 @ 11:53 am
- illlinifan -

Without googling it, I believe the language was “paid when due”. So I guess there could be an argument over the term “paid”

Comment by RNUG Wednesday, Feb 11, 15 @ 12:02 pm
Might be worth re-reading Madiar’s article from this past summer. His thought is the Constitution does indeed trump the State’s police power - particularly in the case of the Pension Clause which has specific language, rich debate, and historical court decisions.

http://www.nasra.org/Files/State-Specific/Illinois/IL%20pension%20history.pdf

Comment by archimedes Wednesday, Feb 11, 15 @ 12:03 pm
== What I’m having trouble understanding is with the crystal clear ruling on Kanerva, why would we expect anything less on SB1? ==

Different issues legally.

Kanerva, in it’s simplest form, was “is retiree health insurance a benefit protected under the constiution’s pension clause”?

SB-1 claims “police powers can override a constitutional clause”, an argument never raised in the Kanerva case.

Comment by RNUG Wednesday, Feb 11, 15 @ 12:10 pm
If Rauner proposes a balanced budget and gets the fiscal house in order he could be stepping on his own foot with regards to using police powers to solve the pension issue.

Comment by Anonymous Wednesday, Feb 11, 15 @ 12:19 pm
option 1 - no need exists to look any further.

Comment by facts are stubborn things Wednesday, Feb 11, 15 @ 12:26 pm
I just don’t think the ISC wants to answer what they view as a hypothetical of can police powers override the constitution. The court just is not going to entertain such things that don’t currently need to be addressed.

Comment by facts are stubborn things Wednesday, Feb 11, 15 @ 12:31 pm
In reaching this result, we acknowledge that substantial budgetary challenges currently confront the Governor and the General Assembly. The adverse economic conditions facing so many of our fellow citizens have taken an inevitable toll on the state’s treasury. Revenues are not keeping pace. Despite ongoing efforts by the Governor and legislature, shortfalls persist. We do not mean to diminish the seriousness of the situation or appear insensitive to the difficulties faced by our coordinate branches of government. Those difficulties are undeniable, and we are highly cognizant of the need for austerity and restraint in our spending. As administrators of the judiciary, we make every effort to economize whenever and however we can. One thing we cannot do, however, is ignore the Constitution of Illinois.

Comment by foster brooks Wednesday, Feb 11, 15 @ 12:33 pm
Options 2 or 3 sound like the dreams of the IPI and Civic Committee.

As many have stated, after Kanerva, I do not see how they can change course.

Comment by Federalist Wednesday, Feb 11, 15 @ 12:37 pm
The constitution does indicate that pensions are a contract, however, the constitution does not stop there — it continues and adds the following …… “that can not be diminished or impaired.”

Comment by facts are stubborn things Wednesday, Feb 11, 15 @ 12:38 pm
No principle of law permits us to suspend constitutional requirements for economic reasons, no matter how compelling those reasons may seem. - isc 2004

Comment by foster brooks Wednesday, Feb 11, 15 @ 12:50 pm
=== The constitution does indicate that pensions are a contract, however, the constitution does not stop there — it continues and adds the following …… “that can not be diminished or impaired.” ===

AG argues that the contract can’t diminish or impair, however, under federal and state case laws police powers can be used to change a contract.

Not saying I agree, just trying to convey their argument.

Comment by Norseman Wednesday, Feb 11, 15 @ 12:54 pm
The court has also ruled that when there is any doubt about the meaning of the pension clause it must be construed liberally in favor of the annuitant. I think the court will reaffirm it’s believe that if possible they look to and stop at what the plain and unambiguous meaning of a statute or constitutional provision says. The court will find that no circumstance exists in this instance to persuade us otherwise.

Comment by facts are stubborn things Wednesday, Feb 11, 15 @ 12:59 pm
@northernwatersports

Clearly defining and identifying limitations of legal terms is in no way being activist, it’s just meeting their responsibility to interpret the law.

EG, one big question is whether you can “diminish or impair” future benefits not yet earned, or if the clause just refers to vested benefits.

I’ve heard legal arguments that what is vested may not be “diminished nor impaired”, but what about unvested pension and health care benefits yet to be earned? Would it be legal to push existing employees into a pension program that requires more contributions from employees for lesser pension returns for future earnings? The EXISTING pension benefits would be protected, but if the system changes for future earnings and vesting, has what is EARNED been diminished and impaired?

