Tag: Lisa Madigan

Illinois Pensions Get $50 Million From S&P Settlement

Illinois

Credit ratings agency Standards & Poor’s announced a $1.375 billion settlement with 18 states today over the alleged inflated ratings it gave mortgage-backed securities which eventually turned toxic.

Illinois will receive a $52.5 million chunk of that settlement – with most of the money going towards its pension systems.

More from the Chicago Sun-Times:

It won’t solve Illinois’ pension crisis — not by a long shot — but it’s “better than nothing,” state Attorney General Lisa Madigan said Tuesday, announcing a $52.5 million settlement connected to the 2008 economic collapse.

[…]

Madigan’s office sued S&P in 2012, alleging the credit ratings agency “compromised its independence as a ratings agency by doling out high ratings to unworthy, risky investments to increase its profits, while its misrepresentations spurred investors, including Illinois’ pension funds, to purchase securities that were far riskier than their ratings indicated.”

“S&P abandoned its critical role in the years leading up to the economic crisis, blinded by its unyielding desire for profits,” Madigan said during a news conference Tuesday morning at the Thompson Center in the Loop.

The majority of the state’s portion will be reinvested in Illinois’ pension systems, Madigan said. To date, the state has recovered approximately $400 million for losses the state pension systems sustained after investing in mortgage-backed securities, Madigan said.

Though Madigan acknowledged the latest settlement will have little impact on the state’s pension mess, she said it nevertheless sends a message.

The Justice Department statement on the settlement, which includes a list of the states receiving money, can be read here.

Illinois Unions Challenging Reform Law Ask Supreme Court to Slow Down

Illinois

When the lawsuit against Illinois’ pension reform law went to the Supreme Court, the Court obliged the state’s request for an expedited process.

The state, win or lose, wants the court’s decision as soon as possible.

But unions and public employees fighting the law are now asking the court to slow down the process. They say they need more time to respond to arguments presented in briefs filed by nearly a dozen groups in support of the law last week.

From Northern Public Radio:

Unions and others fighting to prevent Illinois’ pension law from taking effect are asking the state Supreme Court to ease up on its accelerated timeline.A Sangamon County judge ruled the measure unconstitutional. But Attorney General Lisa Madigan filed paperwork earlier this month that says the state can use “police powers” to cut pensions.

Ten other groups filed briefs backing Madigan’s position.

John Fitzgerald is an attorney who represents retired public school teachers. He says lawyers need more time to respond to all of those additional arguments.

Fitzgerald says his side is still confident reducing benefits is illegal.

“Although we believe that the arguments raised by the amici need to be evaluated and responded to, we do not believe that any of those arguments have any merit; we do not believe that the amici have raised any arguments that should change the outcome of this case.”

The lawyers are asking for an additional month to file briefs with the court. Currently, the briefs are due Feb. 16.

State Lawyers File Arguments in Illinois Pension Lawsuit

Illinois

Illinois Attorney General Lisa Madigan filed the state’s argument in favor of the sweeping pension law on Monday. Illinois is arguing that pension protections are not absolute, and the law doesn’t violate the state’s constitution.

From the Chicago Tribune:

Lawyers for the state argued that the government’s so-called emergency police powers — the ability to take action to ensure the functions of government — trump the protections of the pension clause.

State lawyers said the ability to fund necessary government services, as well as to continue paying out pensions, has been severely hampered by paying an increasing amount of the state’s checking account to fund the pension systems.

“According to the circuit court’s holding, for example, faced with an epidemic requiring the state to purchase and distribute vaccines or other costly medication, the state could not even temporarily reduce pension benefits to cover those costs,” lawyers for the state argued.

“Nor, in a period of prolonged deflation … could the state reduce pension benefits even if the corresponding rise in benefits caused by 3 percent annually compounded COLAs caused every dollar of state revenue to be spent on pension benefits,” the state filing said.

Meanwhile, business leaders and legal experts who support Illinois’ pension reform law also filed briefs with the Supreme Court Monday arguing in favor of the constitutionality of the law.

