[Illinois] Illinois Supreme Court Declares Pension Law Unconstitutional

[SILVER SURFER]

For the foregoing reasons, the judgement of the circuit court declaring Public Act 98-599 to be unconstitutional and permanently enjoining its enforcement is affirmed.

http://www.illinoiscourts.gov/Opinions/SupremeCourt/2015/118585.pdf

 

[joG]

http://www.illinoiscourts.gov/Opinions/SupremeCourt/2015/118585.pdf

I cannot read the document on this mobile. What is unconstitutional about the pension law?

 

[haymarket]

I cannot read the document on this mobile. What is unconstitutional about the pension law?

This may help

Chicago Tribune

The Illinois Supreme Court on Friday unanimously ruled unconstitutional a landmark state pension law that aimed to scale back government worker benefits to erase a massive $105 billion retirement system debt, sending lawmakers and the new governor back to the negotiating table to try to solve the pressing financial issue.



At issue was a December 2013 state law signed by then-Democratic Gov. Pat Quinn that stopped automatic, compounded yearly cost-of-living increases for retirees, extended retirement ages for current state workers and limited the amount of salary used to calculate pension benefits.

Employee unions sued, arguing that the state constitution holds that pension benefits amount to a contractual agreement and once they're bestowed, they cannot be "diminished or impaired." A circuit court judge in Springfield agreed with that assessment in November. State government appealed that decision to the Illinois Supreme Court, arguing that economic necessity forced curbing retirement benefits.

On Friday the justices rejected that argument, saying the law clearly violated what's known as the pension protection clause in the 1970 Illinois Constitution.

"Our economy is and has always been subject to fluctuations, sometimes very extreme fluctuations," Republican Justice Lloyd Karmeier wrote on behalf of all seven justices. "The law was clear that the promised benefits would therefore have to be paid and that the responsibility for providing the state's share of the necessary funding fell squarely on the legislature's shoulders.

"The General Assembly may find itself in crisis, but it is a crisis which other public pension systems managed to avoid and ... it is a crisis for which the General Assembly itself is largely responsible," Karmeier wrote.

"It is our obligation, however, just as it is theirs, to ensure that the law is followed. That is true at all times. It is especially important in times of crisis when, as this case demonstrates, even clear principles and long-standing precedent are threatened. Crisis is not an excuse to abandon the rule of law. It is a summons to defend it," he wrote.

The ruling means Republican Gov. Bruce Rauner and the Democrat-controlled General Assembly will have to come up with a new solution after justices appeared to offer little in the way of wiggle room beyond paying what's owed, which likely would require a tax increase. Coming up with a way to bridge a budget gap of more than $6 billion already was going to be difficult with little more than three weeks before a scheduled May 31 adjournment, and now the pension mess has been added to the mix.

Rauner, who argued during last year's campaign that the law was unconstitutional and didn't go far enough to reduce the pension debt, said the court ruling only reinforces his approach of getting voters to approve a constitutional amendment that "would allow the state to move forward on common-sense pension reforms."

The governor has proposed allowing veteran state workers to keep the current benefits they've earned through a certain date, then move them into a lower-paying benefit plan created for newer state workers. To try to make that approach pass legal muster, he wants lawmakers to put on the ballot a proposed constitutional amendment to clarify that future retirement benefits could be changed.

In its ruling, the court restated that state worker retirement benefits that are promised on the first day of work cannot be later reduced during their term of employment, only increased. But it is unclear whether a change in the constitution could be applied to existing state workers. Even if reluctant lawmakers were to put a measure on the ballot and voters approved it, such a change would spur years of litigation that could involve both state and federal courts.

A coalition of unions that represent government workers and retirees applauded the ruling as protecting "the hard-earned life savings of teachers, police, firefighters, nurses, caregivers and other public service workers and retirees."

"Public service workers are helpers and problem solvers by trade. With the Supreme Court's unanimous ruling, we urge lawmakers to join us in developing a fair and constitutional solution to pension funding, and we remain ready to work with anyone of good faith to do so," Illinois AFL-CIO President Michael Carrigan said in a statement.

