Volume33Issues1&2Winter/Spring2016

ILLINOISPUBLICPENSIONS:WHERETOFROMHERE?
BYERICM.MADIAR
I.Overview
II.ABriefRecapoftheScopeoftheIllinoisConstitutionsPensionClause
III.ThePensionReformDecision
A.TheActsProvisions
B.ProceduralHistory
C.TheIllinoisSupremeCourtsAnalysisandHolding
1.PublicAct980599violatesthePensionClause
2.ThePensionClauseisnotsubjecttoapolicepowersexception
3.ThePensionClauseprovidesabsoluteprotectiontocoveredbenefits
D.TheTakeHomeMessageofthePensionReformDecision
IV.TheChicagoPensionReformDecision
A.Background
B.ProceduralHistory
C.TheIllinoisSupremeCourtsAnalysisandHolding
1.PublicAct980614wasinconsistentwiththePensionReformdecision
2.TheCitysnetbenefitargumentwasillusory
3.TheCitysbargainedforexchangeargumentsfailedunderbasiccontractsprinciples
D.TheTakeHomeMessageoftheChicagoPensionReformDecision
V.WheretoNext?
A.PermissibleOptions
1.SenatePresidentJohnJ.Cullertonscontractualproposal
a.Theproposalanditslegalrationale
b.TheargumentsagainsttheSenatePresidentsproposalareunfounded
i.Theproposalprovideslegalconsideration
ii.Theproposalreflectsabargainforexchange
iii.Theproposalhasamplecaselawsupport
iv.Theproposalisnottantamounttoduress
2.CollectiveBargaining
3.BuyoutProposals
4.RestructuringPensionSystemFunding

B.OtherProposals
A.AmendthePensionClausetoPermitUnilateralLegislativeReductionsinPensionBenefits
B.MunicipalBankruptcy
VI.Conclusion
RECENTDEVELOPMENTS
RecentDevelopmentsisaregularfeatureoftheIllinoisPublicEmployeeRelationsReport.Ithighlightsrecentlegaldevelopmentsof
interesttothepublicemploymentrelationscommunity.Thisissuefocusesondevelopmentsunderthepublicemployeecollective
bargainingstatutes,theequalemploymentopportunitylawsandthepensionprovisionoftheIllinoisConstitution.
I.IELRADevelopments
A.Strikes
II.IPLRADevelopments
A.Arbitration
B.Supervisors
III.EEODevelopments
A.ConstructiveDischarge
B.PensionDevelopments

ILLINOISPUBLICPENSIONS:WHERETOFROMHERE?
EricM.MadiarisaSpringfield,Illinoisbasedattorneywithover15yearsofexperienceinthelegislative,litigation,andregulatory
arenasofIllinoisgovernmentwhereheestablishedasolidreputationwithkeydecisionmakersasaproblemsolver.Priortoentering
privatepracticeandlaunchingMadiarGovernmentRelations,LLCinDecember2014,heservedastheChiefLegalCounselto
IllinoisSenatePresidentJohnJ.CullertonandactedasSenateParliamentarianfrom2009to2014.Mr.MadiarservedastheSenate
PresidentspointpersononpublicpensionreformlegislationwhilehewasChiefLegalCounsel,andwasretainedtocontinueto
providelegalservicesandadviceonpublicpensionreformmatters.HethanksProfessorMartinMalinforinvitinghimtowritethis
Article,whichisbasedonanearlierpresentationattheIllinoisPublicSectorLaborRelationsLawConferenceheldatIITChicago
KentCollegeofLawonDecember4,2015.TheArticlerepresentstheviewsofitsauthor.2016,EricM.Madiar,allrights
reserved.
I.Overview
MarkTwainoncesaid,Itaintwhatyoudontknowthatgetsyouintotrouble.Itswhatyouknowforsurethatjustaintso.For
quitesometime,theaintsoinIllinoishasbeenitsenormouslyunderfundedpensionsystemanditsobligationtopaypension
benefitswhentheybecomedue.[1]Indeed,asa2009legislativereportexplained,underfundingofthepensionsystemoccurred
becausetheStatesfiscalsystemfailedtogeneratesufficientrevenuetobothmaintainpublicservices,suchaseducation,healthcare,
andpublicsafety,aswellascovertheStatesactuariallyrequiredpensioncontributions.[2]Asaresult,thepensionsystemwasused
fordecadesasaproverbialcreditcardtofundpublicservicesandstaveofftheneedfortaxincreasesorservicecuts.[3]
Totackleitsmountingunfundedpensionliabilities,theGeneralAssemblypassedlegislationin2010thatcutthepensionbenefits
providedtofuturepublicemployeesandofficialsenteringserviceafterJanuary1,2011.Thelegislaturealsoenactedatemporary
incometaxincreasein2011tohelpretireunpaidbillsandmaketimelypensioncontributions.Andin2013,thelegislaturepassedtwo
pensionreformbillsthatunilaterallycutthepensionbenefitsofretireesandcurrentemployees.Thefirstbillappliedtoparticipantsin
fouroftheStatesfivepensionsystems,whilethesecondbillappliedtoparticipantsintwooftheCityofChicagosfourpension
systems.
Whilepassingthesebillswasheraldedasabipartisanpoliticalsuccess,itwasshortlived.Inthelasttwelvemonths,theIllinois
SupremeCourtissuedtwounanimousdecisionsinvalidatingbothbillsasviolativeofthePensionClauseoftheIllinoisConstitution.
Inbothdecisions,asexplainedbelow,thecourtheldthattheClausebarsthelegislaturefromunilaterallyreducingthepension
benefitsofcurrentpublicemployeesandretirees.GiventhisoutcomeandtheStateswiderfiscalchallenges,thisArticleassessesthe
legaloptionstheIllinoisGeneralAssemblymaypursuetomitigatethefiscalimpactoffundingitspublicpensionobligations.
ThisArticleisorganizedasfollows:PartIIbeginswithaprimeronthePensionClauseoftheIllinoisConstitution(ArticleXIII,

Section5).PartIIIreviewstheIllinoisSupremeCourtsMay2015decision,whichfoundthatthe2013PensionReformbillPublic
Act980599violatedtheClause.[4]PartIVreviewsthecourtsMarch2016decision,whichsimilarlyfoundthatChicagos2013
PensionReformBillPublicAct980641violatedtheClause.PartVassessestheoptionsthattheGeneralAssemblymaypursue
tomitigateitsfinancialburdenoffundingthepensionsystembasedontheClausesbackgroundandthetworecentcourtdecisions.
TheArticleconcludesthattheuseofordinarycontractprinciplesassuggestedbythisauthorfiveyearsagoprovidesameansto
reducepensionbenefitsofcurrentemployeesandtherebymitigatethisfinancialburden.[5]TheproposalofferedbySenatePresident
JohnJ.Cullerton,inparticular,providesoneviablemeansofmitigation,asdoesforginganagreementwithpublicsectorlaborunions
throughthecollectivebargainingprocess.MunicipalbankruptcyandamendingthePensionClause,however,arenotplausible
options.
II.ABriefRecapoftheScopeoftheIllinoisConstitutionsPensionClause
ThePensionClauseoftheIllinoisConstitutionhaslongbeenunderstoodtopresentaseriouslegalobstacletoanyeffortsbythe
GeneralAssemblytounilaterallyreducethepensionbenefitsofcurrentemployeesandretirees.[6]TheClause,afterall,plainly
providesthat:MembershipinanypensionorretirementsystemoftheState,unitoflocalgovernmentorschooldistrict,orany
agencyorinstrumentalitythereof,shallbeanenforceablecontractualrelationship,thebenefitsofwhichshallnotbediminishedor
impaired.[7]
Indeed,theClausesafeguardsfromunilateralreductionnotonlythebenefitrightscontainedintheIllinoisPensionCodewhena
personjoinsapensionsystem,[8]butalsothosebenefitsfound,atthattime,inotherstatestatutesthatarelimitedto,conditionedon,
andflowdirectlyfrommembershipinoneoftheStatesvariouspublicpensionsystems,includingsubsidizedhealthcarepremiums.
[9]TheClausesprotectionalsoextendstobenefitincreasesaddedduringanemployeestermofservice,[10]andmostlikelyto
existingemployeecontributionrates.[11]
ThebenefitsreceivingprotectionreflectsaplainlanguageanalysisoftheClauseandtracksthedictionarydefinitionoftheterm
benefits.[12]Dictionariesdefinethetermbenefitsasmeaningnotonlythespecificannuitypaymentsapublicemployeeiseligible
toreceive,butalsootherentitlementsofmembershipthatadvantagetheemployee.[13]ThisdefinitionmirrorshowNewYorkcourts
definethesametermunderitsnearlyverbatimconstitutionalprovision,whichservedasthemodelforourPensionClause.[14]New
YorkCourtdecisionsstatethatthetermreferstopecuniarymattersandprohibitsanyactionwhichwouldimpairordiminishthe
membersrightstopaymentofpensions,annuities,andrelatedmonetaryadvantages.[15]
TheClause,however,doesnotrequireapensionsystembefundedataparticularfundingpercentageoraccordingtoaspecific
fundingschedule.[16]Rather,itguaranteesthatpensionswillbepaidtoparticipantswhenthosepaymentsbecomedue.[17]In
addition,theClausegrantspensionrecipientsacauseofactiontocompelthepaymentofpensionsifthepensionsystemisonthe
vergeofdefaultorindefault.[18]
Finally,whiletheClausebarstheGeneralAssemblyfromunilaterallyreducingpensionbenefitrights,theserightsarecontractualin
nature.[19]Asaresult,pensionbenefitscanbereducedthroughusualcontractmodificationprinciplesofoffer,acceptance,and
consideration.[20]
Pensionbenefitsrightsarealsogovernedbytheactualtermsofthestatuteorlegislativeenactmentestablishingthepensionplan.
[21]Tothatend,theserightsaresubjecttoanycontingencies,consistentwithpublicpolicy,foundinthepensionplanatthetimeof
theparticipantsmembership.[22]Indeed,theconventiondelegatesbothsponsoringandopposingtheClauseagreedthatbenefits
couldbelaterreducedpursuanttoacontingencybuiltintothepensionplanatthetimeoftheparticipantsmembership.[23]Asthe
IllinoisSupremeCourtobserved,if[m]embershipintheSystemwassoughtwithknowledgeof[a]condition[builtintoapension
plantolowerbenefits]itclearlycannotbesaidtoimpairordiminishthebenefitswithinthemeaningofthe[Clause].[24]
Insum,whilethePensionClauseprotectspensionbenefitsofcurrentemployees(andretirees)fromadverseunilateralchangesand
thatprotectionbeginsonceapersonattainsmembershipinthepensionplan,pensionbenefitsrightsaredeemedcontractualinnature.
Accordingly,pensionbenefitrightsaresubjecttochangethroughusualcontractprinciplesaswellasanycontingenciescontainedin
thepensionplanatthetimeofmembershipbasedontheClausesdraftinghistoryandrelevantcourtdecisionsconstruingtheClause.
III.ThePensionReformDecision
Asdetailedbelow,theIllinoisSupremeCourtsrecentPensionReformdecisionconsideredwhethertheGeneralAssemblypossessed
thepowertounilaterallycutpensionbenefitsprotectedbythePensionClausepursuanttotheStatessocalledreservedorpolice
powers.Specifically,thecourtaddressedwhetherthe2013PensionReformBill(PublicAct980599)couldbesustainedunderthat
defense,whichisallowedundercourtdecisionsinterpretingtheIllinoisandU.S.ConstitutionsContractClauses.WellbeforetheAct
becamelawinDecember2013,however,thisauthordeterminedthattheClauseposedanabsolutelegalbarriertoanyunilateral

effortsbytheGeneralAssemblytoreducethepensionbenefitsofcurrentemployeesandretirees.[25]
InMay2015,thecourtconfirmedthisconclusion,andunanimouslyfoundthattheClauseisnotsubjecttoapolicepowersdefense.
ThecourtexplainedthattheClauseprovidesabsoluteprotectiontopensionbenefitrightsbasedonitsplainlanguage,draftinghistory,
constitutionalconventiondebates,andpriordecisionsinterpretingtheClause.[26]Accordingly,theCourtconcludedthatPublicAct
980599couldnotbesustainedunderapolicepowersdefense.TheCourtalsoconcludedthateveniftheClauseweresubjecttoa
policepowersexception,theActdidnotqualifyasapermissibleinvocationofthatexceptionbasedontheStatessordidhistoryin
failingtoproperlyfundthepensionsystem.[27]
A.TheActsProvisions
ThePensionReformcaseinvolvedPublicAct980599sreductionofthepensionbenefitsofretireesandcurrentTier1employees
participatingintheTeachersRetirementSystem(TRS),StateUniversitiesRetirementSystem(SURS),StateEmployeesRetirement
System(SERS),andGeneralAssemblyRetirementSystem(GARS).[28]Asdetailedelsewhere,theActwastheproductofthreeyears
ofaggressivelobbyingeffortsbyIllinoisbusinesscommunityandbrokeapoliticalstalemateovercompetingbillsandviewsonhow
toaddresstheStatesunderfundedpensionsystems.[29]
Amongotherthings,theActunilaterallyreducedthepensionbenefitsofTier1employeesandretireesinthesesystemsinfive
differentways.[30]First,theActdelayed,byuptofiveyears,whenparticipantsundertheageof46wereeligibletoreceivetheir
retirementannuities.[31]Second,itimposedacaponthemaximumsalarythatwouldbedeemedpensionableincomewhen
calculatingaparticipantsretirementannuity.[32]Third,itreplacedthe3percentcompoundedannualincreaseinaparticipants
retirementannuitywithaformulathatcappedincreasesatalowerratebasedontheparticipantsyearsofservice.[33]Fourth,it
eliminatedatleastoneanduptofiveoftheannualannuityincreasesdependingontheparticipantsageatthetimetheActtookeffect.
[34]Finally,withrespecttotheTRSandSURSsystems,theActadverselychangedhowthebasicannuityamountiscalculatedfor
participantsinthesesystemsunderthemoneypurchaseformula.[35]
Asidefrombenefitcuts,theActreducedby1percentofsalarytheamountcurrentemployeescontributedtothepensionsystemasa
tradeoffforreplacingthe3percentcompoundedannualincreasewithlowerincreases.[36]TheActalsomadeotherchanges,suchas:
(1)restrictingcollectivebargainingrights(2)allowinglimitedparticipationinanewdefinedcontributionplan(3)barringnon
governmentalemployeesfromparticipatinginthepensionsystemand(4)prohibitingnewhiresfromusingaccumulatedsickor
vacationtimetoboosttheirpensionbenefits.[37]
Finally,theActreplacedthefundingscheduleenactedin1995toachieve90percentfundingbyfiscalyear2045withonetoachieve
100%fundingbyfiscalyear2043.[38]Thenewschedulealsoearmarkedcertainadditionalamountsforpaymentintothesepension
systems.[39]ThenewfundingschedulefurtherincludedasocalledstatutoryfundingguaranteewherebyiftheStateComptroller
failedtomaketheStatepensioncontributionsrequiredbylawtoarelevantStatepensionsystem,thenthegoverningboardforthat
pensionsystemcouldfileamandamusactionbeforetheIllinoisSupremeCourttoorderpaymentoftherequiredcontributionamount.
[40]Sincethefundingguarantee,mandamusaction,andadditionalpensioncontributionsweremerelystatutoryprovisions,the
GeneralAssemblyretainedtheauthoritytoalterorrepealtheseprovisionsinthefuture.[41]
B.ProceduralHistory
ShortlyaftertheActbecamelaw,participantsinTRS,SURS,SERS,andGARSfiledfiveconsolidatedlawsuitschallengingthe
constitutionalityofthelegislationandmovedtoenjoinit.[42]Collectively,thelawsuitsclaimedthattheActsbenefitcutsviolated
variousprovisionsoftheIllinoisConstitution,includingthePensionClause.[43]Thecircuitcourtenteredapreliminaryinjunction
stayingtheActsimplementationpendingadecisiononthemeritsonemonthbeforetheActtookeffect.[44]
TheIllinoisAttorneyGeneraldefendedtheActasajustifiedusethelegislaturespolicepowers.[45]Specifically,theAttorney
Generalarguedthatplaintiffsclaimsshouldberejectedasamatteroflaw:(1)becausethelegislaturepossessestheinherentpowerto
overrideandmodifyobligationsimposedonitbytheIllinoisConstitutionwhenitisreasonableandnecessarytoadvanceanimportant
publicpurpose(2)becauseofthedramaticsqueezeontheStatesfinancescausedbytheGreatRecession,thestrainontheState
revenueswhichwouldresultfromhavingtomeetcurrentpensionobligations,thepoorconditionoftheStateseconomy,andthe
continueddeteriorationoftheStatescreditratingdespitetakingearlieractiontoreducepublicspending,raisetaxes,deferState
vendorpayments,andenactasecondtierofpensionbenefitsfornewhiresand(3)becausethebenefitreductionsfoundintheAct
werefairandreasonableunderthesecircumstances.[46]
PlaintiffsmovedtostriketheStatespolicepowersaffirmativedefenseandseparatelymovedforsummaryjudgmentthattheAct
wasvoidunderthePensionClausebecausethatprovisionwasnotsubjecttoapolicepowersexceptionbasedonitsplainlanguage,
draftinghistory,andrelevantcourtdecisions.[47]TheAttorneyGeneralcounteredwithherowncrossmotionforsummaryjudgment

thatthepolicepowersexceptionwasavaliddefensethatdefeatedallofplaintiffsclaims.[48]
Afterconductinganargumentonthepartiesmotions,thecircuitcourtissueditsdecisioninlateNovember2014grantingplaintiffs
summaryjudgmentmotionthattheActviolatedtheClauseandenteredapermanentinjunctionagainstenforcementoftheAct.[49]
ThedecisionalsodeniedtheAttorneyGeneralsmotion.[50]
ThecircuitcourtfoundthattheAct,onitsface,woulddiminishplaintiffsprotectedpensionbenefitsinthefivewaysdescribed
above.ThecourtfurtherfoundthatneithertheClausesplainlanguage,norcourtdecisionsinterpretingtheClausesupportedthe
conclusionthattheprovisionissubjecttoapolicepowersorreservedpowersexception.[51]Ifanything,thecircuitcourtexplained,
Illinoiscourtshaverejectedthatargument.[52]Finally,thecircuitcourtconcludedthatbecausetheActwasanintegratedlegislative
packageitwasinseverableandthereforeunnecessarytoconsiderplaintiffsremainingclaims.[53]
TheIllinoisAttorneyGeneralappealedthecircuitcourtdecisiontotheIllinoisSupremeCourtandrequestedanexpeditedbriefingand
argument.[54]Thecourtgrantedthatrequest.Whilethepartiessubmittedtheirrespectiveappellatebriefsinduecourse,thecourt
rejectedtheproposedamicicuriaebriefsfiledbypensionreformadvocatesinsupportoftheActsconstitutionality.[55]Thesebriefs,
aswiththeStates,rehashedthesamepolicepowersargumenttheCommercialClubofChicagohadadvancedbackin2011,which
thisauthorthoroughlycounteredin2014.[56]
C.TheIllinoisSupremeCourtsAnalysisandHolding
AfterprovidingabasicoutlineofthedefinedpensionbenefitsStateemployeesmayreceive,detailingIllinoishistoryoffailingto
properlyfunditspensionsystems,andreviewingtheActslegislativehistoryaswellasthecasesproceduralhistory,thecourtstated
therewerethreeissuessetforreview:(1)doestheActsreductionofretirementannuitiesforTRS,SURS,SERS,andGARSmembers
violatethePensionClause(2)ifso,thencanthosereductionsbeupheldundertheStatespolicepowerand(3)ifnot,thenarethe
invalidprovisionsoftheActseverable?[57]Asdetailedbelow,thecourtansweredYestothefirstquestion,andNotothesecond
andthirdquestions.
1.PublicAct980599violatesthePensionClause
Onthefirstissue,thecourtexplainedthatitwaseasilyresolvedthattheActsbenefitreductionsviolatedtheClause.[58]Thecourt
statedthatitsrecentKanervadecisionmadeclearthattheClausesplainlanguagemeanswhatitsaysandifsomethingqualifiesas
abenefitoftheenforceablecontractualrelationshipresultingfrommembership...[then]itcannotbediminishedorimpaired.[59]
ThecourtfurtherstatedthatKanervasinterpretationoftheClausewasnotabreakfrompriorlawbutratherareaffirmationof
whatwasarticulatedinpreviousdecisionsofthecourtandappellatecourt.[60]
Underthesedecisions,thecourtexplained,theClauseprovidesmembersofthepensionsystemwithalegallyenforceablerightto
receivethebenefitstheyhavebeenpromised.[61]ThecourtfurtherexplainedthattheClausesprotectionofbenefitsbeginsoncean
individualfirstembarksuponemploymentinapositioncoveredbyapublicretirementsystem,notwhentheemployeeultimately
retires.[62]Inaddition,thecourtnotedthattheClausesprotectionextendstobenefitincreasesaddedduringanemployeestermof
servicessolongasheorshecomplieswithanyqualificationsimposedwhenthebenefitswerefirstoffered[.][63]Accordingly,
onceanindividualbeginsworkandbecomesamemberofapublicretirementsystem,anysubsequentchangestothePensionCode
thatwoulddiminishthebenefitsconferredbymembershipintheretirementsystemcannotbeappliedtothatindividual.[64]
Basedontheseprinciples,thecourtfoundthattheplaintiffsretirementannuitieswereprotectedbenefits,includingthe3percent
annualcompoundedincreases,andthattheActwoulddiminishthesebenefitsbydirectlyreducingtheirvalueinatleastfivedifferent
ways.[65]ThecourtfurtherfoundthatbecausetheprovisionsoftheActatissuecouldnotbesquaredwiththeClausesplain
language,theGeneralAssemblyoversteppedthescopeofitslegislativepowerandtheCourtwasobligatedtodeclarethose
provisionsinvalid.[66]
Finally,thecourtobservedthatitsconclusionwassupportedbya2014ArizonaSupremeCourtdecision.[67]TheArizonadecision
involvedaprovisionintheArizonaConstitutionvirtuallyidenticaltothePensionClauseandachallengetolegislationthatreduced
thepaymentsretireeswouldreceiveunderthestatutoryformulaprovidingbenefitincreases.[68]TheArizonacourtfoundthatits
constitutionspensionclauseprotectednotonlythebasepensionamount,butalsobenefitincreasesbecausetheywerebothderived
fromthesamestatutoryformula.[69]
2.ThePensionClauseisnotsubjecttoapolicepowersexception
Onthesecondissue,thecourtmadetwoholdingswithrespecttotheStatespolicepowersargument.First,thecourtacknowledged
thatwhilecontractrightsweresubjecttoasocalledpolicepowersunderdecisionsinterpretingtheContractClauseoftheIllinois

