Illinois Supreme Court Affirms the “Cardinal Principle” of Public Pension Legal Rights.

Comments of an Illinois state retiree and former Marine on Illinois' pension contract breach:

"As I did when I volunteered as a United States Marine Corps service member, when I volunteered for state service, I relied on citizens to have my back.  While they seem to support my service in the U.S. Armed Forces, I’m dismayed that my state service is regarded with such enmity.  Had I known, I would have eschewed state employment for the increased immediate benefits of private sector employment.  Instead of relying on our representative democracy to adhere to the rule of law and keep the promises that were made during my 34 years of state employment, I would have obtained a job in the private sector, demanded and received a much larger salary for my educational level and job requirements . . ."

"I will never forget the abandonment that I’ve felt, nor will I forget the foolishness of my naive trust in the ultimate 'I’ve got your back' attitude of every one of us here in the greatest country on Earth."

Illinois Supreme Court, last Thursday:

“Moreover . . . to the extent there is any question as to legislative intent and the clarity of the language of a pension statute, it MUST (my emphasis) be liberally construed in favor of the rights of the pensioner.” (Prazen v. Schoop.)

"Finally, we point out again a fundamental principle noted at the outset of our discussion.  Under settled Illinois law, where there is any question as to legislative intent and the clarity of the language of a pension statute, it must be liberally construed in favor of the rights of the pensioner." 

"Accordingly, to the extent that there may be any remaining doubt regarding the meaning or effect of those provisions, we are obliged to resolve that doubt in favor of the members of the State’s public retirement systems."

http://www.state.il.us/court/Opinions/SupremeCourt/2014/115811.pdf

Colorado Supreme Court:

“As was noted in Endsley v. Public Employees Retirement Association . . . (1974) ambiguities appearing in statutes regulating pension and retirement funds are construed favorably toward the employee.” (Colorado Supreme Court in Taylor v. PERA, November 17, 1975.)

http://scholar.google.com/scholar_case?case=11856628789716288634&q=Taylor+v.PERA&hl=en&as_sdt=2,6

Colorado Attorney General Duane Woodard in an Opinion of the Attorney General: “In resolving this question, I am guided by the cardinal principle that ambiguities in statutes regulating pension and retirement funds are to be construed in favor of the employee." (August 14, 1984)

http://www.coloradoattorneygeneral.gov/ag_opinions/1984/no_84_14_ag_alpha_no_pa_pe_aganf_august_14_1984

For some reason, the Colorado Supreme Court's "cardinal principle" of Colorado public pension contractual rights has gone unnoticed in the current litigation of the Colorado public pension contractual rights case, Justus v. State.  (The State of Colorado and its pension-administering arm, Colorado PERA, are currently attempting to escape contractual obligations to pay for accrued COLA benefits in the PERA pension system.  That is, the State of Colorado does not want to pay its debts.)

Has this "cardinal principle" of Colorado public pension jurisprudence been abandoned?  If so, when did Colorado courts abandon this "cardinal principle"?  If a "cardinal principle" exists in an area of Colorado jurisprudence, should that "cardinal principle" not be a factor in court decisions in that area of jurisprudence? 

What is the typical lifespan of a Colorado Supreme Court "cardinal principle"?

(Keynes has noted, "There is nothing a government hates more than to be well-informed; for it makes the process of arriving at decisions much more complicated and difficult.")

On Thursday, the Illinois Supreme Court (in a case relating to retiree health benefits) confirmed that contractual public pension benefits in Illinois cannot be retroactively diminished or impaired.

The State of Illinois has some of the worst funded public pension systems in the nation.  Nevertheless, the Illinois Supreme Court will not let Illinois politicians off the hook for their past pension system mismanagement.  (If they allowed this, moral hazard would certainly be introduced into legislative pension management.)

The Illinois Legislature, like the Colorado Legislature, has not paid its full public pension bills (ARC) for many years, and like Colorado, Illinois has racked up its public pension debt.  Also, like many Colorado state legislators, a majority of Illinois state legislators want to escape state debts through breach of public pension contracts.

This recent Illinois Supreme Court decision was surprising to many in Illinois who were under the impression that Illinois' Speaker of the House Madigan, through political influence, had four of the members of the Illinois Supreme Court in his back pocket. 