Hopefully this victory will be a great shot in the arm in the effort to oppose the war on pensions and retirees.

 

[clownboy]

Just to clarify, they ruled it unconstitutional in relation to the state constitution.

 

[SILVER SURFER]

Just to clarify, they ruled it unconstitutional in relation to the state constitution.

Well, yeah...should be pretty obvious that the Illinois (stated in the thread title) Supreme Court rules only on the constitutionality of Illinois laws in relation to the Illinois constitution.

 

[MMC]

Chicago's credit rating is 2 notches above junk. Emanuel knows taxes will have to be raised. Chicago has more retired cops on pensions than active duty cops. Now Rauner knows he is fighting a losing cause to not raise the taxes. Otherwise its go to the Fed for the bailout.



Yet the Illinois court blows right through this judicial standard. Based on its prior rulings, the court opines that “neither the legislature nor any executive or judicial officer may disregard the provisions of the constitution even in case of a great emergency” or “for economic reasons.”

If pensions can be modified, the court opines, then “no rights or property would be safe from the State. Today it is nullification of the right to retirement benefits. Tomorrow it could be renunciation of the duty to repay State obligations. Eventually, investment capital could be seized.” This irony of this slippery-slope fallacy is that by shielding pensions the Illinois judges are making it more likely that the state will renege on debt or other obligations. The justices cavil that politicians “made no effort to distribute the burdens evenly among Illinoisans” and could “have sought additional tax revenue.” Yet Illinois raised taxes by a record amount in 2011. The judges even suggest that it is unconstitutional to require government workers, rather than taxpayers, to shoulder the pension burden.

Republican Governor Bruce Rauner has floated an alternative: a state constitutional amendment allowing pension modifications, which would require a public referendum and two-thirds vote of the legislature. Barring that, Illinois taxpayers may want to start contemplating Indiana or Florida residency.....snip~

Illinois Pension Blowup - WSJ

 

[CanadaJohn]

http://www.illinoiscourts.gov/Opinions/SupremeCourt/2015/118585.pdf

It would be interesting to know if the Illinois Supreme Court Justices are members of the State employee pension plan that they just ruled on.

That aside, the State Constitution is an ass if it specifically speaks to pension plans and specifically states that pensions cannot be altered or reduced once offered on the first day of employment. Only liberal unionists would propose such strict language and only ignorant fools would vote to adopt it. If a constitutional amendment is required, get busy and make it happen. Otherwise, look to Detroit's way out and declare bankruptcy.

 

[MMC]

Btw this has National Implications as well.



Illinois Supreme Court Kills Pension Reform Effort
BY BLOOMBERG NEWS


The Illinois Supreme Court rejected the state's solution for its worst-in-the-U.S. $111 billion pension shortfall, handing organized labor a victory while deepening a crisis with national implications.

Across the nation, state and local governments grapple with pension deficits that exceed a combined $2 trillion, according to a Moody's Investors Service report last year. Closing that gap by reducing payments to retirees would abrogate union contracts in many states and even constitutional guarantees. In Illinois, Chicago is grappling with $20 billion in unfunded pension liabilities that threaten its solvency. "Crisis is not an excuse to abandon the rule of law," the seven-member Illinois court ruled. "It is a summons to defend it."

Friday's ruling raised the prospect of further downgrades by credit-rating firms. Investors already have been punishing Illinois. Its 10-year bonds yield about 3.7 percent, the highest since November and the most among the 20 states tracked by Bloomberg.....snip~

Read More At Investor's Business Daily: Illinois Supreme Court Kills Pension Reform Effort - Investors.com
Follow us: @IBDinvestors on Twitter | InvestorsBusinessDaily on Facebook

 

[Hard Truth]

The decision is correct. People plan their lives based on the employee benefits that their contracts require. Cheating pensioners out of the income that they had every right to expect will seriously harm people too old to work, increase welfare and other poverty related expenses, make it hard for government to find reliable employees in the future, and hurts its credibility in general. Pensions and health benefits allow government to reduce and delay expenses by attracting employees willing to sacrifice the higher salary they could get in the private sector in exchange for retirement and health benefits in the future. Governments own many assets such as parks and museums that can be sold to raise revenues if it is impossible to raise taxes or find savings in other governmental expenses.

