Law Professor Examines `Police Powers' Argument in Pension Case

Mar 17, 2015

The 2013 pension overhaul signed by then-Gov. Pat Quinn is being decided by the seven justices of the Illinois Supreme Court. The law extends retirement ages for current state workers, reduces retirees' automatic and compounded yearly increases in the cost-of-living allowance (COLA), and limits the amount of salary used to figure pension benefits.

The law is expected to save $137 billion over three decades. It has yet to be implemented, pending the outcome of the suit filed by unions and retirees.

The plaintiffs in Heaton v. Quinn are teachers, retired teachers, principals and superintendents from around the state.

While we wait for the decision, let's examine the case with Marc Falkoff, an expert in public interest law. Falkoff is a professor at Northern Illinois University. Here's his take on the arguments, and what the pension law says vs. what the state Constitution says:

Dr. Marc Falkoff, NIU Law Professor

First the (Illinois) Constitution. Article XIII, section 5, says retirement benefits "shall not be diminished or impaired."

What if the Court strikes down part of the law, say the part about COLAs, but leaves intact the part about raising the retirement age? Falkoff says the Constitution remains clear no matter what part of the law is being considered:

"Raising the retirement age is going to diminish benefits for a pensioner. Lowering the cost-of-living adjustments is going to diminish benefits. Forcing pensioners to pay more into their health care is going to diminish benefits. Frankly, anything that diminishes benefits is constitutionally impermissible."

But what if the state's unfunded liability -- now about $100 billion -- constitutes an emergency, especially when coupled with a multi-billion dollar budget deficit? Lawyers for the State of Illinois argue the government can invoke special police powers to reduce retirement benefits if they're unsustainable. They cite the COLA adjustments as particularly harmful to the state's fiscal health. Arguing for the state, Solicitor General Carolyn Shapiro said it would be "a new and unheard-of absolute right" to consider the pension protections so overarching that they preempt any changes in an emergency.

Professor Falkoff says the Legislature invoked these special powers before. But, he says, when it comes to Article XIII, the framers meant to check the power of lawmakers:

"You have a specific constitutional provision, and that was put in there specifically to keep the Legislature from doing what it has sought to do here, which is diminish pension benefits."

Falkoff sees the police powers as a general recognition of the power of the Legislature, but they're not enough to trump the specific guarantee that's in the pension clause.

Opponents of the pension law point to last summer's state Supreme Court decision on a law that made state retirees pay more for subsidized health care. Justices ruled the law violated the Constitution's pension protection clause. In that case, the Court ruled subsidized health care is part of the protected benefits under Article XIII. Falkoff cautions, however, the current case is about whether police powers override protections to benefits, including subsidized health care.

Like many Illinois state university professors, Falkoff is invested in the State Universities Retirement System (SURS). As an NIU staff member, this reporter is also invested in SURS, one of the five public pension systems that would be affected by the pending High Court ruling. I asked Falkoff how he keeps his analysis above the partisan fray:

"Of course anyone should be wary of someone who has a stake in doing an analysis of this sort," Falkoff says. "I'll say I've read the court filings, and I've read the Constitution." For Falkoff, the Constitution is straightforward. "When you have a provision that says `the benefits shall not be diminished or impaired', it's hard to believe the Court would find that ambiguous."

Falkoff concedes it's possible the justices may read the police powers as expansive enough to include a very specific provision in the Constitution, but not likely.

It's not clear when the Illinois Supreme Court will decide the case.