What if contributions from employees is doubled or tripled? The absolute benefit hasn’t been diminished since it is unchanged, but since the ROI on the contributions has been “diminished” is it constitutional?

Defining these limitations isn’t judicial activism like the “privacy” rights that were manufactured in Roe v Wade to sanction killing the unborn. When the Civil Rights Act of 1964 was passed, its framers swore up and down that it couldn’t create racial preferences and “quotas”, but instead of interpreting that law, the Supremes made up law to address “former discrimination” by creating discrimination for another class of people. THAT’s judicial activism. It’s proper interpretation of the law, its intent and intention we’re talking about here. I don’t see how you can stretch that into judicial activism.

Comment by Arizona Bob Wednesday, Feb 11, 15 @ 1:00 pm
@Norseman - Wednesday, Feb 11, 15 @ 12:54 pm:

valid point. I was speaking to a comment made earlier that law books are full of rules for modifying contracts. I did not provide the needed context and thanks for helping me to do so.

Comment by facts are stubborn things Wednesday, Feb 11, 15 @ 1:02 pm
- Norseman - @ 9:49 am:

No, the State’s brief didn’t persuade me but I think there is room for the IL SC to go anywhere from 1 to 2.

I don’t expect the State to ever be able to prove a “fiscal emergency” NOT OF THEIR MAKING exists.

Comment by RNUG Wednesday, Feb 11, 15 @ 1:11 pm
>> No principle of law permits us to suspend constitutional requirements for economic reasons, no matter how compelling those reasons may seem. - isc 2004

Principles of economics and demographics, however, _some day_ might…

I’m never going to take on RNUG in a debate about what the IL Constitution or the Pension Clause mean, except that whatever they mean, they don’t mean that the state of IL can print money, or automatically self-generate the revenue the state needs to operate.

Comment by ZC Wednesday, Feb 11, 15 @ 1:15 pm
The court is not in the business of providing guidance to the legislature, and they’re certainly cognizant of how the state rolled, continuing to shortchange the pensions for decades after a lawsuit brought by employees seeking to force the state to make the actuarial annual payments was denied. I hope they no only affirm the lower court ruling, but add that the state, having purposely failed to operate in good faith in attempting to fulfill its constitutional, contractual obligations regarding pensions is hereby ordered to make annual contributions that will fully fund the pensions in 40 years.

That would be both the just and deserved outcome of the state’s spineless actions to date.

Comment by PublicServant Wednesday, Feb 11, 15 @ 1:16 pm
If the state really were in such a financial crisis as to justify abridging constitutional right, how could we afford the biggest tax cut in state history last month?

Comment by anon Wednesday, Feb 11, 15 @ 1:26 pm
Legal researchers on both sides of the issue can cite case law that supports state police powers. Some of the analyses says that it depends on the situation - that the U.S. Supreme Court leaves the door open to what the situation is.

However, according to Westlaw, the most cited case about the U.S. Constitution’s contract protection clause and states’ police powers is the case, U.S. Trust Co. of New York v. New Jersey, 97 S.Ct. 1505. That was a case where the State of New Jersey wanted to get out of a contract because they said they felt they could could no longer afford the terms of the contract. In that case, the U.S. Supreme Court stated:

“Contract Clause of [U.S.] Constitution limits otherwise legitimate exercise of state legislative authority, and existence of important public interest is not always sufficient to overcome that limitation……..”.

also:

“If a State could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all.”

But, ultimately, the only case law research that matters will be the research the Illinois Supreme Court does and chooses to hang its hat on.

I’m just wondering if whichever side loses, will the other side attempt to appeal to the U.S. Supreme Court?

Comment by Joe M Wednesday, Feb 11, 15 @ 1:29 pm
RE the 2002 ERI aka 5 & 5

The above statements have all left out one item. The service time was not a gift.

Under the 2002 ERI terms, the State offered to add 5 years to the age portion of the ‘Rule of 85′ calculation and it was the EMPLOYEE’s OPTION TO BUY up to 5 years of service credit. The normal pension contribution had to be made for the number of years, up to 5, being purchased. The State offered a number of ways to pay for it, but in all cases it was either cash owed to the employee (for unused vacation / sick time), cash directly paid by the employee, or a loan by the State which was deducted from the first several year’s pension checks. The monies paid, one way or the other, went into the appropriate pension fund.

Comment by RNUG Wednesday, Feb 11, 15 @ 1:29 pm
@Arizona Bob. Years and years of precedent have established that an employee has the right to future benefit terms based on what was in effect day one on the job. Stop beating the dead horse. There simply is no question about that.

