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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.
I cannot read the document on this mobile. What is unconstitutional about the pension law?
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.
Just to clarify, they ruled it unconstitutional in relation to the state constitution.
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.
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.
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.
Otherwise, look to Detroit's way out and declare bankruptcy.
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.
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.
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.
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
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.
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.
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 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
Awww, those mean ole retirement systems won’t play with TRS.the other four funds don't want to be combined with TRS.
As with states like Iowa where there is no problem .
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.
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.
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.
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