It should be noted that many government employee unions agreed to significant give-backs during the last recession.

 

[Hard Truth]

Here's a way to save money for government that everyone should support:


"The world’s biggest and most profitable fossil fuel companies are receiving huge and rising subsidies from US taxpayers, a practice slammed as absurd by a presidential candidate given the threat of climate change.

A Guardian investigation of three specific projects, run by Shell, ExxonMobil and Marathon Petroleum, has revealed that the subsidises were all granted by politicians who received significant campaign contributions from the fossil fuel industry.

The Guardian has found that:

A proposed Shell petrochemical refinery in Pennsylvania is in line for $1.6bn (£1bn) in state subsidy, according to a deal struck in 2012 when the company made an annual profit of $26.8bn.
ExxonMobil’s upgrades to its Baton Rouge refinery in Louisiana are benefitting from $119m of state subsidy, with the support starting in 2011, when the company made a $41bn profit.
A jobs subsidy scheme worth $78m to Marathon Petroleum in Ohio began in 2011, when the company made $2.4bn in profit.

“At a time when scientists tell us we need to reduce carbon pollution to prevent catastrophic climate change, it is absurd to provide massive taxpayer subsidies that pad fossil-fuel companies’ already enormous profits,” said senator Bernie Sanders, who announced on 30 April he is running for president.

Sanders, with representative Keith Ellison, recently proposed an End Polluter Welfare Act, which they say would cut $135bn of US subsidies for fossil fuel companies over the next decade. “Between 2010 and 2014, the oil, coal, gas, utility, and natural resource extraction industries spent $1.8bn on lobbying, much of it in defence of these giveaways,” according to Sanders and Ellison.
Advertisement

In April, the president of the World Bank called for the subsidies to be scrapped immediately as poorer nations were feeling “the boot of climate change on their neck”. Globally in 2013, the most recent figures available,the coal, oil and gas industries benefited from subsidies of $550bn, four times those given to renewable energy.

 

[sangha]

It would be interesting to know if the Illinois Supreme Court Justices are members of the State employee pension plan that they just ruled on.

The decision only affects those who began receiving a pension prior to 2011, so this decision doesn't affect them directly

That aside, the State Constitution is an ass if it specifically speaks to pension plans and specifically states that pensions cannot be altered or reduced once offered on the first day of employment. Only liberal unionists would propose such strict language and only ignorant fools would vote to adopt it. If a constitutional amendment is required, get busy and make it happen. Otherwise, look to Detroit's way out and declare bankruptcy.

The constitution says the state can't just change the terms of a contract because it is unhappy with the terms it contractually obligated itself to after the other party has fulfilled their obligations. As far as "pensions cannot be altered or reduced once offered on the first day of employment", that is also not true. The state is free to negotiate changes to pension plans - they just can't change the terms on their own.

 

[MMC]

Illinois harbors hundreds of hidden pension crises.....

Illinois’ severely underfunded pension liability for the five state-run pension funds has earned national media attention. But Illinois is home to many other pension crises that too often fly under the radar. There are 675 public pension funds in Illinois. In addition to the five state-run funds, there are 359 suburban and downstate police pension funds, 301 suburban and downstate fire pension funds, a pension fund for suburban and downstate municipal workers, six pension funds in Chicago and three pension funds in Cook County, which overlaps with the city of Chicago.

These pension funds cover more than 1 million people, or 8 percent of the state’s total population, when active workers, retirees and other beneficiaries are accounted for.

