Friday, December 19, 2014

On the Eve of Pension Appeal: A Recused Justice?

PENSION APPEAL: Recused Justice?

“Our founders designed courts to be distinct from the other two branches of government. In order to govern, state executives and legislators must woo popular majorities and play the game of politics, Judges are assigned a different job: to protect our rights, and to decide cases fairly and one at a time, based on the law and the Constitution, not political pressure.  An independent judiciary is one of the crown jewels of our system of government.”  -Chief Justice William Rehnquist

Nearly a decade ago, Supreme Court Justice Alito belligerently shook his head as President Barack Obama unexpectedly and publicly scolded the highest Federal Court for its recent decision regarding Citizens United. 

The President had seen similar disquieting trends in his own native state of Illinois some years before.  Since then, the outside influences on judicial campaigns in Illinois that a young state Senator Barack Obama characterized as “unseemly” have evolved to flagrantly repulsive in the decade since he tried unsuccessfully to move a bill to reform the judicial election process.  He had not counted on Speaker Madigan’s power to block it.

In fact, the current Justices on the Illinois Supreme Court remain in office and seated for ten years through a partisan elective process that bears the manipulation of significant political and monetary influence of various groups and individuals – all vying for some type of consideration by the Court if and when they so need it. 

For those of us with public pensions, quite soon these wealthy or self-serving strategic benefactors have much to gain (or lose) in the upcoming appeal by Lisa Madigan (Speaker Madigan’s daughter) regarding the November 27th ruling by Judge Belz that SB1 (PA98-0599) – the pension theft bill – is unconstitutional. 

You might remember that Speaker Madigan once boasted in December of last year that he felt secure after his passage of SB1 that at least four of the Justices in the Illinois Supreme Court would find SB1 constitutional.  Like most of Madigan’s observations, his announcement was cryptic but also illuminating.

Following Supreme Court regulation, even if one or two Justices were to recuse themselves from hearing the pension appeal due to possible conflicts of interest, it would still require the agreement of four Justices to affirm or deny.  It would not be a majority of the remaining.

Furthermore, money from the Madigan controlled Democratic Party of Illinois fund has heavily supported at least four of the seven current Justices in their bids to attain seats or for retention in the Illinois Supreme Court.  Justices increasingly need financial backing from parties and groups to secure judicial seats or retention in Illinois. 

Sadly, the partisan elective process, which becomes addictive to monetary donation(s), now occurs in Illinois and happens in other states as well.  Since Obama has left his home state and since the ruling of Citizens United, the result has been an exponential delivery of exorbitant amounts of money to potential state Supreme Court Justices during their candidacies in judicial elections.  Political PAC’s and “dark money” have sought and found new recipients, and they are no longer the least influenced branches of government.

One political lobbyist put the entire plan on the multi-state level quite simply: “We figured out a long time ago that it’s easier to elect seven judges than to elect 132 legislators.”  In other words, if you build it, they will come; but if you build possible influence, they will buy it.

And, in Illinois, if money comes to an aspiring Justice with strings attached, the strings web out in all directions to all political persuasions, especially in the Pension Theft appeal:  right wing PAC groups, labor unions, educational groups, attorney groups, big business, etc. 

Please excuse a Christmas metaphor, but in Illinois each of our current Justices carry the ponderous weight of possible appearance of monetary influence approaching the upcoming Pension Theft appeal like Dickens’ Marley struggling with the lumbering chains of past political indiscretions. 

In fact, connecting the political and accompanying monetary dots in Illinois politics is quite enough to drive anyone to distraction – or more likely cynicism.  For example, many will call for Justice Ann Burke to recuse herself in the upcoming pension theft appeal.  After all, Justice Burke has already declared her position regarding the question of pension benefits in her dissenting point of view in Kanerva v. Weems.  While the decision (6-1) found that the addition of health care was a benefit that could not be diminished or impaired, Justice Burke argued that such a decision was crafted out of “whole cloth,” and only what was promised (salary, etc.) at the time of employment would be protected by Article XIII, Section 5 of the Illinois Constitution.

