Supreme Court | Pension360

Union Coalition Wants Illinois Court To Act Faster In Case Against Reform Law

A coalition of some of the largest labor groups in Illinois filed a motion today calling on the court to speed up its ruling regarding the constitutionality of Illinois’ pension reform law.

The coalition, We Are One Illinois, says the Supreme Court’s July decision—where the court ruled retirees’ health benefits are protected under the state’s constitution—confirms that Illinois’ pension reform law is illegal.

From CapitolFax:

Yesterday, the We Are One Illinois coalition, along with other plaintiffs, filed a motion in Sangamon County urging the Circuit Court to enter judgment in the plaintiffs’ favor on the State’s affirmative defense in light of the recent Supreme Court decision in the case of Kanerva v. Weems. The We Are One Illinois coalition and other plaintiffs assert that the Kanerva decision confirms that the Pension Protection Clause in the Illinois Constitution is absolute and without exception, even with respect to the fiscal circumstances alleged by the State in its defense.

Illinois says its dire fiscal situation gives it the authority to cut to pension benefits, even if they are constitutionally protected. From Reuters:

The state has contended that its sovereign powers allow it to act in a fiscal emergency. Illinois has a $100 billion unfunded pension liability and the country’s worst funded state retirement system. Illinois’s credit ratings are also the lowest among U.S. states.

But the court’s July decision doesn’t bode well for the state’s case. At the time, the court wrote:

“[I]t 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 … Giving the language of article XIII, section 5, its plain and ordinary meaning, all of these benefits, including subsidized health care, must be considered to be benefits of membership in a pension or retirement system of the State and, therefore, within that provision’s protections.”

We Are One Illinois issued the following statement after filing the motion:

“The Kanerva decision confirms what we have always argued, that the state’s constitutional language guards against any diminishment or impairment of pension benefits that Senate Bill 1 imposes. We believe, then, that the State’s defense is without merit and so have asked the Court in this motion to rule in our favor on the State’s defense that seeks to justify Senate Bill 1. We maintain that the constitution protects the hard-earned and promised retirement savings of our members and remain ready to work with any legislator willing to develop a fair and legal solution to our state’s challenges.”

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

Colorado Supreme Court Won’t Hear Lawsuit Seeking Release of Pension Data

Colorado Treasurer Walker Stapleton has for years pushed the state toward initiatives designed to improve the health of its pension system, and open pension data was a big part of Stapleton’s plans.

Back in 2011, Stapleton filed a lawsuit seeking the release of retirement benefit data for Colorado’s highest-earning pensioners. But the state’s pension fund, the Public Employees Retirement Association (PERA), said the information was confidential and refused to release it.

Since then, two lower courts have sided with the pension system on the issue. Stapleton appealed the rulings all the way to the state Supreme Court—but the Court announced today that they wouldn’t be hearing his case. From the Associated Press:

The Colorado Supreme Court has decided not to hear a lawsuit from state Treasurer Walker Stapleton seeking information about employee benefits in the state’s pension system.

Stapleton, a Republican, has sought non-identifying information about the top 20 percent of the pension’s beneficiaries and their annual retirement benefit. He says the information would help him to assess the health of the state pension’s program and how to keep it solvent.

Neither Stapleton nor the Court have released statements addressing the turn of events.

Last year, Stapleton convinced the Board of the PERA to lower its assumed rate of return from 8 percent to 7.5 percent. The Denver Post:

Colorado’s Public Employees’ Retirement Association voted 8-7 to lower its expected rate of return on investments to 7.5 percent, down from 8 percent.

State Treasurer Walker Stapleton has urged the board for three years to lower its rate of return, warning of an eventual collapse and bailout of the pension system for 300,000 teachers and state workers.

[The] vote means the pension fund’s unfunded liability will increase by about $6 billion to $29 billion, Stapleton estimated.

“In the short term, that’s not a good thing,” Stapleton said. “But it makes it all the more imperative that we find a way come together … and commit ourselves to fixing this problem sooner rather than later.”

The vote was a shift in philosophy from three years ago, when the board voted 10-5 to keep its rate of return at 8 percent.

The rate is used to predict investment growth over the next 30 years. Numerous economists have suggested a realistic expectation is 6.5 percent to 7.5 percent for state funds nationwide.

PERA’s average actual rate of return over the last decade has been over 8 percent. But over a different ten-year period—2001 through 2011—it returned only 3 percent annually on average.

Photo: “Denver capitol” by Hustvedt – Own work. Licensed under Creative Commons Attribution-Share Alike 3.0 via Wikimedia Commons

Challengers to Illinois Reform Law Seek Expedited Supreme Court Ruling

Illinois’ pension reform law, passed and signed in December, remains in a legal limbo that has parties on every side of the issue uncomfortable. As a result, the attorneys behind several of the lawsuits challenging the reform law plan to submit motions that they hope will land the case in front of the Supreme Court sooner than later. From the State Journal-Register:

Lawyers challenging last year’s pension reform law said they will make another attempt to get an expedited ruling in the case in the wake of the Illinois Supreme Court’s decision in the retiree health insurance case.

[Attorney Don] Craven said this new motion could enable the pension reform case to get to the Supreme Court earlier than is now considered likely. Before the health insurance ruling, [Judge] Belz set out a lengthy schedule for lawyers on both sides to conduct preliminary work on the cases. Lawyers for the state indicated they want to use six expert witnesses to buttress their case. Aaron Maduff, another attorney challenging the law, said it involved “tremendous, tremendous” preliminary work.

“It’s a huge amount of material,” he said.

At this point, however, the schedule is still in place and a ruling at the circuit court level isn’t expected until next year.

The next hearing in the pension reform lawsuit is scheduled for Sept. 4.

The Illinois Supreme Court ruled earlier this month that it was unconstitutional to charge seniors a premium for their state-subsidized health insurance. The ruling was of particular relevance to the state’s pension reform law because the legal reasoning behind the judgment was that the state is not permitted to diminish retirement benefits protected by the state Constitution.

Some parties believe last month’s ruling was the nail in the coffin for this iteration of state pension reform. But others say the eventual ruling on the reform law won’t be influenced by the previous judgment. From the State Journal-Register:

“The Supreme Court could hardly have been clearer in destroying the police powers argument in the Kanerva case,” said attorney John Myers, who brought another of the pension reform lawsuits. “What the Supreme Court is saying is you have to fund this, now figure it out. That destroys the whole sovereign powers defense, which is, ‘We don’t have to figure it out, we can impair pensions.’ ”

Attorney General Lisa Madigan has said the ruling in the health insurance case does not affect the pension reform case because they involve different legal issues.

Pension benefits are protected in Illinois by the state Constitution. The reform law seeks to end cost-of-living-adjustment increases and raise the retirement age.