Collectively, pension funds in Illinois had an unfunded liability exceeding $144 billion and an aggregate funding ratio of less than 50 percent in 2012, according the biennial pension report published by the Department of Insurance, or DOI.....snip~

https://www.illinoispolicy.org/illinois-harbors-hundreds-of-hidden-pension-crises/

According to these guys.....the report they release later this year. It will be worse.

 

[SILVER SURFER]

It would be interesting to know if the Illinois Supreme Court Justices are members of the State employee pension plan that they just ruled on.

There are five state-funded (or more accurately, state-not-funded) retirement systems: state employees, state universities, general assembly (i.e., legislature), teachers (exclusive of Chicago which has it's own municipal system), and judges. The law affected the first four but exempted the latter. Never having heard a reasonable explanation for that, I can only assume it was an attempt by the legislature to bribe the judges into a favorable decision on a constitutional challenge. Obviously, that backfired. I'm surprised the general assembly didn't also exempt themselves, although doing so would have been political suicide.

That aside, the State Constitution is an ass if it specifically speaks to pension plans and specifically states that pensions cannot be altered or reduced once offered on the first day of employment. Only liberal unionists would propose such strict language and only ignorant fools would vote to adopt it.

Illinois is not the only state with such a constitutional provision. If you read the opinion I linked, you will get the history that led to it. Briefly, the general assembly has consistently under-funded the retirement systems since at least 1917, often ignoring legislation they themselves passed requiring them to fully fund. For at least that long, they have been repeatedly warned of the consequences of said under-funding. The clause was included in the 1970 constitution in hopes it would pressure the legislature into fulfilling its obligation of funding the retirement systems, thus avoiding exactly the situation now facing the state. Unfortunately, that didn't work. Regardless who proposed the language, Illinois voters adopted it. Apparently the state has a lot of "ignorant fools"...much like Canada.

If a constitutional amendment is required, get busy and make it happen.

There have already been a couple of unsuccessful attempts to repeal the pension clause. Even if it was repealed, that might have an effect going forward but it probably wouldn't help the current deficit. The clause reads:

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

In the opinion I linked, the court alluded to contract law prohibiting unilateral change in contract terms. The state can change the terms for new employees regardless of the pension clause. If it tried to change the terms for current employees and retirees post-repeal, that likely still would be ruled a violation of the pre-repeal contract in effect at the time of employment. The courts have already set precedents that do not favor the state.

Otherwise, look to Detroit's way out and declare bankruptcy.

Apples and oranges. First off, states cannot seek protection in federal bankruptcy court. Changing that would involve some thorny constitutional questions relative to state sovereignty. Worse, it could disrupt municipal bond markets, making it even more difficult and costly for states to borrow. I don’t see a solution that doesn’t involve raising taxes.

 

[Linc]

Exactly--and I'm in that cluster**** of a pension system, TRS to be exact.
Started in 1973 when the future jail bird Gov. Walker, unrelated to his pension ****-up, signed a law to not fully match employee contributions.
Too bad GOP Gov. Ogilvie lost that election--but he was forced into an income tax hike which is still at the center of our politics .

Well, yeah...should be pretty obvious that the Illinois (stated in the thread title) Supreme Court rules only on the constitutionality of Illinois laws in relation to the Illinois constitution.

 

[Linc]

It would be interesting to know if the Illinois Supreme Court
Justices are members of the State employee pension plan that they just ruled on.

They most certainly are--some of the highest paid public pensions in the Nation.
A clear conflict of interest that new Gov. Rauner will take to the USSC--more power to him.

We couldn't even get through a low-hanging fruit bill to halt COLA that ex-Gov. Quinn signed and that Rauner supported.
Blowing another 2 billion from next year's budget now estimated at a 6 billion deficit--about the same as when Blago took over 12 years ago.

There are five state-funded (or more accurately, state-not-funded) retirement systems: state employees, state universities, general assembly (i.e., legislature), teachers (exclusive of Chicago which has it's own municipal system), and judges. The law affected the first four but exempted the latter. Never having heard a reasonable explanation for that, I can only assume it was an attempt by the legislature to bribe the judges into a favorable decision on a constitutional challenge. Obviously, that backfired. I'm surprised the general assembly didn't also exempt themselves, although doing so would have been political suicide.

