60th IASBO Annual Conference
Pension Reform Panel Discussion
Dion G. Smith
Manager of Financial Policy
Chicago Public Schools
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Introduction
• Those who attended this panel discussion last year
may recall that we discussed Senate Bill 1946/Public
Act 96-0889, which created a second tier of public
pension benefits for new participants in TRS and
IMRF, and most other new public employees in
Illinois.
• Today’s panelists will discuss developments in
pension reform since last Spring, in the new 97th
General Assembly.
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State Constitutional Issues
• But first I want to spend a few minutes
discussing State constitutional issues.
• Any opinions expressed during my remarks are
my own, and not those of the Chicago Public
Schools or the Chicago Board of Education.
• Finally, please hold questions until all
presentations are finished.
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Illinois Constitution (1970)
• Article XIII, General Provisions, Section 5:
– “Membership in any pension or retirement system of the
State, any unit of local government or school district, or
any agency or instrumentality thereof, shall be an
enforceable contractual relationship, the benefits of which
shall not be diminished or impaired.”
• Article I, Bill of Rights, Section 16:
– “No … law impairing the obligation of contracts … shall
be passed.”
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Illinois Supreme Court Decisions
• Several State Supreme Court opinions have
interpreted the Pension Protection Clause:
– People ex rel. IFT, etc. v. Lindberg (1975)
– McNamee v. State of Illinois (1996)
– People ex rel. Sklodowski v. State of Illinois
(1998).
• But none of these cases specifically considered
whether or not the future, un-earned pension
benefits of current employees are protected.
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New Legal Opinion From Illinois
Senate
• Earlier this year, the Counsel to the State
Senate President issued a lengthy written
opinion, in which he argued that reducing the
future pension benefits of current public
employees was unconstitutional.
• In addition, he concluded that the General
Assembly could not require current employees
to contribute more to support their future
pensions.
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But CTA Pension Reform Act?
• However, if the Senate legal opinion is correct,
then Public Act 95-0708 is unconstitutional:
– In 2008, a sweeping CTA reform package became
law;
– The retirement provisions of that law required,
among other reforms, current CTA employees to
contribute more to support their pension benefits
(see 40 ILCS 5/22-101).
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For Further Reading
• Illinois General Assembly’s website for: State Constitution,
Public Acts, Statutes, Bills, etc. (see http://www.ilga.gov).
• Illinois Commission on Government Forecasting &
Accountability, The Handbook of Illinois Pension Case Law
(see http://www.ilga.gov/commission/cgfa2006/Home.aspx).
• Madiar, Is Welching on Public Pension Promises an Option
for Illinois? (see
http://www.illinoissenatedemocrats.com/images/pensions/D/P
ension%20Clause%20Article%20Final.pdf).
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