Judge in Illinois Pension Lawsuit Rejects Request For More Time

Illinois flagLawyers representing groups challenging Illinois’ pension reform law asked for more time to file arguments this week. The request would have extended the deadline by a month.

The judge presiding over the case rejected that request on Thursday.

From the Associated Press:

The Illinois Supreme Court has rejected a request for an extra month to file arguments by lawyers contesting the law that overhauls a state pension program that is $111 billion in debt.

Attorneys for state employees, retired teachers and others who contest the constitutionality of the law said they needed until March 16.

But the court denied the motion Thursday because it had already agreed to fast track the appeal of a lower court’s ruling. The case is scheduled to be heard in March.

The judge also rejected a request from outside groups who wanted to file additional briefs. From Pantagraph:

A lawsuit seeking to overturn changes to the state’s employee pension systems remains on a fast track.

In a decision issued Thursday, the Illinois Supreme Court denied a request from outside groups and individuals to file briefs in the case, saying the additional filings could put the court’s plan to hear the case during its March term in jeopardy.

Attorneys representing state retirees and employees who would be affected by the Legislature’s controversial 2013 pension overhaul supported the court’s decision.

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.

Lawyers Meet With Judge As Jury Trial in Rhode Island Pension Lawsuit Nears

Rhode IslandThe long-running lawsuit over Rhode Island’s 2011 pension reforms is set to begin on April 20.

Lawyers will eventually argue the law’s constitutionality in front of a jury. But on Tuesday, the lawyers met with the judge presiding over the case to hammer out scheduling matters as the pretrial process continues.

From WPRI:

Lawyers on both sides of the high-stakes lawsuit challenging Rhode Island’s landmark 2011 state pension overhaul met with the judge behind closed doors Tuesday morning as the pretrial process continued.

John Tarantino, a lawyer representing the state, told WPRI.com the jury trial is still on track to begin April 20, as ordered by R.I. Superior Court Judge Sarah Taft-Carter last month.

[…]

Tarantino said Taft-Carter scheduled four pretrial hearings in the suit during Tuesday’s status conference: for Feb. 6, on motions by various municipalities to be removed as defendants; for Feb. 20, on motions to consolidate; for March 6, for advance rulings about the trial; and for March 27, on dispositive motions.

At Tuesday’s status conference, more than two dozen lawyers involved in the case spent about forty minutes meeting with Taft-Carter in a closed courtroom to work through scheduling matters. Taft-Carter made no rulings in the case on Tuesday. She previously said the process for discovery of evidence will end on March 15.

Taft-Carter had previously set a Sept. 15 trial date for the suit but scrapped it as the sides got tied up in pretrial matters.

It’s highly likely the outcome in Superior Court will be appealed to the R.I. Supreme Court no matter which side wins. However, state and union leaders say there is also growing momentum in favor of making another attempt to end the suit with an out-of-court settlement. Raimondo has said she is still open to settling but does not want to change the terms of the settlement agreement that failed last year.

The lawsuit was originally filed in June of 2012 by hundreds of retirees and union members who argue that the state’s reforms aren’t constitutional.

 

Photo credit: “Flag-map of Rhode Island” by Darwinek – self-made using Image:Flag of Rhode Island.svg and Image:USA Rhode Island location map.svg. Licensed under CC BY-SA 3.0 via Wikimedia Commons

Jury Will Hear Rhode Island Pension Lawsuit; Trial Set for April

Rhode Island map and flagA Rhode Island judge sided with the state on Tuesday when she ruled that a jury will hear the lawsuit over the state’s 2011 pension reforms.

More details from WPRI:

Taft-Carter said that while she disagreed with state lawyers’ arguments that they had a constitutional right to a jury trial in the pension case, she would use her discretion to grant a jury trial in light of what she said is the Rhode Island Supreme Court’s long-stated preference for using juries.

