Pension bill expected to head to courts soon after Quinn signs it

SPRINGFIELD — After narrowly passing the Senate with no votes to spare and the House with two votes more than needed, a controversial pension reform bill is headed to Gov. Pat Quinn, who says he will sign it.

Next stop after that: the courts.

Senate Bill 1, a product of a 10-member bipartisan House-Senate conference committee and the four top legislative leaders, barely cleared the General Assembly on Tuesday with a 30-24 roll call in the Senate and 62-53 in the House.

Thirty votes were need in the Senate and 60 in the House.

But opponents of the measure, including labor unions, legislators, and public employee and retiree groups, said they believe that the legislation is unconstitutional and that it will be tossed out by the courts.

The most commonly cited reason is that the bill, which supporters say will save the state $160 billion in pension costs over the next 30 years, represents a violation of the Illinois Constitution's clause that says that membership in a pension system is considered "an enforceable contractual relationship, the benefits of which shall not be diminished or impaired."

One provision of the legislation pushes back the retirement age for workers ages 45 and younger, on a sliding scale.

Most significantly, annual 3 percent cost-of-living increases for retirees are replaced with a less-costly system that only provides the increases on a portion of benefits, based on how many years a beneficiary was on the job. Supporters of the reform bill said the 3 percent COLA was the biggest factor in the state's estimated $100 billion pension shortfall.

Sen. Dale Righter, R-Mattoon, hesitated to say how he thought the courts would rule.

"I think that it faces a stiff challenge, to say the least," said Righter, a lawyer.

Others were insistent that if the bill wasn't unconstitutional, it was immoral.

"We as a body of lawmakers can't look at this and say that this is inherently wrong, this is inherently unfair, this is a promise broken?" said Sen. Linda Holmes, D-Aurora. "This is actually no different than a thief coming into your house in the night and stealing your valuables. The difference is this isn't a thief coming in the night; this is your elected representatives coming to you, looking you straight in the eye and saying I'm going to take away your future. That is more than a promise broken. That is reprehensible."

Sen. William Delgado, D-Chicago, said the bill was "morally wrong, morally corrupt, and we should not be robbing the benefits of these hard-working people."

Linda Brookhart, executive director of the State Universities Annuitants Association, said the legislation "violates long-standing principles of contract law and the Illinois Constitution."

Tom Ryder, a former state representative who is now a lobbyist for the Illinois State Employees Association Retirees, said that "those who retire expected the rules on the day that they retired to be in effect for their retirement. They planned for it, they paid for it and they earned it.

"To now suggest that the rule changes that are part of this bill, for those folks who have already retired, are in some way appropriate does not face those facts for one simple reason: The retirees have no options."

But others said they believed the legislation would be upheld by the courts.

"I do believe that this bill is constitutional," said Rep. Elaine Nekritz, D-Northbrook. "And while that will certainly be up to the Supreme Court to make that decision, we've given our lawyers a number of tools to argue this case so that it will be considered constitutional."

Those tools, lawmakers said, included provisions that allow for a defined contribution option for a limited number of state employees, a 1 percent cut in employee contributions to the pension funds and more aggressive funding of the pension systems.

Madigan also said that the judges retirement system was exempted from the pension reform bill "to eliminate the possibility of a judicial conflict during the adjudication of this matter through the courts system."

Rep. David Leitch, R-Peoria, a member of the House since 1986, noted the 3 percent compounded cost-of-living adjustment was approved by lawmakers in 1989.

"It didn't take this long to adopt that bill," Leitch said. "Clearly that is much easier to pass than to deal with what we're dealing with today. It was my opinion then and I've been vindicated now that in the course of adopting a 3 percent compounded COLA we were putting dynamite into a pension system."

Leitch was one of the few downstaters to vote for the pension reform.

"Today we have to confront the fact that I don't believe there will be a defined benefit system in the future if we don't have the courage today to step up and do what has to be done and rescue this system," he said. "It's not a matter of whether you'd like to or you'd not like to. It's a matter of fundamental mathematics. It's a matter of compound interest. It's what Einstein referred to as the eighth wonder of the world. Compound interest is wonderful when it's on your side. It's devastating when it's not."

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Joe Melugins wrote on December 04, 2013 at 7:12 am

The Center for Tax and Budget Accountability  came up with the senarios below on the new pension law.  My situation is very similar to Employee 2 below.  That means I stand to loose $261.001 over 20 years of retirment.  I will only be working 5 more years till I reach 67 and plan to retire. 

The "considerations" that the new law offers to make it constitutional, don't quite cut it.  I will save 4 thousand dollars from the 1% less contribution while I am working, but it will cost me $261,001.   And the part about the State being required to make its payments also being a consideration, is like giving a good citizenship award to a  thief, for promising not to rob any banks in the future.

Employee 1: Retired teacher, 30 years of service

Initial annual benefit: $67,000

Annual pension benefit after 20 years of retirement: $121,009 a year under the current pension system; $91,183 under the proposed changes

Cumulative 20-year decrease: $284,030

___

Employee 2: Retired Department of Children and Family Services caseworker, 20 years of service

Initial annual benefit: $50,000

Annual pension benefit after 20 years of retirement: $90,306 under current system; $63,000 under proposed changes

Cumulative 20-year decrease: $261,001

 

Illiniwek222 wrote on December 04, 2013 at 9:12 am

Who in the private sector receives pensions anywhere near this percentage of salary, even after the cuts. Quit whining and be grateful.