MADIGAN: "Madigan sounds confident it (the Illinois pension contract breach) will work.  'I think that there will be at least four members of the Illinois Supreme Court that will approve the bill,' he said."

http://wuisnews.wordpress.com/2013/05/24/justice-no-pension-cuts-for-illinois-judges/
http://www.suntimes.com/19841734-418/analysis-madigan-pushes-pension-plan-unions-balk-senate-vote-uncertain.html#.U7cJ-2cU-14
https://will.illinois.edu/news/story/no-pension-cuts-for-illinois-judges

Part of the legal strategy in Illinois was exclusion of judges from the enacted pension contract breach.  (I don't know if Colorado legislators considered, and rejected, this tactic when plotting Colorado's attempt at a Colorado PERA pension contract breach in 2010.)

A few on-line comments on the Illinois Supreme Court Decision:

"If federal funds were used to pay part of any state employee’s salary and benefits, (this) might be grounds for a federal appeal case on impairment of contracts even if ISC were to rule in favor of SB1."

"I think we had to go through this exercise too, and I have to say that I’m gratified that the judiciary has proven itself independent of Madigan’s chilling statement of claiming to be able to get 4 on his side.  The fat lady is tuning up on SB1."

"Finally, it looks like the ISC decided they didn’t want to be made the scapegoat for the pension problems and decided to be clear about the General Assembly’s fault in the whole mess."

(My response: August 16, 2010, “Asked why states are taking the risky strategy of aiming at current retirees, Robert Klausner, a Florida attorney who specializes in public pension law, says many state officials believe they have less to lose in the courtroom by challenging pension protections than taking no action at all. ‘The belief is that if the employer [the state] prevails, it will have been worth the political risk,’ Klausner says.  ‘And if they lose, they will be no worse off than before.’  Klausner adds that legislatures are taking the politically-difficult step and letting the courts be the ‘bad guy’ if they overturn the law.”

http://www.governing.com/news/state/States-Test-Whether-Public-Pension-Benefits-Given-Can-Be-Taken-Away.html)

Illinois pension rights blogger Fred Klonskey:

"Yesterday’s Illinois Supreme Court decision is cause for celebration.  Six of the seven judges agreed that the pension protection clause of the state’s constitution meant what it said. Contractual pension benefits between the state and all government bodies in the state cannot be diminished or impaired."

"Legal opinions suggest that (Illinois gubernatorial candidate) Rauner’s plan would not pass constitutional muster based on yesterday’s 6-1 ruling."

"But it’s bad news for (Governor) Quinn as well.  Aside from his friend Justice Ann Burke (wife of Democratic Machine boss and alderman, Fast Eddie Burke), no member of the court agrees with his plan for pension theft."

http://preaprez.wordpress.com/

From ChicagoBusiness.com:

"Pension reform dealt blow by Illinois Supreme Court."

"Pension reform, RIP?"

"In a case with ominous implications for the state's pension reform law, the Illinois Supreme Court ruled today that the state constitution prevents any diminishment of health care benefits for retired state employees."

"According to the 6-1 decision, the pension protection clause — which says that retirement benefits are a contractual agreement that 'cannot be diminished or impaired' — applies to other retirement benefits, not just pensions.  That overrode the state's argument that its emergency powers, in dealing with its budget crisis, justified an increase in what retirees must pay for their health benefits."

“'This is a major victory for members of state retirement systems,' said John Fitzgerald, a partner at Chicago law firm Tabet DiVito & Rothstein LLC who represents retired state teachers and school administrators.  'I expect it will have a very significant effect on pending litigation' over the state's pension reform law.  'It means that the Illinois Supreme Court is giving the pension protection clause the broad and liberal interpretation that the drafters intended.'”

"In an opinion written Justice Charles Freeman, a Chicago Democrat, the court indicated that it would not take a deferential approach.  The court said any changes to a pension statute 'must be liberally construed in favor of the rights of the pensioner,' quoting one of its own opinions, written in 2013, that involved a dispute over early retirement between an electrical department supervisor and the downstate city of Peru."

(My comment: An earlier observation by Gino L. DiVito comes to mind: “ . . . a short-lived pension reform that is invalidated by court order after protracted litigation . . . would be a disservice to the taxpayers.”)

"In one key paragraph, the court rejected the idea that the state's budget crisis could justify a change in retiree benefits."

"'In the challenges to the overhaul of pensions for state workers and schoolteachers outside Chicago, the state has argued that changes in the cost of living allowance are not protected by the pension clause because they are not a core retirement benefit."