andU.S.Constitutions,theActwasnotavalidinvocationofthatexception.Second,thecourtheldthatbasedonthePensionClauses
plainlanguage,draftinghistory,constitutionalconventiondebates,andrelevantcourtdecisionsinterpretingit,theClauseisnot
subjecttoapolicepowersexception.Asaresult,thePensionClauseprovidesabsoluteprotectiontopensionbenefitrights.Eachof
theseholdingsisdetailedbelow.
Attheoutset,thecourtfirstrejectedthepropositionthatanunambiguousprovisionoftheIllinoisConstitution,likethePension
Clause,yieldstotheStatesfiscalnecessityorafinancialemergency.[70]ThecourtstatedthateachtimetheGeneralAssemblyhad
passedlegislationtoreduceoreliminateexpendituresprotectedbytheIllinoisConstitution,ithadclearlyandconsistentlyfound
[theseattempts]tobeimproper.[71]
ThecourtillustratedthispointbyrecountingthefactsandholdingsofitsdecisionsinPeopleexrel.Lylev.CityofChicagoin1935
andJorgensenv.Blagojevichin2004.[72]InbothitsLyleandJorgensendecisions,thecourtnotedthatithadcompelledthepayment
ofjudicialsalariesdespiteclaimsoffiscalnecessitybecausetheIllinoisConstitutionunambiguouslybarredmidtermsalary
reductions.[73]Bothdecisions,accordingtothecourt,madeclearthatexigentcircumstancesalonedonotcreateexceptionsto
unambiguousconstitutionalprovisions.[74]Rather,anydeparturefromthelawisimpermissibleunlessjustificationforthatdeparture
isfoundwithinthelawitself.[75]Thesedecisions,thecourtexplained,instructedthat[n]oprincipleoflawpermitsustosuspend
constitutionalrequirementsforeconomicreasonsnomatterhowcompellingthereasonsmayseem.[76]
Next,thecourtrejectedthepropositionthattheActwasapermissibleexerciseoftheStatespolicepowersunderrelevantContract
Clausedecisions.[77]Asapreliminarymatter,thecourtnotedthatpastIllinoiscourtdecisionshadfoundthatlegislationreducing
pensionbenefitswasnotdefensibleundersuchatheory.[78]
Thecourtalsofoundthat,forseveralreasons,theActcouldnotclearthethresholdestablishedundercontemporaryContractClause
jurisprudenceasavalidexerciseoftheGeneralAssemblyssocalledpolicepowers.First,theActwasnotaresponsetoan
unknownorunforeseeableproblem,butratheraresponsetoacrisisforwhichtheGeneralAssemblyislargelyresponsible.[79]
Indeed,thecourtobservedthattheStatewaswellawareofthehavocmarketforcescouldhaveonthefiscalhealthofthepublic
pensionsystemandtherepercussionsofdecadesofpensionunderfunding.
Itwasalsoawareofthelongtermcostsassociatedwiththepensionbenefitsatissueandhowthebenefitsweredesignedtooperate.
[80]Inaddition,theStatewaswellawarethatthesebenefitswereconstitutionallyprotectedbythePensionClause,thattheClause
requiredthepaymentofthesepromisedbenefits,andthattheresponsibilityforprovidingtheStatesshareofnecessaryfundingfell
squarelyonthelegislaturesshoulders.[81]
Second,thecourtfoundthattheActwasnottheleastrestrictivemeanstoaddresstheproblembecauselessdrasticalternativeswere
available,especiallysincethelegislaturehadallowedthetemporaryincometaxincreasetosunset.[82]Ifanything,thecourtobserved,
basedonitslegislativehistory,theActwasanexpedienttobreakapoliticalstalemate.[83]
Finally,thecourtequatedtheActtoatakingofprivateproperty,andobservedthattheU.S.ConstitutionsTakingsClausebar[s]the
Governmentfromforcingsomepeoplealonetobearpublicburdens,whichinfairnessandjustice,shouldbebornebythepublicasa
whole.[84]ThecourtnotedhowtheGeneralAssemblymadenoefforttodistributetheburdensofpensionfundingevenlyamong
IllinoisansletalonetheStatescontractpartners.[85]Asaresult,thecourtfoundthattheStatecouldprovenosetofcircumstances
thatwouldsatisfythecontractclause.[86]
3.ThePensionClauseprovidesabsoluteprotectiontocoveredbenefits
InadditiontofindingtheActfailedunderapolicepowersanalysis,thecourtconcludedthatthePensionClausewasnoteven
subjecttoapolicepowersexception.[87]ThecourtbasedthisconclusionprincipallyontheClausesplainlanguageanddrafting
historyattheconstitutionalconvention.[88]ThecourtobservedhowtheClause,unlikeotherconstitutionalguaranteesinthe1970
constitution,wasnotmadeexpresslysubjecttotheStatespolicepowers.[89]Theabsenceofsuchareservation,thecourt
continued,wasnotinadvertent.[90]
Indeed,thecourtdetailedhowanattemptwasmadeduringtheconventiontoprotectpensionbenefitsbysimplyaddinglanguageto
theIllinoisConstitutionsContractClause.[91]Thatattemptwasrejectedinfavoroftheseparate,morespecificprovisionsfoundin
thePensionClause.[92]Thoseprovisions,thecourtinstructed,madeclearthatpensionbenefitscouldnotbeimpairedordiminished.
[93]Useofthetermdiminishedwaslegallysignificant,thecourtnoted,becauseArticleVI,section14oftheIllinoisConstitution
usesthesametermtoprotectjudicialsalaries,andthattermhadlongbeeninterpretedtobarmidtermsalaryreductions
notwithstandingthestatesclaimsofeconomichardship.[94]
ThecourtalsorecountedthetwofailedattemptsbytheIllinoisPublicEmployeesPensionLawsCommission,anagencyofthe

legislature,tohavetheClausessponsorsamendtheprovisionduringtheconventionsothatpensionbenefitsweresubjecttounilateral
legislativemodification.[95]GiventheClausesplainlanguageanddraftinghistory,thecourtconcluded,therewasnopossiblebasis
forinterpretingthe[Clause]tomeanthatitsprotectionscanbeoverriddeniftheGeneralAssemblydeemsitappropriate.[96]To
interprettheClauseinthatfashion,theCourtdetermined,wouldrenderitanullityandallowthelegislaturetodotheverythingthe
[Clause]wasdesignedtopreventitfromdoing.[97]
ThecourtnextaddressedtheStatesclaimthatinterpretingtheClauseasaffordingabsoluteprotectiontopensionbenefitswas
tantamounttoasurrenderofsovereignauthority,whichitmaynotdo.[98]ThecourtrejectedtheStatesclaimbecausetheClause
representsarestrictionthepeopleofIllinoishadeveryrighttoimpose.[99]
ThecourtexplainedthatunlikeGreatBritain,wheresovereigntyisvestedinParliament,sovereigntyortranscendentpowerof
governmentresidesinorwiththepeople.[100]ThepeopleofIllinois,inturn,givevoicetotheirsovereignauthoritythroughthe
IllinoisConstitution.[101]And,[w]hererightshavebeenconferredandlimitsongovernmentalactionhavebeendefinedbythe
peoplethroughtheconstitution,thelegislaturecannotenactlegislationincontraventionofthoserightsandrestrictions.[102]After
all,[i]ncontrasttoaconstitutionalmandate,alegislativeactisbutthewillofthelegislature,inaderivativeandsubordinate
capacity.Theconstitutionistheircommission,andtheymustactwithinthepaleoftheirauthority,andalltheiracts,contraryorin
violationoftheconstitutionalcharter,arevoid.[103]
Basedontheseprinciples,thecourtstatedthattheStatespolicepowersyieldedtotheIllinoisConstitution,includingthePension
Clause.[104]Throughthisprovision,thepeopleofIllinoisyieldednoneoftheirsovereignauthority.[105]Theysimplywithheldan
importantpartofitfromthelegislaturebecausetheybelieved,basedonhistoricalexperience,thatwhenitcametoretirementbenefits
forpublicemployees,thelegislaturecouldnotbetrustedwithmore.[106]
Indeed,thecourtreiteratedthattheClausewasadoptedbecausethedelegatesweremindfulthatthelegislaturehadtreatedpension
fundingasapoliticalfootball,andusedStatepensioncontributionsasarevenuesourcetohelpbalancebudgets.Thoseactions,in
turn,jeopardizedthefinancialresourcesultimatelyneededtopaybenefits.Asaresult,thedelegatesaddedtheClausetoprotect
pensionbenefitsirrespectiveofthefinancialconditionofamunicipalityoreventhestategovernment.[107]
Thedelegatesdistrustofthelegislature,thecourtexplained,hadunfortunatelyproventobewellfounded.[108]Thecourtobserved
thatdespitetheClausesprotections,theGeneralAssemblyhasrepeatedlyattemptedtofindwaystocircumventitsclearand
unambiguousprohibitionagainstthediminishmentorimpairmentofthebenefitsofmembershipinapublicretirementsystem.[109]
TheAct,thecourtremarked,wassimplythelatestassaultinthisongoingpoliticalbattleagainstpublicpensionrights.[110]
Accordingly,becausetheGeneralAssemblymaynotlegislateonasubjectwithdrawnfromitsauthoritybytheconstitution,itcould
notrelyonpolicepowerstoovercomethislimitationforthereissimplynopolicepowertodisregardtheexpressprovisionsofthe
constitution.[111]Therefore,thecircuitcourtwasentirelycorrectwhenitdeclared[theAct]voidandunenforceable.
ThecourtconcludeditsopinionbyfindingthattheActsinvalidprovisionswereinseverable,andbyreaffirmingtheruleoflaw.The
courtstatedemphatically:
ThefinancialchallengesfacingstateandlocalgovernmentsinIllinoisarewellknownandsignificant.Inrulingaswehave
today,wedonotmeantominimizethegravityoftheStatesproblemsorthemagnitudeofthedifficultyfacingourelected
representatives.Itisourobligation,however,justasitistheirs,toensurethatthelawisfollowed.Thatistrueatalltimes.
Itisespeciallyimportantintimesofcrisiswhen,asthiscasedemonstrates,evenclearprinciplesandlongstandingprecedent
arethreatened.Crisisisnotanexcusetoabandontheruleoflaw.Itisasummonstodefendit.Howwerespondisthe
measureofourcommitmenttotheprinciplesofjusticewearesworntouphold.[112]
D.TheTakeHomeMessageofthePensionReformDecision
InitsPensionReformdecision,thecourtconfirmedtheimportofpriordecisionsandscholarshipthatthePensionClauseisnotsubject
toapolicepowersdefense.ThecourtexplainedthattheClauseprovidesabsoluteprotectiontopensionbenefitrightsbasedonits
plainlanguage,draftinghistory,constitutionalconventiondebates,andpriordecisionsinterpretingtheClause.Thecourtalsofound
thateveniftheClauseweresubjecttoapolicepowersdefense,thelegislationatissuedidnotqualifyasavalidinvocationofthat
defensebasedontheStateshistoryinfailingtoproperlyfundthepensionsystem.
Thecourtindicated,however,infootnote12anditsdiscussionofthe2014ArizonaSupremeCourtdecisionthatbenefitincreases
extendedtopersonswhowerealreadyretiredorwhoofferednoadditionalserviceorconsiderationaftertheincreasebecamelawwere
notprotectedbytheClause.[113]Finally,thecourtreaffirmedthebroaderpointthatthePensionClause,aswithotherstate
constitutionalrestrictions,representsasovereignlimitationthepeopleofIllinoisimposedontheGeneralAssembly,andthe
legislaturehasnolegalauthoritytocircumventthatrestriction.

IV.TheChicagoPensionReformDecision
A.Background
Shortlyafterthetrialcourtfoundthe2013PensionReformBillunconstitutionalinNovember2014,twolawsuitswerefiledby
participantsoftheChicagoMunicipalEmployeesAnnuityandBenefitFund(MunicipalFund)andLaborersAnnuityandBenefit
Fund(LaborersFund)challengingtheconstitutionalityoftheChicagoPensionReformBill.[114]Thelegislationwasintroducedas
SenateBill1922asapensionreformproposalinitiatedbytheCityofChicagoandsignedintolawasPublicAct980614onJune9,
2014.[115]ThelegislationwastheproductofnegotiationsbetweentheCityofChicagoandleadersof28ofthe31laborunions
representingemployeesparticipatingintheMunicipalandLaborersFunds.[116]ThebilltookeffectonJanuary1,2015.
MuchlikethepublicactfoundunconstitutionalintheSupremeCourtsPensionReformdecision,PublicAct980614alsounilaterally
reducedthepensionbenefitsofretireesandTier1employeesparticipatinginthetwoChicagopensionfunds.Specifically,theAct
diminishedpensionbenefitsinatleastthreeways:(1)itreducedtherateofthemembersannual,automaticannuityincreasesfrom3
percentcompoundedtonomorethan3percentsimple(2)iteliminatedthoseannuityincreasesaltogetherincertainyearsand(3)it
increasedtherequiredcontributionsofcurrentemployeesfrom8percentto11percentofsalarydependingonthefundingratioof
therespectivepensionfund.[117]
PublicAct980614alsoincludedprovisionsregardingtheCityofChicagosobligationtocontributetotheMunicipalandLaborers
Funds.TheActrequiredtheCity,afterafiveyearphaseinperiod,tobeginmakingcontributionsonanactuarialbasistoachieve90
percentfundingforthetwofundsby2055.[118]Thenewstatutoryfundingobligationwasadeparturefrompriorlaw,whichhadno
actuarialbasisandsimplyrequiredtheCitytomakepensioncontributionsaccordingtoamultipleoftheamountcontributedby
employees.
Alongwiththenewfundingschedule,theActsetforthtwostatutoryenforcementmechanismsshouldtheCityfailtomakeits
requiredpensioncontributions.First,iftheCitydidnotmakearequiredcontributionwithinthetimespecifiedbystatute,thenthe
governingboardoftheaffectedpensionfundcouldpetitiontheStateComptrollertointerceptandredirecttheamountduefrom
moneysotherwiseappropriatedbythelegislaturetotheCityofChicago.Second,iftheCitydidnotmakearequiredcontribution,then
thegoverningboardoftheaffectedfundcouldbringamandamusactiontocompeltheCitytomaketherequiredcontribution.[119]
Thestatutoryrightofaction,however,wasqualifiedintwoways.Thegoverningboardhadthediscretiononwhetherornottofilethe
action.Also,thecourthearingtheactionhadtheauthoritytoestablishareasonablepaymentscheduleinordertoavoidimperiling
thepublichealth,safetyorwelfare.[120]
B.ProceduralHistory
AfterthefilingofthetwolawsuitschallengingtheconstitutionalityofPublicAct980614underthePensionClause,theCityof
ChicagoandStateofIllinoisintervenedinbothcasestodefendtheAct.InJanuary2015,theplaintiffsmovedforapreliminary
injunctionagainsttheActandthetrialcourtreceivedevidenceandtestimonyfrombothparties.TheCitypresentedevidencethat
PublicAct980614wasaproperexerciseofthelegislaturessocalledpolicepowers.Beforetheevidentiaryhearingsconcluded,
however,thetrialcourtstayedtheproceedingspendingtheoutcomeofthePensionReformcasebeforetheIllinoisSupremeCourt.
AftertheIllinoisSupremeCourtissueditsPensionReformdecisioninMay2015,trialcourtproceedingsresumedonanexpedited
scheduletodecidetheconstitutionalityoftheChicagoPensionReformBill.GiventhePensionReformdecision,theCityofChicago
advisedthetrialcourtthatitwouldnolongerpursueapolicepowersdefense.[121]Instead,theCityofferedtwootherargumentsto
upholdtheAct,whichwereadoptedbytheIllinoisAttorneyGeneralandthetwopensionfundboards.
First,theCityclaimedthattheActprovidedparticipantswithanetbenefitthatdidnotdiminishpensionbenefitswhentheActwas
viewedasawhole.Tosupportthisproposition,theCitypointedtoSection22403ofthePensionCode.Section22403statesthat
theobligationtopaypensionbenefitsisanobligationoftherelevantpensionfunditself,andnotthelegalobligationordebtofthe
governmententitythatemploys(oremployed)fundparticipants.[122]
Basedonthisstatutoryprovision,theCityassertedthatitsonlyobligationwastocontributetothetwopensionfundstheamounts
requiredbythePensionCodenothingmoreandnothingless.AndsincetheGeneralAssemblyhadnotrequiredtheCityto
contributetothesesystemsonanactuariallysoundbasis,pensionbenefitsneedonlybepaidsolongasthepensionfunditselfwas
solvent.TheCity,therefore,hadnoobligationtostepinandcontinuepayingbenefitsifapensionfundbecameinsolvent.Underthis
logic,theCityargued,theActactuallyprovidedanetbenefittotheplaintiffsbecausetheActnowcommittedtheCitytofundthese
systemsonanactuarialbasiswithcorrelatingenforcementprovisions.Inshort,intheCitysview,theActensuredthatparticipants
wouldcontinuetobepaidbenefitsalbeitatareducedlevel.

Second,theCityarguedthatPublicAct980614wastheproductofabargainedforexchangebetweentheCityandtheemployees
andretireesparticipatinginthetwopensionfundssupportedbylegalconsideration.TheCitystatedthattheleadersof28ofthe31
laborunionsrepresentingemployeesparticipatinginbothpensionfundsnegotiatedwiththeCitytoreduceemployeeandretiree
pensionbenefitsinexchangefortheCityassumingnewfundingobligationstopreventthefundsinevitableinsolvency.
InJuly2015,thetrialcourtconductedanoralargumentandissueditsdecisionlaterthatmonthfindingtheActviolatedofthePension
Clause.OntheCitysnetbenefitargument,thetrialcourtfounditflawedforseveralreasons.
Thetrialcourtfoundthat,contrarytotheCitysposition,thePensionClauseitselfprovidesanenforceableguaranteethatpension
benefitsaretobepaidwhentheybecamedue.[123]TheClauseestablishestheobligationtopaybenefits,thetrialcourtexplained,by
creatingacontractualrelationshipbetweentheemployerandemployee.Anystatute,accordingtothetrialcourt,thatwouldpurport
tosubtractfromthisobligationisnotconsistentwiththerightsestablishedbythe[Clause].[124]
Inaddition,thecourtexplainedthatnotallprovisionsofthePensionCodewerepartofthecontractualrelationshipestablishedbythe
Clauseonlythosepertainingtobenefitswerepartofit.PriorIllinoisSupremeCourtdecisions,accordingtothecourt,madeitclear
thatPensionCodeprovisionsconcerningpensionfundingwerenotpartofthatrelationship.Asaresultthetrialcourtconcludedthat
thelegislaturecouldnottradestatutoryfundingandenforcementprovisionsforbenefitscuts,especiallywhentheGeneralAssembly
couldchangeorrepealthoseprovisionsatanytime.Toallowsucharesult,thecourtobserved,wouldrendertherightsguaranteedby
the[Clause]illusory.[125]
OntheCitybargainedforexchangeargument,thetrialcourtheldthattheargumentfailedunderbasiccontractprinciples.Thetrial
courtobservedthatwhiletheleadersof28ofthe31laborunionsrepresentingaffectedemployeessupportedtheagreementreached
withtheCity,therewasnoevidencethattheunionsmembershadactuallyagreedtoandratifiedtheagreement.Indeed,therewasno
evidencethatthelegislationwastheresultofthecollectivebargainingprocess.Inaddition,therewasnoevidencedemonstratingthat
theunionleaderswereauthorizedagentswhocouldbindtheotherthreeunions(ortheirmembers),letaloneretirees.Asaresult,the
trialcourtconcludedthatthelegislationdidnotconstituteabargainedforexchange,butratheraunilateralreductioninbenefits
violativeofthePensionClause.
Basedontheseconclusions,thetrialcourtenteredapermanentinjunctionagainsttheentirePublicActduetoitsexpressinseverablity
clause,anddeniedtheCitysmotiontostaythedecisionpendingappeal.TheCityandthetwomunicipalpensionfundsappealedthe
trialcourtdecision,andtheIllinoisSupremeCourtheldoralargumentonthecaseinNovember2015.
B.TheIllinoisSupremeCourtsAnalysisandHolding
OnMarch24,2016,theIllinoisSupremeCourtissueditsdecisionintheChicagoPensionReformcase.Thecourtstatedthattheissue
beforeitwaswhetherthelegislationPublicAct980614violatedthePensionClause.InasuccinctopinionauthoredbyJustice
MaryJaneTheis,thecourtunanimouslyansweredYesandfoundthattheActunconstitutional.Asdetailedbelow,thecourtfirst
foundthattheActcouldnotbesquaredwithitsrecentPensionReformdecisionbeforeturningtoandrejectingtheCitysnetbenefit
andbargainedforexchangeddefenses.
1.PublicAct980614wasinconsistentwiththePensionReformdecision
ThecourtbeganitsanalysisbybrieflyrecountingthescopeofthePensionClausebasedonitsKanervaandPensionReform
decisions.Drawingonitsreviewofthesedecisions,thecourtexplained,theClausecreatesanenforceablecontractualrelationship,
andtheemployeehasaconstitutionallyprotectedrighttothebenefitsofthatcontractualrelationship...atthetimeanindividual
beginsemploymentandbecomesamemberofthepublicpensionsystem.[126]
TheClausesplainlanguage,inturn,barstheGeneralAssemblyfromunilaterallyreducingoreliminatingthepensionbenefits
conferredbymembershipinthesystem.[127]ThePensionReformdecision,accordingtothecourt,reaffirmedtheseprinciplesby
holdingthatthelegislaturecouldnotunilaterallydiminishthevalueofretirementannuitiesforcurrentmembers,includingthe
annualannuityincreasestheywereentitledtoreceiveinretirement.[128]
Onitsface,thecourtobserved,PublicAct980614hadthesameimpactasthelegislationfoundunconstitutionalinthePension
Reformdecision.[129]TheActnotonlyreducedthevalueofannualannuityincreases,butitalsoeliminatedincreasesentirelyfor
certainyears.Asaresult,thecourtfoundthattheActcontravenedtheClausesabsoluteprohibitionagainstdiminishmentofpension
benefits,andexceed[ed]theGeneralAssemblysauthority.[130]
ThefactthatthelegislatureenactedPublicAct980614toaddresstheCitysundisputedexigentcircumstances,thecourtexplained,
waslegallyirrelevantbecausethesamejustificationwasrejectedinthePensionReformdecision.[131]QuotingitsPensionReform

