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* Background is here if you need it. From the 2nd District of the Illinois appellate court on Arlington Heights Police Pension Fund v. Pritzker…
The plaintiffs who are individual active- and retired-beneficiary representatives from multiple suburban and downstate police and firefighter pension funds appeal from the trial court’s order granting summary judgment in favor of defendants. We affirm.
In 2019, defendant Governor Jay Robert “J.B.” Pritzker signed into law Public Act 101- 610 (eff. Jan. 1, 2020) (Act) that, inter alia, amended portions of the Illinois Pension Code. Prior to the Act, there were approximately 650 local police and firefighter pension funds for municipalities with populations between 5000 and 500,000. These funds were governed by five-member boards comprised of two appointed members, two members elected by active members, and one member elected by other beneficiaries (i.e., retirees). I Each board was responsible for determining the retirement, disability, and death benefits payable to fund members and other beneficiaries. […]
Plaintiffs filed a three-count complaint seeking declaratory, injunctive, and other relief and a finding that the Act violated article XIII, section 5, of the Illinois Constitution, commonly known as the pension protection clause (count I), and/or article I, section 16 of the Illinois Constitution, commonly known as the contracts clause (count II), and/or article I, section 15 of the Illinois Constitution, commonly known as the takings clause (count III). The trial court granted certain of defendants’ motions to dismiss; all of the named funds were dismissed as plaintiffs for lack of standing, and count II was dismissed against the remaining plaintiffs for failing to state a cause of action under the contracts clause. These rulings are not challenged on appeal. The trial court later entered summary judgment on counts I and III in favor of defendants. It is from this grant of summary judgment that this appeal arises. […]
Plaintiffs first assert that the Act violates the pension protection clause because it impairs the members’ rights to vote in the election of local pension board members “and to have that local board control and invest local pension funds.” According to plaintiffs, voting rights are a benefit that flows from the contractual relationship and, therefore, cannot be changed. […]
We determine that the ability to vote in the election of local pension board members and to have that local board control and invest local pension funds is not of the same nature and essentiality as the ability to participate in the fund, accumulate credited time, or receive health care, disability, and life insurance coverage. Voting for the local board is, at best, ancillary to a participant’s receipt of the pension payment and other assets. The local boards were entrusted with investing the contributions so that payments could be made to participants. However, choosing who invests funds does not guarantee a particular outcome for benefit payments. The local boards also did not have any say in the actual method of funding; contribution requirements were set in the Pension Code. […]
Plaintiffs make no argument as to how the requirement to pay for the administration of the funds would in any way impair or diminish the payment of their pension benefits. The local funds are already required to pay the costs of administration of the local funds, and plaintiffs do not cite any evidence to show that the costs of administration of the new funds, even including startup costs, would be any greater. … Plaintiffs present no evidence that the Act actually reduced the funding available for the payment of benefits. We find no error in the trial court’s grant of summary judgment in defendants’ favor as to count I and grant plaintiffs no relief. […]
Plaintiffs next contend that the Act violates the takings clause of the Illinois Constitution. Article I, section 15 of the Illinois Constitution states: “Private property shall not be taken or damaged for public use without just compensation as provided by law. Such compensation shall be determined by a jury as provided by law.” […]
Plaintiffs are individual active and retiree/beneficiaries of the local funds: they have no right to the investments held by the funds; rather, they are entitled only to present or future payments from the funds. No plaintiff has any right to direct the investment of the monies held by the funds or direct that they receive any different course of payments (either in amount or frequency) beyond that established by statute and the funds. Simply put, plaintiffs do not own the funds that the Act requires to be transferred to the new statewide police and firefighter pension investment funds. The Act does nothing more than require one type of government-created pension fund to transfer assets to another type of government-created pension fund. Plaintiffs’ rights to receive benefit payments are not impacted by these transfers. As the “property” at issue here is not the private property of the plaintiffs, the takings clause is neither relevant nor applicable here. Thus, we find no error in the trial court’s grant of summary judgment on count III.
For these reasons, the judgment of the circuit court of Kane County is affirmed.
This law has been in effect for three years now. And this was a no-brainer case for the trial and appellate courts. Just ridiculous. And the fact that the plaintiffs argued that the public pension funds is their “property” really tells you a lot about the plaintiffs.
posted by Rich Miller
Tuesday, Feb 7, 23 @ 12:55 pm
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Guess they’ll have to find another way to maintain their rewards status with the airlines and resorts.
Comment by The Opinions Bureau Tuesday, Feb 7, 23 @ 12:58 pm
ah I love the smell of consolidation. please continue…..
Comment by Amalia Tuesday, Feb 7, 23 @ 1:00 pm
Consolidations … can we now address Townships? School Districts?
Comment by Anyone Remember Tuesday, Feb 7, 23 @ 1:25 pm
There was one northern suburbs where the board members would register for pension seminars in Hawaii or other hot spots and of course the spouses would join since accommodations were being reimbursed by the pension fund. Those same courses were available in state or nearby Wisconsin. Guess they will miss those perks.
Comment by Former Auditor Tuesday, Feb 7, 23 @ 1:30 pm
This legislation does nothing to address local boards going on junkets. They still have that ability since they still vote on expenses of their local funds. All the consolidation bill did was consolidate the investments into two funds for purposes of getting better returns and reducing admin costs. As Rich said, this was a no-brainer.
The ones fighting this were the local investment advisors and IPPFA who were making a fortune charging these funds for little benefit.
Comment by Vader Tuesday, Feb 7, 23 @ 3:02 pm
The junkets need to stop. IML/EIU offer free police and fire pension trustee training.
Comment by Robert Montgomery Tuesday, Feb 7, 23 @ 6:30 pm
I thought the asserted purpose of the junkets was to learn how to prudently invest. If they aren’t doing the investing anymore there is even less reason for them.
Comment by Big Dipper Tuesday, Feb 7, 23 @ 7:28 pm