“'This definitely shuts down the argument that the COLA isn't part of the benefit,' said Amanda Kass, budget director and pension specialist at the Center for Tax and Budget Accountability, a nonprofit advocacy group in Chicago."

http://www.chicagobusiness.com/article/20140703/NEWS02/140709930/pension-reform-dealt-blow-by-illinois-supreme-court#

Illinois State Senator Chapin Rose:

"Again, I stress that this ruling related to the trial court’s decision to dismiss the healthcare case and the Supreme Court was ordering it to be reinstated.  Nonetheless that the fact that Court’s opinion was issued by a 6-1 majority of the Justices with such strong language protecting both healthcare and pension benefits gives us a very direct insight into how they view the core issue of statutorily diminished benefits itself.."

http://pension-vocabulary.blogspot.com/2014/07/supreme-court-of-illinois-backs-pension.html

From the Chicago Tribune:

"Supreme Court ruling signals trouble for state, Chicago."

"The Illinois Supreme Court ruled today that subsidized health care premiums for retired state employees are protected under the Illinois Constitution, signaling potential trouble for an overhaul of pension benefits that’s also being challenged in court."

"Retired workers sued, arguing the changes violated a provision in the state constitution that declares pension benefits 'shall not be diminished or impaired.'  Attorneys for the state argued the constitution did not specifically declare health care benefits were protected."

"In Thursday’s ruling, the justices argued 'there is nothing in the text of the Constitution that warrants such a limitation.'”

“'We conclude that the state’s provision of health insurance premium subsidies for retirees is a benefit of membership in a pension or retirement system within the meaning (of the Constitution) and therefore the General Assembly was precluded from diminishing or impairing that benefit,' justices wrote in their opinion."

"The same constitutional clause protecting pension benefits is at the heart of several lawsuits challenging broader pension changes lawmakers passed in December.  That measure reduces costs-of-living increases and raises retirement ages, among other changes."

"The high court did not settle that debate in the healthcare case today, but the language in the majority opinion seemed to support the contention that pension benefits cannot be reduced."

http://www.chicagotribune.com/news/local/breaking/chi-court-state-cant-cut-subsidies-for-retirees-health-care-premiums-20140703,0,6383829.story

From Forbes:

"Illinois Supreme Court Delivers Huge Fiscal Blow To Taxpayers."
(My comment: I would not describe a requirement that one pay one's debts as a "fiscal blow.")

"The Illinois Supreme Court issued an opinion this morning that is a godsend to retired public employees, but a huge blow to the state’s taxpayers and creditors.  The ruling concludes that retiree health insurance falls under the protection of the state’s constitutional non-impairment clause.  In addition to overturning the attempt to save state taxpayers money on retiree health insurance for public employees, the even bigger implication is what this may say about the constitutionality of the state’s recent pension overhaul."

"In December 2013, the state passed a controversial pension overhaul bill that was set to take effect earlier this week, but the implementation of which was delayed by a judicial stay, pending various constitutional challenges."

"Notably the court said today that: 'we have concluded that the provision was aimed at protecting the right to receive the promised retirement benefits, not the adequacy of the funding to pay for them.'”

"This is as clear of a statement as I have seen on the subject.  Essentially, it says to the state that 'we do not care whether or not you have the money to pay for pensions and health care – you are required to pay them.'  Now it is up to our elected officials to figure out if and how we can afford to do this."

http://www.forbes.com/sites/jeffreybrown/2014/07/03/illinois-supreme-court-delivers-huge-fiscal-blow-to-taxpayers/

From Reuters:

"Christopher Mooney, director of the Illinois Institute of Government & Public Affairs at the University of Illinois, said before the ruling that a reversal of Nardulli's decision would indicate the pension reform law could be ruled unconstitutional."

"'If you can't do health insurance, you can't do pensions either,' Mooney said."

"The preamble to Illinois' pension reform law concludes that the state's fiscal problems cannot be solved without changes to the retirement system.  But Mooney said the argument is 'not going to fly' because the state could raise revenue rather than cut benefits."

(My comment: As we have seen, Colorado state and local governments currently give away thirteen percent of their revenue in the form of corporate welfare.)

"Judge John Belz, who is hearing the consolidated lawsuits, in May stopped the pension law from taking effect on June 1 until the challenges were resolved."

