{"id":166,"date":"2015-07-10T15:46:38","date_gmt":"2015-07-10T19:46:38","guid":{"rendered":"https:\/\/sites.bu.edu\/dome\/?p=166"},"modified":"2015-07-10T15:46:38","modified_gmt":"2015-07-10T19:46:38","slug":"unconstitutional-budget-cuts-the-illinois-pension-controversy","status":"publish","type":"post","link":"https:\/\/sites.bu.edu\/dome\/2015\/07\/10\/unconstitutional-budget-cuts-the-illinois-pension-controversy\/","title":{"rendered":"Unconstitutional Budget Cuts \u2013 the Illinois Pension Controversy"},"content":{"rendered":"

Across the country, state governments are facing financial crises<\/span><\/a> and seeking to devise effective ways of saving costs. In Illinois, lawmakers have recently found themselves in conflict with the Illinois Supreme Court over a 2013 budget-related pension reform law<\/span><\/a>. On May 8, 2015, the Court found the law unconstitutional, compelling legislators to go back to the drawing board and find alternative means of balancing the budget.<\/p>\n

\"Illinois<\/a>
Illinois State Capitol
Springfield 1868<\/figcaption><\/figure>\n

With the aim to reduce expenditures, the 2012-2013 Legislature passed\u00a0 \u201cAn act concerning public employee benefits<\/span><\/a>,\u201d meant to address<\/span><\/a> \u201catypically large debts and structural budgetary imbalances\u201d and an extremely low\u2014and potentially falling\u2014 credit rating.\u00a0 Also, the state\u2019s public pension system was considered the most underfunded<\/span><\/a> of any in the United States. The General Assembly expressed hope<\/span><\/a> that the Act would \u201clead to fiscal stability for the State and its pension systems.\u201d\u00a0 The key provisions<\/span><\/a> of the Act were:<\/p>\n

1) terminate automatic, compounded annual cost-of-living increases for retired persons;<\/p>\n

2) increase the retirement age for current public employees; and<\/p>\n

3) reduce the salary amount that can be used for the calculation of pension benefits.<\/p>\n

The Illinois State Constitution, however, includes specific pension provisions for public employees; Article 13, Section 5<\/span><\/a> describes the pensions in Illinois as a binding contract “which shall not be diminished or impaired.\u201d<\/p>\n

Various employee groups, retirees, and unions challenged the Act<\/span><\/a> by asserting their constitutional rights. The Illinois Retired Teachers Association sued first<\/span><\/a> in December, 2013, with a labor coalition named We Are One<\/span><\/a> joining in the litigation a month later. The labor coalition boasted over 621,000 members<\/span><\/a>, including: the Service Employees International Union (SEIU) Local 73, the Illinois AFL-CIO, the Illinois Federation of Teachers, the Illinois Nurses Association, the Illinois Police Benevolent and Protective Association, the Associated Fire Fighters of Illinois, and others. The We Are One complaint<\/span><\/a> asserted that the Act violated the Illinois Constitution\u2019s Pensions Clause and resulted in “an unconstitutional diminishment and impairment of the pension amount a member receives,\u201d as well as<\/span><\/a> violations of the Constitution\u2019s Contracts Clause and Takings Clause.<\/p>\n

After the Illinois Circuit Court found the pension law to be unconstitutional, the State appealed<\/span><\/a> to the Illinois Supreme Court. Several amicus curae<\/em>, including those submitted by professors specializing in constitutional and contract law, social service providers and the City of Chicago, supported the law<\/span><\/a> and argued in favor of its legitimacy. Like the state, they argued<\/span><\/a> the state\u2019s sovereign police power enabled it to reduce the pension benefits as a way of addressing the current budget emergency.<\/p>\n

The Illinois Supreme Court, however, unanimously voted to strike down<\/span> the pension reform law. The court found that the Act violated the Pension Clause<\/span><\/a> despite the financial difficulty placed upon the state with the public pension program:<\/p>\n