“Being mindful of the importance of a jury trial in this country, and our Supreme Court’s expressed preference in favor of having questions of facts to be tried before a jury even where equitable claims are involved, the court is satisfied that these cases should be properly tried before a jury,” Taft-Carter said from the bench.

[…]

R.I. Superior Court Judge Sarah Taft-Carter read her lengthy decision about the jury trial from the bench Tuesday morning at Newport County Superior Court, where she is currently assigned to hear cases. She announced the trial date after conferring with lawyers from both sides in a closed-door status conference.

At stake is whether Rhode Island legislators acted constitutionally three years ago when they reduced future retirement benefits to shave roughly $4 billion off the shortfall in the state’s pension fund for government workers and taxpayers.

Reactions from lawyers on both sides of the case:

John Tarantino, a lawyer for the state, said he was pleased by Taft-Carter’s decision but that it was too early to say when jury selection would take place or how many jurors there would be. “We think a jury should decide it,” he told reporters. “I’m a big believer in jury trials.”

Lawyers for the union plaintiffs declined to comment on the state’s legal victory Tuesday.

[…]

Tarantino and the other lawyers representing Gov. Lincoln Chafee and General Treasurer Gina Raimondo argued in court filings that the state, as a defendant, has a constitutional right to a jury trial and should be allowed to have jurors decide the case, rather than just Taft-Carter ruling on her own. The lawyers representing the unions and retirees opposed the idea, saying it didn’t fit the legal issues at hand.

The state’s 2011 pension reforms were especially controversial because they applied to all workers and retirees, not just new hires.

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.

Atlanta Wins Case Over Employee Pension Contributions

Atlanta skyline

A key portion of Atlanta’s 2011 pension reforms have been upheld in court, the city said Tuesday.

In 2011, the city increased employee contributions to the pension system by 5 percent – a move which workers said violated their contracts. But a judge has sided with Atlanta on the matter.

From Governing:

A Fulton County Superior Court judge has upheld Mayor Kasim Reed’s historic 2011 pension reform, siding with the city in a class-action lawsuit brought by employee unions, the mayor’s office announced Tuesday.

A handful of union workers representing Atlanta fire, police and city employees sued the city last November, claiming the pension reform that forced employees to pay 5 percent more toward their retirement benefits was in violation of their contract and, therefore, unconstitutional. Such an increase, the employees argue, must also increase their pension benefits.

But Reed and city officials argued — and Judge John Goger agreed in his ruling — that the change is allowed under Georgia law. The mayor, who championed the reform in his first term, has long said overhauling the employee retirement benefits program was critical to the city’s financial stability, and will help Atlanta pay off a $1.5 billion unfunded pension liability.

Without increasing contributions, the city can’t afford to pay the full benefits eventually owed to workers, city leaders argue.

Reed and City Attorney Cathy Hampton are expected to hold a press conference on the issue Wednesday.

Atlanta City Hall, as well as Fulton Superior Court, was closed on Tuesday in observance of Veterans Day.

An attorney for the public safety unions said he hasn’t had time to review Goger’s decision. Lee Brigham said it is premature to comment on the case and whether his clients are likely to appeal.

Read more about Atlanta’s pension changes here.

 

Photo Credit: “Atlanta skyline” by AreJay at en.wikipedia – Licensed under Creative Commons Attribution 2.0 via Wikimedia Commons

Teacher Group: Illinois Pension Reform Is “Direct Violation” of Lawmakers’ Oath of Office

Flag of IllinoisLast week, the Illinois State Journal-Register published a piece by Ty Fahner exalting the state’s pension reform law and detailing the consequences that would face Illinois in the wake of a court rejection.

Now, the newspaper has published a rebuttal from Bob Pinkerton, president of the Illinois Retired Teachers Association.

The letter reads:

“What if pension reform is rejected?”

These words were written by Ty Fahner, president of the Civic Committee of the Commercial Club of Chicago, sometimes referred to as the Millionaires’ Club.