decision,thecourtreiteratedthattherewasnopossiblebasisforinterpretingtheprovisiontomeanthatitsprotectionscanbe
overriddeniftheGeneralAssemblydeemsitappropriate.[132]Todoso,thecourtreiterated,wouldrequirethatweallowthe
legislaturetodotheverythingthe[Clause]wasdesignedtopreventitfromdoing.[133]
2.TheCitysnetbenefitargumentwasillusory
TurningtotheCitysnetbenefitargument,thecourtdescribeditasclaimingthattheActsnewpromiseoffinancialstability
offsetsthediminishmentofbenefitsandtherebyconfersabenefitonaffectedparticipantswhentheActisviewedasawhole.[134]
Asdetailedbelow,thecourtrejectedtheCitysargumentbasedonthreereasons.
First,thecourtstatedthattheargumentproceededfromtheflawedpremisethattheprovisionsoftheActthatenhancetheCitys
fundingobligationorchangethemethodoffundingtofullyfundthepensionsarebenefitsentitledtoconstitutionalprotection.[135]
Thispremise,accordingtothecourt,conflict[ed]withsettledprecedent.[136]
Accordingtothecourt,itsPensionReform,Lindberg,[137]McNamee,andSklodowskidecisionsallinstructedthat[l]egislative
fundingchoices...remainoutsidetheprotectionsoftheClauseandtheprovisiondoesnotcontrolfunding.[138]Asaresult,
passingafundingstatutethataimstoprovidefullfundingbyincreasingthemultiplierusedtodeterminetheCityscontribution,or
bychangingthemethodoffundingtoanactuariallybasedfundingrequirementtoensuretheFundsreach90percentby2055and
beyonddoesnotcreateabenefitprotectedbythe[Clause].[139]
Second,thecourtfoundthattheActcontainednoclearandunmistakablelanguageindicatingthattheGeneralAssemblyintendedto
createanenforceablecontractualrighttofullactuarialfundingthatwouldbeprotectedagainstimpairmentbysubsequent
legislation.[140]Thecourtexplainedthatlegislationdoesnotnormallycreatecontractualorvestedrights,unlessthelegislature
expressedclearandunequivocalintenttodoso.[141]NothingintheActsoperativelanguage,thecourtfound,expressedsuch
intenteventhoughtheGeneralAssemblysstatedpurposeinenactingthelegislation[was]tosavetheFundsfrominsolvency.[142]
Accordingly,theActsstatutoryfundingprovisions[were]notabenefitthatcanbeoffsetagainstanunconstitutional
diminishmentofpensionbenefits.[143]
Third,andmostimportantly,thecourtrejectedtheCitysclaimthattheActsfundingprovisionscreatedabenefitbecausethey
replace[d]anillusorysetofunfundedstatutorypromisesderivedfromSection22403ofthePensionCode.[144]Accordingtothe
court,adoptingtheCitysviewthatSection22403oftheCodeonlygaveparticipantsarighttothemoneyavailableintheir
respectivefundsuponretirementwouldbeinconsistentwiththeplainmeaningofthe[Clause],andwouldundermineourholdingin
[thePensionReformdecision],andwouldleadtoanabsurdandunjustresult.[145]TheCourtexplainedthattheClauseitself
mandatesthatmembersoftheFundshavealegallyenforceablerighttoreceivethebenefitstheyhavebeenpromisednotmerely
toreceivewhateverhappenstoremainintheFunds.[146]
Indeed,thecourtremarked,thewholepurposeofestablishingtheclausewastoeliminateanyuncertaintyastowhetherstateand
localgovernmentswereobligatedtopaypensionbenefitstotheiremployees.[147]Furthermore,theGeneralAssemblyandCityhad
beenputonnoticesincethe1970Constitutionsratificationthatthebenefitsofmembershipmustbepaidinfull,andthattheymust
bepaidwithoutdiminishingorimpairingthem.[148]Asaresult,thenotionthattheGeneralAssemblycouldsomehowoffera
purportedoffsettingbenefitofactuariallysoundfundingandfundsolvencywasabsurdbecauseitwasmerelyanoffertodo
somethingtheClausealreadymandatedwhenparticipantsjoinedthepensionfund.[149]
ThecourtconcludedthattotheextentSection22403ofthePensionCodepurportedtoestablishthatmembersofthetwoCityfunds
onlyhadtherighttoamountsintheFunditselfbyvirtueofthelegislativelyprescribedfundingchoices,thatsectioncannot
overcomethe[Clauses]constitutionalguarantee.[150]ThecourtnotedhowSection22403wasenactedpriortothe1970
ConstitutionandbeforetheClauseestablishedacontractualrelationshipbetweenemployerandemployeeanditscorollarylegal
obligationtopaypensionbenefitstoemployees.[151]
ThecourtfurthernotedthattotheextentSection22403conflictedwiththeClausesmandate,itdidnotsurviveratificationofthe
IllinoisConstitution.[152]ThenewconstitutionsTransitionScheduleprovision,thecourtfound,invalidatedanypre1970statutes
conflictingwithprovisionsofthe1970IllinoisConstitution.[153]
ThecourtconcludeditsrejectionoftheCitysnetbenefitargumentbyfindingthattheActssalutarygoalofsolvencysimplycould
notjustifytheunconstitutionalmeansusedtoachievethatend.[154]Topermitsucharesult,thecourtadmonished,wouldrequireitto
abdicateitsownobligationtoinvalidateunconstitutionallaws,andcreateanendrunaroundthereservedsovereignpowers
argumentthecourtrejectedinitsPensionReformdecision.[155]Simplyput,theClauseremovedtheoptionofunilaterally
diminishingbenefitsasameansofattainingpensionstability.[156]

ThecourtfurtheradmonishedthattheClausewasintendedtoforeclosetheabilityoftheGeneralAssemblytocreatethevery
emergencyconditionsusedtojustifyitssuspensionoftherightsconferredandprotectedbytheconstitution.[157]Insum,the
GeneralAssemblycouldnotunilaterallydecidewhetherpensionparticipantswerebetteroffundertheActbecausethat
determinationmustbemade,ifatall,accordingtocontractprinciplesbymutualassentofthemembers,notbylegislative
dictates.[158]
3.TheCitysbargainedforexchangeargumentfailedunderbasiccontractprinciples
TurningtotheCitysfinalargument,thecourtrejectedtheclaimthattheActwasnotaproductofunilateralaction,butrather
codifiedabargainedforexchangemadebetweentheCityandtheunionsrepresentingtheFundsparticipants.[159]Thecourt
observedthatwhiletheActmayhavebeentheproductofnegotiationsandpromotedasanagreementwiththeCityslaborunions,it
wasnottheresultofabargainedforexchange.[160]
Tobesure,thecourtrecognized,ordinarycontractprinciplesallowforthemodificationofpensionbenefitsinabargainedfor
exchangeforconsideration.[161]Inaddition,thecourtstatedthatpriordecisionsmadeclearthattheClauseneitherprohibitsthe
legislaturefromprovidingadditionalbenefitsandrequiringadditionalemployeecontributionsorotherconsideration,norprohibits
anemployeefromknowinglyandvoluntarilyagreeingtomodifypensionbenefitsfromanemployerinexchangeforvalid
considerationfromtheemployer.[162]
Inthecollectivebargainingcontext,though,thecourtnotedthatunderIllinoislawpublicemployeesdesignateaparticularunionas
theirexclusiveagenttoconductcollectivebargainingnegotiations.[163]AndtheNewYorkcourtdecisionstheCityreliedonto
supportitsbargainedforexchangeargumentallinvolvedagreementswherepensionbenefitrightswerechangedthroughcompletion
ofthecollectivebargainingprocess.[164]
Inthiscase,however,thecourtobserved,itwasundisputedthattheunionswerenotactingasauthorizedagentswithinacollective
bargainingprocess.[165]Accordingly,thenegotiationstheCityengagedinwiththeunionswerenodifferentfromlegislative
advocacyonbehalfonanyinterestgroupsupportingcollectiveintereststoalawmakingbody.[166]Asaresult,thecourtfoundthat
theplaintiffshaddonenothingtounequivocallyassenttotheActsbenefitchanges,andthatnothinginthelegislativeprocessthat
ledtotheActconstitutedawaiveroftheFundsmembersconstitutionalrightsunderthe[Clause.][167]
D.TheTakeHomeMessageoftheChicagoPensionReformDecision
ThecourtsrecentChicagoPensionReformdecisionreaffirmedandclarifiedseveralpointswithrespecttotheprotectivescopeofthe
PensionClause.First,thecourtreiteratedthatadheringtousualcontractprinciplesoffersanavenuetomodify(i.e.,reduce)pension
benefitsprotectedbytheClause.NothingintheClausesjurisprudencesupportsacontraryproposition.Second,asananalogueto
contractprinciples,thecourtindicatedthatpensionbenefitsofpublicemployeesbelongingtoaunionmaybechangedbyalabor
unionthroughthecollectivebargainingprocesswhenactingastheexclusivebargainingagentundertheStatespublicsectorlabor
relationslaws.
Third,thecourtalsoreiteratedthattheGeneralAssemblylackstheunilateralpowertoreducethevalueofthepensionbenefits
participantsareentitledtoreceiveundertheplaninplacewhentheyjoinedthesystem,includingcoveredbenefitincreases.Asthe
courtputit,therewasnopossiblebasisforinterpretingthe[PensionClause]tomeanthatitsprotectionscanbeoverriddenifthe
GeneralAssemblydeemsitappropriate.[168]
Finally,withrespecttopensionunderfunding,thecourtmadeclearthattheClauseitselfguaranteesthatpensionbenefitsmustbepaid
whentheybecomedueandthattheinsolvencyofaparticularpensionfundcouldnotobviatethatobligation.Thecourtexplainedthat
thisobligationderivesfromtheClausethroughitscreationofacontractualrelationshipbetweenpublicemployeesandtheiremployer,
whichabsolutelysafeguardsthebenefitsofthatrelationshipfromdiminishmentorimpairment.Thecourtfurtherexplainedthatthe
fundingprovisionsfoundintheIllinoisPensionCodearenotdeemedpartofthecontractualrelationshipthatformsthebasisofthe
Clausesscopeofprotection.Asaresult,thenotionthattheGeneralAssemblycouldsomehowofferapurportedoffsettingbenefit
offundsolvencywasabsurdbecauseitwasmerelyanoffertodosomethingalreadymandatedbytheClausewhenparticipants
joinedthepensionfund.
V.WHERETONEXT?
InlightofthePensionClausesbackgroundandtheIllinoisSupremeCourtstworecentdecisions,theobviousquestioniswhatcan
theStatelegitimatelydotoaddressitsplight?Asdetailedbelow,therearefourpermissibleoptions.Itisalsoworthwhiletodiscuss
twootherproposalsthatareofferedbycertainstakeholders,butlackplausibilityasdetailedbelow.

A.PermissibleOptions
1.SenatePresidentJohnJ.Cullertonscontractualproposal
a.Theproposalanditslegalrationale
ThefirstoptiontheGeneralAssemblymaypursueistheproposaloutlinedbySenatePresidentJohnJ.Cullertontoreducepension
benefitsinaconstitutionalmannerthroughcontractprinciples.ThecoreofthisapproachwassetforthinSenateBill2404,[169]
whichpassedtheSenate40160inMay2013withbipartisanandlaborunionsupport.[170]Despitethatsupport,SenateBill2404
wasnevercalledforavoteintheHouseofRepresentatives.Theproposaloffersapragmaticconstitutionalpathtomitigatethe
pensionunderfundingproblemanditsimpactontheStatebudget.
TheproposaloffersTier1employeesinthethreelargestStatepensionsystemsTRS,SURS,andSERSachoiceofeitheragreeing
toalowerannualannuityincrease(i.e.,COLAincrease)orrejectingtherequestedchange.[171]Specifically,thelegislation
providesanelectionprocesswhereinTier1employeesareexpresslyaskedinthelegislationtoagreetowaivetheirrighttothecurrent
annual3percentcompoundedCOLAincreasetheywouldotherwisereceiveinretirement,andinsteadreceivetheTier2COLA
increase.TheTier2COLAincreasewouldannuallyincreaseaparticipantsretirementannuityamountbythelesserof3percent
simpleorhalftherateofinflation,anddelaythereceiptofthoseincreasestotheearlieroffiveyearsafterretirementorage67.
Tier1employeeswhoagreetothelowerCOLAincreasewillreceive,ataminimum,oneitemoflegalconsiderationforgivingup
theircurrentcompounded3percentCOLA.Inthelegislationitself,theStateexpresslyandirrevocablypromises,asanemployer,to
neverofferfuturesalaryincreasesonanonpensionablebasis.ThewaiverofthisrightcreatesanewlegaldetrimentontheState,as
anemployer,thatbenefitsemployeeswhoaccepttheoffer.
Tier1employeeswhorejecttheCOLAchangewillcontinuetokeeptheircurrentannual3percentcompoundedCOLAincreasesin
retirement.Fortheseemployees,however,theStatewillexerciseitslegalrightasanemployerandonlyofferallfuturesalary
increasestotheseemployeesonanonpensionablebasis.Putdifferently,aTier1employeerejectingtheCOLAchangewillstillbe
offeredsalaryincreasesinthefuture,butonlyontheexpressconditionthattheincreases,ifaccepted,willnotapplyinthecalculation
oftheemployeespensionatretirement.Thisoptionreflectsthestatusquobecauseanemployeewillcontinuetokeeptheir
compoundedCOLAwhiletheStatemayexercisethelegalrightitcurrentlyhas,asexplainedbelow,totieconditionstofuturesalary
increases.
Forexample,ifaTier1employeerejectstheCOLAchangeandcurrentlyhasanactualsalaryof$50,000,thentheemployees
pensionablesalaryamountwillremainfrozenat$50,000eventhoughtheemployeelaterreceivesincreasesonanonpensionable
basisthatraisehisorheractualsalaryto$75,000atthetimeofretirement.TheTier1employeeinthisexample,though,wouldnot
paypensioncontributionsonsalaryamountsabove$50,000.
TheSenatePresidentsproposalisbasedonthepremisethatpensionbenefitsprotectedbythePensionClausearecontractualin
natureandsubjecttomodificationinaccordancewithusualcontractprinciples.[172]AsconfirmedbytheIllinoisSupremeCourts
ChicagoPensionReformdecision,whilepensionbenefitscannotbereducedunilaterally,theycanbereducedorotherwisemodified
solongastheemployeeknowinglyandvoluntarilyagreestothemodificationinexchangeforvalidconsiderationfromthe
employer.[173]
Illinoiscourtsdefinethetermconsiderationassomeright,interest,profitorbenefitaccruingtooneparty,orsomeforbearance,
detriment,lossorresponsibilitygiven,sufferedorundertakenbytheother.[174]UnderIllinoislaw,anyactorpromisewhichisof
benefittoonepartyordisadvantagetotheotherisasufficientconsiderationtosupportacontract.[175]Apromise,however,todo
whatapersonisalreadyboundtodobycontractorstatutedoesnotconstitutelegalconsideration.[176]
Ontheissueofwhatmayserveasconsideration,theIllinoisAppellateCourthasindicatedthatworkhours,salarylevels,andother
termsofemploymentaregenerallynotprotectedbytheClauseeventhoughchangestothesetermswouldindirectlyaffectthepension
amountapersonwouldultimatelyreceiveinretirement.[177]Indeed,astosalaries,Illinoiscourtshavelongheldthatpublic
employeesdonothaveavestedrightintheexpectationofthecontinuanceofaspecificrateormethodofcompensation,evenwhere
theyareemployedpriortotheamendmentofanenactedsalaryschedule.[178]
Inaddition,theIllinoisAppellateCourthasnotedthatNewYorkcourtdecisionshavefounditpermissibleforapublicemployerto
offerfuturesalaryincreasesontheconditionthattheincreasesnotqualifyaspensionableincomeifacceptedbytheemployee.[179]
TheNewYorkdecisionsinstructthatsinceapublicemployerhasnoobligationtoofferpublicemployeessalaryincreasesunless
otherwiserequiredbystatuteorcontracttheemployerhasthepowertoofferfuturesalaryincreaseseitherwithoutconditionand
therebycounttowardtheemployeespensionoronanonpensionablebasis.[180]Inturn,whenemployeesacceptfuturesalary

increasesonanexpressnonpensionablebasis,theycannotlaterclaimthattheseincreasesareincludableforpensionpurposes
becauseawaiverhasoccurredandtheincreasesaretherebyexcludedfromthepensioncalculationformula.[181]
Recastinthelightofthesedecisions,theSenatePresidentsproposalharnessesthediscretionarypoweroftheState,asanemployer,to
conditionornotconditionitsofferingoffuturesalaryincreasestoeachTier1employeeinordertoobtainapensionbenefitreduction.
ThelegalconsiderationtheproposalofferstoeachTier1employeewhoagreestolowerCOLAincreasesinretirementistheStates
irrevocablepromise,asanemployer,toneverofferhimorherfuturesalaryincreasesonanonpensionablebasis.ATier1employee,
ofcourse,isfreetorejectthisoffer.Ifheorshedoes,thentheemployeewoulddosowiththefullknowledgethatallfuturesalary
increaseswillonlybeofferedtohimorherexpresslyonanonpensionablebasisarighttheState,asanemployer,mayexercise.
Accordingtonewsreports,theSenatePresidentsproposalisestimatedtosavetheStateabout$1billionayear.[182]Insum,the
SenatePresidentsproposaloffersabasicframeworkthatcanbeenhancedwithotherformsofconsiderationtoachievethesame
objectiveofsavingstotheState.
b.TheargumentsagainsttheSenatePresidentsproposalareunfounded
CriticsclaimthattheSenatePresidentsproposalfailstofollowcontractprinciplesonfourmaingroundsandthereforeviolatesthe
PensionClause.[183]Ironically,someofthecriticsofthisproposalarethesamelaborunionsthatsupportedandcharacterizedSenate
Bill2404from2013asconstitutional[184]eventhoughtheproposalcontainsthesamepensionablesalarychoiceasSenateBill
2404.[185]Noneofthesegroundsarecompellinganddispositiveasexplainedbelow.
i.Theproposalprovideslegalconsideration
CriticsfirstcontendtheproposaldoesnotofferTier1employeesanylegalconsiderationbecauseeverytimeemployeesreceivea
salaryincreaseitmustcountforpensionpurposesandthisissomethingthatthePensionCodealreadyprotects.Thiscontentionis
wrongasamatteroflaw.
Asnotedearlier,relevantNewYorkcourtdecisionsthatIllinoiscourtsrelyuponholdthatincreasedcompensationonlyconstitutes
pensionablesalarywhentheemployergrantsitunconditionally.[186]ThesameargumentthatcriticsadvancetodayfailedinNew
Yorklongago.[187]IllinoiscourtsfindNewYorkcourtdecisionsconstruingthatstatesvirtuallyidenticalpensionclausepersuasive.
[188]
Inaddition,thecriticscontentionisnotsupportedbythePensionCodesplainlanguage.TherelevantprovisionsofSERS,SURS,
andTRSdefiningpensionablecompensationallrefertocompensationthathasalreadybeenearnedanddoesnotexpresslyforeclose
thepublicemployersrighttoofferfuturesalaryincreasesonanonpensionablebasis.[189]Ifthecriticscontentionweretrue,thena
publicemployercouldonlyavoidtheactuarialimpactofsalaryincreasesbygivingnoincreasesatall.
Tobesure,IllinoisandNewYorkcourtdecisionshaveequallyinvalidatedlegislationthatunilaterallynarrowedthestatutory
definitionofpensionablesalary.[190]Noneofthesedecisions,however,involvedanexpressofferingoffuturesalaryincreasesona
nonpensionablebasis.[191]Asaresult,thesedecisionssimplycannotbeminedtocreateafarbroaderruleoflawforfactual
circumstancesnotevenbeforethecourt.Anyattempttodosoreflects,atbest,wishfulthinking.
Despitethecriticsprotests,theSenatePresidentsproposaldoes,indeed,offeremployeeslegalconsideration.Asdiscussed
previously,theStateisirrevocablypromising,asanemployer,toneverofferthemfuturesalaryincreasesonanonpensionablebasis.
Thewaiverofthislegalrightisanewbenefitthatemployeesacceptingtheofferwouldobtainanddonotpossesstoday.Illinois
courtsstatethatanyactorpromisewhichisofbenefittoonepartyordisadvantagetotheotherisasufficientconsiderationto
supportacontract.[192]TheSenatePresidentsproposalisafarcryfromthecircumstanceswhereIllinoiscourtshavefoundthe
offeredconsiderationgrosslyinadequateandillusory.[193]
Moreover,theclaimthattheofferedconsiderationisnotmeaningfulorinadequatebecauseitisnotequivalenttothefinancial
valueofwhatemployeesaregivingupisnotcompelling.AstheIllinoisSupremeCourtrecentlyexplained,principlesofcontract
lawdonotrequirethatthevalue[theparties]exchangebeequivalent.[194]Indeed,courtsdonotgenerallyinquireintotheadequacy
oftheconsiderationforacontract,justthatitbepresent,whichisthecasewiththeSenatePresidentsproposal.[195]
ii.Theproposalreflectsabargainedforexchange
Criticsnextcontendthatthebenefitreductionresultingfromtheproposaldoesnotreflectabargainedforexchangebetweenthe
StateandTier1employees.CriticscomplainthatTier1employeeshavenoabilitytoindividuallybargainfortheconsideration
theymaydeemmostvaluabletoagreetolowerannualCOLAincreasesinretirement.Instead,theproposalpurportedlypresents

employeeswithatakeitorleaveitofferleadingonlytonegativefinancialoutcomes.
ThecriticsargumentproceedsfromafundamentalmisapprehensionofIllinoiscontractlaw.Illinoiscourtsdonotinvalidatecontracts
wherepartieshaveunequalbargainingpowerevencontractspresentedonatakeitorleaveitbasisandconsentissecured
throughhardbargainingandthepressureoffinancialcircumstances.[196]Indeed,thebargainedforexchangerequirementneither
prohibitstakeitorleaveitoffers,[197]norinsistsupontheabilitytoindividuallynegotiatethetermsoftheoffer.[198]
Rather,undergeneralcontractprinciples,abargainedforexchangeexistsifonepartyspromiseinducestheotherpartyspromiseor
performance.[199]TheSenatePresidentsproposaladherestothebargainedforexchangerequirementbyexpresslyofferingthe
StatesirrevocablepromiseinexchangeforemployeesagreeingtolowerannualCOLAincreasesinretirement.
iii.Theproposalhasamplecaselawsupport
CriticsfurthercontendthattheNewYorkcourtdecisionsthatsupporttheproposalonlydealtwiththenotionthatapublicemployer
canofferabonus,notregularsalaryasnonpensionable,andeventhenonlyonaoneoffbasis.Asidefromadmittingthelegal
premisethatapublicemployerhastherighttooffercompensationonanonpensionablebasis,theargumentblatantlyignoresthe
factualandlegalcontextofthesedecisions.
TheprimaryNewYorkcasesupportingtheSenatePresidentsproposalisCarrollv.Grumet.[200]InCarroll,thecourtheldthataplan
adoptedbyNewYorkCitygrantingfiremenemergencycostoflivingincreasesdesignedtofostercontinuedemploymentby
increasingtakehomepay,withoutaffectingtheirpensions,squaredwiththeNewYorkConstitutionsPensionClause.[201]Theplan
providedcostoflivingadjustmentsof$420perannumupon[the]conditionthatsuchincreaseshouldnotconstitutesalaryforthe
purposeofcomputinghispensionuponretirement.[202]
Theplaintiffinthecasereceivedandacceptedoneofthe$420annualincreases,retired,andlaterfiledsuittohavethatincreaseincludedinhis
pensionablesalary.[203]Theplaintiffclaimedthattheexclusionoftheincreasehereceivedviolatedhispensionrightsbecausetherelevant
pensionstatutestatedthathispensionwouldbenotlessthanonehalfhisfullsalaryorcompensationatthedateofhisretirementfrom
service.[204]Theplaintiffassertedthatfullsalaryorcompensationincludedthe$420annualbonus.