Alexander wrote on December 04, 2013 at 11:12 am

Ah the old "private sector" argument. I'll skip past tax dollars used to support the "private sector" and go straight to this -- Yeah, think about all the people in the third world who don't have a roof over their head or clean water to drink or for that matter law and order (ahem police). How about I come over to your house, take everything in it, strip your savings clean and say you should be grateful to still be alive.

spangwurfelt wrote on December 04, 2013 at 6:12 pm

"How about I come over to your house, take everything in it, strip your savings clean and say you should be grateful to still be alive."

You left out, "and then name our football mascot after you too."

Alexander wrote on December 04, 2013 at 8:12 am

Correct me if I'm wrong -- but what stops the legislature in the future just gutting the "sueable" requirement for yearly funding of the pensions? If the constitution isn't a strong enough guarantee, why would an ordinary bill be? 

MsAnneThrope wrote on December 04, 2013 at 12:12 pm

 “Who” and “whoever” are subjective pronouns; “whom” and “whomever” are in the objective case. That simply means that “who” (and the same for “whoever”) is always subject to a verb, and that “whom” (and the same for “whomever”) is always working as an object in a sentence. 
    

yates wrote on December 04, 2013 at 3:12 pm

This bill reminds me of Obama Care. A group of like minded elected officials stealing from one group to satisfy another. Good luck with the court challenge.

Sid Saltfork wrote on December 04, 2013 at 5:12 pm

Well, your satisfied arn't you?

yates wrote on December 05, 2013 at 11:12 am

Yea Sid , Im satisified I have to $ub$idize my kids health care plans because they no longer can afford to pay for them under your Obama Care. Looks like everybody is losers.

Sid Saltfork wrote on December 05, 2013 at 3:12 pm

Not everybody, yates; not everybody.

Local Yocal wrote on December 05, 2013 at 3:12 am
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This may be overcynical here, but it seems Speaker At-It-Again knows darn well this legislation violates the Constitution. This is a diminishment and an impairment. Unknown is how the justices can weasel around this language, but we've seen a mandate to buy health insurance become "a new tax," so anything can happen.

The exempt justices might want to appear fair and impartial and declare the law unconstitutional (a year from now? after November elections) and the legislature is then sent back to the scribbling board, thus,..... net effect is "appearing to look like we're doing something for votes in November" creating the perfect political solution: stalling for more time without raising taxes (new revenue), and without cutting a budget prior to election time.

Public employees, your retirement can has been kicked once again.

Interesting there's been no detailed report of who voted for and who voted against, and most controversial, who voted present or were absent to create the close vote. What? Was Cullerton sent to kidnap certain legislators?

It seems a study of which legislators voted yes because their districts aren't laden with public employees and dependent on unions, and those who voted no where public employees and unions are a substantial voting bloc is in order. Call it Masterpiece Political Theater. Those with nothing to lose can vote for it; those needing to appear like champions of the public employees can vote against it with neither hurting their re-election chances or stopping the thing from going to the courts.

SB 1 was never meant to fix anything, it was intended to get tied up in the courts and find out if Illinois' Constitution stands in the way of gouging the public sector, the best way to avoid raising revenue or cutting a budget.

Whenever lawyers draft legislation that deliberately runs counter to the law, the game looks rigged from the get-go.

It may be an underestimation of the clerical abilities of legislative staff, but 327 pages doesn't get typed overnight, so this has been in the works, (how was it the media was able to know its passage was certain?) and in classic At-It-Again fashion, sprung on the legislature (and public) quickly and with little time to review the details and avoid the risk of an informed and enraged public. We're not going to have any Wisconsin-protest crap down here in Springfield.

How does breaking contracts and reneging on deals improve your bond rating? Do the actuary tables suggest there is time to fool around with this until 2044?

Dan Corkery wrote on December 05, 2013 at 9:12 am

Please note that that there are two links above: one to the House roll call and the other to the Senate roll call.

Bulldogmojo wrote on December 10, 2013 at 8:12 am

I'm in the self managed plan. As it is currently reported the new legislation does not impact the self managed plan. I'm sure they tried to see if there was a way to divert assets from this plan as stealing is what they do and no private sector company would agree to an IOU

Now how can you allow one class of retirement investors to enjoy legal protections to their contractually earned money and rip off another class in the same state?

My current value in my self managed plan is $126,948.59

My contributions to date are $49,002.73

The state's contribution is $33,280.04 (on deposit they can't take back)

I set the allocation and I have no particular skill in accounting or investing. If I can manage to get these kinds of returns the only problem with the state is it's ability to steal the money from the pensions. These people need to be stopped by any legal means necessary or they will continue to do it.

Also all the union haters who are state employees need to keep in mind our unions are also representing YOUR interests in court to safeguard your pensions as well

Sid Saltfork wrote on December 10, 2013 at 5:12 pm

Your referring the "fair share" members I assume.  The people who want the help, but do not want to pay for it.  They are the same people who want the real union members to demonstrate, protest, and if necessary, strike.  Those people who demand angrily: "What is the union doing about this!"   Yeah, I know some of those people.

People seem to not understand that "the union" is them.  Now, all of the unions have banded as one.  WE ARE ONE represents all of the state, university, and K-12 teachers unions.   Demonstrations were lacking this past week though.  There should have been an angry, jeering, and reckless multitude show up; and go through those expensive, fancy doors in the Capitol Building.