Comment by anon Wednesday, Feb 11, 15 @ 1:33 pm
=== You could say the rate went down 25% or is 25% higher than the original rate..===

If going from 3% to 5% was a 67% increase, then the drop from 5% to 3.75% is a 25% drop. The tax rate has never before dropped 1.25.

Comment by anon Wednesday, Feb 11, 15 @ 1:52 pm
With due respect to RNUG and everyone else, I think #2 and 3 are exceptionally unlikely. The judiciary is known, inherently, as a branch the defers to the legislature when it comes to policy and on determinations such as the extent of our financial woes. The judiciary is just not equipped, as an institution, to second-guess the extensive factual findings the GA made in the statute. That just doesn’t happen; a court just wouldn’t likely say “well the GA was incorrect in concluding that the state is in severe dire straits; we think IL is in bad shape, but not severe.” That’s just what judges do.

As for the professor’s “no constitutional right is absolute” argument, let me quote the IL S. Ct. in Jorgensen: “No principle of law permits us to suspend constitutional requirements for economic reasons, no matter how compelling those reasons may seem.”

Comment by Irish guy Wednesday, Feb 11, 15 @ 1:56 pm
Can we please stop talking about a SCOTUS appeal??? SCOTUS cannot overrule the IL S. Ct. on a matter of state constitutional interpretation.

Comment by Irish guy Wednesday, Feb 11, 15 @ 1:58 pm
Unless, for example, SCOTUS finds that the state constitution conflicts with the federal constitution, which is inapplicable. Regardless, there are no federal questions here.

Comment by Irish guy Wednesday, Feb 11, 15 @ 2:06 pm
Speaking of pension fixes. Maybe the Gov should read this on the added cost of 401k plans.

http://www.reuters.com/article/2015/02/10/usa-pensions-ners-idUSL1N0VK31Y20150210

Comment by Norseman Wednesday, Feb 11, 15 @ 2:26 pm
The state has a problem largely of its own making. They underfunded the pension system and now have a large unfunded liability. The state will end up amortizing that debt out over 30 or 40 years at a fixed amount. The state then can continue to make the normal payment. Any pension system, if not properly funded, will experience a large problem. The single biggest factor in a pension system is proper funding not the benefit per say. The benefit can legitimately be argued as too gracious etc. but the systems health is dependent on proper funding. Look no further then tier 2 for the proper way to make changes in a pension system going forward. If you move to a 401K style system there will no longer be new tier 2 employees paying into and helping to fix the pension system.

Comment by facts are stubborn things Wednesday, Feb 11, 15 @ 2:41 pm
A question for everyone. In McNamee it looks to a non-lawyer like me that the court is saying they won’t intervene until the pension obligations are in danger of not being met. The introduction to SB1 tries to make the claim that pension obligations are in danger of not being met. Can this be grounds for the court to go beyond a statement about SB1 and order the state to pay in to the pension fund on some schedule as approved by the court?

Comment by ex-ISU Wednesday, Feb 11, 15 @ 2:55 pm
There is legal precedent for a court to rule that inadequate funding is an unconstitutional impairment of benefits, and in addition to striking down SB1 under either #1 or #2 of RNUG’s scenarios above, I hope the ISC finally steps up to the plate and requires the legislature to continue funding the pensions (as they have in recent years) and eliminate most of the unfunded liability over 30 years. Below is a link to a New York State Supreme Court decision in 1993 that prohibited that state’s legislature from reducing pension funding. As you will see, New York’s constitutional provision regarding pensions is worded virtually identically to ours (because our clause was modeled after theirs).

http://www.leagle.com/decision/1993238191AD2d47_1234

Comment by Andy S. Wednesday, Feb 11, 15 @ 2:57 pm
===grounds for the court to go beyond a statement about SB1 and order the state to pay in===

The Court has already refused to do this.

Comment by Rich Miller Wednesday, Feb 11, 15 @ 2:58 pm
@ Andy S. - Wednesday, Feb 11, 15 @ 2:57 pm:

=As you will see, New York’s constitutional provision regarding pensions is worded virtually identically to ours (because our clause was modeled after theirs).=

Indeed, our pension clause was patterned after New York’s. Only Arizona, Illinois, New York and Alaska have this extra ordinary constitutional protection to their pension benfits.