Thecourtterselyrespondedthat[i]ftheincreasedcompensationhadbeenunconditionallygrantedbytheCitywithoutquestionit
wouldhaveconstitutedsalaryorcompensationforpensionpurposes.[205]Inotherwords,thefactthattheincreasewascalleda
costoflivingincreaseorbonuswaslegallyirrelevant.Whatwasrelevant,thecourtobserved,wasthattheplaintiffvoluntarily
acceptedthesocalledbonusundertheexpressconditionthatitnotberegardedassalaryforpensionpurposes,andthatthe
plaintiffwasnototherwiselegallyentitledtoreceivetheincrease.[206]Takentogether,thecourtconcludedthatplaintiffsacceptance
oftheincreaseunderthestatedconditionconstitutedawaiverofhispensionrightsforvalidconsideration,andwasconsistentwiththe
NewYorkConstitutionspensionprovision.
Simplyput,theCarrolldecisiondoesnot,ascriticsclaim,representacircumstancewherethepublicemployerofferedaonetime
compensationincreaseonanonpensionablebasistoemployees.Rather,thepublicemployercategoricallymadeallincreasessubject
tothatconditionwhenofferedeachyear.Inaddition,thefactthattheincreasewascalledacostoflivingincreaseorbonuswas
legallyirrelevantbecausethecourtrecognizedthat,absentthecondition,theincreasewouldhaveconstitutedpensionablesalaryor
compensationunderthegoverningpensionstatute.
Indeed,theIllinoisAppellateCourtreliedontheCarrolldecisionlongagoasanexampleofactionpublicemployerscouldtake
consistentwithourPensionClause.[207]Inaddition,inBallentinev.Koch,NewYorkshighestcourtconstruedtheCarrollcase(and
itsprogeny)asallowingfundsordinarilyincludedinthecalculationofpensionbenefitstobeofferedonanonpensionablebasis.
[208]ThisisthesameBallentinedecisiontheIllinoisSupremeCourtfavorablycitedinitsrecentChicagoPensionReformdecision.
[209]
Inshort,theSenatePresidentsproposalsquareswiththeNewYorkcourtdecisionsIllinoiscourtshavereliedupontoconstrueour
PensionClause.Furthermore,theproposalitselfisnodifferentfromwhatoccurredinCarroll:ittoocategoricallyoffersfuture
compensationincreasesotherwisequalifyingaspensionableincomeonanonpensionablebasis.Criticsoftheproposalcanmakeno
validorcompellingclaimtothecontrary.
iv.Theproposalisnottantamounttoduress
Criticsfinallycontendthattheproposaliscoerciveandvoidaseconomicduress.Thisisso,criticsclaim,becausetheproposals
offeredchoiceiscoupledwiththethreatthatallfutureincreaseswillonlybeofferedonanonpensionablebasisifemployeesreject
theoffer.Thisargumentiswithoutmeritandcanbedispatchedquickly.

UnderIllinoislaw,economicduressexistswhenapersonisinducedtoenterintoacontractbyawrongfulactorthreatofsuchan
actbyanotherpersonthat,inturn,deprivesthepersonenteringintothecontractofhisorherfreewill.[210]Wrongfulactsareacts
thatarecriminal,tortious,inviolationofacontractualdutyorwronginamoralsense.[211]Illinoiscourtshaveheldthataclaimof
duresscannotbepredicatedonhardbargainingorthefinancialpressureitplacesonthepersonhavingtomakethechoice.[212]In
addition,thefactthattheaproposalpresentsapersonwithchoicesthatallentailnegativeoutcomeswhencomparedtohisorher
existingcircumstancesdoesnotrendertheproposalawrongfulact.[213]
Moreimportantly,thefactthatanofferisstructuredinawaythatincludesathreatbythepersonmakingtheoffertotakeactionthat
thepersonhasalegalrighttoexercisedoesnotconstituteeconomicduressorcoercion.[214]SincetheSenatePresidentsproposalis
premisedontheStatesthreattoexercisealegalrightitpossessesthereisnowrongfulacttosupportthecriticsclaimofduress.
2.CollectiveBargaining
AsidefromtheSenatePresidentscontractualproposal,theIllinoisSupremeCourtsChicagoPensionReformdecisionstrongly
indicatesthatpensionbenefitsmayalsobemodifiedbypublicsectorlaborunionsactingasauthorizedagentswithinthecollective
bargainingprocessfortheirmembersunderIllinoislaw.[215]ThecourtfoundthatthelegislationatissueviolatedthePensionClause
becausethelaborunionswerenotactingasauthorizedagentswithinthecollectivebargainingprocess.[216]Tosupportthis
proposition,thecourtreferencedtwoNewYorkcourtdecisionscitedbytheCityofChicago.
Inthesedecisions,theNewYorkCourtofAppealsheldthatdulydesignatedlaborunionscouldbindtheirmemberstothetermsof
collectivebargainingagreementsthatwaivedtheconstitutionalprotectionsthemembersenjoyedundertheNewYorkConstitutions
pensionclause.[217]AsanotherNewYorkcourtsuccinctlyexplained,thepurposeofitspensionclausewasmerelytoinsurethat
pensionandretirementbenefitswouldnotbesubjecttothewhimoftheLegislatureorthecapriceoftheemployer.[218]Thecourt
continuedthat:
WhereasunilateralactionbytheemployerortheLegislaturemaynotimpairsuchbenefits,thepartiesarenotprevented
fromnegotiatingareduction.TheUnionisfreetowaiveanyrightofitsmemberstocertainbenefitsinexchangefor
otherconsiderationandthepartiesarefreetonegotiatelessbeneficialtermsfornewemployeeshiredafterthe
agreementexpires.Aslongasthecontractualbenefitsarenotunilaterallydiminished,thereisnoconstitutional
violation.[219]
Inshort,NewYorkcourtdecisionsindicatethatdulyauthorizedunionsmaycollectivelybargainoverandwaivetheprotectedpension
benefitrightsoftheirmembersinexchangeforconsideration.
WhetherIllinoiscourtswillreachthesamebroadconclusionasNewYorkcourtswithrespecttoIllinoispublicsectorlaborunions
underourPensionClauseremainstobeseen.MayorRahmEmanuelofChicago,however,hasexpressedinterestinnotwaitinglong
tofindout.
ShortlyaftertheIllinoisSupremeCourtissueditsdecision,MayorEmanuelstatedthatheintendstorestartnegotiationswiththe
Cityslaborunionstoforgeapensionreformagreementthroughcollectivebargaininggiventheopeningprovidedbythedecision.
[220]Ifanewaccordwithlaborunionscannotbereached,thenMayorsofficemaypursueworkrulechanges,lowerbreakinpay
fornewemployees,anotherroundofhealthcarereforms,andothercostsavingconcessionsanddedicatethosesavingsto
pensions.[221]
ItisimportanttonotethatasthisArticlewenttopresstheIllinoisSupremeCourtissueditsdecisioninMatthewsv.ChicagoTransit
Authority.[222]Inthatdecision,thecourtfurtherconfirmedthatordinarycontractprinciplesmaybeusedtomodifytheexisting
pensionbenefitsofcurrentemployees,andthatpublicsectorlaborunionshavetheauthoritytomodifytheexistingpensionbenefitsof
itsactivemembersthroughthecollectivebargainingprocess.[223]TheMatthewsdecisionappearstoprovideaclearpathfortheuse
ofthecollectivebargainingprocessasacontractualmeanstomodifythepensionbenefitsofcurrentpublicemployeeswhobelongto
unions.
3.BuyoutProposals
Asidefrompursuingtheabovecontractualproposals,legislatorsarealsoconsideringproposalsthatwouldoffertobuyoutTier1
employeesoftheirpensionbenefitsbygivingemployeesanimmediatelumpsumamountatretirement.[224]Unlikethebuyoutplans
prevalentintheprivatesector,though,legislatorsareadvancingproposalsthatofferlumpsumpaymentsthatarelessthanthenet
presentvalueofthesebenefitsandtherebyreduceStatepensioncontributions.
HouseBill4427,thebeststudiedoftheseproposals,sponsoredbyRepresentativeMarkBatinick,offersaonetimepaymentoption

equalto75percentofthenetpresentvalueofbenefits.[225]Employeesneednotseekadiscountedbuyoutoftheirentirepension,but
mayseekapartialbuyout.Forexample,theycanchoosetoreceive50percentoftheirnormalpensionpayment,andthenreceivea
lumpsumpaymentthatisequalto75percentofthenetpresentvalueoftheremainingbenefit.[226]AsidefromsavingtheState
moneybydiscountingtheliability,theproposalshiftstheinvestmentrisknowbornebytheStatetotheemployeestakingthebuyout.
Itisdifficulttoestimatethefinancialimpactoftheproposalsincethesavingsaredirectlyrelatedtoeachmembersdecision,whichis
difficulttopredict.Somehavestatedthattherateofparticipationwouldmirrortheparticipationratesinprivatesectorbuyouts,but
thatishighlyunlikelytooccurfortworeasons.
First,privatesectoremployeesreceivebuyoutproposalsequalto100percentofthenetpresentvalueoftheirbenefit.[227]Second,
privatesectorbuyoutsarecalculatedwithinterestratesbetween4and5percent.[228]TheproposedbuyoutsinHouseBill4427are
calculatedwiththepensionsystemsassumedrateofreturn,whichis7.5percentforTRSand7.25percentforSERSandSURS.[229]
Thehighertheinterestrate,thelowerthebuyoutpayment.Becauseofthesedifferences,theparticipationrateinthisproposedbuyout
shouldbeconsiderablylowerthanthatofprivatepensionplans.
Tothatend,actuariesforTRSperformedanactuarialanalysisassumingtenortwentypercentofemployeeswouldelecttoreceivea
fullbuyoutatretirement.[230]IftenpercentofemployeesparticipatinginTRSmadethatelection,thentheStatewillsave$3.5billion
incontributionsbetweennowand2045,[231]andreducetheStatespensioncontributionby$79millionthefirstyearafterittakes
effect.[232]Iftwentypercentmaketheelection,thenbuyoutsavingswouldessentiallydouble.[233]Andasaruleofthumb,the
potentialsavingsassociatedwiththeproposalasappliedtoSERSandSURSshouldbeequaltoTRS.[234]Asaresult,HouseBill
4427couldsavetheStateapproximately$7billioninpensioncontributionsthrough2045,[235]andreducetheStatesnextannual
pensioncontributionofnearly$7billionby$160millionafterittakeseffect.[236]
4.RestructuringPensionSystemFunding
Asnotedabove,theIllinoisSupremeCourthasheldthatthePensionClauseguaranteesthatpensionsaretobepaidwhentheybecome
dueandthattheobligationtopaybenefitsexistsirrespectiveofthepensionsystemsfundingratio.[237]Withthatsaid,howtheState
couldmeettheseobligationspresentsaseriouspoliticalproblembecausecurrentrevenuesareinsufficienttoalsopayforcompeting
fiscalpriorities.Thistaskhasbecomeevenmoredifficultwiththeexpirationofthe2011incometaxincrease,[238]andacontinuing
Statebudgetstalemateinitseleventhmonthasofthiswriting.[239]Asaresult,asidefrompursuingdifferentcontractualoptions,the
GeneralAssemblymayalsoattempttomitigatetheimmediateandlongtermfinancialburdenoffundingthepensionsystemby
restructuringitscurrentstatutoryfundingschedule.
Tothatend,theCenterforTaxandBudgetAccountability(CTBA)hasofferedaproposalthathasgarneredsomeattention.[240]The
CTBAproposalwouldreplacethecurrentstatutoryfundingschedulefortheStatesfivepensionsystems.Thatscheduleseeksto
achieve90percentfundingbyFY2045.TheCTBAproposalwouldreamortizethatscheduledtoseektoachieve80percentfunding
byFY2055.[241]
UnlikethecurrentbackloadedfundingschedulethatincreasesStatecontributionseachyear,theCTBAproposalplacestheStateona
scheduleofmakingleveldollarcontributionstothepensionsystems,muchlikefixedmortgagepayments.[242]CTBAstatesthata
leveldollarpaymentplanwouldmakeStatepensioncontributionsmorepredictableandbecomeadecliningfinancialobligationover
timeinreal,inflationadjusteddollars.[243]Theproposal,however,wouldrequiretheStatetomakehigherpensioncontributionsthan
undercurrentlaw.[244]ItisalsopremisedonpolicymakersrestructuringhowtheStateraisesrevenuethroughhigherincometaxes
andanexpandedsalestaxonservicessoitcanaffordthenewleveldollarfundingscheduleandotherspendingpriorities.[245]
BeyondtheCTBAproposal,therecontinuestobestronginterestinshiftingtheemployersportionofthenormalcostof
pensionbenefitspaidbytheStatefordownstateandsuburbanschoolteachersanduniversityandcommunitycollege
employees,respectively,tolocalschooldistricts,universities,communitycolleges.[246]Thenormalcostrepresentsthe
costofpensionbenefitsearnedbypublicemployeesfortheirserviceinthecurrentyear.[247]ForTRSandSURS
participants,thetotalnormalcostofbenefitsforFY17isabout$2.5billion.
Employeespaytheirshareofthetotalnormalcostthroughpensioncontributionsderivedfromsalarydeductions,which
isabout$1.2billionforFY2017.SURSemployeescontribute8percentofsalaryandTRSemployeespay9.4percentof
salary.Theremaining$1.3billionofthetotalnormalcostrepresentstheemployersportionandiscurrentlypaidbythe
Statefordownstateandsuburbanschooldistricts,universitiesandcommunitycolleges.Inotherwords,eventhough
downstateandsuburbanschooldistricts,universities,andcommunitycollegesarethedirectemployersoftheir
employees,theStatepaystheemployersportionofthetotalnormalcostofpensionbenefitsearnedbydownstateand
suburbanschoolteachersanduniversityandcommunitycollegeemployees.

Placedintocontext,theStatesannualpensioncontributioniscomprisedoftheemployersportionofthetotalnormal
costplusanamounttopaydownpastunfundedliabilities.[248]ForFY2017,theStatespensioncontributionfrom
GeneralRevenueFundsforSURSandTRSisabout$5.5billion,[249]withtheemployersshareofthetotalnormalcost
consistingofabout$1.3billionofthattotal.[250]IftheGeneralAssemblyweretoshifttheemployersportionofthetotal
normalcostofbenefitscurrentlypaidbytheStatetolocalschooldistricts,universities,andcommunitycolleges,then
theStatewouldfreeupabout$1.3billionthatcouldbespentonotherpriorities,suchaseducationandpublicsafety.[251]
B.OtherProposals
WhiletheCourtsrecentrulingsstronglysignalthattheStateandlocalgovernmentsmustinevitablycomeupwithmoneyneededto
paytheirpensionobligations,somestakeholdersviewtherulingsasacalltoactionandanimpedimenttotheStatesfiscalrecovery.
[252]Intheirview,therulingshavesaddledthestatewithanunsustainableburdenthatcanonlybemetthroughdraconiantax
increasesandservicescutsthatwillcausetaxpayerstoleaveIllinois.[253]ThesestakeholdersviewStateandlocalpensionobligations
asanunfairburden.AsTyFahneroftheChicagosCommercialClubstated,Itisfundamentallyunfairtoask95percentofusall
ofusthosewhoarenotinoneofthestatesfivepensionsystemstopayforthe5percentwhobenefitfromtheseplans.[254]Asa
result,somestakeholderssupportamendingthePensionClausetopermitunilaterallegislativereductionsinbenefits,andtoallow
IllinoismunicipalitiestofileforChapter9bankruptcyanddischargetheirpensionobligations.Bothproposalsarediscussedbelow
andfacesignificantpoliticalandlegalobstaclesrenderingthemimplausible.
1.AmendthePensionClausetoPermitUnilateralLegislativeReductionsinPensionBenefits
ShortlyaftertheIllinoisSupremeCourtissueditsPensionReformdecisioninMay2015,theCivicFederationofChicagostatedthat
nowwasthetimetoamendthePensionClausetoclarifythatitonlyappliestoaccruedbenefitssotheGeneralAssemblycould
unilaterallyreducethebenefitsexistingemployeescouldaccruethroughfutureservice.[255]Callsfortheamendmentwererenewed
aftertheIllinoisSupremeCourtissueditsChicagoPensionReformdecision.[256]
TheCivicFederationcontendstheamendmentisnecessarybecausethepresentlevelofbenefitsforcurrentemployeesisunaffordable
andjeopardizesessentialgovernmentservicesandthesolvencyofthepensionfunds.[257]WhiletheCivicFederationstatesthatit
isnotsupportinganyspecificbenefitcuts,theamendmentshouldbeadoptedsothattheideasofstakeholderswhowantunilateral
benefitscutscanbelegislated.[258]TheproposedamendmentwasoneofmanyrecommendationsfoundintheCivicFederations
comprehensiveroadmaptofixIllinoisfinances,whichalsorecommendedanincometaxincreaseandexpansionoftheStates
salestaxtoservices.[259]
WhiletheCivicFederationdidnotunveilthetextofitsproposedconstitutionalamendment,thereislittlelikelihoodtheamendment
willbecomelawforacouplereasons.ThefirstreasonrelatestotheprocessofproposingamendmentstotheIllinoisConstitution.An
amendmenttotheIllinoisConstitutionmustfirstbeproposedbytheGeneralAssemblyandreceivetheapprovalofthreefifthsofthe
memberstheSenateandHouseofRepresentatives.[260]Thatlegislativeapprovalmustalsooccuratleastsixmonthspriortothenext
generalelection,whichwasMay9fortheNovember2016Election.Inaddition,theamendmentmustberatifiedbyeitherthreefifths
ofthosevotingonthequestionoramajorityofthosevotingintheelection.[261]
SincenomemberoftheGeneralAssemblysponsoredtheCivicFederationsproposedamendment,itwasnotinapositiontoreceive
legislativeapproval.Inaddition,evenifithadbeenfiled,therewaslittleprospectthattheproposedamendmentwouldhavegained
theneededsupermajoritysupportforlegislativeapproval.The2013PensionReformBilldiscussedearlierinthisArticlepassedthe
GeneralAssemblywithslimmajoritiesinbothchambersandwasstronglyopposedbylegislatorsinbothpoliticalparties.[262]The
CivicFederationappearstohaveacceptedthisrealityandobservedthatitsnextopportunitytoincludeitsproposedconstitutional
amendmentonballotwouldbeattheNovember2018Election.[263]
EveniftheCivicFederationsproposedamendmentreceivedlegislativeapprovalandwasratifiedbyIllinoisvoters,itisunlikelythat
theproposalwouldsurvivealegalchallenge.Asnotedabove,theamendmentispremisedonthesameeconomicnecessityandpolice
powertheorythattheIllinoisSupremeCourtrejectedinitsPensionReformdecision.
Inthatdecision,thecourtrejectedtheStatespolicepowersargumentbecausePublicAct980599wasnotaresponsetoan
unknownorunforeseeableproblem,butratheraresponsetoacrisisforwhichtheGeneralAssemblyislargelyresponsible.[264]
ThecourtfurtherfoundthattheActwasnottheleastrestrictivemeanstheStatecouldhaveusedtoaddresstheproblem,butan
expedienttobreakapoliticalstalemate.[265]Inaddition,thecourtindicatedthattheActwastantamounttoatakingofprivate
propertybecausetheActfailedtodistributetheburdensofpensionfundingevenlyamongIllinoisansletalonetheStatescontract
partners.[266]ThecourtexplainedthattheU.S.Constitutionbar[s]Governmentfromforcingsomepeoplealonetobearpublic
burdenswhich,inallfairnessandjustice,shouldbebornebythepublicasawhole.[267]

Inshort,whetherunderaContractClause[268]orTakings[269]theory,thesameargumentsthatprevailedinthePensionReform
decisionagainstPublicAct980599wouldequallyapplytotheCivicFederationsproposedamendment.Asaresult,theproposal
amendmentdoesnotofferaplausiblepathtounilaterallyreducethefiscalburdenofStateandlocalpensionobligations.
2.MunicipalBankruptcy
AfinalproposalreceivingsomeattentionisallowingmunicipalitiestofileforbankruptcyunderChapter9oftheU.S.Bankruptcy
Codeasameanstodischargeallorpartofthepensionbenefitsowedtomunicipalemployeesandretirees.Theproposalisinspiredby
rulingsfromfederalbankruptcycourtjudgesinCaliforniaandDetroit,whichheldthatpublicpensionbenefitsprotectedunder
CaliforniaandMichiganlawweresubjecttodischargeunderacourtapprovedrestructuringplan.[270]
RepresentativeRonSandackfiledtheproposalasHouseBill4214.[271]Theproposalwoulddothreethingsaspartofspecifically
authorizingIllinoismunicipalitiestofileforChapter9bankruptcytodischargedebt.First,itestablishesaneutralevaluationprocess
wherebyamediatorcanevaluatethescopeofthemunicipalitysfinancialobligations,theavailablemeanstopaythoseobligations,
andassemblethemunicipalityscreditorstorenegotiateitsdebtsandtherebyavoidtheneedtofileforChapter9bankruptcy.[272]If
theneutralevaluationprocessfailstoproduceasettlementwithin90daysafterbeginningoranimpasseisreachedwithinthatperiod,
themunicipalityisfreetofileforChapter9bankruptcy.[273]
Second,theproposalallowsamunicipalitytofileforChapter9bankruptcywithoutexhaustingtheneutralevaluationprocessifit
declaresafiscalemergencyasoutlinedbytheproposal.[274]Theproposalpermitsamunicipalitytodeclareafiscalemergencyby
adoptingaresolutionbymajorityvoteofitsgoverningboardfindingthatitsfiscalconditionjeapordizesthehealth,safety,orwell
beingof[its]residents.[275]
Third,andmostimportant,theproposalincludesaprovisionestablishingstatutorylienrightsformunicipalgeneralobligationand
revenuebondholders.[276]Thepurposeofcreatingtheserightsistoensurethatthesebondholderswillcontinuetoreceivefulland
timelydebtservicepaymentsduringandafteramunicipalbankruptcyproceeding.[277]Generally,thefilingofaChapter9
bankruptcypetitionterminatesthefullfaithandcreditpledgeamunicipalitymakestogeneralobligationbondholderstorepaythem
throughthefullexerciseofthemunicipalitystaxingpower.[278]Thefiling,inturn,enablesthemunicipalitytospendrevenues
otherwiseusedfordebtserviceforotherpublicpurposes.Astatutorylienpermitsamunicipalitytocontinuemakinguninterrupted
paymentstobondholdersduringandafterthebankruptcy.[279]
Inaddition,theproposalseekstoclassifytherevenuesdedicatedtorepayrevenuebondsissuedbyIllinoismunicipalitiesasspecial
revenuesunderSection902oftheBankruptcyCode.[280]Undercertaincircumstances,theCodeinsulatesrevenuesspecificallydedicated
torepayrevenuebonds,suchaswaterandseweruserfees,frombeingdivertedforotherpurposesduringandafterthebankruptcyproceeding.