Nine briefs were filed in total in support of the state, including one from the city of Chicago.

More from Reuters:

Illinois is getting support from its biggest city, business leaders and legal experts in its quest to defend the constitutionality of a 2013 law aimed at easing the state’s huge public pension burden.

The city of Chicago, social service providers and professors specializing in constitutional and contract law were among the parties that filed nine so-called amicus briefs with the Illinois Supreme Court by a Monday deadline.

The briefs backed the state’s appeal of a Nov. 21 court ruling that found the 2013 law violated a provision in the Illinois Constitution preventing retirement benefits for public workers from being impaired or diminished.

[…]

Illinois says it is required to maintain its sovereignty by the U.S. Constitution and that its police powers allow it to reduce retirement benefits to deal with the state’s fiscal emergency. Those arguments were echoed in briefs filed on Monday by legal experts and business group the Civic Committee of the Commercial Club of Chicago.

Chicago contended in its support brief that its efforts to rein in pension costs would be threatened if the court were to reject the state’s police powers argument.

The city, which is defending a 2014 law aimed at boosting funding for two of its four retirement systems from a union-backed constitutional challenge in Cook County Circuit Court, said it has a vital interest in the state’s case.

“Failure to achieve reform for the Chicago funds would have a devastating impact on Chicago’s economy and its delivery of essential services, as well as on the retirement security of current and former employees,” Chicago’s filing stated.

The Chicago Public Schools, the nation’s third largest school system, also backed the state’s position, as did Chicago’s transit authority and park district.

Illinois is shouldering over $100 billion of unfunded pension liabilities. The state has the worst credit rating of any state in the country.

Illinois Gov. Signs Law Allowing Felons To Be Stripped of Pensions

Illinois capitol

Illinois Gov. Pat Quinn has signed into law a measure that allows the Illinois Attorney General to strip pension benefits from public officials who have been convicted of felonies related to their job.

The bill was passed unanimously by the state Senate earlier this month.

From the Associated Press:

A new state law will make it tougher for felons to receive a public pension.

Gov. Pat Quinn signed legislation Monday giving Illinois’ attorney general more power to stop pension payments to convicted felons.

[…]

The Illinois Supreme Court in July upheld a lower court ruling that Attorney General Lisa Madigan couldn’t challenge a Chicago police pension board decision allowing Burge to keep his taxpayer-supported pension.

State Sen. Kwame Raoul is a Chicago Democrat. He says it’s “unconscionable” that Burge receives a pension and the law allows “taxpayers a way to fight back.”

The bill came about after former Chicago policeman Jon Burge was allowed to keep his pension even after being convicted of a serious felony. From the Sun-Times:

In July, the Illinois Supreme Court ruled a Cook County court was correct in not allowing Madigan to intervene in a police pension matter. The decision allowed disgraced former Chicago Police Cmdr. Jon Burge, who was convicted in 2010 for lying about the torture of police suspects, to keep his public pension of about $54,000 a year.

The police pension board deadlocked 4-4 on a motion to strip Burge of his pension. Some argued his conviction was not related to his police work, since he was convicted on perjury and obstruction of justice from a civil suit filed after he left the force.

Under the law, the state attorney general will be able to petition the court to strip pension benefits from public officials. Previously, the attorney general wasn’t allowed to intervene in the decision, which was left to pension boards.

 

Photo credit: “Gfp-illinois-springfield-capitol-and-sky” by Yinan Chen. Via Wikimedia Commons

Illinois Supreme Court Expedites Pension Reform Appeal

Illinois flagThe Illinois Supreme Court on Wednesday complied with a request by Illinois Attorney General Lisa Madigan to fast track the hearing over the state’s pension reform law, which a lower court found unconstitutional.

From Reuters:

The court ordered public labor unions and retiree groups challenging the law and the state to file their briefs in January and February with oral arguments to be scheduled in March. Illinois Attorney General Lisa Madigan had asked the court last week to speed up the appeal process.

The state asked for oral arguments as early as Jan. 22 and no later than March 10 to enable Illinois’ upcoming budget to incorporate about $1 billion in cost-savings under the law, or adequate spending cuts or tax increases to offset those savings.

