Rauner’s Planned Pension
Deal with Cullerton: Better Read the Latest ILSC Decision
We were having lunch the other day with a friend/blogger
after the late March release of the latest Illinois Supreme Court response to
one more attempt to curtail the benefits earned by retirees and future retirees
of state workers safeguarded by the Pension Protection Clause in the Illinois
Constitution.
In this case, it was the March 24th refutation of
the argument by those representing the City of Chicago and besieged Mayor Rahm
Emanuel to support the legal validity of Public Act 98-641, passed by the
General Assembly; which would progressively increase the contributions of
workers in the MEABF (Municipal Employees Annuity and Benefit Fund)and the LABF(Labor
& Retirement Board Employees), make permanent changes in their retiree Cost
of Living allowances, and promise to make payments to bring funding ratios to
90% by 2055.
Promise, that is.
If this sounds strangely familiar, it should. Especially if you were a retired state worker
in 2013 when the We Are One Coalition
was promoting SB2404 as a way forward in a negotiated solution to remedy an
outrageous unfunded liability in Illinois.
Cullerton’s bill in 2013 offered what was promoted by the
WAO coalition as a choice (or consideration) between retaining a compounded
COLA or specific health care opportunities.
According to the WAO coalition, the most attractive of the offerings was
the promise of a “key element…the language that guarantees pension funding…This
will help guard against a repeat of the mistakes made by politicians of the
past.”
Promise, that is, again.
You might also remember that the General Assembly dismissed
the Cullerton SB2404 and instead embraced the Nekritz/committee’s more
draconian SB1, which was later struck down by a unanimous decision of justices
of the Illinois Supreme Court in May of 2015.
Interestingly, the aforementioned Public Act 98-641 now
provides quite an analogous opportunity to view the potential judicial reaction
to the Cullerton bill and its supporters, including the WAO coalition. Although it contains some aspects of the more
severe SB1, an argument incorporating an affirmative defense and an argument
for sovereign rights, the bulk of its presentation included an affirmation of shared
sacrifice on the part of unions (and particular peoples) as well as promises
made by the City to make payments.
In fact, current Governor Rauner and Minority Leader Representative
Jim Durkin have been intensely promoting the same type of “consideration”
argument, and Governor Rauner has vocalized his collaboration with Senate
Leader Cullerton in the drafting of another “choice” pension reform bill in
order to save the state money and provide money for the Governor’s desperate
revenue needs.
Nothing thus far.
Back in 2013, leadership from the WAO Coalition informed a
group of us in Lombard that representative tallies of membership indicated a majority
willingness to accept “choice” between health care and COLA benefits an
acceptable pathway to making permanent changes in future benefits of public
workers. “We’ve done a large sample of
our people,” we were informed.
“While both bills employ a
"choice" concept to meet the constitutional challenge, only the
Cullerton-Coalition bill provides something of value in exchange for a
participant agreeing to a benefit change.
The unions believe SB 2404 is
constitutional, and we urge that it be passed.”
The recent ILSC decision in the case of the City of Chicago
contravenes this presumed position of political influence by either sampling or
the acquiescence of specific union members as representative of the whole:
¶ 23
The court additionally rejected defendants’
assertion that the Act was a valid bargained-for exchange, finding that (1) the
unions were not acting as agents in a collective bargaining process, (2) the
unions could not have represented the retired members while at the same time
acting as representatives of the active employees, and (3) nothing in the
process that led to the enactment of the Act barred the individual plaintiffs
from asserting their constitutional rights or operated as a waiver of those
rights.
Secondly, the inclusion of language to promise making
payment “from now on” to increase funding is treated as a canard by the ILSC.
¶ 41
Despite the City’s reliance on the General
Assembly’s stated purpose in enacting the legislation to save the Funds from
insolvency and the inclusion of enforcement mechanisms, nothing in the Act’s
funding provisions expressly provides for an enforceable contractual right to
an “actuarial funding guarantee.” Indeed, the language in the enforcement
provisions is qualified in many respects.
40 ILCS 5/8-173.1, 11-169.1 (West 2014).
For example, the Act provides that the Funds may
bring a mandamus action at their discretion if the City fails to make its required
annual contributions, and limits any repayment plans to those that do not “significantly
imperil[ ] the public health, safety, or welfare.” 40 ILCS
5/8-173.1(b), 11-169.1(b) (West 2014).
Nothing in that language supports a legislative
intent to establish clearly and unequivocally an enforceable contractual right
of the members of the Fund to an “actuarial funding guarantee.” Accordingly, for
all of these reasons, the statutory funding provisions are not a “benefit” that
can be “offset” against an unconstitutional diminishment of pension benefits.
¶47
The City’s theory would allow the legislature
“through its funding decisions, [to] create the very
emergency conditions used to justify its
suspension of the rights conferred and protected by the constitution.” Heaton,
2015 IL 118585, ¶ 85.
This is the very circumstance that the pension
protection clause was intended to foreclose. To be
clear, the constitution removed the option of unilaterally
diminishing benefits as a means of attaining pension stability.
In other words, the offer of 2013’s SB 2404 to make payments
or face mandamus proceedings by the unions is regarded as an “illusory promise”
at best by the ILSC in its 2016 decision.
As for the question of what might constitute a valid
consideration when it comes to choices, the ILSC is also nuanced in its
response:
Whether members of the Funds may be “better off”
under the new terms of the Act despite the unconstitutional diminishment of their
benefits, as defendants contend, is not for the General Assembly to decide unilaterally.
The fundamental point here is that determination must be made, if at all,
according to contract principles by mutual assent of the members, and not by legislative
dictates.
Some, like
Rauner and other legislators, hold out hope that this decision means pension
benefits may be curtailed through a collective bargaining process. On the other hand, the nearest such
bargaining at a localized level may reach might be the amount of pension
pick-up (as in Chicago and the CPS) and not much more. We may have ratified salaries or benefits or
class sizes or increased assistance for students’ programs in our association
negotiations – but I do not recall ever choosing retirement options or changes
in after-work benefits.
My friend
across the lunch table had been present at that same meeting in 2013. He had loudly and vehemently reminded
leadership that no one had ever asked him how he’d felt about the proposed
SB2404. He also propitiously forewarned
them what the ILSC said last month:
In this case, it is undisputed that the unions
were not acting as authorized agents within a collective bargaining process.
Thus, we need not resolve whether the vote taken by union representatives as
expressed in the Brandon affidavit bound members of the Funds in a collective
bargaining process. Rather, we agree with the trial court that “these
negotiations were no different than legislative advocacy on behalf of any
interest group supporting collective interests to a lawmaking body.”
The individual members of the Funds have done
nothing that could be said to have unequivocally assented to the new terms or
to have “bargained away” their
constitutional rights. Accordingly, nothing in
the legislative process that led to the enactment of the Act constituted a
waiver of the Funds members’ constitutional rights under the pension protection
clause.
Recalling all of this, our friend/blogger smiled and ordered the
Taramosalata.
We cringed.
He shares.
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