"Illinois has had the worst-funded pension system among all U.S. states after decades of skipping or skimping on pension payments."

http://www.reuters.com/article/2014/07/03/usa-illinois-retiree-healthcare-idUSL2N0PE10720140703

From Bloomberg:

"The Illinois Supreme Court, in a 6-1 decision today, ruled the health-insurance premium subsidies are pension benefits protected by the state’s constitution that can’t be diminished or impaired, as Illinois lawmakers tried to do with a 2012 law that let an administrator determine the level of contributions."

"Protection of pension benefits is the same provision in the Illinois constitution retirees are relying on in challenging Quinn’s plan to cut the pension shortfall with reductions in cost-of-living adjustments and increasing the retirement age for workers who are now 45 or younger."

"The ruling supports the argument that 'retirement security, including affordable health care and a modest pension, cannot be revoked by politicians,' Henry Bayer, executive director of the Illinois chapter of the American Federation of State, County and Municipal Employees, said in a statement."

http://www.bloomberg.com/news/2014-07-03/illinois-pension-reform-in-question-on-insurance-ruling.html

From Illinois Issues Blog:

"Kent Redfield, an emeritus professor at the University of Illinois Springfield, said that while the ruling pertains to a different case, the language used is clear. 'You could find some way to parse some of it, but it’s really, really difficult.  There’s no logical way to get to upholding Senate Bill 1 (the pension reform legislation) based on the clear content of this ruling and the way they’ve construed the pensions clause.'”

"Republican candidate for governor Bruce Rauner has advocated for moving employees’ future benefits to a system that looks more like a 401-K.  That plan would go even further than SB1, so it is unlikely that it would be upheld if SB 1 were rejected.  But it is possible that the court’s ruling might strengthen his case for offering a defined contribution plan to newly-hired employees."

http://illinoisissuesblog.blogspot.com/2014/07/options-for-pension-reform-plan-b-may.html

Excerpts from the July 3, 2014 Illinois Supreme Court Decision:

"Each of the complaints alleged that Public Act 97-695 violates the pension protection clause of the Illinois Constitution of 1970 (Ill. Const. 1970, art. XIII, § 5).  Two of the complaints alleged a violation of the contracts clause (Ill. Const. 1970, art. I, § 16), and one complaint alleged a violation of the separation of powers clause (Ill. Const. 1970, art. II, § 1)."

"The Kanerva v. Weems plaintiffs further claim that Public Act 97-695 violates the contracts clause of the Illinois Constitution (Ill. Const. 1970, art. I, § 16), which provides that '[n]o ex post facto law, or law impairing the obligation of contracts *** shall be passed.'”

"As to that subset of now-retired employees, they allege that the State promised participants in that program that they would receive free health insurance if they established at least 20 years of creditable service and that the subset of plaintiffs who took early retirement reasonably and detrimentally relied on the State’s promise by, among other things, retiring from state service AND MAKING CASH PAYMENTS TO OBTAIN ADDITIONAL SERVICE CREDITS (my emphasis).  That subset of plaintiffs claim that, under these circumstances, the State should not be permitted to renege on its promise and should be enjoined from withholding health insurance premiums from the annuity payments owed to the early retirees."

(My comment: Many Colorado PERA retirees have purchased service credit in the PERA pension system.  I believe that these separate public pension contracts have also been violated under SB10-001.  The Colorado PERA service credit statute requires that the benefits in place at the time of purchase of the service credit must be provided.)

"The complaint in the Bauer v. Weems case also challenges Public Act 97-695 on the ground that it constitutes an impermissible impairment of contract in violation of the contracts clause (Ill. Const. 1970, art. I, § 16)."

“Moreover . . . to the extent there is any question as to legislative intent and the clarity of the language of a pension statute, it must be liberally construed in favor of the rights of the pensioner.” (Prazen v. Schoop.)

" . . . it is clear that if something qualifies as a benefit of the enforceable contractual relationship resulting from membership in one of the State’s pension or retirement systems, it cannot be diminished or impaired."

"Delegates were also mindful that in the past, appropriations to cover state pension obligations had 'been made a political football' and 'the party in power would just use the amount of the state contribution to help balance budgets,' jeopardizing the resources available to meet the State’s obligations to participants in its pension systems in the future."

"It does so, he explained, in order to protect 'public employees who are beginning to lose faith in the ability of the state and its political subdivisions to meet these benefit payments' and to address the 'insecurity on the part of the public employees [which] is really defeating the very purpose for which the retirement system was established."

