Should Illinois public employee pensions be a top priority?

Not at the expense of other crisises

llinois' biggest problem is the state budget; the budget's biggest problem is the plush pensions for public employees; lavish pensions are a problem because of a constitutional clause that bans the "diminishment or impairment" of their benefits.

How did we get into this mess?

If we understand how, perhaps we can find a way out. And, indeed, the 1970 constitutional convention debate does provide an answer, albeit a far from perfect one.

First thing to know is that the original pension protection clause (now Article XIII, Section 5) was introduced and approved on the convention floor without a committee's usual close scrutiny and hearings. Surprise, one day it just showed up.

How could one of the most consequential, complex and troubling provisions in the Constitution avoid the usual vetting like most other constitutional provisions? The simple answer: This is Illinois.

The clause's sponsors argued pensions needed constitutional protection because the Legislature and municipalities might be inclined to slash benefits, even though draconian cuts had never been made. The floor debate on the clause barely filled 10 pages of the convention's thousands of pages of transcripts.

But not without some disagreement, which turned out to be remarkably prescient. John Parkhurst, a downstate Republican delegate, said, "… on the face of it, this innocuous little amendment sounds a lot like motherhood and strawberry shortcake. Actually, I think it is a culmination of a kind of a running battle by a special interest group of pension administrators in … Illinois that has been going on in the Legislature for years and years, and it probably should be continued in the Legislature."

Paul Elward, a Chicago Democrat warned, "… if ever there was a bust-the-budget constitutional amendment, this is it." John Woods, a northwest suburban GOP delegate was prescient when he said the clause "literally bristles with potential for confusion."

Bernard Weisberg, a Chicago independent, said, "To take it up for the first time in the way in which (we have) now seems to me to really invite us to walk up a swamp blindfolded." He warned of potential "litigation for some years to determine its meaning and effect, and perhaps hold out the illusion of protection without the reality of protection, which I think only the Legislature can give."

How right he was. The proposal passed, and since then Illinois has witnessed a number of lawsuits and court decisions that some legal experts (but not all) say lock in the clause's absolute protections of pension benefits for veteran employees and retirees. Meanwhile, the state resorts to desperate measures to feed the pension funds. For example, almost all the revenues from the recent state income tax increase go into meeting the state's pension obligations.

But is protection locked in? Judges rely heavily on legislative debate to determine the "intent" of such legal language as the pension protection clause. And this is why it's important to revisit that debate now. In that debate, some delegates were worried that the clause would require full, 100 percent, funding of pension benefits, which could limit the governor's and Legislature's flexibility, ultimately draining the budget. The clause's co-sponsors repeatedly tried to reassure the convention that the clause would not require full funding, or anything like it.

Helen Kinney, a DuPage County delegate and clause co-sponsor, gave those assurances bluntly: "It was not intended to require 100 percent funding or 50 percent or 30 percent funding or get into any of those problems, aside from the very slim area where a court might judicially determine that imminent bankruptcy would really be impairment."

And what is "imminent bankruptcy?" As Parkhurst asked, is it, say, 29 percent or 33 percent of full funding? Although funding is approaching those dismal levels, it does not become a legal issue until bankruptcy is imminent, which it isn't.

So, I suggest the state partially or fully defer putting money into pensions for now. Make pension funding wait in line with education, health and welfare, transportation, safety and other programs now being shorted by the politically motivated priority that pensions receive. Give the state more time to put its finances in order.

And if the pensions then face imminent bankruptcy, let the retirees sue. Let them learn what many other people are going through. Maybe then, the public employee unions will come to the bargaining table blessed with some common sense.


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  • This seems a pretty good synopsis of what the considerations would be.

    The other thing one has to figure is that in 1970, there was no ERISA, and Illinois law at the time (also applicable to private employers) was that pensions were a gift, which could be rescinded at any time.* The idea that they were in consideration for work didn't arise until later.

    Thus, one would also have to consider the Pension Clause in that context, as well as the context of the floor debate at the con-con.

    Anyway, even with the current view that there are contract rights in pensions once they are earned, such as by vesting after 5 years, the Cullerton view that state employees are U.S. Supreme Court judges, and even prospective benefits cannot be altered hits me as too extreme. However, since Illinois Supreme Court justices are on a state pension plan, maybe they protect themselves, too (the rule of necessity prevents them from all recusing themselves).

    Now: How many minutes is it going to take for someone to post "I paid my 9%, so it is unfair to do anything about my pension?"

    *Remember all the howling then about "the Teamsters took my contribution, but cited some technicality to deny me my pension," resulting in ERISA?

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