Comment by facts are stubborn things Wednesday, Feb 11, 15 @ 3:11 pm
==Unless, for example, SCOTUS finds that the state constitution conflicts with the federal constitution, which is inapplicable.==

C’mon, man. There is a contracts clause in the federal constitution, and allowing SB1 to impair contracts could very well violate that clause even if it doesn’t violate the IL constitution. Where do you think all the “police powers” cases come from? They are federal cases dealing with the application of the federal contracts clause to state actions.

Comment by Anon. Wednesday, Feb 11, 15 @ 3:45 pm
Kanerva, in it’s simplest form, was “is retiree health insurance a benefit protected under the constiution’s pension clause”?
@RNUG

“SB-1 claims “police powers can override a constitutional clause”, an argument never raised in the Kanerva case.”

That is a distinction without a difference. If anything, the pension issue (SB-1) is even a weaker case than the health insurance issue.

Comment by Federalist Wednesday, Feb 11, 15 @ 3:48 pm
===grounds for the court to go beyond a statement about SB1 and order the state to pay in===

The Court has already refused to do this.

Correct! And the ISC will not do that this time ever. They will override SB 1 in its entirety and let the GA and GOV deal with it without specific resolutions or recommendations.

Comment by Federalist Wednesday, Feb 11, 15 @ 3:51 pm
- Norseman - Wednesday, Feb 11, 15 @ 9:56 am:

=== “I got my Kanerva notice yesterday. ===

Did it address how the legal fee would deducted?”

Interesting that the state loses the case, many university employees are dues paying members of the SUAA which also joined in the lawsuit, other are or were a member of unions that used lawyers and the retirees still have to pay these other attorneys.

Even more interesting that the Attorneys involved seeking the payment from retirees never asked or received permission from the retirees to represent them- but they still get a bill. Those who individually hired the “Kanerva” attorneys would logically pay them- not others.

Is this legal? What if you don’t pay these attorneys. Does that mean you don’t get the health insurance money held in escrow back because you will not pay these extra attorneys? How does that fly in the face that the ISC ruled that it was unconstitutional in the first place?

Many, many question involved.

But no matter about common sense, this is the land of, by, and for lawyers so I expect the retirees will have to pay the Kanerva attorneys or go out and hire a lawyer to protest the payment.

Comment by Federalist Wednesday, Feb 11, 15 @ 4:02 pm
The Court is never going to order funding or a tax increase due to separation of powers concerns. However, if the State actually stiffs a retiree on a pension payment, the Court may then order payments to be made directly out of the general fund which is what happened in the case about the County treasurer stipends which were not paid in full after the legislature did not appropriate enough money to the fund.

Comment by anon Wednesday, Feb 11, 15 @ 4:08 pm
SCOTUS has already watered down the federal contracts clause to include an implied exception for instances where impairment is necessary to serve an important public purpose. The federal contracts clause is a toothless tiger.

Comment by Irish guy Wednesday, Feb 11, 15 @ 4:11 pm
Further, the federal contracts clause is irrelevant if ISC finds that the state pension clause is absolute. If that happens, then state has no federal grounds whatsoever.

Comment by Irish guy Wednesday, Feb 11, 15 @ 4:15 pm
@facts are stubborn…

=Only Arizona, Illinois, New York and Alaska have this extra ordinary constitutional protection to their pension benefits.=

The only difference is that in Arizona we take that obligation seriously and properly fund the pensions to 70-80% of the obligation, which is considered pretty responsible especially compared to “union friendly” Illinois. We don’t allow teachers to strike in Arizona, which means we can keep liabilities to manageable levels. Illinois really ought to try that sometime.

Comment by Arizona Bob Wednesday, Feb 11, 15 @ 4:45 pm
== … there’s one other position that the Court could take ==

That’s an interesting possibility, something that I don’t believe either of us considered (there was liquid refreshment involved!).

== Had the Court ruled differently in McNamee, public pensions across Illinois would be adequately funded. ==

Same could be said of IFT; the courts could have ordered a minimum funding level then.

Comment by RNUG Wednesday, Feb 11, 15 @ 5:24 pm
@Arizona Bob

Am I correct in assuming if teachers are not allowed to stike that they do have arbitration rights? If so, I think most employers would prefer the opposite (right to strike vs. salary arbitration).

Comment by Stones Wednesday, Feb 11, 15 @ 7:26 pm
@arizona bob

Funding is the key — agreed. There is no greater determinant as to the health of a pension system then proper funding.

Comment by Facts are stubborn things Wednesday, Feb 11, 15 @ 9:04 pm