Jim Dey: Amendment's meaning sparks meaningful debate

Jim Dey: Amendment's meaning sparks meaningful debate

Today's column can be summed up in a few words, "Just because you're paranoid doesn't mean they're not out to get you." Or not.

Everyone knows our elected officials are desperate to solve Illinois' apocalyptic public pension woes and, at the same time, equally desperate to avoid political retribution from the voters for doing so.

So what better way to do so than to have the voters themselves approve the means by which the benefits of public employees or retirees are modified in a way that reduces, or even eliminates, the pension funds' $80 billion-plus unfunded liability.

Sure, it's black helicopter stuff, but this is Illinois, a place where the politicians don't play straight with the public for two days in a row.

Ever heard of Constitutional Amendment 49 to the Illinois Constitution? It's on the Nov. 6 ballot, and it will become law if it is approved by the supermajority of 60 percent of those voting on the question or a majority of those who cast a ballot for any office in that election.

The amendment purports to make it harder for state and local government to increase public sector pensions. It supposedly was driven by the propensity of some legislators, Chicago's Democratic House Speaker Michael Madigan to name one, to pass special legislation aimed at enhancing pension benefits of connected politicos.

Did you hear about the Madigan bill that allowed two teachers' union lobbyists, nonpublic jobs, to qualify for $100,000-plus annual public pensions by working one day each as a substitute teacher?

Backers say the proposed amendment is intended to make it more difficult to pull stunts like that by increasing the number of votes necessary to pass such legislation from a simple majority to a special two-thirds majority.

It's especially ironic that Madigan is the chief sponsor of the amendment to make it harder for people like Madigan to use the legislative process to pay off political friends with taxpayer dollars.

But some skeptics argue that the amendment's convoluted language is really a back door effort to override Article XIII, Section 5, of the Illinois Constitution, which provides that the pension benefits earned by state employees "shall not be diminished or impaired."

In other words, the Illinois Constitution states that once you earn it, no one can take it away.

It's the view of retired University of Illinois Professor John Kindt that Madigan & Co. are hiding behind the amendment's wall of words to provide the legal cover necessary to override the so-called "nonimpairment clause."

"It's a threat to all benefits," Kindt argues.

That may or may not be the case. Many do not share Kindt's interpretation.

UI economist J. Fred Giertz, who plans to vote against the amendment, said he's not concerned the proposed amendment would jeopardize the retirement benefits public employees have earned.

He acknowledged that "some people believe it's kind of a back door attempt to replace the nonimpairment clause."

"No one seems to be concerned about it within the university," Giertz said. "I think it's not a problem."

He opposes the amendment because it is sloppily drafted and fears it will have a confusing effect on local governments. But he speculated that he is in the minority.

"I think it's very likely to pass," he said.

This is technical, boring stuff. Indeed, readers may feel themselves nodding off, and that's if they haven't already stopped reading.

Here's the background.

Beset by pension woes and embarrassed by continued revelations over pension sweeteners for special groups of state employees or, even more outrageous, state pension benefits for non-state employees, legislators hatched the plan for Amendment 49 earlier this year.

Speaker Madigan filed the proposed amendment with the clerk of the Illinois House on April 9. Whatever Madigan really wants, he gets. So by May 3, both the Illinois House and Senate had signed off on the proposal by overwhelming margins.

The House vote was 113-0, with local Reps. Chapin Rose, Jason Barickman and Naomi Jakobsson voting yes. The vote in the Senate was 51-2. Area Sens. Dale Righter and Shane Cultra voted in favor while Champaign's Mike Frerichs provided one of the two no votes.

Rose said he supports the concept of requiring a two-third votes to approve pension increases in state and local government and believes that's what the amendment does.

"The clear reading of this is that it just affects future benefit increases," Rose said. "That's the way it was explained."

However, he has heard from critics and plans to meet with Kindt to listen to his interpretation. "I stand to be corrected," Rose said.

Barickman said he anticipates voting for the amendment and said it was prompted by a desire to "allow voters a direct opportunity to weigh in on some of the pension reform measures" considered in Springfield.

"My intent was certainly not to try to create a back door way to reduce already accrued benefits," he said.

Barickman emphasized that he is not providing a legal interpretation of the amendment's language, just describing its purported intent.

Sen. Frerichs attributed his no vote to the poor drafting of the amendment.

"It could have been a lot more simple and clear," he said.

The proposed amendment is so long that it will not be printed on ballots. Instead, voters will be provided the conventional explanation of its meaning and asked to vote yes or no.

Kindt suggested that the extraordinary length of the proposed amendment is no accident. He said it "contains more words than the entire first 10 amendments to the U.S. Constitution" and that the "obvious intent ... is to hide its true impact from voters in a 700-word avalanche of unnecessary and deceptive words."

