Pension Article by Chris Wetterich

[cdillon]

By CHRIS WETTERICH
THE STATE JOURNAL-REGISTER
Posted Mar 02, 2011 @ 11:00 PM
Last update Mar 03, 2011 @ 05:53 AM

The people who wrote the 1970 Illinois Constitution knew they were guaranteeing public employees that their pensions would not be reduced once they started working, according to a new legal analysis by the Senate Democrats’ top lawyer.
The 76-page report – complete with 630 footnotes – attempts to refute arguments by the Civic Committee of the Commercial Club of Chicago that the legislature has the power to change future benefits for current employees.
Over the last eight months, Eric Madiar, chief legislative counsel to Senate President John Cullerton, D-Chicago, reviewed the debates at the constitutional convention, related court cases and the papers of Henry Green, one of the sponsors of the constitution’s pension clause, which are at the University of Illinois.
“In sum, welching is not a legal option available to the state,” Madiar concluded.
However, the state could negotiate a reduction in future pension benefits for current employees, he added.
In a statement Wednesday, the Civic Committee stood behind its position. That organization had the Chicago law firm of Sidley Austin draft its own legal opinion about why future benefits for existing workers can be modified.
“We are confident that it is possible to reform retirement benefits for current public employees in accordance with the Illinois Constitution,” the statement said. “We believe it is in everyone’s best interests to reform retirement benefits for public employees in a way that significantly reduces costs and provides pension benefits into the future.”
Debate continues
Madiar’s analysis simply fuels the debate over public employees’ pension rights.
House Speaker Michael Madigan, D-Chicago, himself a delegate to the constitutional convention, has said he is open to a bill reducing future benefits. It will face a certain court challenge if passed.
Cullerton has said reducing benefits is unconstitutional but he would allow a Senate hearing if the House passes pension reductions.
Cullerton told The State Journal-Register editorial board last week that he didn’t tell Madiar what to write.
“I told him to just do the research,” Cullerton said.
When the pension clause was inserted into the constitution, state pensions were no better funded than they are today, leading public employee groups to push for the framers to better protect them. Today, the five state-funded systems, which cover state employees, public school teachers, university employees, legislators and judges, have $84.2 billion in liabilities and are 39 percent funded. In 1970, the five systems were 42 percent funded.
Prior to the 1970 Constitution, only judges and legislators’ pensions were constitutionally protected. Other public pensions “could be modified or abolished by the legislature at any time,” Madiar wrote.
“[P]ublic employees believed the government would abandon the already underfunded pension system in an economic crisis,” he wrote.
Green and convention delegate Helen Kinney introduced the pension clause at the convention.
Delegates' intentions
Kinney and Green talked about the intentions behind the clause during floor debate, Madiar wrote.
“Benefits not being diminished really refers to this situation: If a police officer accepted employment under a provision where he was entitled to retire at two-thirds of his salary after 20 years of service, that could not be subsequently changed to say he was entitled to one-third of his salary after 30 years of service, or perhaps entitled to nothing,” Kinney said.
“[I]f you mandate the public employees in the state of Illinois to put in their 5 percent or 8 percent or whatever it may be monthly, and you say when you employ these people, ‘Now if you do this, when you reach 65, you will receive $287 a month,’ that is in fact what you will get,” Green said.
Delegates twice approved the clause: Once on July 21, 1970 by a 57-36 vote, with six members voting present, and again on Aug. 31, 1970 by a 99-3-2 vote.
In August 1970, state Sen. E.B. Groen, the chairman of the state’s Pension Laws Commission, asked Green to change the clause so lawmakers could make “reasonable modifications” to benefits, Madiar wrote. Green rejected the suggestions.
In its analysis, Sidley Austin argues that the two delegates’ opinions do not prove the rest of the convention shared those views.
“The personal views of one delegate cannot compel the adoption of an interpretation of the pension clause that is not supported by its plain meaning and that is contrary to settled principles of constitutional interpretation,” the law firm wrote.
Madiar said Sidley Austin’s reading of the debates is “myopic.”
“Illinois courts generally afford significant weight to sponsor statements when discerning the original intent and purpose of statutes and constitutional provisions,” he wrote.
***
The Illinois Constitution’s Pension Clause
“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.”
Copyright 2011 The State Journal-Register. Some rights reserved