The pension reform law was supposed to go into effect on June 1 but was put on hold by Sangamon County Circuit Court Judge John Belz in May pending his Nov. 21 ruling in five consolidated lawsuits. The state’s new fiscal year begins July 1 and the legislature usually passes a budget by May 31.

The law’s opponents asked the supreme court on Tuesday not to speed up the case.

The law raises retirement ages and suspends COLAs for some workers, and makes state contributions to the pension system enforceable by the Illinois Supreme Court.

Fast-Tracking of Illinois Pension Case Could Be Blocked

Illinois flag

Last week, Illinois asked the state Supreme Court to expedite the hearing over the state’s pension reform law.

But on Sunday, attorneys representing the state workers and retirees said they could block the attempt to fast track the case. Such a move could drastically change the timeline for the lawsuit’s hearing.

From the Southern Illinoisan:

In a move that could play a significant role in how Gov.-elect Bruce Rauner crafts his first budget this spring, the lawyers say Illinois Attorney General Lisa Madigan’s bid to put the case on a fast track is unwarranted.

“We do not believe there is any need to impose an emergency schedule,” said attorney John Fitzgerald, who is among a team of lawyers representing retirees. “We see no need to depart from the rules.”

On Thursday, Madigan asked the high court to move quickly in hearing the case because of the financial ramifications the pension changes will have on the state budget.

[…]

Madigan suggested the court schedule oral arguments for as early as Jan. 22 or no later than mid-March.

Attorneys for the retirees, who say the expedited schedule is unnecessary, have until Tuesday to file their objections to the motion.

Without the expedited schedule, the deadline for filing the first significant set of records in the case wouldn’t occur until the final week of January.

After that, the typical court schedule calls for both sides in the lawsuit to trade paperwork for nearly three months. Once that is completed, the high court would then schedule oral arguments.

Under that scenario, the court could hear the case as early as May. If they miss the May docket, the next time the judges are scheduled to hear oral arguments is September.

Following the argument phase, the court could take months to issue a ruling. In a similar case regarding health insurance costs, the court took nearly 10 months to overturn the state’s attempt to force retirees to pay a portion of their pensions toward that expense.

Sangamon County Circuit Judge John Belz ruled last month that the law was unconstitutional.

Illinois Senate Passes Bill That Allows Felons To Be Stripped of Pensions

Illinois capitol

A bill that would allow the Illinois Attorney General to strip pension benefits from felons passed through the state Senate unanimously last week.

From the Chicago Sun-Times:

The House bill, co-sponsored in the Senate by Sen. Kwame Raoul, D-Chicago, Jacqueline Collins, D-Chicago, and Daniel Biss, D-Evanston, passed the Senate 51-0 without debate.

“What we did in this bill is to clarify the language to make sure that it authorizes the attorney general to petition the court to enjoin the payment of pension funds where somebody’s convicted of a felony in connection to their duty,” Raoul said.

[…]

The bill was debated in committee with some Republicans worried the attorney general could abuse the authority. But Raoul said the attorney general could file a petition to the court, then to the appellate court and ultimately to the Illinois Supreme Court.

“It’s unlikely that you would have an attorney general who could have a conspiracy with the Appellate Court and the Supreme Court,” Raoul said.

A Madigan spokeswoman said the bill will give the attorney general an important new role in pension board cases.

“A public employee convicted of a felony related to their service should not be allowed to receive a taxpayer-funded pension,” state attorney general’s office spokeswoman Maura Possley said. “This bill provides the attorney general with an important watchdog role to ensure taxpayers are not left to foot the bill for a convicted felon.”

The bill came about after former Chicago policeman Jon Burge was allowed to keep his pension even after being convicted of a serious felony. From the Sun-Times:

In July, the Illinois Supreme Court ruled a Cook County court was correct in not allowing Madigan to intervene in a police pension matter. The decision allowed disgraced former Chicago Police Cmdr. Jon Burge, who was convicted in 2010 for lying about the torture of police suspects, to keep his public pension of about $54,000 a year.