Critics have focused on the amendment's final paragraph, which was added at the last minute of legislative review, as the game changer.

Here's what it states:

"Nothing in this section shall prevent the passage or adoption of any law, ordinance, resolution, rule, policy or practice that further restricts the ability to provide a 'benefit increase,' 'emolument increase,' or 'beneficial determination,' as those terms are used under this section."

For starters, what does "beneficial determination" mean? Isn't that another way of saying a determination of benefits?

But what about the entire paragraph?

Springfield lobbyist Dick Lockhart, in a memo sent to his clients, said he interprets it to mean the following: "Although providing or increasing a benefit would require a three-fifths vote of the governing body, like a school board or a city council, restricting or eliminating a benefit can be done with a simple majority vote."

That's the black helicopter interpretation — the conspiracy theory view of the amendment's real intent.

Of course, what the amendment really means can only be divined by the judicial branch of government. So the question of the amendment's meaning is open to debate until the courts make an interpretation.

There also is a conspiracy theory about the conspiracy theory. Noting public employee unions and various retiree groups oppose Amendment 49 because it will make it harder to win benefit increases, Rose said he wonders "if there is really something (to what the critics are saying) or are they trying to scare people into opposing it?"

This is a debate over legal definitions with no definitive answers — at least not until the amendment passes and the legal questions are addressed in court. But by then, it might — with emphasis on the word "might" — be too late.

Here's a link to the complete language, at the General Assembly's website.

Jim Dey, a member of The News-Gazette staff, can be reached by email at jdey@news-gazette.com or at 351-5369.

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proudliberal84 wrote on October 06, 2012 at 11:10 am

Another reason to oppose this constitutional amendment is the super-majory requirement it imposes on our legislatures. Such requirements are not healthy and often exacerbate the problems or hinder solutions. For example, consider California's decades-old super-majoritary requirement for raising taxes, which has hobbled their officials' ability to solve their fiscal crisis. Now, this is independent of whether raising taxes is a good idea or not. Instead, these super-majority requirements force officials to choose other paths, like in California where they institute all sorts of fees to make up for the revenue they cannot raise via taxes. (One problem with fees of course is they are often hidden, but that is neither here nor there.) The legislative process works better when elected majorities can do what they want and voters can decide to retain or throw out elected majorities because of the actions they take.

There are lots of other reasons to oppose this amendment as well, of course.

charliecrothers wrote on October 06, 2012 at 5:10 pm

My Dad told me, when I was 15 years old, "If the Insurance company ever comes to you with a new plan or product to replace the policy I bought for you today,,, tell them to get lost.  When "they" come to you with a proposed "change", its a bad deal and primarily benefits them, not you". 

And he was right.  My policies, I bought 4 more under options every 5 years, have been cheap, built up cash/loan value and paid dividends that now pay the premiums, all wonderful things that have been chiseled away by the BIG life insurance companies over the years.  Today, you can't buy a policy as good as mine from 45 years ago.

This proposed amendment, this "slight-of-hand", introduced by the prank-master Madigan, reeks of subterfuge and skullduggery.  AVOID it for what it is, a backdoor means of messing with current annuitants. If you want to deal with future contracts between Teachers, or State Employees and their retirement or other benefits, then it needs to be done in the open. 

Consider the source.  This is no different than the insurance salesman who wants to come out to your house some evening and convince you to convert all your "old" flea-bitten policies to something wonderful,,, like "whole-life"... 

Vote NO to amend Article XIII of the Illinois Constitution!!!

read the DI wrote on October 06, 2012 at 6:10 pm

Jim Dey calling something boring is like white criticizing white for being white.

Sid Saltfork wrote on October 06, 2012 at 7:10 pm

It is an attempt to make a retroactive law.  Someone owes a debt based on law; but writes a new law abolishing the debt.  If the legislature wants to change benefits for current employees that is one thing; but to make it retroactive to change benefits already earned is criminal.  It definitely violates contract law.  It simply means that a government enity would stiff all of it's creditors, bond holders, and retired employees.  Debts cannot be erased by passing a new amendment.  States cannot declare bankruptcy either.  States can stop spending on pork barrel projects, corporate tax breaks; and raise taxes.  The elimination of retired persons being exempt from paying state income taxes can be done also. 

Everyone has to share the pain; not just a selected group.

bmwest wrote on October 07, 2012 at 12:10 am
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I don't think that the last paragraph of the amendment was intended to cut earned benefits but, even it it were, I don't think the courts would rule this unclear language to supercede the clearly written impairment clause.  Even if they did, I think any change would be struck down by federal contract law.  The best they might be able to get out of it is justification to change not-yet-earned benefits.