The question should be, “What happens when the Supreme Court reminds us what the Illinois Constitution says in Article 13, Section 5, ‘… benefits, of which, cannot be diminished or impaired?’”

What does the legislature do when it is forced to acknowledge the pension reform lawmakers voted for is in direct violation to their oath of office?

Mr. Fahner writes, “A decade ago, only a small fraction of state revenues went to fund the pensions.”

This is the problem. Over the years, the legislature violated the laws they passed by skipping or reducing pension payments so they could afford new projects.

The state cannot expect retirees to fill the pension gap left by irresponsible lawmakers. It is not right that the legislature is now attempting to reduce benefits to pay for the past negligence of the state.

Over the years, no one complained when new programs were implemented without new revenues because stealing from the pensions seemed harmless to them at the time and these were available dollars already allotted in the state budget.

The bill is coming due for all those years of pension holidays. Illinois has the fifth-largest economy in the country. I believe we can figure out a way to pay our bills.

Read Ty Fahner’s original column here.

Former Illinois Attorney General Pushes For “Plan B” On Pension Reform

Flag of IllinoisIn all likelihood, a judgment on the constitutionality of Illinois’ 2013 pension reform law will in the next six months.

Former Illinois attorney general Ty Fahner doesn’t want the state to be blindsided by the result. If the law is overturned, he says, there needs to be another plan in place.

Fahner is asking lawmakers from around the state to start developing alternate reform ideas. From the News-Gazette:

“I still hope and expect, I truly do, that the court may find Senate Bill 1 constitutional. Whether that’s a false hope or not, I need to make the point that even if they do, after all of that, we’re still in terrible shape as a state,” Fahner said. “If they overturn it, there will be incredible hardship, which is what we are trying to get people to focus on now, not because it will change their decision, but I think there has to be a debate, a discussion, right now, because if you wait until the spring when the court finally rules, it’s going to be a little bit too late.

“They’re going to be in the middle of the budget at the end of the session. Whether it’s Quinn or Rauner, they’re going to have a difficult time. I think they need to talk now.”

He’s encouraging candidates for governor and the Legislature to address the question, and wants voters to ask them about it.

“That’s all we’re trying to do with this,” said Fahner, whose group is pushing what it calls a “What If?” initiative. “It’s so profound and the damages could be so terrible that people have to think about it now and not just give a political reaction later that, ‘We’ll have to sort it out.'”

State Rep. Adam Brown, R-Champaign, said he was “more than happy to be a part of the conversation” about an alternative pension plan.

“But at this point, there are just too many unknowns,” he said.

[…]

[Senate President John] Cullerton’s spokesman John Patterson advised patience.

“It has been a long struggle to get a law through the General Assembly and now a case to the courts,” he said. “Given the complexity of the issue and the difficulty in gettting to this point, we should now see what the courts have to say. There are a lot of people with a lot of opinions, but they aren’t on the Illinois Supreme Court, and it is the justices who will ultimately tell us what can and cannot be done.

“At this point the case is still before the trial court, so it seems a bit premature to already be predicting its demise. Let’s let the judiciary do its job.”

As for Republican gubernatorial candidate Bruce Rauner’s proposal that state employees be moved into 401(k)-style, Fahner said, “The idea of a 401(k) is great, but I’m not sure it would work in the current situation.”

Fauher also questions whether the reform law goes far enough. From the News-Gazette:

“[The law] only scratches the surface of the state’s problems. We also have to look at what drives jobs from the state. We’ve got to do a lot to make this a more jobs-friendly state.”

This year, he said, 26 percent of the state budget is devoted to pension payments. By 2024, pension payments would eat up a third of the budget.

He said that would lead to higher property taxes, fewer teachers and less money for social services.