\u201cFor as long as there have been public pension systems in Illinois, there has been tension between the government\u2019s responsibility for funding those systems, on the one hand, and the costs of supporting governmental programs and providing governmental services, on the other.\u201d Nevertheless, the court firmly concluded that the law was unconstitutional, writing that \u201cthere is simply no way that the annuity reduction provisions in Public Act 98-599 can be reconciled with the rights and protections established by the people of Illinois when they ratified the Illinois Constitution of 1970 and its pension protection clause.\u201d<\/p>\n

The court was also unconvinced by the State\u2019s primary affirmative defense<\/span><\/a> \u2013 that the pension reform law was a valid exercise of the State\u2019s police power in a state of emergency.\u00a0 Citing the cyclical nature of the economy, the Court asserted<\/span><\/a> that the State has faced fiscal struggle before and cannot lower or terminate expenditures that the Illinois Constitution protects. As one potential alternative, lawmakers have submitted legislation to confront the state debt by amending the Illinois Municipal Code. This law<\/span><\/a> would allow cities in Illinois to file Chapter 9 bankruptcy petitions under the national Bankruptcy Code.<\/p>\n

The Illinois pension reform controversy may hold an important lesson for other legislatures struggling to balance the budget, especially since six other states have constitutional protections<\/span><\/a> for public pensions. If the Illinois Supreme Court\u2019s decision is any indication of how other state courts might react, legislators would be advised to keep state constitutionality in mind when developing budget-related bills; the judiciary will likely not be receptive to economic arguments when used as justification for violating an unambiguous constitutional clause. Facing such provisions, lawmakers may ultimately be drawn to amending the state constitution<\/span><\/a> as a strategy, which Illinois Governor Rauner reportedly plans to pursue in the next year.<\/p>\n

\"1436458928-3\"<\/a>Chloe Noonan is from Monterey, California and graduated from Sarah Lawrence College with concentrations in Modern Languages and International Studies. She anticipates graduating from Boston University School of Law with a Juris Doctor<\/em> in Spring 2016. During Summer 2015, Chloe will intern at the Lawyers\u2019 Committee for Better Housing in Chicago, Illinois, where she plans to focus on affordable housing preservation and eviction defense for low-income tenants.<\/p>\n","protected":false},"excerpt":{"rendered":"

Across the country, state governments are facing financial crises and seeking to devise effective ways of saving costs. In Illinois, lawmakers have recently found themselves in conflict with the Illinois Supreme Court over a 2013 budget-related pension reform law. On May 8, 2015, the Court found the law unconstitutional, compelling legislators to go back to […]<\/p>\n","protected":false},"author":10138,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[10,9,6,5],"tags":[],"_links":{"self":[{"href":"https:\/\/sites.bu.edu\/dome\/wp-json\/wp\/v2\/posts\/166"}],"collection":[{"href":"https:\/\/sites.bu.edu\/dome\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sites.bu.edu\/dome\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sites.bu.edu\/dome\/wp-json\/wp\/v2\/users\/10138"}],"replies":[{"embeddable":true,"href":"https:\/\/sites.bu.edu\/dome\/wp-json\/wp\/v2\/comments?post=166"}],"version-history":[{"count":1,"href":"https:\/\/sites.bu.edu\/dome\/wp-json\/wp\/v2\/posts\/166\/revisions"}],"predecessor-version":[{"id":167,"href":"https:\/\/sites.bu.edu\/dome\/wp-json\/wp\/v2\/posts\/166\/revisions\/167"}],"wp:attachment":[{"href":"https:\/\/sites.bu.edu\/dome\/wp-json\/wp\/v2\/media?parent=166"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sites.bu.edu\/dome\/wp-json\/wp\/v2\/categories?post=166"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sites.bu.edu\/dome\/wp-json\/wp\/v2\/tags?post=166"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}