Elaine Nekritz
John J. Cullerton
James B. Durkin
Gino L. DiVito
Lloyd A. Karmeier
SPRINGFIELD — In a highly anticipated decision that came with no advance notice, the Illinois Supreme Court ruled Friday that the state’s overhaul of public pension systems is unconstitutional.
A unanimous opinion authored by Justice Lloyd A. Karmeier said there was “simply no way” the law, advanced in 2013 to rein in a benefit system the state was increasingly unable to afford, could be reconciled with a constitution that says benefits “shall not be diminished or impaired.”
Citing a similar decision by the Arizona Supreme Court last year — as well as its own conclusion in a case last year that said employee health-care benefits could not be taken away — the court dealt a huge blow to lawmakers who tried to argue the state could use its “police powers” to get around the so-called “pension protection clause” due to a financial crisis.
In no uncertain terms, the justices held that the constitutional language in the pension clause means what it says and that it was written that way because of persistent fears the legislature would try to skimp on payments in order to fund other projects, Karmeier wrote.
“The concerns of the delegates who drafted [A]rticle (13), [S]ection 5, and the citizens who ratified it have proven to be well founded. Even with the protections of that provision, the General Assembly has repeatedly attempted to find ways to circumvent its clear and unambiguous prohibition against the diminishment or impairment of the benefits of membership in public retirement systems,” Karmeier wrote. “(The pension law) is merely the latest assault in this ongoing political battle against public pension rights.”
He wrote that the state could not successfully argue that it had tried everything else to improve its financial condition to contend that pension changes were a true last resort.
“One alternative … would have been to adopt a new schedule for amortizing the unfunded liabilities. The General Assembly could also have sought additional tax revenue,” Karmeier wrote. “While it did pass a temporary income tax increase, it allowed the increased rate to lapse to a lower rate even as pension funding was being debated and litigated.”
The state’s top justices also looked to more distant history for guidance in the case, citing the U.S. Supreme Court’s decision declaring unconstitutional the suspension of the writ of habeas corpus by President Abraham Lincoln during the Civil War.
That was “a period of emergency that, by any measure, eclipsed the one facing our General Assembly today,” Karmeier wrote.
He added: “Crisis is not an excuse to abandon the rule of law. It is a summons to defend it. How we respond is the measure of our commitment to the principles of justice we are sworn to uphold.”
The release of the 38-page decision was not announced in advance. The court usually gives at least a few days’ notice before issuing opinions.
It follows years of debates and indecision by lawmakers on how to reform retirement systems that are still estimated to be under-funded by roughly $100 billion.
The high court decision affirms the ruling of 7th Judicial Circuit Judge John William Belz, who also ruled the law violates Article 13, Section 5 of the state constitution.
He stopped the law from going into effect about a year ago and, in November, declared it unconstitutional before lawyers for Attorney General Lisa M. Madigan asked the state’s high court to hear the case.
Legislators passed Senate Bill 1 — which would have reduced cost-of-living adjustments for employees and retirees, capped pensionable salaries and raised the retirement age on a sliding scale for some state workers — in December 2013. It was signed by then-Gov. Patrick J. Quinn shortly thereafter.
The law affected four out of the five state worker pension systems, including plans for teachers, public employees, state university workers and members of the General Assembly. To avoid a conflict of interest when the case went to the courts, it did not change the judges’ system.
“We are delighted that today’s Supreme Court opinion recognizes and ensures the pension rights of state employees, as required by our constitution,” said Gino L. DiVito, a partner at Tabet, DiVito & Rothstein — who represented the group of public employees and retirees who challenged the law.
“And we trust that the General Assembly will address the state’s fiscal difficulties in a manner consistent with the constitution and in a way that is fair to all the citizens of Illinois.”
Carolyn E. Shapiro, the state’s solicitor general, represented the government in the case.
A statement from Gov. Bruce Rauner’s office said lawmakers should now focus on changing pension plans for “future benefits not yet earned.”
“The Supreme Court’s decision confirms that benefits earned cannot be reduced. That’s fair and right, and why the governor long maintained that SB1 is unconstitutional,” the statement says. “What is now clear is that a constitutional amendment clarifying the distinction between currently earned benefits and future benefits not yet earned, which would allow the state to move forward on common-sense pension reforms, should be part of any solution.”
Members of the General Assembly struck a somber tone on the decision.
Rep. James B. Durkin, the House GOP leader from Western Springs, said in a statement that he respects the court but disagrees with its decision.
Senate President John J. Cullerton, a Chicago Democrat who long said the approach in Senate Bill 1 would be unconstitutional, called the decision a “victory for retirees, public employees and everyone who respects the plain language of our constitution.”
He also said it “should be balanced against the grave financial realities we will continue to face without true reforms.
“If there are to be any lasting savings in pension reform, we must face this reality within the confines of the Pension Clause.”
In the final part of its decision, the court ruled that once the heart of the law — provisions that would reduce annuities for employees and state workers — was deemed invalid, the other segments of the law could not survive either.
Rep. Elaine Nekritz, a Northbrook Democrat and one of the lead pension-law negotiators in the House, said that those other provisions were an attempt to strike a balance between employee benefits and the overall health of the state.
But the court’s action negates that balance, she said.
Nekritz also pointed to a section of the opinion that said “[a]dherence to constitutional requirements often requires significant sacrifice, but our survival as a society depends on it,” calling it an off-point summary of the circumstances.
“The goal of Senate Bill 1 was to put Illinois on more sound fiscal footing so that we could survive as a society,” she said. “So I found it odd that they made that statement, when what they’re really doing is making it more difficult to fund education, more difficult to fund competing demands … That one hit me pretty hard.”