[281]Thebondratingagency,Fitch,explainedthatthepowerofthisprotectionwasevidentinboththeStocktonbankruptcyandthe
Detroitbankruptcywherewatersystembondholderswerecontinuouslypaiddebtservice.[282]Takentogether,theproposals
creationofstatutorylienrightsforgeneralobligationbondholdersandclassificationofdedicatedrevenuestorepayrevenue
bondholdersasspecialrevenuesareintendedtoinsulatebondholdersfromtakingahaircutshouldanIllinoismunicipalityfilefor
bankruptcy,whichiswhatoccurredintheDetroitandotherrecentmunicipalbankruptcies.[283]
MuchliketheCivicFederationsproposaltoamendthePensionClause,themunicipalbankruptcyproposalfacesstiffpoliticaland
legalopposition.Onthepoliticalfront,themeasureisopposedbyMayorRahmEmanuelofChicagoandbypublicsectorlabor
unions.[284]AtanAugust2015hearingheldbytheHousePensionandPersonnelCommittee,abankruptcyexpertobservedinhis
testimonythatbycreatingstatutorylienrightstheproposalwasdesignedtoprotectmunicipalbondholdersandallowmunicipalitiesto
rejectlaborcontractsandpensionobligations.[285]RepresentativeSandackrespondedthatmunicipalbankruptcywouldonlybeused
asalastresort,andthatthemainideabehindtheproposalistogivemunicipalitiesmoreleverageforwhentheyarenegotiatinglabor
contracts.[286]GiventhecurrentpoliticalcompositionoftheGeneralAssemblyandoppositionfromtheMayorofChicago,the
proposalhasnotandisnotexpectedtoadvance.[287]
Onthelegalfront,asdetailedbelow,theproposalisuntenablebecausetheGeneralAssemblysimplylacksthelegalpowerto
statutorilyauthorizeitsmunicipalitiestofileforbankruptcywheretheresultistheunilateraldischargeoftheirpensionobligations.
ThisconclusionstemsfromthefactthatbeforeanIllinoismunicipalityiseligibletofileapetitionunderChapter9oftheBankruptcy
Code,theGeneralAssemblymustfirstenactastatelawprovidingspecificauthorization.[288]
ThestatelawauthorizationrequirementderivesfromtheU.S.SupremeCourtsdecisioninUnitedStatesv.Bekins,whichupheld
Congresspowertoenactmunicipalbankruptcylegislation.[289]Therequirementbalancestheconstitutionaldifficultiesofallowing
municipalitiestoshedtheirdebtobligationsthroughabankruptcycourtapprovedplanwithoutrunningafoulofU.S.Constitutions
ContractClause,[290]whilealsopreservingtheStatessovereigncontroloveritsfiscalaffairsanditsmunicipalitieswithoutfederal
interferenceundertheTenthAmendment.[291]TheBekinsdecisionupheldthemunicipalbankruptcystatute,inpart,byemphasizing
thatthestatutedidnotaffectanyrestrictiononthepowersofStatesortheirarmsofgovernmentintheexerciseoftheirsovereign

rightsandduties.[292]
Importantly,federalcourtsconstruingthestateauthorizationrequirementhavefoundthatthestatelawpurportingtoprovide
authorizationmustinfactbevalidunderstatelaw.[293]Indeed,asonefederalbankruptcycourtobserved,whileCongresshasmade
bankruptcyavailabletomunicipalities,statesretaintheirconcomitantrightstolimitaccessbytheirpoliticalsubdivisionsto
bankruptcyrelief.[294]
Underoursystemofgovernment,Staterightsandpowersderivefromthepeoplewho,inturn,candelegateittorepresentative
instrumentstheycreateorreserveittothemselves.[295]ThepowerstheyhavereservedareshownintheprohibitionssetforthinState
constitutions.[296]AndastheIllinoisSupremeCourtrecentlynoted,whichreservedpowersastategovernmentmayexerciseisa
questionforthepeopleofthatstate,notthefederalcourts.[297]
ThisconclusionisreinforcedbytheBekinsdecision.Inthatdecision,thecourtobservedthatStates,likesovereigngovernments
enteringintotreaties,areatlibertytomakeagreementswithCongressiftheessenceoftheirstatehoodismaintainedwithout
impairment.[298]Indeed,theverylegalauthority[299]theBekinscourtrelieduponstatedthatsovereigngovernmentswereunableto
enterintotreatiesthatviolatetheirownconstitutions.[300]TheU.S.SupremeCourt,ofcourse,agrees.[301]
Giventhatframework,itisimportanttonotethattheNinthCircuitCourtofAppealsheldlongagothatCaliforniasstatelaw
authorizingitsmunicipalitiestofileforbankruptcydidnotviolatetheContractsClauseoftheCaliforniaConstitutionbecausethat
ClausewasconstruedinlockstepwiththeContractsClauseoftheU.S.Constitution,andbecausetheBekinsdecisionhadfoundthat
thestatelawdidnotviolatethefederalContractsClause.[302]ThesamelogicwasemployedintheDetroitbankruptcycase.Inthat
case,thecourtrejectedtheargumentthattheMichiganstatuteauthorizingmunicipalbankruptcyviolatedtheMichiganConstitutions
PensionProtectionClausebecausetherewasnothinginthatClausesdraftinghistoryorjurisprudencetosuggestthatitwasintended,
asanindependentmatterofstatelaw,toprovidegreaterprotectiontopensionbenefitsrightsthanthataffordedundertheU.S.
ConstitutionsContractsClause.[303]ThisissimplynotthelawinIllinois.
TherecentPensionClausedecisionsdiscussedinthisArticlemakeclearthatwhenitcametoretirementbenefitsforpublic
employees,thepeopleoftheIllinois,throughthelimitsfoundintheIllinoisConstitution,determinedthatthelegislaturecouldnot
betrusted.[304]Tothatend,thepeopleofIllinoiswithdrewfromtheGeneralAssemblythelegalauthoritytotakeanyactionthat
unilaterallydiminishesorimpairsthepensionbenefitrightsofmembersofthepensionsystems.[305]
AstheIllinoisSupremeCourtputit,therewasnopossiblebasisforinterpretingthePensionClausetomeanitsprotectionscanbe
overriddeniftheGeneralAssemblydeemsitappropriate.[306]Indeed,accordingtothecourt,thePensionClauseremovedtheoptionof
unilaterallydiminishingbenefitsasameansofattainingpensionstability.[307]Asaresult,thePensionClausewithdrawsfromtheGeneral
Assemblythelegalpowertopassanystatuteauthorizingmunicipalbankruptcyasameanstounilaterallydischargepublicpensionobligations.

ToallowtheGeneralAssemblytoenactsuchastatelawwouldsimplybeanendrunaroundthePensionClauseandbeinconsistent
withitspurpose.[308]Municipalgovernments,afterall,arecreaturesoftheIllinoisConstitution.Theyhavenoother
powers.[309]
Thisconclusionismadeallthemorenecessarygiventheholdingsoftworecentmunicipalbankruptcycourtdecisions.[310]Inboth
cases,thebankruptcycourtjudgesfoundthatonceastatelegallyauthorizesamunicipalitytofileforChapter9bankruptcy,the
municipalityisfreetodischargeitspensionobligationsthroughabankruptcycourtapprovedplanregardlessofanystatelaw
obstaclestothecontrary.[311]WhetherthesedecisionswouldequallyapplytoanIllinoismunicipalityinlightofthePensionClause
isbeyondthescopeofthisArticle,butitappearshighlyuncertaininthisauthorsviewbasedontheBekinsdecisionandChapter9s
plainlanguageandlegislativehistory.[312]
VI.Conclusion
Bismarckoncesaid,Politicsistheartofthepossible,theattainable.ThroughitsrecentPensionReformandChicagoPension
Reformdecisions,theIllinoisSupremeCourtdeliveredaclearmessagethatthepoliticsofpensionreformrequiresfidelitytothe
IllinoisConstitution,makingunilateralreductionsinbenefitsbothimpossibleandunattainable.Politicswithoutsuchfidelityis
ineffectualandcomesattremendouspublicexpense.Weare,afterall,agovernmentoflaws,notmenandwomen.
AsdetailedinthisArticle,theIllinoisSupremeCourtsrecentdecisionsrevealaviablepathtoenactpensionreformlegislationthat
resultsinsavingstotheStateandsquareswiththeIllinoisConstitutionsPensionClause.Thatpathisadherencetousualcontract
principlesandSenatePresidentJohnCullertonsproposalprovidesoneapproachconsistentwiththoseprinciples.Anothermore
collaborativeapproachisengagingpublicsectorlaborunionsandforginganagreementthatreducespensionbenefitsofcurrentunion
employeesthroughthecollectivebargainingprocess.
Lawmakersmayalsorestructurethecurrentstatutoryfundingscheduleandpursuesomeformofabuyoutproposal.Inaddition,

lawmakersmayshifttheemployersportionofthenormalcostofpensionbenefitspaidbytheStatefordownstateandsuburban
teachersanduniversityandcommunitycollegeemployees,respectively,tolocalschooldistricts,universities,andcommunity
colleges.Finally,whileamendingthePensionClausetopermitunilateralbenefitcutsandallowingIllinoismunicipalitiestofilefor
Chapter9bankruptcytodischargetheirpensionobligationsareportrayedbyitssupportersasviableoptions,thisArticleshowsthatis
simplynotthecase.
Intheend,whilecontractprinciplesandotherpermissibleoptionsdiscussedinthisArticlecanhelpmitigatethefinancialburdenof
Stateandmunicipalpensionobligations,theStatemuststillrestructureitsrevenuesystemsoitfiscalobligationsaremet,notsimply
deferred.That,ofcourse,willrequirepoliticalcourageandentailtaxincreases.Welchingonpublicpensions,however,isstillnotan
option.

__________________________________________________________________________________________________________________________________________________
[1]EricMadiar,IllinoisPublicPensionReform:WhatsPastIsPrologue,31ILL.PUBLICEMPLOYEERELATIONSREPORT,Summer2014,
at11andnn.6466(Summer2014)[hereinafterMadiarPrologueArticle](detailingIllinoislonghistoryoffailingtoproperlyfund
publicpensions)availableat:http://www.nasra.org/Files/StateSpecific/Illinois/IL%20pension%20history.pdf.
[2]IllinoisGeneralAssembly,ReportofthePensionModernizationTaskForce,48(revisedMar.30,2010)[hereinafterPensionTaskForce
Report]availableat:http://cgfa.ilga.gov/Upload/112009PensionTaskForceReport.pdf.

[3]Id.
[4]InrePensionReformLitigation,2015IL118585,32N.E.3d1.
[5]SeeEricMadiar,IsWelchingonPublicPensionPromisesanOptionforIllinois?AnAnalysisofArticleXIII,Section5ofthe
IllinoisConstitution,at3,5966,77(Mar.1,2011),availableat:http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1774163
[hereinafterMadiar,WelchingonPublicPensions](comprehensivelyreviewingtheoriginsanddraftinghistoryoftheClause,the
courtdecisionsconstruingtheprovision,andassessingthelegalargumentsmadebyvariousstakeholdersregardingtheClauses
scope,includingtheuseofcontractprinciples).ArevisedversionofthisArticlewaspublishedunderthesametitleintheFallof2014
byJohnMarshallLawSchoolofChicago.EricMadiar,IsWelchingonPublicPensionPromisesanOptionforIllinois?AnAnalysis
ofArticleXIII,Section5oftheIllinoisConstitution,48JOHNMARSHALLL.REV.167(2014)[hereinafterMadiarPensionArticle].
[6]SeeInrePensionReformLitigation,2015IL118585,at40,32N.E.3dat15Madiar,PastisPrologue,supranote1,atnotes
6466andaccompanyingtext(observinghowthe1971,1973and1975ReportsoftheIllinoisPublicEmployeesPensionLaws
CommissionstatedthatpensionbenefitscouldnotberemovedorrepealedunderthePensionClauseoncetheywereenactedbythe
GeneralAssembly).Foracomprehensivediscussionofthedraftinghistoryandoriginsoftheclause,seeMadiarPensionArticle,
supranote5).
[7]Ill.Const.of1970,art.XIII,5.
[8]MadiarPensionArticle,supranote5,at234235.
[9]Kanervav.Weems,2014IL115811,at40,13N.E.3d1228,1240.
[10]SeeInrePensionReformLitigation,2015IL118585,atn.12,32N.E.3dat17n.12(However,oncetheadditionalbenefitsare
inplaceandtheemployeecontinuestowork,remainsamemberofacoveredretirementsystem,andcomplieswithanyqualifications
imposedwhentheadditionalbenefitswerefirstoffered,theadditionalbenefitscannotbeunilaterallydiminishedoreliminated.)
MadiarPensionArticle,supranote5,at26264.
[11]SeeMadiarPensionArticle,supranote5,28995(discussinghowtheClausebarstheGeneralAssemblyfromunilaterally
increasingexistingemployeecontributionratesforthesamelevelofbenefits).
[12]MadiarPensionArticle,supranote5,at17374,234(referringtothedictionarydefinitionofthetermbenefitandplacingit
intothecontextoftheClause).
[13]Id.
[14]Feltv.BoardofTrusteesoftheJudgesRetirementSys.,107Ill.2d158,16768,481N.E.2d698,700(1985)MadiarPension
Article,supranote5,at184205,217,222(discussingtheoriginsanddraftinghistoryoftheIllinoisConstitutionsPensionClause
andhowtheClausewasbasedonthenearlyverbatimprovisionfoundintheNewYorkConstitution).

[15]MadiarPensionArticle,supranote5,at234(quotingBrownv.N.Y.StateTeachersRet.Sys.,296N.Y.S.2d649,650(N.Y.App.
Div.1966),affd,279N.Y.S.2d532(N.Y.1967)).
[16]MadiarPensionArticle,supranote5at23542,28089.
[17]Id.
[18]Id.InrePensionReformLitigation,2015IL118585,atn.3,32N.E.3dat8n.3.
[19]Buddellv.Bd.ofTrusteesoftheStateUniv.RetirementSys.,118Ill.2d99,10405(1985).
[20]Id.Krausv.BoardofTrusteesofthePolicePensionFund,72Ill.App.3d833,84950,390N.E.2d1281,1293(1979).SeeInre
PensionReformLitigation,2015Ill.at1185at46&n.12,32N.E.3dat1617&n.12(favorablycitingBuddellandKraus).
[21]Peopleexrel.Sklodowskiv.State,182Ill.2d220,229,695N.E.2d374,377(1998)McNameev.State,173Ill.2d433,438,672
N.E.2d1159,1162(1996)DiFalcov.Bd.ofTrustees,122Ill.2d22,2621N.E.2d923,925(1988)Kernerv.StateEmployees
RetirementSys.,72Ill.2d507,515,382N.E.2d243,247(1978)Kraus,72Ill.App.3dat84950,390N.E.2dat1293.
[22]Kernerv.StateEmployeesRetirementSys.,72Ill.2d507,515,382N.E.2d243,247(1978)Kraus,72Ill.App.3dat850,390
N.E.2dat1293Kernerv.StateEmployeesRetirementSys.,53Ill.App.3d747,753,368N.E.2d1118,1122(4thDist.1977)affd,72
Ill.2d507382N.E.2d243(1978).AccordMatthewsv.ChicagoTransitAuthority,2016IL117638at61(statingwhereapublic
employeebecomesamemberofaretirementsystemunderastatutethatincludesaprovisionwhichmayoperatetodenyhimbenefits
inthefuture,thatprovisiondoesnotbecomeanunconstitutionalimpairmentofhisretirementbenefitsbecauseheagreedtoitasa
conditionofhismembershipinthesystem.).
[23]4RecordofProceedings,SixthIllinoisConstitutionalConvention293132(Del.Kinney)(statingthesheandDelegateHenry
Green,theClausesotherprincipalsponsor,agreedthatitwouldbequitefairifapersonundertookemploymentunderastatutethat
providedforacontingencyforloweringthebenefitsatsomefuturetime,thatthiswas,indeed,thecontracthehadaccepted.Allwe
areseekingtodoistoguaranteethatpeoplewillhavetherightsthatwereinforceatthetimetheyenteredintotheagreementto
becomeanemployee,andasMr.Greenhassaid,ifthebenefitsare$100amonthin1971,theyshouldbenotlessthan$100amonth
in1990.)Id.at2930(Del.Green)(InanswertoDelegateParkhurstsquestionwithregardtothediminishingaspectofitthecost
oflivinganyofyouwhoknowwhenyoubuyaninsurancepolicyyouregoingtogetbackwhatthecontractsays.Nowifthedollar
isntworthbut27centswhenyougetitback,thereisabsolutelynoreasonwhyyouhaveanyrecourseagainstthatinsurance
company.)Id.(Del.Whalen)(statinginoppositionthatpensionbenefits,ascontractualrights,maybesubjecttoanycontingency
builtintothecontract.).
[24]Kernerv.StateEmployeesRetirementSys.,72Ill.2d507,515,382N.E.2d243,247(1978).
[25]Madiar,WelchingonPublicPension,supranote5.
[26]InrePensionReformLitigation,2015IL118585,7175,32N.E.3d1,2326.
[27]Id.at60,32N.E.3dat2021.
[28]Id.at5,32N.E.3dat45.
[29]SeeMadiarPastisPrologue,supranote1,atnotes38andaccompanying.
[30]InrePensionReformLitigation,2015IL118585,2732N.E.3dat11.
[31]Id.
[32]Id.
[33]Id.
[34]Id.
[35]Id.
[36]Madiar,PastisPrologue,supranote1.

[37]Id.
[38]Id.
[39]Id.
[40]Id.
[41]Id.
[42]InrePensionReformLitigation,2015IL118585,3235,32N.E.3dat1314.
[43]Id.TheplaintiffsassertedthattheActviolatedtheIllinoisConstitutionsPension,Contract,TakingsandEqualProtection
Clauses.Id.
[44]Id.at38,32N.E.3dat15.
[45]Id.
[46]Id.
[47]Id.
[48]Id.
[49]Id.at3932N.E.3dat15.
[50]Id.
[51]Id.
[52]Id.
[53]Id.at40,32N.E.3dat15.
[54]Id.at4132N.E.3dat1516.
[55]Order,InrePensionReformLitigation,2015IL118585(Jan.22,2015).
[56]Madiar,PastIsPrologue,supranote1,attextaccompanyingnotes25796.
[57]InrePensionReformLitigation,2015IL118585,at43,32N.E.3dat16.
[58]Id.at45,32N.E.3dat16.
[59]Id.(citingKarnervav.Weems,2014IL115811,13N.E.3d1228).
[60]Id.at46,32N.E.3dat16.
[61]Id.
[62]Id.
[63]Id.atn.12,32N.E.3dat17n.12.
[64]Id.
[65]Id.at47,32N.E.3dat1718.
[66]Id.

[67]Id.at4850,32N.E.3dat18(citingFieldsv.ElectedOfficialsRetirementPlan,320P.3d1160(Az.2014)).
[68]Id.
[69]Id.
[70]Id.at52,32N.E.3dat1819.
[71]Id.at5253,32N.E.3dat1819.
[72]Id.at5358,32N.E.3dat1920(citingJorgensenv.Blagojevich,211Ill.2d286,811N.E.2d652(2004)Peopleexrel.Lylev.
CityofChicago,360Ill.25,195N.E.451(1935)).
[73]Id.
[74]Id.at5657,32N.E.3dat1920.
[75]Id.at5632N.E.3dat19.
[76]Id.at58,32N.E.3dat20.
[77]Id.at59,32N.E.3dat20.
[78]Id.at5961,32N.E.3dat2021.
[79]Id.at6466,32N.E.3dat2122.
[80]Id.at66,32N.E.3dat22.
[81]Id.
[82]Id.at67,32N.E.3dat22.
[83]Id.at6768,32N.E.3dat22.
[84]Id.at69,32N.E.3dat2223.
[85]Id.
[86]Id.
[87]Id.at70,32N.E.3dat23.
[88]Id.
[89]Id.
[90]Id.at71,32N.E.3dat23.
[91]Id.at72,32N.E.3dat23.
[92]Id.
[93]Id.
[94]Id.
[95]Id.at7374,32N.E.3dat24.
[96]Id.at75,32N.E.3dat2425.

[97]Id.
[98]Id.at76,32N.E.3dat35.
[99]Id.
[100]Id.at77,32N.E.3dat25.
[101]Id.at78,32N.E.3dat25.
[102]Id.at7932N.E.3dat2526.
[103]Id.at80,32N.E.3dat26.
[104]Id.at8182,32N.E.3dat2627.
[105]Id.
[106]Id.at82,32N.E.3dat2627.
[107]Id.
[108]Id.at84,32N.E.3dat27.
[109]Id.
[110]Id.
[111]Id.at85,32N.E.3dat2728.
[112]Id.at87,32N.E.3dat28.
[113]Seeid.atn.12&49,32N.E.3dat17n.12&18(notingtheIllinoisAppellateCourtsKuhlmanndecision,whichfoundthata
memberwasnoteligibleforanincreaseinbenefitswherehehadceasedcontributingtothepensionfundpriortothechangeinthe
law,andthe2014ArizonaSupremeCourtdecision,whichstatedthataparticipanthasarightintheexistingformulabywhichhis
benefitsarecalculatedasofthetimehebeganemploymentandanybeneficialmodificationsmadeduringthecourseof
employment.).TheKuhlmanndecisionexplainedthatprovidingsuchabenefitincreasewouldbetantamounttoanunconstitutional
expenditureofpublicfundsforaprivatepurposeinviolationofArticleVIII,Section1(a)oftheIllinoisConstitution.Kuhlmannv.Bd.ofTrs.,
106Ill.App.3d603,607,435N.E.2d1307,1311(2dDist.1982).SeeMadiarPensionArticle,supranote5,at261262&n.510(discussingthe
Kuhlmanndecisionandcollectingcasesinthepublicpensioncontext).ArticleVIII,Section1(a)statesthat[p]ublicfunds,propertyorcredit
shallbeusedonlyforpublicpurposes.Ill.Const.of1970,art.VIII,1(a).WhiletheGeneralAssemblymayhavebroaddiscretiontoin
determiningwhatconstitutesapublicpurposeunderArticleVIII,Section1(a),thatdiscretionisnotunlimitedandcourtswillintervenewhen
publicpropertyorfundsaredevotedtoapurelyprivateuse.Wrightv.CityofDanville,174Ill.2d391,400,675N.E.2d110,11617(1996).
Accordingly,ArticleVIII,Section1(a)providesIllinoiscourtswithauthoritytodeterminewhetherpensionbenefitswereconstitutionally
affordedinthefirstplace,especiallywherethepersonreceivingthebenefitmerelyprovidednominalortokenconsideration.SeeMcCordv.
Pike,121Ill.288,296(1887)(voidinganattemptedsaleofcountypropertyforinadequateornominalconsideration)Perkinsv.ReservoirPark
Fish.&BoatClub,130Ill.App.128,1906WL2292(3d1906)(same)Ill.AttyGen.Op.S691,at6667(Jan.30,1974)(discussingtheMcCord
andPerkinsdecisions)Ill.AttyGen.Op.S797,at233(Feb.7,1974)(same).Indeed,thisveryissueisnowpendingbeforeatrialcourtin
SangamonCounty,IllinoisandinvolvesaprovisionfoundinPublicAct941111,whichwasenactedin2007.Theprovision,amongotherthings,
allowedanonpublicemployeewhoworkedforapublicsectorlaboruniontopurchasepensionservicecreditintheTeachersRetirementSystem
(TRS)forthetenyearshespentworkingastheunionslegislativelobbyistmerelybyworkingonedayasasubstitutepublicschoolteacher.Ray
Long,LobbyistSuestoRegainBigPensionHeGotFrom1DayasSubstituteTeacher,CHI.TRIB.(Mar.18,2015),availableat:
http://www.chicagotribune.com/news/ctpensionlawsuitlobbyistmet20150318story.htmlComplaint,Piccioliv.Bd.ofTrusteeoftheTeachers
RetirementSystem,No.2015MR43(Cir.Ct.SangamonCounty)availableat:https://drive.google.com/file/d/0B4Bi
iePG1O6OVYtV3ZpaEtkMUE/view?pref=2&pli=1.In2012,theGeneralAssemblylaterretroactivelyrepealedthisprovisioninPublicAct97
0651,whichdeclaredthatthe2007provisionviolated,amongotherthings,ArticleVIII,Section1(a)oftheIllinoisConstitution.LawsofIllinois,
PublicAct970651,97,at77,availableat:http://www.ilga.gov/legislation/publicacts/97/PDF/0970651.pdf.Theplaintiffwhofiledsuit
contendsthatthe2012repealofthe2007provisionviolatesthePensionClause.Complaint,Piccioliv.Bd.ofTrusteeoftheTeachersRetirement
System,No.2015MR43,at46.Theoutcomeofthiscaseshouldbeinteresting.