Moreover, Justice Burke raised over $1.8 million in her 2008 campaign to ward off a possible challenger.  According to Follow The Money, groups in support of the current Pension Theft Bill, like the Prtizkers and other business-minded leaders, supplied nearly $1 million in her support.  On the other hand, labor unions also provided another $55,000.  Candidate Committees, like Madigan’s Democratic Party of Illinois, also provided a tidy sum. 

Augmenting this cradle of strings, Justice Burke’s husband, Alderman Edmund Burke is a consistent contributor to the architect “put on earth” to pass Pension “Reform” – ex-Governor Patrick Quinn.  After loaning Quinn over $200,000 and supplying the candidate Quinn with another $50,000, the Burkes’ daughter Jennifer was appointed by Quinn to serve in a $117,000 position on the Illinois Pollution Control Board in 2011.  (

Unfortunately, in the political realm of Illinois, Justice Burke remains no more indebted to conflicting and influential backers than most if not all of the other Illinois Justices. 

In just this last election cycle, voters witnessed an expensive battle in the fifth district race for the retention of Illinois Supreme Court Justice Lloyd Karmeier.  In a combat tailored in the microcosmic result of a Citizen United decision, powerful factions of attorney groups faced off with even larger groups of “dark money” supplied by groups like the Chamber of Commerce to retain the Justice.  The amount of money fueling this specific race for judicial retention reached unheard of highs - nearly $2 million – after receiving nearly $4 million in pro business interests earlier (  In fact, according to, “during 1990’s, costs for Supreme Court races hovered between $20 million and $30 million per election; now, it’s routine for the annual haul to exceed $55 million” ( - .VJUQT50EAA).   

Influence?  In Karmeier’s election for retention, organized trial lawyer groups were doggedly fighting to defeat a judge who had overpowered them in 2004 by taking untold donations from Philip Morris through various front groups and PACs like the Chamber of Commerce, and then refused to recuse himself during later appeals to the highest court in an earlier suit against the cigarette manufacturers claim of “lite” as “harmless.”  The Illinois Supreme Court – and Lloyd Karmeier – overturned the earlier decision and found in favor of the cigarette manufacturer.

Robert Clifford of Clifford Law Offices was part of the trial lawyers’ consortium to defeat Karmeier’s retention.  He expressed his concerns in a recent Tribune editorial regarding the influences of big business in Illinois judicial retentions and elections he has historically witnessed.  “I readily joined this battle because consumers’ rights are in jeopardy every time Karmeier votes on an issue that could affect the interests of those who helped to elect him…Insurance companies and large corporations have funneled money through organizations such as the U.S Chamber of Commerce so that specific identities of the donors remain anonymous.  Voters can’t find out who funneled money to the organizations for those purposes” ( ).

Although caught between the various influences and political/monetary pressures of those powerful entities who support or discourage pension benefits, some Illinois Supreme Court Justices assert they’re ideologically untouchable.  The current Chief Justice of the Illinois Supreme Court Rita Garman expressed her own disbelief in the power of group(s) or PAC donations to influence legal decisions in a Chicago Lawyer article heralding her as “Person of the Year” in 2013. 

Commenting positively on a more meritorious method for judicial selection over an unsavory elective process inundated in cash, Justice Garman nevertheless felt that the independence of the judicial branch in Illinois was still functional and neutral.  “I think politics plays no role in any of the issues we have before us…If a legislative challenge goes up or down, (it’s) based upon whether it meets the standards of our constitution.  And I think our court will analyze it that way. I know that time to time there is speculation about the party split on the court.  That is not an issue with the court” ( .”).

Of course, the particulars of the appealed bill PA 98-0599 remain wholly opposed to Justice Garman’s more erudite imagination of immunity from political pressure or distance from big business.  The removal of the Judicial Retirement System (JRS) from the proceedings in the bill and its later passage as PA98-0599 appears intentionally and strategically designed to influence the Justices by avoiding any immediate or direct consequences for those who would deliberate.    If included, the Justices' awareness of their retirement program's less-than-30% funding as well their initial salaries of over $200,000  would probably weigh as heavily in the decision as their future backing by untold parties.