The dirty little secret is that "diminished benefits" will be thrown out once the USSC sees that the General Assembly and 42 years worth
of governors didn't match the employee contributions over those years.

Add to that the coming amendment in 2018 to the Constitution that Rauner will push to the Constitution.

As well, TRS took the brunt of the missed contributions--the other four funds don't want to be combined with TRS.
As with states like Iowa where there is no problem .

 

[joG]

The decision only affects those who began receiving a pension prior to 2011, so this decision doesn't affect them directly



The constitution says the state can't just change the terms of a contract because it is unhappy with the terms it contractually obligated itself to after the other party has fulfilled their obligations. As far as "pensions cannot be altered or reduced once offered on the first day of employment", that is also not true. The state is free to negotiate changes to pension plans - they just can't change the terms on their own.

Negotiate changes? Negotiate with whom?

 

[EMNofSeattle]

They most certainly are--some of the highest paid public pensions in the Nation.
A clear conflict of interest that new Gov. Rauner will take to the USSC--more power to him.

We couldn't even get through a low-hanging fruit bill to halt COLA that ex-Gov. Quinn signed and that Rauner supported.
Blowing another 2 billion from next year's budget now estimated at a 6 billion deficit--about the same as when Blago took over 12 years ago.



The dirty little secret is that "diminished benefits" will be thrown out once the USSC sees the General Assembly and 42 years worth
of governors didn't match the employee contributions over those years.

Add to that the coming amendment in 2018 to the Constitution that Rauner will push to the Constitution.

As well, TRS took the brunt of the missed contributions--the other four funds don't want to be combined with TRS.
As with states like Iowa where there is no problem .

I think the leg should throw their hands up and do nothing about the pensions, just wait until the checks start bouncing then ask again for pension reform

 

[Linc]

I think the leg should throw their hands up and do nothing about the pensions,
just wait until the checks start bouncing then ask again for pension reform

Means-testing is the only way to deal with the public pension crisis that will explode next decade, giving us our second depression.
My cut-off level for still receiving COLA is poverty-level pension plus 30%--obviously that's debatable.
What isn't debatable is that a pensioner getting 100k a year needs 3% COLA.

It's a toss-up between California and Illinois as to who goes bankrupt first.
Ask the DEM Mayors in California stuck with unsustainable golden parachute public pensions.
But hey, unions simply started negotiating the same parachutes and EROs that administrators had been getting since public pensions began .

 

[joG]

This may help

Chicago Tribune



Hopefully this victory will be a great shot in the arm in the effort to oppose the war on pensions and retirees.

It seems clear that the States and Union have made promises they cannot sustain. But it is good that they cannot declare a non contractual obligation nor unilaterally break their obligations after the fact. Maybe this will be a small nudge to find a real solution. But the main problem is that pensions are a private good and should not be publicly supplied And above all that long-term commitments must be totally funded.

 

[EMNofSeattle]

Means-testing is the only way to deal with the public pension crisis that will explode next decade, giving us our second depression.
My cut-off level for still receiving COLA is poverty-level pension plus 30%--obviously that's debatable.
What isn't debatable is that a pensioner getting 100k a year needs 3% COLA.

It's a toss-up between California and Illinois as to who goes bankrupt first.
Ask the DEM Mayors in California stuck with unsustainable golden parachute public pensions.
But hey, unions simply started negotiating the same parachutes and EROs that administrators had been getting since public pensions began .

Nope, the Feds will just bail out california and Illinois, probably unconditionally. And we will have crises every twenty years, you have watched as I have debated with numerous people who are more left-leaning then I am, and they all say that we can't let any of the trouble of these pensions ball on the employee even though that's the only person a problem can fall on. It's not right, it's not ethical it's completely wrong to do what's necessary to save the retirement system because it was screwed up.