[114]SeeJonesv.Mun.EmployeesAnnuity&Ben.FundofChicago,No14CH20027,2015WL4662009,(Cir.Ct.CookCounty
July24,2015),availableat:http://pensionlitigation.org/wpcontent/uploads/2014/12/ILJonesv.MEABFcircuitcourtdecisionJuly
242015.pdf.[hereinafterJonesCircuitCourtdecision].
[115]Jonesv.Mun.EmployeesAnnuity&Ben.FundofChicago,2016IL119618,at14,19.

[116]Seeid.at4952.
[117]Id.at17,18.
[118]Id.at15.
[119]Id.at16.
[120]Id.
[121]Id.at20.
[122]40ILCS5/22403.
[123]JonesCircuitCourtdecision,supranote114,at23.
[124]Id.at24.
[125]Id.at27.
[126]Id.at29.
[127]Id.
[128]Id.at30.
[129]Id.at31.
[130]Id.
[131]Id.at32.
[132]Id.
[133]Id.
[134]Id.at35.
[135]Id.at36.
[136]Id.
[137]60Ill.2d266,326N.E.2d749(1975).
[138]Jones.2016Ill.119618at3637.
[139]Id.at38.
[140]Id.at39.
[141]Id.at40.
[142]Id.
[143]Id.at41.
[144]Id.at42.
[145]Id.at43.
[146]Id.

[147]Id.
[148]Id.
[149]Id.at44.
[150]Id.at45.
[151]Id.
[152]Id.at46.
[153]Id.
[154]Id.at47.
[155]Id.
[156]Id.
[157]Id.
[158]Id.at47.
[159]Id.at49.
[160]Id.at5153.
[161]Id.at53.
[162]Id.
[163]Id.at54.
[164]Id.
[165]Id.at55.
[166]Id.
[167]Id.
[168]Id.at32.
[169]98thIll.Gen.Assemb.,SenateBill2404(engrossedversion),available
at:http://www.ilga.gov/legislation/98/SB/PDF/09800SB2404eng.pdfMoniqueGarcia&KimGeiger,SenatePresidentCullerton
OffersNewPensionPlan,CHI.TRIB.(May13,2015)availableat:http://www.chicagotribune.com/ctillinoispensionreform
cullertonmet051320150512story.htmlEricZorn,Ok,WhatAboutThisIdeaonPensions?,CHI.TRIB.(Sept.8,2015)availableat:
http://www.chicagotribune.com/news/opinion/zorn/cttoughchoicepensionreformperspec090920150908column.html.
[170]98thIll.Gen.Assemb.,SenateBill2404(billstatus),availableat:http://www.ilga.gov/legislation/BillStatus.asp?
DocNum=2404&GAID=12&DocTypeID=SB&LegID=74021&SessionID=85&SpecSess=&Session=&GA=98.
[171]TheproposalwouldalsoapplytoTier1participantsintheGeneralAssemblyRetirementSystem(GARS).
[172]Jonesv.Mun.EmployeesAnnuityandBen.FundofChicago,2016IL119618at53Buddellv.Bd.ofTrusteesoftheState
Univ.RetirementSys.,118Ill.2d99,105,514N.E.2d184,187(1987).
[173]Jones,2016IL119618at53and47.
[174]Carterv.SSCOdinOperatingCo.,LLC,2012IL113204at23,976N.E.2d344,352(quotingLipkinv.Koren,392Ill.400,

406,64N.E.2d890,893(1946)).
[175]Doylev.HolyCrossHosp.,186Ill.2d104,112,708N.E.2d1140,1145(1999).
[176]Watkinsv.GMACFin.Servs.,337Ill.App.3d58,64,785N.E.2d40,44(1stDist.2003)Boylev.Whipple,62Ill.App.2d448,
453,211N.E.2d113,115(3dDist.1965).
[177]Krausv.Bd.ofTrustees,72Ill.App.3d833,849,390N.E.2d1281,129293(1979)MadiarPensionArticle,supranote5,at235,
276.AsoneIllinoiscourtputit,statutesgoverningthewages,workingconditions,oremploymentbenefitsofpublicemployeesdo
notcreateanyvestedrightsinthecontinuedexistenceofthoselaws.Gustv.VillageofSkokie,125Ill.App.3d102,107(1stDist.
1984).
[178]ChicagoPatrolmensAssnv.CityofChicago,56Ill.2d503,508(1974).
[179]Kraus,72Ill.App.3dat84950,390N.E.2dat1293MadiarPensionArticle,supranote5,at273,279,&n.565.
[180]Carrollv.Grumet,117N.Y.S.2d553,555(App.Div.1953),favorablycitedinKraus,72Ill.App.3dat850,390N.E.2dat1293.
[181]Id.at55556.AccordBallentinev.Koch,674N.E.2d292,296(N.Y.1996)Schachtv.CityofNewYork,346N.E.2d518,31
32(N.Y.1976)McGarriglev.CityofNewYork,803N.Y.S.2d529,531(App.Div.2005)Rosenv.NewYorkCityTeachers
RetirementBd.,122N.Y.S.2d485,48688(App.Div.),affd,116N.E.2d239(N.Y.1953)Whitev.Hussey,87N.Y.S.2d252(App.
Div.1949),affd95N.Y.S.2d539(1950)Schwartzv.Simpson,114N.Y.S.2d730,73638(Mun.Ct.1952).
[182]MoniqueGarcia&KimGeiger,SenatePresidentCullertonOffersNewPensionPlan,CHI.TRIB.(May13,2015)available
at:http://www.chicagotribune.com/ctillinoispensionreformcullertonmet051320150512story.html.

[183]SeeGregHinz,State,CityStudyNewPensionSolutionsAfterSupremeCourtSlap,CRAINSCHI.BUS.(Apr.8,2016)available
at:http://www.chicagobusiness.com/article/20160408/BLOGS02/160409859/statecitystudynewpensionsolutionsaftersupreme
courtslapEricZorn,Ok,WhatAboutThisIdeaonPensions?,CHI.TRIB.(Sept.8,2015)available
at:http://www.chicagotribune.com/news/opinion/zorn/cttoughchoicepensionreformperspec090920150908column.html.
[184]MichaelT.Carrigan,CullertonPensionBillBestForWorkers,CHI.TRIB.(May23,2013,availableat:
http://articles.chicagotribune.com/20130523/opinion/chi20130523carrigan_briefs_1_pensionsystemsavingsretirement
system(describingSenateBill2404asconstitutional).
[185]CompareWeAreOne,CoalitionReachesPensionAgreementwithSenatePresidentSupportSB2404,OpposeSB1,available
at:http://www.weareoneillinois.org/news/coalitionreachespensionagreementwithsenatepresidentWeAreOne,Summaryof
NegotiatedAgreementbetweenWeAreOneIllinoisandSenatePresidentJohnCullerton,availableat:
http://www.weareoneillinois.org/documents/NegotiatedAgreement.pdf(detailingtheprovisionsofSenateBill2404andpensionable
salarychoice)withEricZorn,Ok,WhatAboutThisIdeaonPensions?,CHI.TRIb.(Sept.8,2015)availableat:
http://www.chicagotribune.com/news/opinion/zorn/cttoughchoicepensionreformperspec090920150908column.html(quoting
thespokespersonforAFSCMEwhonowdescribesthepensionablesalarychoiceasunconstitutionalandcoercive)WeAreOne,
StatementOnSoCalledConsiderationModelPensionChanges,(May26,2016)availableat:
http://www.weareoneillinois.org/news/statementonsocalledconsiderationmodelpensionchangesWeAreOne,SummaryThe
ProposedConsiderationBasedPlanIsUnconstitutionalBecauseItOffersNoConsiderationInExchangeForReducingPension
Benefits,(May26,2016)availableat:http://www.weareoneillinois.org/documents/WAOI_consideration_memo.pdf.
[186]Carrollv.Grumet,117N.Y.S.2d553,555(App.Div..1952)citedinKraus,72Ill.App.3dat850,390N.E.2dat1293.
[187]SeeRosenv.NewYorkCityTeachersRetirementBd.,122N.Y.S.2d485,48688(App.Div.),affd,116N.E.2d239(N.Y.1953)
(reversinglowercourtdecision(115N.Y.S.2d263,266)whichheldthattheNewYorkPensionClausegaveemployeesthelegalright
toreceivesalaryincreaseswithoutconditionandthereforecountforpensionpurposes).AccordSchwartzv.Sampson,114N.Y.S.2d
730,73637(Mun.Ct.1952).
[188]SeeFelt,107Ill.2d16768481N.E.2dat702Kraus,72Ill.App.3dat846,390N.E.2dat1290.
[189]See40ILCS5/14103.10(definingcompensationasallremunerationforservicesperformed)40ILCS5/15111(defining
earningsasanamountpaid)40ILCS5/16121(definingsalaryasactualcompensationreceived).
[190]Seee.g.,InrePensionReformLitigation,2015IL118585at27(imposingaunilateralcaponpensionablesalarydefinition)
Felt,107Ill.2d16263481N.E.2dat700(unilateralchangingofpensionablesalarydefinitionfromlastdayofservicetotheaverage

salaryforthefinalyearofservice)Bardensv.Bd.ofTrusteesofJudgesRetirementSys.,22Ill.2d56,59,174N.E.2d168,170(1961)
(unilateralchangingofpensionablesalarydefinitionfromlastdayofservicetotheaverageofthelastfouryearsofservice)Kraus,72
Ill.App.3dat836,390N.E.2dat128384(unilateralchangingofpensionablesalaryfrom50%ofthesalaryassociatedwiththe
employeesrankatthetimeofretirementto50%oftheapplicablesalaryinplacewhentheemployeewentondisability)Kleinfeldtv.
NewYorkCityEmployeesRetirementSystem,324N.E.2d865(N.Y.1975)(imposingaunilateral20%limitontheamountof
increasedcompensationreceivedbyaStateemployeedeemedpensionableinanygivenyear).
[191]Indeed,atleastoneNewYorkcourthasfoundthisdistinctiondispositiveanddescribeditasunlikethecircumstancewherethe
legislatureunilaterallynarrowsthestatutorydefinitionpensionablesalary.Kleinfeldtv.NewYorkCityEmployeesRetirementSys.,
341N.Y.S.2d784,78990(App.Div.1973),affd,324N.E.2d865(N.Y.1975).
[192]Doylev.HolyCrossHosp.,186Ill.2d104,112,708N.E.2d1140,1145(1999).
[193]Seee.g.,Mimicav.AreaInterstateTrucking,Inc.,250Ill.App.3d423,42425,620N.E.2d1328,133132(1stDist.1983)
(holding,interalia,thatanatwillemployeewasofferedgrosslyinadequateconsiderationfortheassignmentofhispatentrightstohis
employerwheretheemployeemadetheassignmentunderthethreatofterminationinexchangefornotbeingimmediatelyfired,but
wasfiredtwoweekslater).
[194]Carterv.SSCOdinOperatingCo.,LLC,2012IL113204at24,976N.E.2dat352.
[195]Gallaherv.Lenart,226Ill.2d208,243,874N.E.2d43,64(2007)Chandrav.Chandra,2016ILApp.(1st)143858at16.
[196]Koveleskiev.SBCCapitalMarkets,Inc.,167F.3d361,367(7thCir.1999)(applyingIllinoislaw)(citingandquotingKewanee
Prod.CreditAssnv.G.Larson&SonsFarms,146Ill.App.3d301,305,496N.E.2d531,534(1986)).
[197]Boomerv.AT&TCorp.,309F.3d404,416(7thCir.2002)(applyingIllinoislaw)(citedfavorablybyRossv.MayCo.,377Ill.
App.3d387,391,880N.E.2d210,215(1stDist.2007)).
[198]Carbajalv.H&RBlockTaxServs.,Inc.,372F.3d903,906(7thCir.2004)(applyingIllinoislaw)Chandlerv.AT&TWireless
Servs.,Inc.,358F.Supp.2d701,70405(S.D.Ill.2005)(applyingIllinoislaw).Employees,ofcourse,hadnoopportunitytohaggle
overtheirpotentialpensionbenefitrightswhentheyenteredpublicemployment,butwerepresentedwithapresetofferastowhat
theirrightswouldbe.
[199]Boomer,309F.3dat416Ross,377Ill.App.3dat391,880N.E.2dat215.InRoss,theIllinoisAppellateCourtheldthatthe
employerspurportedmodificationofanemploymentcontractwasnotpartofabargainedforexchangewheretheemployerprovided
additionalbenefitstoallemployeeswithoutactuallyofferingthosebenefitsinexchangeforthemodification.377Ill.App.3dat391
92,880N.E.2dat21516.
[200]117N.Y.S.2d553(App.Div.1952).
[201]Id.at554.
[202]Id.(emphasisadded).
[203]Id.at555.
[204]Id.
[205]Id.
[206]Id.
[207]Kraus,72Ill.App.3dat84950,390N.E.2dat1293(statingthat[i]thasalsobeenheldthatanagreementwherebyacostof
livingallowanceispaidandacceptedbyapublicemployeeonconditionthatitwillnotberegardedassalaryforpensionpurposes
wasvalidandbindingontheemployee).
[208]674N.E.2d292,296(N.Y.1996).
[209]Jonesv.Mun.EmployeesAnnuity&Ben,Fund,2016IL119618at54.
[210]Hurdv.Wildman,Harrold,Allen&Dixon,303Ill.App.3d84,9192,707N.E.2d609,61415(1stDist.1999).

[211]Id.
[212]Id.
[213]Seee.g.,Johnsonv.IBM,891F.Supp.522,529(N.D.Cal.1995)(employerdidnotcommitawrongfulact,forduress
purposes,byrequiringanemployee,subjecttotermination,tochoosebetween(1)acceptingalowerpayingjob,(2)acceptingtwo
weeksofseverancepay,attheemployersdiscretion,or(3)accepting26weeksofenhancedseverancewithadditionalhealthandjob
placementinconsiderationforsigningarelease.)
[214]Id.Alexanderv.StandardOilCo.,97Ill.App.3d809,812,81516,423N.E.2d578,580,58283(1stDist.1981)Higginsv.
BrunswickCorp.,76Ill.App.3d273,278,395N.E.2d81,85(1stDist.1979).
[215]Jonesv.Mun.EmployeesAnnuity&Ben.Fund,2016IL119618at54.
[216]Id.at55.
[217]SeeBallentinev.Koch,674N.E.2d292,296(N.Y.1996)([B]ecauseplaintiffsdesignatedthePBAastheiragentforthe
collectivebargainingnegotiationsatissuehereandwerethusboundbyitsactionstakenontheirbehalfduringthenegotiations
process[citation],thePBAswaiveroftheconstitutionalprotectionsof[NewYorkspensionprotectionclause]isvalidastoplaintiffs.
...)Schachtv.CityofNewYork,346N.E.2d518,519(N.Y.1976)(Plaintiff,havingdesignatedtheuniontobeheragentfor
collectivebargainingpurposes,isboundbyagreementmadebythatuniononherbehalf.).
[218]VillageofFairportv.Newman,457N.Y.S.2d145,148(App.Div.1982)citedfavorablyinBallentine,674N.E.2dat294.
[219]Id.(emphasisaddedandcitationsomitted).
[220]SeeFranSpielman,IllinoisSupremeCourtStrikesDownChicagoPensionRescuePlan,CHI.SUNTIMEs(Mar.24,2016)
availableat:http://chicago.suntimes.com/politics/illsupremecourtstrikesdownrescueplanfor2chicagopension/FranSpielman,
Emanueldeterminedtocraftnewpensiondealaftercourtruling,CHI.SUNTIMES(Apr.7,2016)availableat:
http://chicago.suntimes.com/politics/emanueldeterminedtocraftnewpensiondealaftercourtruling/.
[221]FranSpielman,EmanuelDeterminedtoCraftNewPensionDealAfterCourtRuling,CHI.SUNTIMES(Apr.7,2016)availableat:
http://chicago.suntimes.com/politics/emanueldeterminedtocraftnewpensiondealaftercourtruling/.
[222]2016IL117638.
[223]Seeid.at54(recognizingthatitsJonesdecisionfoundthatordinarycontractprinciplesmaybeusedtomodifypublicemployeepension
benets);id.at6575(detailingtheauthorityofpublicsectorlaborunionstomodifythepensionbenetsofitsmembersthroughthe
collecvebargainingprocess,andrejecngtheclaimthatalaborunionmustobtaintheindividualconsentofeachmemberofthebargaining
unit).

[224]HB4427,99thGen.Assembly,Reg.Sess.(IlI.2016)H.B.56.25,99thGen.Assemb.,Reg.Sess.(2016).
[225]Id.
[226]Id.
[227]SeeNatlRetireeLegislativeNetwork,ADefinedPensionBenefitBuyoutInformationSheet12(2012),
http://www.nrln.org/documents/NRLN%20PENSION%20BENEFIT%20BUYOUT%20INFORMATION%20SHEET.pdf.
[228]SeeSteveVernon,Pensionbuyouts:Whowinsandwholoses?,CBSMONEYWATCH,(Oct.29,2012),
http://www.cbsnews.com/news/pensionbuyoutswhowinsandwholoses/.
[229]H.B.4427,99thGen.Assemb.,Reg.Sess.(IlI.2016).
[230]DougFinke,StateLawmakersExploreIimplicationsofaPensionBuyoutProposal,PEORIAJ.STAR(Apr.10,2016),availableat:
http://www.pjstar.com/news/20160410/statelawmakersexploreimplicationsofpensionbuyoutproposal?page=3.
[231]Id.
[232]COMMNONGOVTFORECASTINGANDACCOUNTABILITY,PENSIONIMPACTNOTE99thGeneralAssembly3(2016),availableat:
http://cgfa.ilga.gov/Upload/99HB4427%20REV.pdf.

[233]Id.
[234]Id.at1.
[235]Finke,supranote230.
[236]COMMNONGOVTFORECASTINGANDACCOUNTABILITY,supranote232,at3.
[237]InrePensionReformLitigation,2015IL118585,89,32N.E.3dat2829.
[238]LYMANSTONE,ILLINOISCONSIDERSFURTHERINCOMETAXINCREASESASTEMPORARYTAXNEARSEXPIRATION,TAXFOUNDATION
(2014),availableat:http://taxfoundation.org/article/illinoisconsidersfurtherincometaxincreasestemporarytaxnearsexpiration.
[239]IvanMoreno,RaunerMadiganRivalryHamstringsIllinoisBudgetTalks,ST.LOUISPOSTDISPATCH,Apr.17,2016,availableat:
http://www.stltoday.com/news/stateandregional/illinois/raunermadiganrivalryhamstringsillinoisbudgettalks/article_12b3cd50
e4fb55588148e394a38e69ec.html.
[240]CTR.FORTAXANDBUDGETACCOUNTABILITY,ITISALLABOUTREVENUE:ACOMMONSENSESOLUTIONFORILLINOISFISCAL
SOLVENCY(2015),availableat:http://www.ctbaonline.org/reports/itallaboutrevenuecommonsensesolutionillinoisfiscalsolvency.
[241]Id.at1214.
[242]Id.
[243]Id.at13.
[244]Id.
[245]Id.at13.
[246]MadeleineDoubek,SchoolDistrictsSpending,PensionSpikingDeepenStatesGeographicFaultLines,REBOOT
ILLINOIS,(Aug.72015),http://www.rebootillinois.com/2015/08/17/editorspicks/madeleinedoubek/schooldistricts
spendingpensionspikingdeepenstatesgeographicfaultlines/43905/.
[247]Inst.forIllinoisFiscalSustainability,WhatWoulditMeantoShiftMoreIllinoisTeacherPensionCoststoSchool
Districts?(2011),availableat:https://www.civicfed.org/iifs/blog/whatwoulditmeanshiftmoreillinoisteacher
pensioncostsschooldistricts.
[248]Id.
[249]]CommnonGovtForecastingandAccountability,supranote232,atiii.
[250]TeachersRetirementSystemoftheStateofIllinois,ActuarialValuationReport:June30,2015ActuarialValuation
ofPensionBenefits,at60,availableat:http://trs.illinois.gov/pubs/actuarial/2015ValuationRept.pdfStateUniversities
RetirementSystemofIllinois,ActuarialValuationReportasofJune39,2015,at1,availableat:
http://www.surs.com/pdfs/invinfo/avr15.pdf.
[251]Id.
[252]Seee.g.,TedDabrowski&JohnKlingner,Pension101:UnderstandingIllinoisMassive,GovernmentWorkerPensionCrisis,
IllinoisPolicyInstitute,(opiningThegrowingcostofpensionshastrappedthestate,thecityofChicago,andhundredsof
municipalitiesinfinancialcrises,forcingmanygovernmentstoraisetaxesandshortchangeprogramsonwhichlowerincome
Illinoisansrely.***Thecrisisthreatenstoburdentaxpayerswithmassive,everescalatingtaxestobailoutasystemthatisnot
sustainablegovernmentworkerpensionsconsumeafourthofthestatesbudget)availableat:
https://www.illinoispolicy.org/reports/pensions101understandingillinoismassivegovernmentworkerpensioncrisis/GregHinz,
IllinoisHasHadItsPensionDayofReckoning.NowWhat?,CRAINSCHI.BUS.(May15,2015),availableat:
http://www.chicagobusiness.com/article/20150509/ISSUE05/305099977/illinoishashaditspensiondayofreckoningnowwhat
BrieffortheCivicFederationofChicagoasAmicusCuriaeinSupportofDefendantAppellants,InRePensionReformLitigation,No.
118585,at23,25,27,29(claimingthatIllinoisisunable,notunwilling,toitspensionobligations,thattheseobligationsare
unsustainableandunaffordableandblockthefundingofessentialgovernmentservicesandinfrastructurenecessaryforthehealth,
safetyandwelfareoftheStatescitizens,andthatwithoutunilateralcutsinbenefitstherewillbeassociatednegativeeffectsonthe
businessclimateandtheStateseconomywithanunwillingnesstolocateorexpandbusinessinIllinois)availableat:
http://www.illinoiscourts.gov/supremecourt/specialmatters/2015/118585_amicus_mot_civic_fed_011415.pdf.