As one might expect, Speaker Madigan, who predicts a 4-3 win for his daughter’s "sovereign powers argument," spins all of this quite differently.  “The intent was to eliminate the possibility of judicial conflict during the adjudication of this matter through the court system…”

Senator Bill Brady identified a simple contradiction in the Speaker’s argument: "If it’s a conflict for the judges to be in the pension bill, then it’s a conflict they’re taking money from the groups they’re making rulings about” (

In other states, or at least 30 of them, voters have adopted merit selection to pick judges at various levels.  In most cases, non-partisan screening commissions conduct interviews, review deliberation records, and recommend qualified finalists to the state governor, who then makes an appointment.  Retentions are often dealt with by simple majority elections. 

Unfortunately, in at least 21 other states like Illinois, judges are elected in the same political process as we’ve come to expect for our federal congress people after Citizens United or McCutcheon v. Federal Election Commission. 

Despite Chief Justice Garman’s proffering of independence, a retired Supreme Court Justice from West Virginia (also an elective judiciary) stated: “It’s pretty hard in big money races not to take care of your friends…It’s very hard not to dance with the one who brung you” (

How deeply Speaker Madigan resides in the darkness of Illinois’ Justices robes is hard to say; however, he certainly will not be alone.  Pension supporters like AFCSME and WeAreOne will be there, as will Sidley Austin, the Civic Committee and Winston-Strawn.  We might even catch the shadows of twin brothers with an oily nature to them. 

And the Justices?  Caught between many voices and even more money from self-interested backers, we can perhaps only hope they'll be controlled and guided the deep ruts of earlier (and recent) Constitutional decisions to guide them as they hear Lisa’s appeal – an attempt to break contractual promises made by the state because the state has the power to do so?

There will be no recusing by any of the Justices, for in the political circus called Illinois none are untouched.

Tuesday, December 9, 2014

Basic Math on Changes in Actuarial Assumptions?

Basic Math/ Basic Truths

The other week at an interesting gathering of fellow retirees in Skokie, I listened to an illuminating presentation by Rich Frankenfeld from TRS.  It was a long drive, but well worth it.  In his update, Rich covered a variety of areas for concern:  the financial condition of TRS, health insurance information, various plans available to all of us in the room, and other “major issues” including the threat and possible outcomes for SB1.   The President of the Skokie Organization for Retired Educators (S.O.R.E.) is, of course, Fred Klonsky. 

Of note was another review of the changes to Cost of Living Allowances under the new SB1 for Tier 1 retirees and the forced “simple” interest for Tier 2. 

While speaking to several of the points in his program, Rich dropped a small piece of information that caught my interest. 

“Our eldest recipient of a pension in from TRS is currently 108 years old.”

Spoiler alert (Biss, Nekritz, Madigan, Klonsky quickly retorted that he was personally planning to beat that number.

108 years old? 

I’ll assume it was a she, but still what an incredible and protracted life-span.

Born in 1906.  The year Theodore Roosevelt warns the nation that we face a corporatist elite that would endanger all our freedoms; the year The Jungle is published; and the year of the Windber Strike by 5000 workers in Pennsylvania marching to join with the nascent United Mine Workers.

Started teaching in 1927.  A lanky but gifted pilot takes an outrageous gamble to fly solo across the Atlantic and somehow land in Paris, France.

I envision her teaching 40 years while the world struggled to survive economic collapse, bleed profoundly to thwart fascism, endure the pervasive terror of an accumulation of nuclear weapons, Viet Nam…

She retires in 1967.

According to the Chicago Tribune, an average salary for a teacher in 1967 was between $6800 and $7400.  By the way, even then the Tribune seemed concerned about the increases in teacher salaries over the last decade. 
So, assuming she has her full time in and she has a stipend, let’s figure her 75% of salary for her retirement annuity at $6000 per year.

She earns a Cost of Living Allowance in 1968.  And, still alive, she receives that COLA for 47 years!  YOU GO,GIRL!

On the other hand, this is an unexpected extension in a life span that actuaries or Senators like Dan Biss would call an unexpected change in assumptions.  We all live too long now; therefore, SB1. 

But when you actually run the numbers, it seems less onerous than the Senator would have me believe.  In fact, her final annuity earnings seem closer to penury than an easy subsistence.

3% Compounded COLA on $6000 over a period of 47 years = $24,071.

3% Simple Interest COLA on $6000 over a period of 47 years = $14,460.

Monday, December 8, 2014

Ken Previti: National Theft of Pensions by December 11th?