“A lot of people say this isn’t a problem, all you do is just raise more taxes. This goes back to the jobs issue. We could raise taxes again, but we already know what the job losses have been,” Fahner said. “We’re losing jobs because it’s a very hostile work environment with regulations and everything else. If you have less jobs, you have less people to pay the taxes which fund all of these needs, and that’s what is happening to us.”

Governor Pat Quinn has said he doesn’t have a “plan B” in place if the law is deemed unconstitutional.

Illinois Governor Candidates Talk Pensions in First Debate

 

One of the hottest issues in the race for Illinois governor is also one where the candidates differ starkly: how to fix the state’s retirement system.

So it’s no surprise that pensions came up during the race’s first debate.

There were no revelations here; Pat Quinn and Bruce Rauner both used the time to double-down on their stances. From the Associated Press:

Quinn signed legislation last year that would fully fund the retirement systems by 2045, in part by cutting benefits. Public-employee unions have sued, saying the overhaul violates a provision of the constitution that says benefits can’t be reduced.

Rauner supports letting retirees keep the benefits they’ve been promised but freezing the systems and moving employees to a 401(k)-style plan in which workers are not guaranteed a certain level of benefits. He said that plan — similar to what most private-sector workers have — wouldn’t save much money to start but would save billions in the long term.

“I don’t believe it’s right to change the payments to a retiree after they are already retired, and that’s what Gov. Quinn did,” Rauner said.

But Quinn called Rauner’s plan “risky” because workers’ retirements would depend largely on market performance. He said he deserves credit for making Illinois’ full pension payment each year he’s been governor — something his predecessors didn’t do. That contributed to Illinois having the worst-funded pension systems of any state in the U.S.

Illinois’ pension reform law has spent the last 6 months being fast-tracked through lower courts. A ruling on the constitutionality of the law could come before the end of the year.

Illinois Pension Case Stays On Fast Track; Arguments Set For November

Flag of IllinoisIllinois’ pension reform law is going to get its day in court soon. A judge on Wednesday scheduled arguments for and against the law for next month. That means a final ruling on the law could be made by the end of the year.

The law’s opponents and defenders have one thing in common: they both want a ruling on the law’s legality sooner than later.

From Reuters:

Sangamon County Circuit Court Judge John Belz, who is overseeing five consolidated lawsuits filed by labor unions and others, set Nov. 20 for arguments for and against the constitutionality of the law passed by the Illinois legislature last December.

Public labor union coalition We Are One Illinois and other parties have been seeking an expedited ruling in the wake of a July 3 Illinois Supreme Court decision in an unrelated case that determined health care for retired state workers is a pension benefit protected by a provision in the state constitution.

The same provision, which prohibits the impairment or diminishment of retirement benefits for public workers, is the focus of the lawsuits against the state’s pension reform law. The new law, which is currently on hold, reduces and suspends cost-of-living increases for pensions, raises retirement ages and limits the salaries on which pensions are based.

In documents filed with the court on Friday, Illinois Attorney General Lisa Madigan argued that the high court’s July 3 ruling only dealt with retiree health care subsidies being part of the contractual relationship Illinois has with members of the state’s public pension systems.

“The court did not address whether such benefits are immune from the state’s exercise of its police powers. That issue was not before the court,” Madigan’s court filing noted.

In its defense of the pension reform law, Illinois is leaning heavily on its so-called police powers trumping the constitutional provision against reducing public employee retirement benefits. Those powers include the state’s ability to properly fund education, healthcare and public safety. Those sectors would experience substantial cuts if the state’s already large pension burden grows, Madigan said in the filings.

We Are Illinois released the following statement on Wednesday:

“As we have always maintained and the recent Kanerva decision confirms, the pension protection clause of the Illinois Constitution is absolute and without exception. There is no merit to the State’s purported justification for the unconstitutional diminishments and impairments that SB1 imposes. We are hopeful for a swift resolution in the plaintiffs’ favor, so that we can work with legislators willing to develop a fair—and legal—solution to our state’s challenges, together.”