"In light of the constitutional debates, we have concluded that the provision was aimed at protecting the right to receive the promised retirement benefits, not the adequacy of the funding to pay for them."

"Defendants observe that health care costs and benefits are governed by a different set of calculations than retirement annuities.  While that is unquestionably true, it is also legally irrelevant."

"Finally, we point out again a fundamental principle noted at the outset of our discussion.  Under settled Illinois law, where there is any question as to legislative intent and the clarity of the language of a pension statute, it must be liberally construed in favor of the rights of the pensioner.  This rule of construction applies with equal force to our interpretation of the pension protection provisions set forth in article XIII, section 5.  Accordingly, to the extent that there may be any remaining doubt regarding the meaning or effect of those provisions, we are obliged to resolve that doubt in favor of the members of the State’s public retirement systems."

From the dissent of one Justice hearing the case:

"Stated otherwise, by its plain language, the pension protection clause prohibits legislative action that diminishes or impairs pension benefits by altering the terms of the contract governing the pension."

"The pension protection clause protects pensions, not subsidized health care premiums."

http://www.state.il.us/court/Opinions/SupremeCourt/2014/115811.pdf

Statement of Illinois Senate President John Cullerton on the Illinois Supreme Court Decision:

"Today, the Illinois Supreme Court made it very clear that the Pension Clause means what it says."

"The Court cannot rewrite the Pension Clause to include restrictions and limitations that the drafters did not express and the citizens of Illinois did not approve."

"The Clause was aimed at protecting the right of public employees and retirees to receive their promised benefits and insulate those benefits from diminishment or impairment by the General Assembly."

"If the Court’s decision is predictive, the challenge of reforming our pension systems will remain."

Statement from AFSCME:

“'The Supreme Court ruled today that men and women who work to provide essential public services — protecting children from abuse, keeping criminals locked up, caring for the most vulnerable and more — can count on the Illinois Constitution to mean what it says,' AFSCME Council 31 executive director Henry Bayer said. 'Retirement security, including affordable health care and a modest pension, cannot be revoked by politicians."

“'Unions representing public employees and retirees have stood virtually alone against political and corporate-funded attacks on retirement security,' Bayer added.  'Time and again we have urged legislators to respect the constitution they are sworn to uphold, and to work together with us to develop fair and constitutional solutions to the state’s very real fiscal challenges.  We remain ready to work in good faith with anyone to do so.'”

Here are a few selected comments, from the many, that have been posted about the Supreme Court Decision at the Illinois political news site, Capitol Fax:

"Even though (Senate President) Cullerton’s plan was agreed to by a lot of people, it wasn’t in compliance with the contract clause or the pension clause.  It would have been found unconstitutional also, maybe just not with as many votes."

"Sounds like the Supreme Court decision for SB1 is embedded within this ruling. 'Finally, we point out again a fundamental principle noted at the outset of our discussion.  Under settled Illinois law, where there is any question as to legislative intent and the clarity of the language of a pension statute, it must be liberally construed in favor of the rights of the pensioner.  This rule of construction applies with equal force to our interpretation of the pension protection provisions set forth in article XIII, section 5.  Accordingly, to the extent that there may be any remaining doubt regarding the meaning or effect of those provisions, we are obliged to resolve that doubt in favor of the members of the State’s public retirement systems."

"Keep in mind the Pension system does not need to be funded 90% like the legislature and Quinn have pushed for.  In fact most Pension Systems are not even close to that number."

(My comment: The proponents of SB10-001 in Colorado propose that their contract breach achieve an unnecessary standard of 100 percent PERA pension funding.  This level of funding has been achieved only twice in PERA's history.)

"This really shouldn’t be a surprise to anyone.  Don’t make promises you don’t intend on keeping."

Comments of an Illinois state retiree and former Marine:

"As I did when I volunteered as a United States Marine Corps service member, when I volunteered for state service, I relied on citizens to have my back.  While they seem to support my service in the U.S. Armed Forces, I’m dismayed that my state service is regarded with such enmity.  Had I known, I would have eschewed state employment for the increased immediate benefits of private sector employment.  Instead of relying on our representative democracy to adhere to the rule of law and keep the promises that were made during my 34 years of state employment, I would have obtained a job in the private sector, demanded and received a much larger salary for my educational level and job requirements . . ."

"I’m a veteran of the USMC, and I appreciate all the gratitude that I get for that service.  Is state service comparable?  Absolutely not.  I risked my life in service of my country as a Marine.  I never expected to be accorded the same level of appreciation for my service to the state, but I did expect our representatives, and by proxy of your vote for them, to keep their promises, whether they were constitutionally protected, or not."