[253]SharonBrooksHodge,PolicyAnalyst:TaxHikeWithoutPensionReformIsAnAssaultonTaxpayers,MADISONCOUNTYRECORD
(Apr.27,2016)availableat:http://madisonrecord.com/stories/510718257policyanalysttaxhikewithoutpensionreformisanassault
ontaxpayers.

[254]TyFahner,Commentary,PensionsCanAndMustBeReformed,STATEJOURNALREGISTER(Mar.18,2011)availableat:http://www.sj
r.com/article/20110318/News/303189931.

[255]FranSpielman,EmanuelHopefulChicagoPensionReformsWillSurviveEvenThoughStatesDidnt,CHI.SUNTIMES,(May8,
2015),availableat:http://chicago.suntimes.com/politics/emanuelhopefulchicagopensionreformswillsurviveeventhoughstates
didnt/.
[256]KerryLester,IllinoisLegislatorsSkepticalAboutNewPensionDealThisSpring,CHI.TRIb.(May13,2015),available
at:http://www.chicagotribune.com/suburbs/dailysouthtown/news/ctstaillinoispensionsst051420150513story.html.
[257]CivicFederation,StateofIllinoisFY2017BudgetRoadmap:StateofIllinoisBudgetOverview,Projectionsand
RecommendationsfortheGovernorandtheIllinoisGeneralAssembly4,4445(Feb.11,2016)[hereinafterCivicFederationReport)
availableat:https://www.civicfed.org/sites/default/files/ReportRoadmapFY2017.pdf.
[258]JohnOConnor,IllinoisSupremeCourtStrikesDownChicagoPensionsPlan,AssociatedPress(Mar.24,2016),available
at:http://bigstory.ap.org/article/b7a533dfb58449438247bc53a19cc0e5/illinoissupremecourtstrikesdownchicagopensionsplan.
[259]CivicFederationReport,supranote257,at34.
[260]Ill.Const.of1970,art.XIV,2(a).
[261]Id.at2(b).
[262]See98thIll.Gen.Assemb.,ConferenceCommitteeReportNo.1toSenateBill1(billstatus)available
at:http://www.ilga.gov/legislation/BillStatus.asp?DocNum=1&GAID=12&DocTypeID=SB&LegId=68366&SessionID=85&GA=98.
[263]CivicFederationofChicago,StateofIllinois:FY2017RecommendedOperatingandCapitalBudgets:Analysisand
Recommendations,at21(May3,2016)availableat:https://www.civicfed.org/sites/
default/files/Report_FY2017RecommendedBudget.pdf.
[264]InrePensionReformLitigation,2015IL118585,at66,32N.E.3dat22.
[265]Id.at6768,32N.E.3dat22.
[266]Id.at69,32N.E.3dat22.
[267]Id.
[268]Russellv.Sebastian,233U.S.195,20205(1914)(observingthatastateconstitutionalamendmentqualifiesasastatelawfor
purposesofdeterminingwhethercontractsrightsareimpairedunderthefederalContractsClause).
[269]Hornev.Dept.ofAgriculture,135S.Ct.2419,242728,243133(2015)(holdingthattheappropriationofpersonalpropertyby
thegovernmentconstitutesapersetakingrequiringthepaymentofjustcompensationbasedonthefairmarketvalueoftheproperty
atthetimeofthetaking)Lynchv.U.S.,292U.S.571,579(1934)(contractrightsarepropertyrightsforpurposesoftheFifth
AmendmentoftheU.S.ConstitutionandapplyingFifthAmendmentprotectiontocontractrightsrepudiatedbythefederal
government)U.S.TrustCo.ofNewYorkv.NewJersey,431U.S.1,n.16(1977)(notingthat[c]ontractrightsareaformofproperty
andassuchmaybetakenforapublicpurposeprovidedthatjustcompensationispaid.)U.S.v.Larnioff,431U.S.864,878(1977)
(holdingthataservicemenhadalreadyearnedthecontractualrighttoreceiveamilitarybonusuponagreeingtoreenlistintheNavy
eventhoughthebonusprogramwasrepealedbyCongressbeforetheservicemanbegantoservehisreenlistment,andindicatingthat
Congresswouldhaveeffectuatedatakingiftherepealofthebonusprogramwasintendedtodivesttheservicemanofhisbonus)
U.S.v.SecurityIndus.Bank,459U.S.70,77(1982)([T]heFifthAmendmentcommandsthat,howevergreattheNationsneed,
privatepropertyshallnotbethustakenevenforawhollypublicusewithoutjustcompensation.Ifthepublicinterestrequires,and
permits,thetakingofpropertyofindividualmortgageesinordertorelievethenecessitiesofindividualmortgagors,resortmustbehad
toproceedingsbyeminentdomainsothat,throughtaxation,theburdenofthereliefaffordedinthepublicinterestmaybeborneby
thepublic.)(quotingLouisvilleJointStockLandBankv.Radford,295U.S.555,602(1935)).SeealsoUnitedStatesv.WinstarCorp.,
518U.S.839,885(1996)(characterizingthegovernmentsrepudiationofoneofitscontractsasabreachofcontract,ratherthana

taking,andtriggeringthepaymentofdamagesasatraditionalremedy).
[270]See,e.g.,InreCityofDetroit,504B.R.97(Bankr.E.D.Mich.2013)InreCityofStockton,478B.R.8(Bankr.E.D.Cal.2012).
[271]99thIll.Gen.Assemb.,HouseBill4214,available
at:http://www.ilga.gov/legislation/99/HB/PDF/09900HB4214lv.pdf.RepresentativeSandackrefilledHouseBill4214asHouseBill
4500inJanuary2016.See99thIll.Gen.Assemb.,HouseBill4500,availableat:http://www.ilga.gov/legislation/billstatus.asp?
DocNum=4500&GAID=13&GA=99&DocTypeID=HB&LegID=93477&SessionID=88.
[272]Id.at14,613.
[273]Id.at12.
[274]Id.at1314.
[275]Id.at13.
[276]Id.at1516.
[277]ChapmanandCulterLLP,PrimeronMunicipalDebtAdjustment,Chapter9:TheLastReportforFinanciallyDistressed
Municipalitiesat30(explainingthepurposeofastatutorylienintheChapter9bankruptcycontext)available
at:http://www.afgi.org/resources/Bankruptcy_Primer.pdf.
[278]Id.
[279]11U.S.C.926
[280]99thIll.Gen.Assemb.,HouseBill4214,at16availableat:http://www.ilga.gov/legislation/99/HB/PDF/09900HB4214lv.pdf.
[281]ChapmanandCulterLLP,PrimeronMunicipalDebtAdjustment,Chapter9:TheLastReportforFinanciallyDistressed
Municipalitiesat2629(explainingspecialrevenuebondsandtheirtreatmentintheChapter9bankruptcycontext)available
at:http://www.afgi.org/resources/Bankruptcy_Primer.pdf.
[282]Fitch,U.S.MunicipalRatingsHigherThanGORatingsNotUsuallyWarranted,BUSINESSWIRE,(Sept.22,2015)available
at:http://www.businesswire.com/news/home/20150922005817/en/FitchU.S.MunicipalRatingsHigherRatingsWarranted.
[283]RandleB.Pollard,FeelingInsecureAStateViewofWhetherInvestorsInMunicipalGeneralObligationsBondsHaveaMere
PromisetoPayoraBindingObligation,24WIDENERL.J.19,2635(2015)(discussingdifferenttypesofmunicipalbondand
financialobligationsandreviewinghowgeneralobligationsbondsfaredintheDetroit,Stockton,California,andJeffersonCounty,
Alabamabankruptcies)GunjanBenerji,IllinoisBankruptcyBillsStealPagesFromCaliforniaandLearnFromDetroit,DEBTWIRE
(Feb.3,2016)(same)available
at:http://www.clarkhill.com/uploads/medium/resource/1429/Illinois_bankruptcy_bills_steal_pages_from_California_and_learn_from_Detroit.pdf.
[284]SeeKimGeiger,Gov.RaunerSuggestsBankruptcyforTownstoFightPensionWoes,CHI.TRIB.(Feb.4,2015),available
at:http://www.chicagotribune.com/ctbruceraunermunicipalitybankruptcymet20150204story.htmlYvetteShields,Displaying
StarkDivisions,IllinoisLawmakersTalkChapter9,BONDBUYER(Sept.1,2015),available
at:http://www.bondbuyer.com/news/regionalnews/displayingstarkdivisionsillinoislawmakerstalkchapter910835521.html.
[285]SeeYvetteShields,DisplayingStarkDivisions,IllinoisLawmakersTalkChapter9,BONDBUYEr(Sept.1,2015),available
at:http://www.bondbuyer.com/news/regionalnews/displayingstarkdivisionsillinoislawmakerstalkchapter910835521.html
(discussingthetestimonyofWilliamBrandt)BrianMackey,LegislatorsDebateWhetherIllinoisCitiesCanDeclare
Bankruptcy,PEORIAPUBLICRADIO(Aug.25,2015),availableat:http://peoriapublicradio.org/post/legislatorsdebatewhetherillinois
citiescandeclarebankruptcy#stream/0(same).
[286]BrianMackey,LegislatorsDebateWhetherIllinoisCitiesCanDeclareBankruptcy,PEORIAPUBLICRADIO(Aug.25,
2015),availableat:http://peoriapublicradio.org/post/legislatorsdebatewhetherillinoiscitiescandeclarebankruptcy#stream/0.
AmandaRobert,InIllinois,SomePushBankruptcyAsSolutionToTroubledPublicBudgets,FORBESMAGAZINE(Apr.19,2016)
(same)availableat:http://www.forbes.com/sites/legalnewsline/2016/04/19/inillinoissomepushbankruptcyassolutiontotroubled

publicbudgets/#63d95d06122e.SeealsoHenryJ.Feinberg,Commentary:PassABankruptcyLaw,GiveTaxpayersAChance,CHI.
TRIB.(May5,2015)(notinghowastatutorylienwouldmakesurebondholdersarefirstinlinetogettheirmoneybackandput
municipalitiesfilingunderChapter9inthepositiontomodifylaborcontracts).
[287]YvetteShields,DisplayingStarkDivisions,IllinoisLawmakersTalkChapter9,BONDBUYER(Sept.1,2015),available
at:http://www.bondbuyer.com/news/regionalnews/displayingstarkdivisionsillinoislawmakerstalkchapter910835521.html.
[288]11U.S.C.109(c)(2)(requiringamunicipalitytobespecificallyauthorizedtobeadebtorundersuchchapterbyStatelaw,or
byagovernmentalofficerororganizationempoweredbyStatelawto[so]authorize.)(emphasisadded).
[289]304U.S.27(1937).SeeFranklinCaliforniaTaxFreeTrustv.PuertoRico,805F.3d322,32728(1st.Cir.2015)(describingthe
originsofthestatelawauthorizationrequirementasnecessarytoavoidaTenthAmendmentproblem)InreCityofBridgeport,128
B.R.688,692(Bankr.D.Conn.1991)(statingthatitisbeyondperadventurethatmunicipalitiesarepoliticalsubdivisionsofstates
fromwhichtheyderivealloftheirrightsandpowers.Chapter9doesnotdisturbthatarrangement,thatis,itdoesnotgiveacityrights
andpowersindependentofthestate.Thus,chapter9doesnotgiveacitythepowertofileabankruptcypetition.Rather,itisthestate
whichmustdecidewhethertoempoweritscitiestofile.)InreCityofHarrisburg,PA,465B.R.744,75354(Bankr.M.D.Pa.,2011)
(same).
[290]Id.at5354(discussingthatthepurposeofthemunicipalbankruptcystatutewassimplytoremovetheobstacleposedbythe
U.S.ConstitutionsContractClausetostatelegislationimpairingexistingcontractsbecauseonlyCongresshadthepowertoremove
theobstacleviaitsbankruptcypower)HanoverNatlBankv.Moyses,186U.S.181,188(1902)(ThegranttoCongress[regarding
bankruptcies]involvesthepowertoimpairtheobligationofcontracts,andthisthestateswereforbiddentodo.).
[291]304U.S.at5153(explaininghowthestatutepreservedstatecontroloveritsfiscalaffairsanditsbecausethemunicipalityhad
tohavestatelawauthoritytocarryouttheplanapprovedbythebankruptcycourt,andbecausethestates,likesovereigngovernments
enteringintotreaties,wereatlibertytomakeagreementswithCongressiftheessenceoftheirstatehoodismaintainedwithout
impairment.).
[292]Id.at4953(quotingH.R.Rep.No.75517,at2(1937)S.Rep.No.75911,at2(1937))(emphasisadded).Sevenyearsafter
itsBekinsdecision,theU.S.SupremeCourtemphasizedthatitupheldthemunicipalbankruptcystatuteonlybecauseCongresshad
beenespeciallysolicitoustoaffordnogroundfortheobjectionthatanexerciseoffederalbankruptcyoverpoliticalsubdivisionsof
theStatemightmateriallyrestrict(its)controloveritsfiscalaffairswherebystateswouldnolongerbefreetomanagetheirown
affairs.ThestatutewascarefullydrawnsoasnottoimpingeonthesovereigntyoftheState.TheStateretainscontrolofitsfiscal
affairs.Thebankruptcypowerisexercised***onlyinacasewheretheactionofthetaxingagencyincarryingoutaplanof
compositionapprovedbythebankruptcycourtisauthorizedbystatelaw.FaitouteIron&SteelCo.v.CityofAsburyPark,312U.S.
502,508(1942)(quotingBekins,304U.S.at5051).
[293]SeeInreSuffolkRegionalOffTrackBettingCorp.,462B.R.397,417421(Bankr.E.D.N.Y.2011)(findingthatapublicbenefit
corporationestablishedunderNewYorklawwasineligibletofileaChapter9bankruptcypetitionbecausetheNewYorkcountythat
authorizedthefilingthroughacountyresolutionlackedthestateconstitutionalauthoritytoenactsucharesolution,andnotingthat
courtcouldnotturnablindeyetoNewYorklawgoverningthescopeofacountysauthority)InreNewYorkCityOffTrack
BettingCorp.,427B.R.256,26871(Bankr.S.D.N.Y2010)(statingthatcourtsmustlooktostatelawwhendeterminingwhether
validauthorizationisgiventoamunicipalitytofileaChapter9provisionandlookingtorelevantprovisionsofthestateconstitution)
InreSullivanCountyReglRefuseDisposalDist.,165B.R.60,73andn.41(Bankr.D.N.H.1994)(same,andstatingamunicipality
hasonlythosepowersgrantedbythestate.Unlessstatelawhasauthorizedthemunicipalitytoseekprotectionunderfederallaw,use
oftheBankruptcyCodewouldimplicatetheTenthAmendmenttotheU.S.Constitution.)InreSummerLakeIrr.Dist.,33F.Supp.
504,506(D.Or.1940)(Thequestionofthetechnicalvalidityofstateconsentisaquestionofstatelawforthedeterminationofstate
courts.).Seealso,BrieffortheU.S.asIntervenorAppellee,Inre:CityofDetroit,2014WL2555744at*39*40(6thCir.2014)
(statingthatastatelawthatpurportstoauthorizecommencementofbankruptcyproceedingsbutthatisinvalidundertheStatesown
constitutionwouldnotsatisfythisstatutoryrequirementandthatthequestionofwhethertheMichiganPensionClausedoesinfact
renderinvalidthestatelawauthorizingcommencementoftheseproceedingsturnssolelyonissuesofstatelaw.)VincentS.J.
Buccola,WhoDoesBankruptcy?MappingPensionImpairmentinChapter9,33Rev.Banking&Fin.L.585,60607(observingthat
ifwithinthemeaningofastatesconstitutiontheactof[amunicipality]petitioning[underChapter9]orperhapstheactof
petitioningplusproposingtoadjustdebtswereunderstoodtoconstituteimpairment,thenstatutoryauthorizationtopetitionwould
bevoidasultravires.).McConnell&Picker,WhenCitiesGoBroke:AConceptualIntroductiontoMunicipalBankruptcy,60U.Chi.L.Rev.
425,457&n.143(1993)(Loominginthebackgroundofthisissue[i.e.,thestatelawauthorizationrequirement],butnotresolvedinlitigation,is
whethergeneralstateconstitutionalprovisionsrequiringmunicipalitiestomakeadequateprovisionforthepaymentofdebtsshouldbeinterpreted
asbarringbankruptcyfilings.)(citedfavorablyinPuertoRicov.FranklinCal.TaxFreeTrust,Nos.15233,15255,S.Ct.,2016WL
3221517,at*8(U.S.,June13,2016)).

[294]InreCityofHarrisburg,Pa.,465B.R.744,753(Bankr.M.D.Pa.2011).Moreover,itisbeyonddoubtthatmunicipalitiesare
politicalsubdivisionsofstatesfromwhichtheyderivealloftheirrightsandpowers.Chapter9doesnotdisturbthatarrangement,that
is,itdoesnotgiveacityrightsandpowersindependentofthestate.InreCityofBridgeport,128B.R.688,692(1991).Under
Illinoislaw,[m]unicipalgovernments,whetherhomeruleornonhomerule,arecreaturesoftheIllinoisConstitution.AT&Tv.
VillageofArlingtonHeights,156Ill.2d399,414,620N.E.2d1040,1047(1993).
[295]CityofEastlakev.ForestCityEnterprises,Inc.,426U.S.668,672,(1976)McPhersonv.Blacker,146U.S.1,25(1892)
(legislativepoweristhesupremeauthority,exceptaslimitedbytheconstitutionofthestate,andthesovereigntyofthepeopleis
exercisedthroughtheirrepresentativesinthelegislature,unlessbythefundamentallawpoweriselsewherereposed.Whatis
forbiddenorrequiredtobedonebyastateisforbiddenorrequiredofthelegislativepowerunderstateconstitutionsastheyexist).
[296]Munnv.Illinois,94U.S.113,124(1876).
[297]InrePensionReformLitigation,2015IL118585,atn.14,32N.E.3d1,n.14.AccordGregoryv.Ashcroft,501U.S.452,460
(1991)(Throughthestructureofitsgovernment,andthecharacterofthosewhoexercisegovernmentauthority,aStatedefinesitself
asasovereign.)HighlandFarmsDairyv.Agnew,300U.S.608,612(1937)(Howpowershallbedistributedbyastateamongits
governmentalorgansiscommonly,ifnotalways,aquestionforthestateitself.)Schuetteev.CoalitiontoDefendAffirmativeAction,
134S.Ct.1623,164647(2014)(Scalia,J.concurring)(SoitwouldseemtogowithoutsayingthataStatemaygivecertainpowersto
cities,laterassignthesamepowerstocounties,andevenreclaimthemforitself.).
[298]Bekins,304U.S.at53.
[299]Id.at52(citing1OPPENHEIM,INTERNATIONALLAW493,494(4thed.2HYDE,INTERNATIONALLAW489).
[300]See1OPPENHEIM,INTERNATIONALLAW497(4thed.)(SuchtreatiesconcludedbyheadsofStates,orrepresentativesauthorised
[sic]bytheseheads,asviolateconstitutionalrestrictionsarenotrealtreaties,anddonotbindtheStateconcerned,becausethe
representativeshaveexceededtheirpowersinconcludingthetreaties.)2HYDE,INTERNATIONALLAW494(AnindependentStateis
deemedtopossessthebroadestrighttoenterintointernationalagreements.Itsconstitutionmay,however,invariouswayslimitand
regulatetheexerciseoftheright,restrictingtheconclusionoftreatiesdesignedtoeffectcertainobjects,orprescribingthemethodby
whichtheStateshallgiveitsconsenttocertainclassesofengagements.Anunconstitutionaltreatymustberegardedasvoid.).
[301]SeeReidv.Covert,354U.S.1,1619(1957)(findingthatCongresscannotlegallybinditselftoatreatywithanothernationthat
violatestheBillofRights).
[302]InreMercedIrr.Dist.,114F.2d654,665(9thCir.1940).SeeUnitedFirefightersofLosAngelesv.CityofLosAngeles,259
Cal.Rptr.65,6875(Cal.App.1989)(notingthatpublicpensionbenefitsareprotectedunderboththeStateandFederalContracts
Clauses)Birkhoferv.Krumm,81P.2d609,62021(Cal.App.1938)(construingtheCaliforniaContractClauseinlockstepwiththe
federalContractClause).Asaquestionoffederallaw,theU.S.SupremeCourtistheultimateexpositorofwhetherastatelawviolates
theU.S.Constitution.Dodgev.Bd.ofEduc.ofCityofChicago.,302U.S.74,7879(1937).Whenitcomestowhetherastatelaw
violatestheIllinoisConstitution,however,theIllinoisSupremeCourt,notafederalcourthasthelastword.HopeClinicforWomen,
Ltd.v.Flores,2013IL112673,at79,991N.E.2d745,765.
[303]InreCityofDetroit,Mich.,504B.R.191,24448(Bankr.E.D.Mich.2013).
[304]InrePensionReformLitigation,2015IL118585,at82,32N.E.3dat2627.
[305]Id.at8287,32N.E.3dat2628.SeeMcPhersonv.Blacker,146U.S.1,25(1892)(observingthatthelegislativepoweristhe
supremeauthority,exceptaslimitedbytheconstitutionofthestate,andthesovereigntyofthepeopleisexercisedthroughtheir
representativesinthelegislature,unlessbythefundamentallawpoweriselsewherereposed.***Whatisforbiddenorrequiredtobe
donebyastateisforbiddenorrequiredofthelegislativepowerunderstateconstitutionsastheyexist.).Cf.IBMv.Evans,99S.E.2d
220,22223(Ga.1957)(holdingthattheGeorgialegislaturecouldnotexemptpropertyfromstatetaxationinviolationofthestate
constitutionwhenprovidingconsenttoexclusivefederaljurisdictionoverthatpropertyunderArticleI,Section8,Clause17ofthe
U.S.Constitution).
[306]Jones,2016IL119618,at32(quotingInrePensionReformLitigation,2015IL118585,at75).
[307]Id.at47.
[308]Id.

[309]AT&Tv.VillageofArlingtonHeights,156Ill.2d399,414,620N.E.2d1040,1047(1993).
[310]InreCityofStockton,Cal.,526B.R.35,56(Bankr.C.D.Cal.2015)InreCityofDetroit,Mich.,504B.R.191,25455(Bankr.
E.D.Mich.2013)InreCityofStockton,Cal.,475B.R.720,72729(Bankr.C.D.Cal.2012)
[311]InreCityofStockton,Cal.,526B.R.35,56(Bankr.C.D.Cal.2015)InreCityofDetroit,Mich.,504B.R.191,25455(Bankr.
E.D.Mich.2013)InreCityofStockton,Cal.,475B.R.720,72729(Bankr.C.D.Cal.2012).
[312]SeeHon.ThomasB.Bennett,Consent:ItsScope,Blips,Blemishes,andaBekinsExtrapolationTooFar,37CAMPBELLL.REV.3,
1718,2223(2015)(forawellreasonedcriticismofthecurrentviewtakenbysomebankruptcycourtjudgesthatonceastate
authorizesitsmunicipalitiestofileaChapter9bankruptcycaseneitherthestate,themunicipality,noranyoneelsemayrejecttheuse
ofanypartsofChapter9alongtheroadtoreadjustmentofmunicipaldebts).