What I haven't heard anyone talk about is the bipartisan support benefit increases typically receive.  As I understand it, they are supported nearly unanimously by both parties since the bill is typically on their successor while it buys them votes now.  So, because it is so poorly written and because a pension increase vote is unlikely to be affected by this change from 50% to 60% yes votes required to pass, I plan to vote against it.

I really wish they'd just change the plans for not-yet-earned benefits for whatever they're going to cut from current employees such as myself.  A combination of Social Security and a 457 plan with matching funds required to be paid at the same time as the paycheck would be ideal because the state can't underfund those.  That takes the state off the hook for investment gains/losses, eliminates the need for systems with different rules, and eliminates Social Security offset penalties for those who worked both in regular and exempt jobs during their career.  I'm not sure the state could afford it, though, since it's so far behind as it is now and they'd have to actually make the payments on time every time as well as chip away at the underfunding on the old plans.

Sid Saltfork wrote on October 07, 2012 at 11:10 am

You are right about the Social Security offset penalties.  Someone can work in the private sector for 20 years paying into Social Security, and work 20 years in the university setting only to find out at the time of retirement that they will receive only 40% of their Social Security retirement amount.  In 1969; all new state employees were required to pay into both their pension system, and Social Security.  This reduced the pension cost to the state.  The university employees were not allowed to do so.  The idea was that they would work all of their income lives for the university.  Academics would work only in academia of course.  The Civil Service employees were lumped into it also.  Any young person thinking about employment in the state university system needs to take this into account.  More, and more young people are disregarding state, or university employment due to the concern for their future.  Young people considering teaching as a profession should have the same concern.

FarmField wrote on October 10, 2012 at 2:10 am

Benefit increases, enacted after the Pension Protection Clause was added to the Illinois State Constitution at the 1970 Constitutional Convention, is the primary cause of higher pensions.  If the five state pensions (TRS, SURS, SERS, JRS, GARS) were at 1970 benefit levels the pensions would be perfectly affordable and the State could make its annual contribution to TRS, for example.  1970 benefits were perfectly fine.  Emboldened that the pension protection clause stated pensions could not be "diminished or impaired" even if benefits were increased, legislators exchanged benefit increase legislation for campaign contributions and votes every year (except two) from 1971-2011.  This is revealed in the book Illinois Pension Scam by Bill Zettler.  You can also refer to "Evolution of the TRS Benefit Structure" on the TRS website.  What were some of the TRS (Teachers Retirement System) benefit increases passed in that time period?  Cost of Living Allowance (COLA) went from 1.5% not compunded to 3% compounded.  Sick leave credit increased from 1/2 year to 2 years.  Note that sick leave is often exchanged for years of service credit at retirement to allow one to retire earlier.  Annual Accrual rate (service credit muiltiplier) increased from 1.5% to 2.2%.  Note that years of service credit is different than actual years worked thanks to many schemes such as exchanging unused sick leave for years of service credit.  The minimum age to retire to receive the maximum possible pension decreased from 66 years to 55 years.  The minimum number of years worked to receive the maximum pension decreased from 45 years to 33 years.  The maximum rate (years of service factor) increased from 70% to 75%.  Typically in TRS for example the maximum rate (years of service factor) is multiplied by the average of the last 4 years pensionable income (salary plus perks) to determine starting pension.  The early retirement option (ERO) was introduced which allows employees to purchase credits at a discounted rate to retire earlier.  How did your legislator vote on benefit increase legislation that became law (Public Act)?  You would need a list of the House Bills, Senate Bills, and then look up the Roll Call (voting record) for each bill.  Michael Madigan was a delegate at the 1970 Constitutional Convention, first voted into office as a State Rep in 1970, took office in 1971, has been a State Rep ever since, has been Speaker of the House (#1 position in the House of Representatives) since 1983 (except 1995-6 when a Republican held that position), bills can be watered down or tabled indefinitely in the House Rules Committee, and is Chair of the Illinois Democratic Party.

Sid Saltfork wrote on October 11, 2012 at 11:10 am

Your points are valid as they pertain to TRS.  The public needs to keep in mind that SERS, and SURS differ from TRS.  Each pension system has it's own issues, and policies.  The GARS (legislators), and the Judges Retirement System differ from the others also.  Interestingly, the Judges Retirement System is being exempted from pension reform by the legislators.  Wonder why?

Senate Bill 1313 was passed last spring requiring retirees to pay a portion of their earned health care insurance after they had been told that it would be covered by their employer after 20 years of service.  Interestingly; a retired judge, and a group of retired administrators filed a lawsuit over the retroactive law.  It will go to the courts.

The public needs to make the distinction between the pension systems; and those who benefit the most from them.  It is not the retired front line workers that get the headlines when pension abuse is in the news.  Now, the pension reform matter is back into the hands of the legislators who benefit the most from their pension system.  It's Illinois.  What'da you gonna do?