"Instead, now I have been relegated to being one of 'them.'  Abandoned by many who feel that they have no stake in the malfeasance of their representatives, and who expect me, alone, to shoulder the burden of their incompetence."

"I’m a United States Marine.  I don’t give up.  And while I will always support the United States, I will never again support those who feel that any minor impairment of their financial condition takes precedence over the slow financial death of my family and I."

"I will never forget the abandonment that I’ve felt, nor will I forget the foolishness of my naive trust in the ultimate 'I’ve got your back' attitude of every one of us here in the greatest country on Earth."

"I’ll pass that on to my friends and family.  I’ll also recommend that anyone working for the state, get everything up front in wages and salary because, ultimately, you cannot trust that anyone 'has your back.'”

The following comment called to mind the fact that Colorado's public sector unions (our "union bosses") supported the 2010 Colorado PERA pension contract breach in SB10-001.  Pensioners no longer pay union dues:

"The problems of the state fiscal are not the problems of the pensioners.  Any 'Union Boss' negotiating any retreat or surrender is clueless at this point moving forward."

"'Where are Madigan’s 4 votes?': 'I’m sorry, but this is flat-out offensive to me.  Madigan owns no one on this court.  Anyone who knows any of these justices or follows the Court is fully aware of that."

"I’m not sure if state employees/retirees will ever be out of the spotlight that we never wanted to be in."

"Completely agree with you . . . We as retirees or current state employees never asked for all of this negative attention or to be blamed for the state’s fiscal problems when we in fact have never been the cause of the problem.  I have been a lifelong IL resident and also worry greatly about our state’s future, but please lay the blame for our current problems where it deserves to be and not on us retirees."

"Once the conditions of the contract are fulfilled, you can’t unilaterally change the contract terms retroactively."

"There are ways to legally change a contract retroactively, but it normally requires the agreement of BOTH parties to the contract, and it usually also requires a payment (or other valuable consideration) by one of the parties to the other party."

"Think of it like a fixed rate car loan or fixed rate mortgage, where the bank wants to change the terms of the deal after you’ve been paying on the loan for years.  Law says you can’t do it unless you have violated the terms of the loan (contract) that you signed."

"For those that are upset and make claims of unfairness to other citizens of the state, know that this a legal decision, and in my view the decision was proper.  If the state makes commitments, it needs to keep them.  If the constitution has plain-language protections, that’s how you read them. The pols have for too long pandered for votes and power with taxpayer money.  Now, maybe some of the pandering will be stopped."

"Thanks to AFSCME, IFT, and IEA for continuing to fight for public employees and retirees while other unions and many liberal Democratic legislators failed to do so."

(My comment: Again, in Colorado, public sector unions tossed their retired members under the bus and supported the breach of Colorado PERA pensioner contracts in 2010.  This act sullied the U.S. Labor Movement.)

"The terms going forward were already changed in 2011 … it’s called 'Tier 2'″.

"We may still be a land of laws… a big win for every citizen of Illinois."

"The court ruled that Healthcare is definitely a benefit of membership in the pension system. Certainly, current annuitants relied on that in making an irrevocable decision to retire.  I see no reason to assume that the AAI, which is much more related to the pension itself than is healthcare premiums, will not be ruled a pension benefit too."

"This is the correct decision.  It is also the Supreme Court declining to give the General Assembly a pass for years of mismanagement and the lack of political will to raise taxes."

(My comment: The historical mismanagement of the Colorado PERA pension system by Colorado state legislators and Colorado PERA trustees has been documented at the website, saveperacola.com and at ColoradoPols.com.)

"After reading Burke’s dissent, I think she would also vote against SB1, which would make a decision against it unanimous."

"The constitution can be changed, but the changes cannot be applied retroactively."

"Cullerton's deal is off the table.  The unions won’t budge after this ruling.  Woulda shoulda coulda."

"The contract is between the state and me, and the state and you, and the state and thousands of other individuals.  Cullerton, nor any other politician can negotiate with 'the unions' about the contract between the state and me.  I think the decision today clearly upholds those thousands of individual commitments.  None of which involves a union."

"It’s hard as a beneficiary to not cheer this ruling, but it’s equally hard as a citizen and taxpayer to not grieve for lost opportunity, or at least lost time."

