Public pension reform effort by the Illinois State Legislature ruled unconstitutional by the Supreme Court of Illinois
In re Pension Reform Litigation, [Doris Heaton, et al,] v Pat Quinn, Governor, State of Illinois, et al, Supreme Court of Illinois, 2015 IL Docket 118585,
In this action the plaintiff contended the Act amending Illinois Pension Code (40 ILCS 5/1-101 et seq.) by reducing retirement annuity benefits for individuals who first became members of four of Illinois’ five State-funded pension systems prior to January 1, 2011 was unconstitutional. Members of the retirement systems affected by Public Act 98-599 and groups representing those members brought five separate actions challenging the validity of the new law on the grounds that it violated numerous provisions of the Illinois Constitution of 1970, including Article XIII, section 5 (Ill. Const. 1970, Art. XIII, § 5), popularly known as the Pension Protection Clause.
The Circuit Court declared Public Act 98-599 to be unconstitutional in its entirety as a violation of the so-called Pension Protection Clause, and permanently enjoined its enforcement. The court rejected Illinois’ claim that “the Act could be upheld, notwithstanding its violation of the Pension Protection Clause, based on the State’s reserved sovereign powers"
As the Circuit Court’s ruling invalidated a statute of the State of Illinois, Illinois could appeal directly to the Illinois Supreme Court.
Illinois has five State-funded Retirement Systems [Systems] for public employees, which Systems provide traditional defined benefit plans under which members earn specific benefits based on their years of service, income and age. All five Systems are subject to the pension protection clause set out in Illinois’ State Constitution, which provides that “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” [Ill. Const. 1970, art. XIII, § 5].
Concern over ongoing funding deficiencies and the attendant threat to the security of retirees in public pension systems eventually led directly to adoption of Article XIII, section 5, the Pension Protection Clause, when the new Constitution was adopted in 1970 inresponse to “the poor job governmental entities had done in meeting their pension obligations over time” whereby during the past twenty-two “the unfunded accrued liabilities of these pension plans in Illinois have increased from about $359,000,000 to almost $2,500,000,000, and the unfunded accrued liabilities are real and are not theoretical obligations based upon service already rendered.”
The advocates for adopting Article XIII, [see Record of Proceedings, Sixth Illinois Constitutional Convention 2925 (statements of Delegate Green)] argued that “Our language is that language that is in the New York Constitution which was adopted in 1938, really under a similar circumstance. In 1938 you were about at the end of the Depression, but there was a great consideration on the part of the New York General Assembly to really cut out some of the money that they were giving to the pension programs in New York; and it was for this reason that the New York Constitution adopted the language that we are suggesting. Since that time, the state of New York the pension funds for public employees have been fully funded, and so I think we have good reason to believe that this type of language will be a mandate to the General Assembly to do something which they have not previously done in some twenty-two years.”
After a scholarly analysis of the issues relevant to this case, the Supreme Court sustained the Circuit Court’s conclusion that Public Act 98-599 was void and unenforceable in its entirety, thereby holding that the Act was unconstitutional and sustained the Circuit Court’s “permanently enjoining its enforcement.”
The decision is posted on the Internet at: