Circuit Judge Finds Pension Reform Unconstitutional
In a written decision dated November 21, 2014, Judge John Belz of the Sangamon County Circuit Court entered a final declaratory judgment that “Public Act 98-0599 is unconstitutional and void in its entirety.” The court also ordered that the preliminary injunction preventing State defendants (including SURS) from implementing the Act since May 14, 2014, become permanent.
Judge Belz relied on recent statements by the Illinois Supreme Court in Kanerva v. Weems that the Pension Protection Clause “is clear that if something qualifies as a benefit of the enforceable contractual relationship resulting from membership in one of the State’s pension or retirement systems, it cannot be diminished or impaired.” As a result, the court concluded, “the Illinois legislature could not have been more clear that any attempt to diminish or impair pension rights is unconstitutional.”
The court found that Public Act 98-599 impaired and diminished the benefits of membership in State retirement systems on its face by imposing lower automatic annual increases, skipping automatic annual increase payments, imposing a pensionable earnings cap, increasing retirement ages, and changing the method of determining the effective rate of interest.
The court found as a matter of law that the State’s reserved sovereign powers (or “police powers”) “provided no legally valid defense.” The court went on to state, “The Pension Protection Clause contains no exception, restriction or limitation for an exercise of the State’s police powers or reserved sovereign powers. Illinois courts, therefore, have rejected the argument that the State retains an implied or reserved power to diminish or impair pension benefits.”
Finally, the court found that the Act was unconstitutional in its entirety, despite its severability provisions. “Notwithstanding the presence of a severability clause, legislation is not severable where, as here, it is a broad legislative package intended to impose sweeping changes in a subject area, and the unconstitutional provisions of that package are important elements of it.”
The State defendants have 30 days from the date of the decision to appeal directly to the Illinois Supreme Court.