"Now generally I am against tax increases of any kind regardless of income level.  But I am also a state employee and I didn’t start this fight.  The millionaires of the Chicago Civic Club started it.  So, a graduated tax on people like Rauner who want to buy the Governor’s office?  I would be happy to vote for that."

"I totally agree, but the supporters of SB1 used going through this exercise in futility as an excuse for passing these onerous bills in the first place.  They’ve received the ISC’s answer. They threw everything, including the kitchen sink, at the Supremes to see what would stick, and I would argue that very little, and most likely none of it will ultimately stick."

"Throughout all this, I’ve been an Illinois citizen and taxpayer.  As a member of that unfortunate club, it's time to get down to the business of properly funding the state’s priorities going forward. We’re in for some hurt brought to us by 60 years of political incompetence on both sides of the aisle.  But, as we were when this started, we’re all in this together, and equally so.  We better all get back to solving the state’s big problems in a constitutional way, and the sooner the better.  I’ll vote for any candidate that lays out an equitable plan to do so, and stops with the political hedging that both side’s politicians think they can get away with."

"These 'new tier' programs are the only ones that seem to constitutionally survive."

"All the State workers reading Cap Fax instead of doing their job… REJOICE!!!"

"SB1 is road kill that just got run over by a steamroller: 'Under settled Illinois law, where there is any question as to legislative intent and the clarity of the language of a pension statute, it MUST be liberally construed in favor of the rights of the pensioner.' (again, emphasis in caps.)"

"Haven’t prior S Ct cases indicated that one becomes a member of a pension system upon being hired (not just upon retirement) and that the terms of the system upon the date of hire can’t be diminished?  I thought so, and that this was why the Tier 2 class was structured as applying to those hired on or after that certain date."

"The bill is due, it’s not about how we can screw retirees and current workers anymore–it’s how do we pay them what they were promised and the Court has guaranteed."

"You become a member of a retirement system when you start paying into it."

"We’re going to have to have a sales tax on as many services as Indiana does.  What is it currently?  17 vs. 51 services?  We’re also going to have to pass the Fair graduated income tax."

"I was drawing a parallel with the various arguments Madiar presented in his pension analysis with what the ISC came down with here.  Yes, Eric (Madiar) never really addressed the issue of health care being protected, but he touched on all the relevant cases that the ISC touched on in this opinion.  To me, there is something like an 85% – 90% parallel."

(My comment: Senator Cullerton's legal aid Eric Madiar believes that Colorado's recent theft of fully-vested, accrued public pension COLA benefits is likely unconstitutional.  So, why did Cullerton going down that path in Illinois?  From “Public Pension Benefits Under Siege”:

“The adoption of the contractual approach by Colorado . . . however, make(s) it more likely that pension reform efforts (the COLA provisions of SB 10-001) will be found unconstitutional.”

A PDF of the Madiar paper is available on the website of the National Conference of State Legislatures at the following link:

http://www.ncsl.org/home/search-results.aspx?zoom_query=madiar%20public%20pensions)

"One could argue that Illinois, as a large progressive state, has had lower than expected taxes for its spending levels, since some of its 'revenue' (since 1939) was 'borrowed' from mandated (but unpaid) state pension fund contributions."

"It can’t be fixed by a constitutional amendment not due to ex post facto law limits (technically, that only applies to criminal laws), but due to the analogous 'impairment of contract' and due process considerations.  Same basic concept, but different legal doctrine categories."

"I’m glad the rule of law and plain language was upheld, but I expected more wiggle room; guess the ISC wanted to put this issue to bed once and not have to revisit it any time soon."

Link to Illinois Supreme Court Decision:
http://www.state.il.us/court/Opinions/SupremeCourt/2014/115811.pdf

Support the Rule of Law in Colorado at saveperacola.com.

5 Community Comments, Facebook Comments

  1. hawkeye says:

    I realize you have nothing against school "principals", but I'm sure you would want this sic to be corrected:

    Has this "cardinal principal" of Colorado public pension jurisprudence been abandoned?

  2. hawkeye says:

    Indeed, several recent court cases, such as Rhode Island and Illinois, lend support to saveperacola.  However, the Rhode Island Supreme Court justices are appointed to life terms, and are thus free to strictly apply the law and adhere to on-point legal precedent without concern about job security or politics.  In Illinois, the pension and associated COLA is enshrined into the state constitution … much stronger than a contractual obligation.