Regardless of why the pensions are screwed up, they are and it needs to be fixed but the majority of Democratic voters are not going to let that happen, you're going to insist that all the tax payers pay a lot of money to bail out these pension systems, unconditionally with no expectation that the systems be reformed to prevent another crisis in the future.

Just think back a few years ago to win Detroit was going bankrupt, and the state legislature of Michigan took control of the cities finances and appointed to state comptroller to the city's budget, and the residents of Detroit were absolutely pissed that the state had to take charge of their city because their city was run straight into the ground by the city leadership, they were basically upset that Lansing didn't just cut them giant checks unconditionally, when the city got into a hole so deep they couldn't even keep the street lights on

 

[Linc]

Nope, the Feds will just bail out california and Illinois, probably unconditionally. And we will have crises every twenty years, you have watched as I have debated with numerous people who are more left-leaning then I am, and they all say that we can't let any of the trouble of these pensions ball on the employee even though that's the only person a problem can fall on. It's not right, it's not ethical it's completely wrong to do what's necessary to save the retirement system because it was screwed up.

You seem to forget which party is in control in DC.
The numbers I keep hearing from Federal district judges are 44 cents on the dollar for the pension to continue.
Or just a one-time pay-off of whatever you contributed--no interest build-up over the 30 years or so.

Regardless of why the pensions are screwed up, they are and it needs to be fixed but the majority of Democratic voters are not going to let that happen, you're going to insist that all the tax payers pay a lot of money to bail out these pension systems, unconditionally with no expectation that the systems be reformed to prevent another crisis in the future.

You obviously mistake me for a liberal DEM on this issue while still acting like a wolf in Progressive clothing.
Please keep blaming it on the DEMs so I can show you what GOPs have done here in Illinois.
They're some of the biggest whiners while not needing COLA--while they held the Governor's mansion for 26 straight years while this stew was cooked.

 

[SILVER SURFER]

They most certainly are--some of the highest paid public pensions in the Nation.
A clear conflict of interest that new Gov. Rauner will take to the USSC--more power to him.

Judges are EXEMPT from the law they overturned, therefore no conflict of interest.

We couldn't even get through a low-hanging fruit bill to halt COLA that ex-Gov. Quinn signed and that Rauner supported.

If Quinn signed it, you obviously did get it through…and the ISC overturned it.

Blowing another 2 billion from next year's budget now estimated at a 6 billion deficit--about the same as when Blago took over 12 years ago.

Links? So…the deficit hasn’t increased in 12 years?

The dirty little secret is that "diminished benefits" will be thrown out once the USSC sees that the General Assembly and 42 years worth
of governors didn't match the employee contributions over those years.

Care to translate that into something intelligible? Are you trying to say the USSC will negate the Illinois constitution’s pension clause because the legislature/governors didn’t fund the retirement systems? For that matter, on what grounds would the question even get to the USSC?

Add to that the coming amendment in 2018 to the Constitution that Rauner will push to the Constitution.

See my post #13 for an explanation of why that probably wouldn’t help the current deficit.

As well, TRS took the brunt of the missed contributions

Link?

the other four funds don't want to be combined with TRS.
As with states like Iowa where there is no problem .

Awww, those mean ole retirement systems won’t play with TRS.

 

[EMNofSeattle]

You seem to forget which party is in control in DC.
The numbers I keep hearing from Federal district judges are 44 cents on the dollar for the pension to continue.
Or just a one-time pay-off of whatever you contributed--no interest build-up over the 30 years or so.




You obviously mistake me for a liberal DEM on this issue while still acting like a wolf in Progressive clothing.
Please keep blaming it on the DEMs so I can show you what GOPs have done here in Illinois.
They're some of the biggest whiners while not needing COLA--while they held the Governor's mansion for 26 straight years while this stew was cooked.

Oh there's plenty of republican blame to go around. Afterall they controlled California through the 80s and 90s and helped set up these systems, Scott Walker who's hailed as a hero for union busting just happened to exempt the unions that endorsed him for Gov.

