Supreme Court Summaries

Opinion filed May 8, 2015

In re Pension Reform Litigation, 2015 IL 118585

Direct appeal from the circuit court of Sangamon County

JUSTICE KARMEIER delivered the judgment of the court, with opinion.

Chief Justice Garman and Justices Freeman, Thomas, Kilbride, Burke, and

Theis concurred in the judgment and opinion.

In the fall of 2013, the General Assembly enacted a statute amending the

Illinois Pension Code to reduce the retirement annuity benefits of individuals who

first became members of four of the State of Illinois pension systems prior to

January 1, 2011. That enactment became effective on June 1, 2014. It was

challenged in five separate actions which were consolidated in the circuit court of

Sangamon County. That court declared the statute to be unconstitutional in its

entirety as a violation of the pension protection clause of the Illinois Constitution of

1970, and enforcement of the statute was permanently enjoined. The circuit court

stated that the State of Illinois made a constitutionally protected promise to its

employees concerning their pension benefits. Under established and

uncontroverted Illinois law, the State of Illinois cannot break that promise. Appeal

of this statutory invalidation lay directly to the Illinois Supreme Court.

The pension protection clause states that [m]embership in any pension or

retirement system of the State, any unit of local government or school district, or

any agency or instrumentality thereof, shall be an enforceable contractual

relationship, the benefits of which shall not be diminished or impaired.

Although it was argued in defense of the statute that the current financial

emergencies of the State of Illinois justify this measure as an exercise of police

power as a matter of reserved state sovereignty, the supreme court noted in this

decision that the States financial problems were also a concern when the

Constitution of 1970 was enacted and, in fact, drove the inclusion of the pension

protection clause at that time. The legislature cannot exercise a higher power than

that given by the state constitution itself. This outcome is supported by years of

legal precedent, as well as by Kanerva v. Weems, which, in July of 2014,

announced the supreme courts ruling that the constitutional pension protection

clause prohibited a statutory reduction in health care premium subsidies under State

retirement systems.

Even vendors to whom the State owes money because of the financial crisis are

entitled to interest on their unpaid bills. What the General Assembly has done is to

force retirees, alone, to bear public burdens which, in all fairness and justice, should

be borne by the public as a whole. No effort was made to distribute this financial

burden evenly among Illinoisans. A temporary increase in the rate of income tax,

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allowing for additional revenue, was recently allowed by the legislature to lapse. It

cannot be said that there are no alternative remedies available to address these

financial difficulties.

The result reached in the circuit court was affirmed.