Posted November 21, 2014 4:11 pm by Comments (6)

Print Friendly

By: Mark Glennon*

 

A Sangamon County Circuit Court granted labor’s motion to invalidate SB1, Illinois’ pension reform law. The court’s order is linked here.

 

The court granted labor’s motion for a judgement on the pleadings, meaning that no trial is needed and the bill is void as a matter of law. No affirmative defenses are allowed, including the state’s “police powers” argument that the state is too broke to pay its bills. That complex defense, which the state had prepared in detail with the assistance of paid, expert economists, won’t be heard.

 

The ruling will be appealed, probably directly to the Illinois Supreme Court.

 

*****************

A few thoughts:

 

Mercifully, the court did invalidate all of SB1, including the horrid funding guaranty it contained, which would have forced untold additional appropriations into the pensions.

 

The decision doesn’t matter much. SB1 would have reduced the unfunded liability for four state pensions by just $20 billion in total (that’s what the A.G. says in its sword pleadings on behalf of the state). The state-reported total unfunded liability as of June 30, 2014 was $111 billion. Add $50 billion for unfunded healthcare liabilities which the Kanerva decision recently ruled are also constitutionally protected. Use real numbers with proper assumptions, not “Illinois Math,”  and the true total is now well over $200 billion. That’s just for the five state pensions. Never mind the other 675 municipal pensions in Illinois.

 

The decision was rightly decided and entirely predictable. Accepting the police powers argument would have meant court-based management of the state budget, including decisions like how much taxes can be raised, and priorities between pensions and other obligations. The Illinois Supreme Court surely will uphold the decision and invalidate the law.

 

Questions should be asked about whether Attorney General Lisa Madigan blew her chance to argue the police powers defense. She did not raise it in the Kanerva litigation earlier this year, allowing that case to become the leading precedent on which this new ruling was based. We discussed the question here.

 

Count on the politicians who authored the doomed, inadequate law to now cry, “we did the hard work on pension reform, but those darn courts struck it down. Most of them knew this would probably happen, and happen after the election.

 

No pension reform that depends on Illinois courts will work. The judges are pensioners who clearly hate pension reform, and the Kanerva decision proved they will just make up the law that suits the pension results they want. The lawyers who write the reforms and defend them in court are pensioners, too.

 

Will somebody please propose real reform now?

 

By: Mark Glennon*

 

 

 

Sort by:   newest | oldest
Rich
The General Assembly’s inaction over the past year, while knowing where the Courts would stand on the reform bill, has already been a Pension Holiday. The worst thing we could possibly do is deliberately make the hole bigger. Even if the Supreme Court finds that “sovereign powers” to obviate the Constitution may be necessary under extraordinary circumstances , the issue of whether the current fiscal crisis rises to that extraordinary level has yet to be heard. Certainly at a minimum, the State would need to demonstrate that (a) the crisis was not at least reasonably foreseeable and (b) the State… Read more »
Rich- You’re right about the legal argument. And the plaintiffs could rightly point to all the arguments made by Cullerton that there’s “no crisis” and his whole ‘I Like Illinois’ bit. Like I said, the case was rightly decided (though the court should have provided more reasoning). Of course, I disagree that there’s no crisis, to put it mildly. We are way past ability to solve this without meaningful benefit cuts. Funding the pensions adequately to meet the promises made is far, far beyond anything fiscally or politically possible, and always has been. The notion of another pension holiday is… Read more »
Rich
Mike, you’re certainly right that the first next step will be to come clean and tell it like it is. I’m we both agree that the vast majority of citizens have not a clue as to what the State’s fiscal condition. Even seeing a news article on the lowered bond rating just causes them to gloss over. A key blunder on SB1 is that the GA never really vetted the actual language of the bill with those affected by it. And I’m not talking about union leaders, but everyone. They certainly elicited the ire of those already retired. Whereas the… Read more »
Mike
Here’s yet another example of the Illinois General Assembly, public education, and pension systems run amok. Illinois State Board of Education > Division & Program Areas > School Business Services > Items of Interest > Limitation of Administrative Costs. “School District’s budgeted administrative expenditures can not increase more than 5% over their prior year actual administrative expenditures, per Section 17-1.5 (Limitation of Administration Costs) of the School Code. The following functions are included under administrative expenditures: 2320 Executive Administration Services 2330 Special Area Administration Services 2490 Other Support Services – School Administration 2510 Direction of Business Support Services 2570 Internal… Read more »
Mike

How about another Pension Holiday until the unions and special interests agree to repeal the Pension Protection Clause.
Starve the Beast.
The effect of the Pension Protection Clause was to hike salaries and benefits because the unions and special interest groups thought the goose laid the golden egg.
How is Rauner going to grow business with the pension noose around everyone’s neck.

wpDiscuz