RECENTDEVELOPMENTS
RecentDevelopmentsisaregularfeatureoftheIllinoisPublicEmployeeRelationsReport.Ithighlightsrecentlegaldevelopmentsof
interesttothepublicemploymentrelationscommunity.Thisissuefocusesondevelopmentsunderthepublicemployeecollective
bargainingstatutes,theequalemploymentopportunitylawsandthepensionprovisionoftheIllinoisConstitution.
I.IELRADevelopments
A.Strikes
InChicagoBoardofEducationandChicagoTeachersUnion,LocalNo.1,IFTAFT,32PERI194(IELRB2016),theIELRB
grantedtheChicagoBoardofEducations(CBE)requestforpreliminaryinjunctivereliefpursuanttoSection16(d)oftheIELRA.
TheIELRBfoundreasonablecausetobelievethattheChicagoTeachersUnion(CTU)authorizedandconductedaonedaystrike
whichmayhaveviolatedofSections14(b)(3)and13(b)oftheIELRAwhentheUnionhadnotgiven10daysnoticeofitsintentto
strikeandhadnotexhaustedstatutoryimpasseprocedures.TheIELRBalsoheldthatpreliminaryinjunctivereliefwasjustandproper
underthecircumstances.
TheCTUandtheCBEsmostrecentcollectivebargainingagreementexpiredonJune30,2015.OnApril1,2016,theunionengaged
inaonedaystriketoprotestanallegedunfairlaborpracticefortheCBEsrefusaltobargainingoodfaithandtoprotesttheStateof
IllinoissfailuretofundpubliceducationinChicagoadequately.
UnderSection13(b)oftheIELRA,forastrikeagainstCPStobelawful,aminimumof30daysmustelapseafterafactfindingreport
hasbeenmadepublicandaminimumof10daysmustelapseafteranoticeofintenttostrikeisgivenbytheuniontotheemployer.At
thetimeofthestrike,neitherconditionwassatisfiedandtheIELRBconcludedthattheApril1,2016strikedidnotmeettheSection
13(b)requirements.
Section14(b)(3)oftheIELRAmakesitanunfairlaborpracticeforauniontofailtobargainingoodfaith.TheIELRBciteditsprior
decisionsrecognizingthatengaginginanunlawfulstrikeviolatesSection14(b)(3).TheIELRBrejectedtheCTUsargumentthat,in
accordancewithMaestroPlasticsCorp.v.NLRB,350U.S.270(1956),strikesoverunfairlaborpracticesarenotsubjecttostatutory
noticerequirements.TheIELRBreasonedthattheprivatesectorprecedentdidnotapplyundertheIELRAwhichhascarefully
craftedprerequisitesforastriketobelawfulandwhichabrogatedthecommonlawrulethatallpublicemployeestrikesareillegal.
TheIELRBobservedthatstatutesinderogationofthecommonlawareconstruedstrictlyinaccordancewiththeirexpresslanguage.
TheCTUalsoarguedthatitstrikewaslawfulbecauseitwasaimedatthelegislatureandnotattheCBEsbargainingposition.The
IELRBrejectedthatargument,observingthatacceptingtheCTUspositionwouldcompletelyevisceratetheverycarefully
constructedstatutoryschemeforwhenstrikescanbelawful.Accordingly,theIELRBconcludedthattherewasreasonablecauseto
believetheUnionsApril1,2016strikeviolatedSection14(b)(3)oftheAct.
ThiswasthefirsttimetheIELRBhasfacedasituationwhere(1)aunionclaimedtherighttostrikewithoutregardtotherequirements
oftheIELRAandwhere(2)aunionvoluntarilyplacedaonedaylimitonastrike.TheIELRBfoundthatpreliminaryinjunctiverelief
wasjustandproperduetotheprobabilitythattheCTUcouldengageinanotherstrikepriortosatisfyingtheSection13(b)
requirements.TheIELRBreasonedthattheconditionswhichmotivatedtheApril1,2016strikestillexistedandtheCTUhadnot
acknowledgedthatitsconducthadbeenunlawful.
TheIELRBacknowledgedthatCTUPresidentKarenLewiswrotealettertoCBEDirectorofLaborRelationsJosephMoriarity
assuringthattheCTUwouldnotengageinanotherstrikewithoutexhaustingthestatutoryimpasseproceduresandprovidingthe
statutorilyrequirednotice.TheIELRB,nevertheless,foundinjunctivereliefjustandproperbecauseMs.Lewisdidnothaveauthority
tobindtheCTU,onlytheCTUsHouseofDelegatesanditsmembershiphadsuchauthoritytheCTUcontinuedtomaintainthatits
strikewaslawfulandthematterwasoneofsubstantialpublicinterest.
IELRBMemberSyreddissented.ShearguedthatinjunctivereliefwasnotappropriatebecausethelawgoverningwhethertheSection
13(b)requirementsappliedtounfairlaborpracticestrikeswasunsettledandthelikelihoodofareoccurrenceoftheApril1strikewas
speculative.

II.IPLRADevelopments
A.Arbitration
InStateofIllinoisv.AFSCME,2016IL118422(2016),theIllinoisSupremeCourtvacatedanarbitratorsawardenforcinga
bargainedforwageincrease.ThecourtheldthatbecausetheGeneralAssemblyhadnotappropriatedfunds,asrequiredbySection21
oftheIPLRA,topayforthewageincreases,theawardorderingtheStatetopaytheincreaseswasagainstpublicpolicy.Thecourt
emphasizedthatitsholdingonlyappliedtotheenforcementofmultiyearcollectivebargainingagreementswithStateemployees,
which,accordingtotheIPLRA,arenegotiablesubjecttotheappropriationpoweroftheemployer.Thecourtdidfindthat,asa
matteroflaw,thearbitratorsawardenforcingthewageincreasesdrewitsessencefromthecontractbutrejectedAFSCMEs
argumentthatallowingwageincreasestobesubjecttoappropriationsrenderedbargainingforwageincreasesmeaninglesstheState
convincedthecourtthatenforcingtheawardwouldviolateaclearpublicpolicythattheStatemaynotspendpublicmoneywithout
legislativeauthorizationtodoso.
In2008,AFSCMEandtheStatenegotiatedamultiyearcollectivebargainingagreementcoveringmorethan40,000Stateemployees.
TheagreementwassettoexpireonJune30,2012,andincludedwageincreasesineachyear.Astimewenton,theStateofIllinois
financialsituationdeclinedconsiderably.AFSCMEagreedtochangeswhichaffordedtheStatehundredsofmillionsofdollarsincost
savings,includingdelayingpartofthewageincreasesscheduledforthe2012fiscalyear.TheGovernorsproposedbudgetforthat
yearwouldhavecoveredthedelayedwageincreases,buttheGeneralAssemblysapprovedbudgetleft14Stateagencieswithout
enoughfundstopaytheincreases.AFSCMEtookthistoarbitration,arguingthattheStatewasneverthelessobligatedtopaythe
bargainedforincreases.Basinghisdecisiononthefourcornersofthecollectivebargainingagreementanddeclining,onlackof
jurisdictiongrounds,toconsidertheStatesargumentsbasedonSection21oftheIPLRA,thearbitratororderedtheStatetopaythe
wageincreases.TheStateappealedtotheIllinoiscourts.AtissueinthelowercourtswastheeffectofSection21,whichmakes
collectivebargainingformultiyearagreementssubjecttotheappropriationpower.TheAppellateCourtupheldthearbitrators
awardandreiteratedtheStatesobligationtopaythewageincrease,sayingthattheunavailabilityofthefundsataparticulartime
doesnoterasethebargainingobligationandtheStateshouldpaytheincreasesasitcould
TheIllinoisSupremeCourtreversedandvacatedtheawardasagainstpublicpolicy.ThecourtrejectedAFSCMEsargumentsthat(1)
makingwageincreasessubjecttoappropriationsrendersbargainingoverwageincreasesmeaningless,and(2)sinceothercontracts
haveexpresslymadewageincreasessubjecttoappropriationsandthiscontractdidnot,theexclusionofsuchaprovisionmeansthe
raiseswerenotsubjecttoappropriation.InsteadthecourtfoundthatSection21oftheIPLRAimpliesthatallmultiyearcollective
bargainingagreementsaresubjecttoappropriationsbytheGeneralAssembly.Apartialdissenttookissuewiththislineofreasoning,
sayingthatallowingtheStatetogetoutofitsbargainingobligationsbyfailingtoappropriatefundsisitselfapublicpolicyviolation.
However,themajoritylimiteditsholding,consistentwithSection21oftheIPLRA,tosaythatonlymultiyearagreementsaresubject
toappropriationsbytheGeneralAssembly.
B.Supervisors
InWaterPipeExtension,Bureauof,Engineering,Local1092v.CityofChicago,DepartmentofWaterManagement,CaseNo.LRC
15009(ILRBLocalPanel2016),theLocalPanelaffirmedtheAdministrativeLawJudgesdecision,findingthattheChiefDispatcher
employedbytheCityofChicago,DepartmentofWaterManagementwasnotasupervisorwithinthemeaningofSection3(r)ofthe
IPLRA.
CentralDispatchprocessedallcallsandcomplaintsregardingtheCityofChicagoswaterandsewersystem.ChiefDispatcherJoe
PusaterioversawalloperationsandemployeesoftheCentralDispatch.
UnderSection3(r)oftheAct,employeesaresupervisorswhenthey:(1)performprincipalworkthatissubstantiallydifferentfromthe
workoftheirsubordinates(2)havetheauthority,intheinterestoftheemployer,toperformanyenumeratedsupervisoryfunctionsor
effectivelyrecommendsuchaction(3)useindependentjudgmentconsistentlywhenperformingthosefunctionsand(4)spenda
preponderanceoftheirtimeexercisingthatauthority.
Whenfacedwithanerrantemployee,Pusateriwasabletoeitherdiscussmatterswiththeemployeeorrequestapredisciplinary
hearing.Atapredisciplinaryhearing,thehearingofficerdeterminediftheemployeewouldbesubjecttodiscipline.Infindingthat
PusateriwasnotasupervisorunderSection3(r),theALJnotedthatPusatericouldnotactuallyinitiatedisciplineagainsthis
subordinates.Rather,Pusateriwasonlyabletorecommenddisciplinebyrequestingapredisciplinaryhearing.TheALJfoundthatthe
abilitytorecommenddisciplinewasnotthesameasbeingabletoeffectivelyrecommenddisciplinaryaction.Becausetherecord
lackedevidenceofhowfrequentlyPusaterisrecommendationswerefollowed,theALJconcludedthattheCityfailedtoprovethat
Pusaterihadthepowertoeffectivelyrecommenddiscipline.TheILRBaffirmedtheALJsdecision.
BoardMemberAndersondissented.HearguedthatPusaterididhavetheauthoritytoeffectivelyrecommenddiscipline.Board
MemberAndersonnotedthatPusateriimplicitlyhadtheauthoritytoeffectivelyrecommenddisciplinebecausehehadtheauthorityto
choosebetweenselectinganondisciplinaryapproach,discussingmatterswiththeemployee,orinitiatingaformaldisciplinary
process.

III.EEODevelopments
A.ConstructiveDischarge
InGreenv.Brennan,136S.Ct.1769(2016),theU.S.SupremeCourtheldthatthestatuteoflimitationsforaconstructivedischarge
claimbeginstorunonlywhentheemployeegivesnoticeofhisresignation,notonthelastdateoftheemployersallegedly
discriminatoryact.
MarvinGreenworkedfortheU.S.PostalServicefor35years.In2008,heappliedforapromotionbutwaspassedover.Greenalleged
thathewasdeniedthepromotionbecauseofhisrace.In2009,Greenssupervisorsaccusedhimofintentionallydelayingthemail,
whichisacriminaloffense.OnDecember16,2009,GreenandthePostalServicesignedanagreement(theAgreement).The
AgreementpromisedthatthePostalServicewouldnotpursuecriminalchargesinexchangeforGreenspromisetoleavehiscurrent
postmasterposition.TheAgreementalsogaveGreenthechoicetoretireoracceptadifferentpositionatalocationwithsignificantly
lowerpay.Greenchosetoretire.OnFebruary9,2010,GreensubmittedhisresignationeffectiveMarch31,2010.
OnMarch22,201041daysaftersubmittinghisResignation,but96daysaftersigningtheAgreement,Greeninitiatedcounseling
withtheEqualEmploymentOpportunity(EEO)officetoreportanunlawfulconstructivedischargeinviolationofTitleVII.Unlikea
privatesectoremployee,whogenerallyhas180or300daystofileachargeofdiscrimination,beforeafederalcivilservantcansuehis
employer,hemustcontactanEEOcounselorwithin45daysofthematterallegedtobediscriminatory.29C.F.R.1614.105(a)(1).
Greenfiledsuitinfederalcourt.However,boththedistrictcourtandU.S.CourtofAppealsfortheTenthCircuitagreedthatGreens
claimagainstthePostalServicewastimebarredanddismissedhisclaim.BothcourtsagreedthatthelimitationsperiodforGreens
constructivedischargeclaimbegantorunonthedateofthelastallegeddiscriminatoryactbythePostalService,whichwasthe
signingoftheAgreementonDecember16,2009.
TheU.S.SupremeCourtreversed.TheCourtheldthatthe45dayperiodforinitiatingcounselingbeginstorunonthedatean
employeeresigns,notonthedateoftheemployerslastallegedlydiscriminatoryactgivingrisetotheresignation.Thecourtreliedon
thestandardrulecanon,wherealimitationsperiodstartstorunonlywhenaplaintiffhasacompleteandpresentcauseofaction
uponwhichhecanfilesuitandobtainrelief.TheCourtnotedthatacompleteandpresentcauseofactionforaconstructivedischarge
claimhastwoelements:
(1)discriminationthatbecomessointolerablethatareasonablepersonintheplaintiffspositionwouldhavefeltcompelled
toresignand(2)actualresignation.
TheCourtdeterminedthatacompleteandpresentcauseofactionforaconstructivedischargeclaimnecessarilyincludesthe
employeesresignation.Insupportofthedecision,theCourtnotedthatpracticalconsiderationssupportapplyingthestandardrule
because[s]tartingthelimitationsclocktickingbeforeaplaintiffcanactuallysueforconstructivedischargeserveslittlepurposein
furtheringthegoalsofalimitationsperiod.
GreenandthePostalService,however,disagreedontheactualdateofresignation.Greenarguedthatheresignedwhenhesubmitted
hisretirementpaperworkonFebruary9,2010.ThePostalServicearguedthatGreenresignedonDecember16,2009,whenhesigned
theAgreement.TheCourtremandedthecasetotheTenthCircuittodeterminethedateonwhichGreengavenoticethathewould
resign.
B.PensionDevelopments
InJonesv.MunicipalEmployeesAnnuity&BenefitFund,2016IL119618,theIllinoisSupremeCourtaffirmedtheCircuitCourtof
CookCountysdecisionthatPublicAct98641sreductionofretirementannuitiestomembersoftheMunicipalEmployeesAnnuity
andBenefitFundandtheLaborersandRetirementBoardEmployeesAnnuityandBenefitFund(collectivelytheFunds)violated
ArticleXIII,Section5oftheIllinoisConstitution.
ArticleXIII,Section5oftheIllinoisConstitutioniscommonlyknownasthePensionProtectionClause.Itstates,Membershipin
anypensionorretirementsystemoftheState,anyunitoflocalgovernmentorschooldistrict,oragencyorinstrumentalitythereof,
shallbeanenforceablecontractualrelationship,thebenefitsofwhichshallnotbediminishedorimpaired.PublicAct98641
reducedthevalueofannualannuityincreases,eliminatedthementirelyforcertainyears,postponedthetimeatwhichtheybegan,and
completelyeliminatedthecompoundingcomponentoftheincreases.Italsoincreasedemployeecontributionsandprovidedfor
gradualincreasesinCitycontributionsuntilthefundsachieved90percentfundingin2055.Italsocontainedprovisionsfor
enforcementoftheCitysfundingobligations.
DefendantsarguedthattheActprovidedanoffsettingbenefittoitsmembersbecauseitwouldrescuethefundsfrombecoming
insolvent.However,thecourtreasonedthatpassingastatutethatlookedtochangingfundingmethodstoensuretheFundswould
reach90percentfundingby2055didnotcreateabenefitprotectedbythePensionProtectionClause.ThecourtrejectedtheCitys
assertionthatthefundingprovisionsintheActmustbeviewedasabenefitbecausetheyreplacedanumberofillusorypromises.
ThecourtbrokedowntheCityscontentionbyreasoningthatpromisingsolvencycannotbenettedagainsttheunconstitutional
diminishmentofbenefits.ThecourtconcludedthattheGeneralAssemblycouldnotunilaterallyimplementnewtermsoftheAct.
TheCitycontendedthattheActwasabargainedforexchangewithitsunionsandnotaunilaterallyproducedchange.Thecourtfound
thattheunionswerenotactingasauthorizedagentswithinacollectivebargainingprocess,andthenegotiationswerenodifferentthan
legislativeadvocacyonbehalfofaninterestgroup.ThecourtaffirmedthecircuitcourtsdecisionthattheActwasunenforceableinits
entirety.

InMatthewsv.ChicagoTransitAuthority2016IL117638,theIllinoisSupremeCourtheldthatcurrentemployeeslackedstandingto
challengetheenforceabilityoftheChicagoTransitAuthoritys(CTA)2007collectivebargainingagreement(CBA)whichchanged
retireehealthinsurance,butemployeeswhohadretiredpriortothe2007CBAhadstandingtochallengeitsenforceability.
Furthermore,thecourtheldthattheprovisionofhealthcarebenefitstotheretireeswhoretiredunderthe2004CBAconstitutedan
enforceable,vestedrightthatsurvivedtheexpirationofthatagreement.
UnderpriorCBAs,includingthe2004CBAwhichranthroughDecember31,2006,retireesreceivedhealthinsuranceatnocostto
them.Thecontractsfurtherprovided,Thisbenefitterminateswhentheretireeattainsage65.The2004CBAalsoprovided,
EitherofthepartiesheretoshallhavetherighttoopenthisAgreementformodificationand/oradditionstobeeffectiveJanuary1,
2007...Thepartieswereunabletoreachagreementonthetermsofthe2007CBAandtheysubmittedtheirdisputetointerest
arbitration.Thearbitratorawardedthatatrustwouldbecreatedwhichwouldbecomesolelyresponsibleforretireehealthcare,thatthe
trustwouldbeempoweredtochargeretireesupto45percentoftheirhealthcarecostsandtoassessa3percentpayrolltaxoncurrent
employeestofundthetrust.TheGeneralAssemblyenactedlegislationimplementingthearbitrationawardandthetrust.
ThecurrentandretiredformeremployeesbroughtputativeclassactionsagainsttheCTAanditsretirementplanfollowingthechanges
tohealthcarebenefits.Thefiveindividualplaintiffswerenamedonbehalfofthemselvesandasrepresentativesoftwoputative
classes.InClassI,WilliamsrepresentedformeremployeeswhoweremembersofAmalgamatedTransitUnionLocal308andretired
underthe2004CBA.InClassII,theremainingplaintiffsrepresentedaclassofCTAemployeesandretireeswhoretiredafterJanuary
1,2007,orremainedcurrentemployeesoftheCTA.
ThecourtheldthatthecurrentemployeesandthosewhoretiredafterJanuary1,2007,lackedstandingtosue.Thecourtnotedthat
onlythepartiestoaCBAmaydisputeanarbitrationawardincourttherefore,onlytheemployerandthedesignatedrepresentativeof
thebargainingunitmaybringsuittochallengeanarbitrationaward.Inthiscase,theCBAprovidedthattheCTArecognizedthe
transitunionasthesoleandexclusivecollectivebargainingagentforthebargainingunitemployees.Theindividualmembersofa
bargainingunitmaynotbringsuitagainstanemployertochallengeanarbitrationawardunlessthecourtfindsthattheunionbreached
itsdutyoffairrepresentation.Inthiscase,theClassIIplaintiffswererepresentedbytheTransitUnionsduringthebargainingand
arbitrationprocessthatresultedinthe2007CBA.Additionally,therewasnoallegationthattheunionbreacheditsdutyoffairly
representingtheClassIIplaintiffs.Therefore,thoseplaintiffslackedstanding.
Incontrast,followingexpirationofthe2004CBA,WilliamsandtheClassIretireeswerenolongeremployedbytheCTAandwere
notrepresentedinthesubsequentcollectivebargainingandarbitrationproceedings.Therefore,thecourtheld,theyhadstandingto
pursueclaimsforenforcementofbenefitsgrantedunderthe2004CBA.
Thecourtdistinguishedthecasebeforeitfromitspriorcasesinvolvingchangestoretirementbenefits.Inpriorcases,thebenefits
weresetbystatuteandthechangesweremadebyamendingtherelevantstatute.Intheinstantcase,thebenefitswerecreatedby
collectivebargainingagreementsandweresubjecttothetermsoftheCBAs.ThecourtreasonedthatthePensionProtectionClauseof
theIllinoisConstitutionprotectstheretirementbenefitsasprovidedforintheCBAbutdoesnotprecludemodificationofthose
benefitsifmodificationisallowedundertheCBA.Thecourtwrote:
Forthosepublicservantswhoseemploymentisgovernedbyacontract,suchasaCBA,thepensionprotectionclause
guaranteestheretirementbenefitsthatareprovidedintheiremploymentcontract.Thetermsofsuchanagreementaresubject
tonegotiationbetweenthepublicemployerandthedesignatedcollectivebargainingrepresentativeandareimplementedby
theapplicableprovisionscodifyingtheagreementinthePensionCode.Ifthetermsoftheagreementprovideforvested
retirementbenefits,thosebenefitsareconstitutionallyprotectedby[thePensionProtectionClause].However...ifthe
underlyingcontractallowsforthemodificationofcertainretirementbenefits,thepensionprotectionclausedoesnotpreclude
modificationoraltertheessentialnatureoftherightsgrantedunderthecontract.Therefore,neitherthelanguageofthe
pensionprotectionclausenorourpriorcaselawpresentsanobstacletoacontractualprovisionthatpermitssubsequent
modificationofpublicretirementbenefits.
Thecourtthenturnedtothetermsofthe2004CBA.Focusingontheprovisionthattheretireehealthbenefitterminatedwhenthe
retireeturnedage65,thecourtconcludedthatthe2004CBAreflectedtheintenttoprovidehealthcarebenefitstoformeremployees
duringtheirretirementandtospecifythetypeofbenefitthatwouldbeprovidedbasedontheageofeachretiree.Thus,although
retireehealthcarebenefitscouldbechangedbyagreementuponexpirationofthe2004CBA,Williamsandotherretireescontractual
righttoretireehealthcarebenefitsunderthe2004CBAwasfullyaccruedandnotmodifiedbyagreementorthe2007arbitration.
Therefore,theCourtheldthattheprovisionofhealthcarebenefitstoWilliamsandtheotherClassIplaintiffswhoretiredunderthe
2004CBAconstitutedanenforceable,vestedrightthatsurvivedtheexpirationofthatagreement.Thecourtheldthattheystateda
claimforbreachofthePensionProtectionClauseoftheIllinoisConstitution.

PUBLISHED:July7,2016
FILEDUNDER:Issue1,Issue2,Volume33

Search

IllinoisPublicEmployeeRelationsReport.PoweredbyWordPressandManifest