Washington had a republican written budget passed in 2002 that delayed state payments to pensions hoping for unrealistic levels of taxes later.

The democratic former governor of IL is to be praised for siting the reform.

But the reality is, many rank and file democratic voters deny there's even a problem or if they just throw some arbitrary tax on some oil rig in Pennsylvania all will be well.

Regardless of how I politically identify (and I have explained many times I choose my label based on the turn of the century progressve movement in the style of people like William Jennings Bryan or Robert LaFollete or TR) or what you think i truly am, it doesn't change the math, and you seem to agree. I'm not criticizing you. You have it right, I think that there is insufficient political will to enact the types of reforms you are talking about, clearly at the state court level there is not.

Even if yu made a lump sum payout of principal it would still be viciously opposed by unions who prefer defined benefit systems

 

[CanadaJohn]

There are five state-funded (or more accurately, state-not-funded) retirement systems: state employees, state universities, general assembly (i.e., legislature), teachers (exclusive of Chicago which has it's own municipal system), and judges. The law affected the first four but exempted the latter. Never having heard a reasonable explanation for that, I can only assume it was an attempt by the legislature to bribe the judges into a favorable decision on a constitutional challenge. Obviously, that backfired. I'm surprised the general assembly didn't also exempt themselves, although doing so would have been political suicide.




Illinois is not the only state with such a constitutional provision. If you read the opinion I linked, you will get the history that led to it. Briefly, the general assembly has consistently under-funded the retirement systems since at least 1917, often ignoring legislation they themselves passed requiring them to fully fund. For at least that long, they have been repeatedly warned of the consequences of said under-funding. The clause was included in the 1970 constitution in hopes it would pressure the legislature into fulfilling its obligation of funding the retirement systems, thus avoiding exactly the situation now facing the state. Unfortunately, that didn't work. Regardless who proposed the language, Illinois voters adopted it. Apparently the state has a lot of "ignorant fools"...much like Canada.




There have already been a couple of unsuccessful attempts to repeal the pension clause. Even if it was repealed, that might have an effect going forward but it probably wouldn't help the current deficit. The clause reads:



In the opinion I linked, the court alluded to contract law prohibiting unilateral change in contract terms. The state can change the terms for new employees regardless of the pension clause. If it tried to change the terms for current employees and retirees post-repeal, that likely still would be ruled a violation of the pre-repeal contract in effect at the time of employment. The courts have already set precedents that do not favor the state.



Apples and oranges. First off, states cannot seek protection in federal bankruptcy court. Changing that would involve some thorny constitutional questions relative to state sovereignty. Worse, it could disrupt municipal bond markets, making it even more difficult and costly for states to borrow. I don’t see a solution that doesn’t involve raising taxes.

Thanks for that further review. I guess I'm used to the way that public pension plans work in Canada, where the government has no access or control over the pension funds/reserves and they are managed independently and the deposits to those accounts and the payments made to retirees, are totally controlled outside government. Public pension plans in Canada are extremely well run and very solvent. In fact, about a decade ago, they were so well funded they had to, by law, reduce deposits and increase payments because they had too much money on hand. More recently, with the financial crisis in 2008, a lot of investments suffered and so deposits were increased although payments weren't reduced or adversely affected.

As I've said on other threads related to public pensions in the US - there are two problems that seem prevalent - 1) the employee is not paying sufficiently into their own retirement and 2) the government has too much access to the funds/reserves to use to fund other responsibilities of government - neither one of those is good for a sustainable system.

 

[haymarket]

It seems clear that the States and Union have made promises they cannot sustain. But it is good that they cannot declare a non contractual obligation nor unilaterally break their obligations after the fact. Maybe this will be a small nudge to find a real solution. But the main problem is that pensions are a private good and should not be publicly supplied And above all that long-term commitments must be totally funded.

First, when a worker for the peoples government has earned a pension it is totally and completely proper that it be guaranteed by the government.

Second, you have offered no proof at all that these pensions are "promises they cannot sustain". No verifiable evidence has been provided to support such a claim.