The police pension board deadlocked 4-4 on a motion to strip Burge of his pension. Some argued his conviction was not related to his police work, since he was convicted on perjury and obstruction of justice from a civil suit filed after he left the force.

The bill now goes to Gov. Quinn’s desk.

 

Photo credit: “Gfp-illinois-springfield-capitol-and-sky” by Yinan Chen – www.goodfreephotos.com (gallery, image). Via Wikimedia Commons

Illinois Asks Supreme Court to Fast-Track Pension Reform Hearing

Illinois flagIllinois’ Attorney General on Thursday requested that the state supreme court hold hearings on the state’s pension reform law as soon as January and no later than March.

From Reuters:

Attorney General Lisa Madigan filed a motion to accelerate the state’s appeal of a Nov. 21 Sangamon County Circuit Court judge’s ruling that the law aimed at easing Illinois’ huge pension burden violated protections in the state constitution for public worker retirement benefits.

“A prompt resolution of those issues is critical because the state must either implement the act, or in the alternative, significantly reduce spending and/or raise taxes,” the motion stated.

At stake is an approximately $1 billion cut in Illinois’ contribution to four of its pension systems in fiscal 2016 under the law. Republican Governor-elect Bruce Rauner, who takes office next month, has a Feb. 18 deadline to present a budget to the Democrat-controlled legislature, which has until May 31 to pass the spending plan with simple majority votes. A three-fifths majority vote on bills would be needed after that date to have a budget in place by July 1, the start of fiscal 2016.

[…]

The reform law was enacted in December 2013 to help save Illinois’ sinking finances. It reduces and suspends cost-of-living increases for pensions, raises retirement ages and limits salaries on which pensions are based. Employees contribute 1 percent less of their salaries toward pensions, while contributions from the state, which has skipped or skimped on its pension payments over the years, are enforceable through the Illinois Supreme Court.

Illinois had $104 billion of unfunded pension liabilities at the end of fiscal year 2014.

First Ruling on Illinois Pension Reform Law Expected Friday

Illinois capitol

Sangamon County Judge John Belz spent Thursday hearing arguments for and against Illinois’ major pension overhaul.

On Friday, he is expected to release his ruling on the law. If he declares it unconstitutional, the debate could move to the halls of the Supreme Court sooner than later.

More from the Chicago Tribune:

[Judge Belz] could move to hold hearings in the case, or he could declare the measure unconstitutional, which would likely send the matter directly to the state Supreme Court.

Even then, it could take several more months before the justices make a final decision, meaning Rauner may not get the clarity he’s seeking in time to drive cost-saving pension changes during the spring legislative session.

Belz held a hearing Thursday, and Illinois Attorney General Lisa Madigan’s office argued the pensions could be modified in times of emergency — such as the financial straits caused by the state’s worst-funded pension system in the nation.

A battery of attorneys for state employees and retirees argued strenuously the law should be tossed out because it is unconstitutional — a move that would put it on a likely path to the Illinois Supreme Court.

In July, the high court threw out a different law that cut health-care benefits that had been guaranteed to retirees, saying lawmakers had overstepped what they were allowed to do. That decision alone buoyed the hopes of state pensioners — as well as the city of Chicago retirees who don’t want their own pensions plans reduced.

Friday’s ruling is key because it is the first step toward determining whether officials can scale back public pensions in any way once they are set.

Unions believe the law represents an unconstitutional breach in contract. From the Chicago Tribune:

Unions representing government workers are asking Judge John Belz to declare unconstitutional a law approved nearly a year ago that aims to rein in costs of a retirement system reeling from more than $100 billion in debt.

At the heart of the pension issue is a clause in the Illinois Constitution that says membership in any state pension system is an “enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”

Employee unions argued that the pension law, which curbs annual cost-of-living pension increases for current retirees and delays the age for retirement for many current public workers, clearly violated those protections.

Illinois governor-elect Bruce Rauner believes the law will be overturned by the Supreme Court. Rauner has said in the past that the law doesn’t go far enough to reduce pension liabilities.