    In Colorado, TABOR is the 800-pound gorilla influencing the entangled web of maneuver and deceit behand SB10-1 and the subsequent court room brawl. Common sense tells us all that voters will not knowingly increase taxes to close the PERA funding gap.  Also, it's political reality that legislators will find other uses for established revenue streams other than properly funding PERA via paying the ARC.  Under TABOR the legislature has lost most of its power to tax. At the state level we are now a popular democracy, not a representative republic. This fact alone makes it extremely impossible for the state to keep the "PERA Promise", at least on a contractual basis.  Although I believe the Colorado Supreme Court should stay out of politics and render a "righteous" decision by strictly applying the law along with on-point legal precedents, I'm sure TABOR weighs heavily on their collective mind-set.  I also believe some justices are being overly influenced by a trendy new legal doctrine known as "notions of fairness" which is an outgrowth of the "social contract" concept.  

     

     

    • Algernon Moncrief says:

      Colorado PERA's lawyers are engaged in a flat earth debate.  The evidence of the Colorado PERA COLA contract includes admissions of its existence by all parties.  There is no question that the PERA COLA is a contractual obligation.  The Colorado PERA COLA contractual relationship under discussion has been confirmed in written testimony provided by Colorado PERA's lawyers to the JBC in 2009, and by the sponsor of SB10-001, Senator Josh Penry, and by members of the Legislature during floor debate of SB10-001, and by PERA's representative Rob Gray at the inception of the "automatic" PERA COLA benefit, and by PERA's current Executive Director in a public statement.  All involved parties agree, on the record, that the PERA COLA is a contractual obligation.  Colorado PERA's lawyers are currently trying to persuade the Colorado Supreme Court to don the blinders and ignore the many acknowledgements of the PERA COLA contract by Colorado PERA and state officials.  Their latest Clintonesque undertaking is to persuade the Colorado Supreme Court that "shall" does not mean "shall."  PERA's lawyers recently created this new contrivance to feed to the judges.  They hope the judges will swallow it whole and allow Colorado governments to engage in what is unquestionably theft.  I am astounded that Colorado state officials may engage in such deception with impunity.

      True, Illinois is one of the seven states that has constitutional language specifically supporting public pension contractual rights, but the fact that a certain type of contract receives no specific mention in a state constitution does not diminish the validity of that contractual relationship entered in that state.  The preponderance of contractual relationships in the states receive no specific mention in state constitutions.  All contractual rights are protected under the U.S. and Colorado constitutions.  (Note that both Colorado case law and Illinois case law require that any ambiguity in public pension statutes must be liberally construed to the favor of the public pension member.  Note that the U.S. Supreme Court has determined that state governments shall receive very little deference in attempts to escape their own financial obligations.)

      In Colorado, public pension contracts are strongly supported in case law.  Colorado is one of the states in which courts follow the strict "California Rule" of public pension jurisprudence.  For 60 years, the Colorado Supreme Court has recognized the contractual public pension relationship, including the specific right to the pension "escalator."  This makes sense, otherwise Colorado governments would be free to retroactively take the earnings of their employees.  Colorado governments would be free to include an automatic COLA provision in a public pension plan, force their employees to fund that COLA benefit, underfund their pension plan, and then take and use employee consideration supporting the COLA to pay off plan unfunded liabilities.

      Public employees in Illinois prudently supplemented public pension Contract Clause protection in their state a few decades ago.  They correctly anticipated that Illinois state politicians, like Colorado politicians, would underfund Illinois pension systems and then attempt to pay off state debts through breach of contract.

      In regard to TABOR, rather than providing an excuse for breach of the state and federal constitutional contract clauses, the language of TABOR supports public pension contracts in Colorado.  The language of TABOR recognizes state and local public pension obligations as district "debt."

  3. hawkeye says:

    Hey Algernon, I can see the Colorado Supreme Court "don the blinders" and use the "durational language" contrivance or ploy offered by PERA's attorneys.  That way they can rule that the COLA is not contractual as a defense in case savepercola approaches the federal courts.  The Colorado AG could argue the case has no standing in federal court because the state supremes ruled that the COLA is not contractual.  In other words, the "shall" addressing the core benefit has a different meaning than the "shall" in the COLA (or pension escalator) because of durational language addressing how the annuity is paid to beneficiaries.

    Rhetorical question … if an aging simpleton like me understands what's going on, why is our state judiciary system having so much consternation over a relatively simple matter?  

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