Ken Previti: National Attempt at Pension Theft by December 11th?

According to In These Times.Com, “Reps. John Kline (R-Minnesota) and George Miller (D-California), the highest-ranking members on the House Education and Workforce Committee, have brokered a last-minute deal to reform multi-employer pensions, In These Times has learned. They’re now urging party leaders to include the plan as part of an omnibus spending bill, just before the 113th Congress is set to leave Washington for good on December 11” (

Friend and blogging colleague Ken Previti has likewise alerted us to this latest attempt by the current lame-duck Congress on private sector pension theft for multi-employer plans. 

“Reps. John Kline (R-Minnesota) and George Miller (D-California), the highest-ranking members on the House Education and Workforce Committee, have brokered a last-minute deal to reform multi-employer pensions, In These Times has learned. They’re now urging party leaders to include the plan as part of an omnibus spending bill, just before the 113th Congress is set to leave Washington for good on December 11.
“The full extent of the Kline-Miller proposal remains unclear. In addition to providing trustees with new benefit-gutting powers, it may include other less high-profile elements from the “Solutions Not Bailouts” report, a proposal authored last year by the National Coordinating Committee for Multiemployer Plans (NCCMP), a labor-management coalition.”

Not surprisingly, the designated goals of the NCCMP’s menu sound eerily similar to many of the phrases and clich├ęs offered by those legislators in Illinois proposing SB1.  Example: “Any recommendations for change to the existing system must still provide regular and reliable lifetime retirement income to participants.” 

Regular?  Reliable?  Would that be either without a promised COLA? 

In addition, the longstanding corporate argument of saving the entire system by cutting back on promises appears early on in the presentations.  Also, of course, what’s last on itemized goals and is usually first in unspoken strategies appears: to spur economic growth. 

The report by In These Times identifies the soon-to-be retiring Democratic member of Congress  (Miller) as the enticement for other uneasy liberals in the Democratic Party to join Republicans in this (suddenly) promising initiative.    Unions supporting the measure include massive Building Trades organizations, which feel compelled to compromise now rather than face harsher action in the next few years.  That sounds familiar. 

Understandably, many retired union members feel double-crossed. 

As Ken would alert all of us:
“Yes, teachers are the primary target, the scapegoats, for all of the damage done by the political theft and corruption that is strangling people who work for a living. But the target area has widened and continues to widen.
The federal government’s members of the House Education and the Workforce Committee seems to be the giant bully of bullies – especially during the lame-duck session of Congress. The Los Angeles Times reports it HERE.
“Passing legislation on a tight deadline–especially a bogus deadline–is invariably a formula for serious mischief. That’s what’s happening with a proposal to deal with a supposed crisis in worker pensions by allowing trustees to slash the pensions of already-retired workers to shreds.

Read Ken’s important blog post:

Friday, November 28, 2014

VOCABULARY - Judge Belz: AG Madigan cross motion denied WITH PREJUDICE

Judge Belz: Lisa Madigan’s “cross-motion for summary judgment is denied WITH PREJUDICE…”

When the Illinois Supreme Court hears Attorney General Lisa Madigan’s appeal of Sangamon County Judge Belz’s decision, the justices will be reviewing earlier court decisions as well as attending to her reconstructed arguments.  According to a spokesperson interviewed a few days ago on WBBM radio, the Attorney General does not plan to change her argument defending PA98-599.

In fact, she cannot.  The appeal to the Supreme Court in Illinois is an appeal of the decision presented by Judge Belz, not a “do-over.” 

Moreover, that decision includes the District  Court’s order: “The Plaintiffs’ motions are granted.  The defendants cross-motion for summary judgment is denied, with prejudice, because the Court finds there is no police power or reserved sovereign power to diminish pension benefits.”

You might remember that in Kanerva v. Weems, Justice Burke’s single dissent included her expressed concerns that the inclusion of health care as an inherent and additional pension benefits were beyond the scope and definition of “pension,” which was to be considered a fixed fiscal sum specified at the moment of employment.  In her opinion, the acceptance by the six other Illinois Justices to additional arrangements or benefits made during the life of one’s contract, including healthcare, were equivalent to “making something out of whole cloth.”

Judge Belz’s specific selection of the term “with prejudice” regarding the affirmative defense police-power argument engaged by Attorney General Madigan now likewise becomes considered unsupported - a “making something out of whole cloth.”  In short, fabricated. 

What is a judgment “with prejudice?”

A court may also enter judgment with prejudice, however. This signifies that the court has made an adjudication on the merits of the case and a final disposition, barring the plaintiff from bringing a new lawsuit based on the same subject. If a new lawsuit is brought, a defendant can properly invoke res judicata as a defense, because a court will not relitigate a matter that has been fully heard before. Often a court will enter a judgment with prejudice if the plaintiff has shown bad faith, misled the court, or persisted in filing frivolous lawsuits. (

The question of constitutionality may propel the pension lawsuit to the Illinois Supreme Court, but Lisa Madigan’s appeal will arrive tainted and sullied by the term “with prejudice,” and the Illinois Supreme Court Justices are compelled to take notice.

In addition, the latest written decision by Judge Belz will act as a clear and lucid reminder of past precedent(s), as well as his close scrutiny of the faulty reasoning by the Attorney General’s legal team. 

Citing the recent decisions by the ISC in Kanerva v Weems, Judge Belz astutely reminds the same Supreme Court of its mid-summer view regarding the Pension Protection Clause: “it 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” (Kanerva v Weems, 2014 IL 11581, 38). 

Furthermore, in each acting section of PA 98-599, the Belz Court found that the law was enabled by the General Assembly’s diminishment and/or impairment to the benefits of membership in the State retirement system – to which the defendants (Attorney General Lisa Madigan) “admit…will reduce the AAI [automatic annual increases] amounts certain pension system members receive.” 

Moreover, the legal team for the Attorney General of Illinois openly admits that any operation of the law’s effect will generate a mathematical reduction of COLA’s for retirees, a lessening of COLA’s for those yet to retire, a declining of caps on pensionable salaries of current workers, sudden raises in the thresholds for retirement ages, new methodology for determining rates of interest(s) for members’ money purchase options…in sum, a reduction of overall pension annuity payments.

But, in an affirmative defense of police powers, Lisa Madigan considers such an admission of fiscal destruction a defendable strength before before the Illinois Supreme Court?  Reconsider.

On his way to his carefully wrought conclusion, Judge Belz cited other antecedent cases, which historically reinforce his considered opinion: McNamee v. State; Felt v. Bd. Of Trustees of Judges Retirement System; Kraus v Bd. of Trustees of Pension Fund of Vill. of Niles, and Kanerva v. Weems.  Beyond “with prejudice,” the sobering weight of precedent figures heavily in the Circuit Court decision.

Finally, despite the Chicago Tribune’s plea for some guidance regarding any of the legally acceptable and unacceptable aspects of the law, the act called PA 98-599 holds that 39 provisions making up the totality of the new law must be held and enacted in inseverability.  That is, these subsections of PA98-599 are “mututally dependant and inseparable from one another.” 

In Judge Belz’s findings, because of this refusal to exclude the overt benefit reduction provisions of the Act, “all 39 provisions identified in the Act’s ‘[s]everability and inseverability’ clause must fail.”   
Clarification: the law includes a promise to guarantee funding for the State pension systems. 
Further clarification: the inclusion of a promise to ameliorate an unfunding caused by the State in order to receive legal justification for taking the funding away from those owed is neither inseverable nor acceptable.

Personally, I have spent years repeating the legal mantra of Article XIII, Section 5, for my friends and family: “shall not be diminished nor impaired.”  But, perhaps it is reason #6 of Judge Belz’s order in the finding of summary judgment of November 21st I should begin memorizing:

“The defendants (AG Madigan, have attempted to create a factual record to the effect that, if a reserved sovereign power to diminish or impair pensions existed, the facts would justify an exercise of that power.  The defendant can cite no Illinois case that would allow this affirmative defense.  Because the Court finds that no such power exists, it need not and does not reach the issue of whether the facts would justify the exercise of such a power if it existed, and the Court will not require the plaintiffs to respond to the defendants’ evidentiary submissions…

In summary, the State of Illinois made a constitutionally protected promise to its employees concerning their pensions benefits.  Under established and uncontroverted Illinois law, the State of Illinois cannot break its promise.”