Are pensions safe in a Con-Con?

Illinois voters have eight days to decide whether they want the state to call a constitutional convention. For those who want to know the pros, cons or the logistics, look at Illinois Issues magazine, which has published numerous articles in print and online throughout the past year (see the list below). But one specific question burning in the minds of many current state employees, a.k.a. voters, is whether a convention would rip away their pensions and retiree health benefits.

In fact, that fear will lead many of those employees to vote “no” on the referendum. People on both sides of the Con-Con debate agree that the state’s obligations to its existing employees, particularly those who are not fully vested in the pension system, is open to interpretation.

It’s generally agreed that the state’s future public employees would be vulnerable to change. Potential reforms include increasing the retirement age before a person could tap into his or her benefits, limiting automatic yearly pension increases and increasing the employee contribution rate by at least 1 percent. Again, these are for new hires only. See more here from a 2005 report by the Governor’s Pension Commission.

Existing employees are different. On one hand, courts have ruled — and the Illinois Constitution of 1970 declares — pensions are contractual relationships between the state and its employees. The state Constitution, Article 13, Section 5, reads:

Membership in any pension or retirement system of the state, any unit of local government or school district, or any agency of instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.

Even if the state charter changed, legal challenges likely would cite protection under the U.S. Constitution, Article 1, Section 10 (scroll down to see “Section 10”) that says states cannot breach contracts, including pension obligations.

Elena Kezelis, former chief counsel for then-Gov. Jim Edgar, says she interprets the Constitution as protecting those who are fully vested in the pension system as having unalterable rights. She points to the back of the state Constitution, where a “savings clause” would protect every contract in place if a new document were approved. If another convention were called and pension benefits were revised, then she says that provision would grandfather in the existing pension contracts. Prudent drafters would include that kind of language again, she says.

The question is, she says, how delegates and how courts would define the point at which current state employees are vested into a contractual right that cannot be taken away from them.

Bruno Behrend, co-founder of the Illinois Citizens Coalition that supports a constitutional convention, says he agrees with the same interpretation: Pension benefits of vested employees could not be taken away. And he says he doesn’t think delegates would erase that constitutional guarantee because the goal of a convention would be to draft a new constitution that would win voter approval. Taking away benefits that have been promised to existing employees wouldn’t go over so well with voters, he says. Instead, he supports pension reforms aimed at making the state more accountable in chipping away at some $100 billion in pension debt.

One main force behind a campaign to oppose a convention disagrees with the interpretation that the pensions of active public employees are safe. Among the reasons the Illinois Federation of Teachers union opposes a convention is that there's no telling what would happen, according Steve Preckwinkle, IFT's political director. “Our belief is that if Article 13, Section 5 of the Constitution were to be either eliminated or modified in certain ways that the pension security of active government employees throughout the state at all levels of government could be jeopardized.”

The IFT also is the top donor to a statewide campaign to defeat the November 4 referendum. It and affiliate members have contributed $300,000 to the Alliance to Protect the Illinois Constitution, according to the Illinois Campaign for Political Reform, a Chicago-based think tank that keeps track of campaign contributions. The second top donor is the Illinois Education Association, donating $225,000.

Ann Lousin, who opposes a convention, says pension reforms are a “perfect example of how a lack of political will on the part of officeholders can lead to a constitutional crisis.”

She is a former research assistant for the 1970 Con-Con, a former parliamentarian for the House in the 1970s, a former chair of the Illinois State Civil Service Commission and a current law professor at John Marshall Law School in Chicago. In a recent paper for the Social Science Research Network, Lousin points out that the intent of the 1970 Constitution, Article 13, Section 5, is unknown and that there’s little legislative or court record on the subject. She says case law from the New York Constitution of 1938, upon which the Illinois section is based, suggests that the contractual guarantee applies only to the pension, not to such companion benefits as health care. And, she says, because legislators lack political will, they fail to fully fund the five state pension systems. That will result in dire consequences in the not too distant future. “By most estimates, the crisis will come by 2020 or 2025 when an Illinois pensioner will not receive a pension check.”

It's easy to assume that with or without another constitutional convention, public employee pensions are at risk in the future.

If you want more information about a constitutional convention, consider these stories that have published on this blog or in Illinois Issues magazine in the past year:

• The language of the referendum resulted in the blue piece of paper voters will get on Election Day.
• How a 2010 convention could differ from the 1970 convention
• Pros and cons of a convention: Q&A with Lt. Gov. Pat Quinn and Dawn Clark Netsch
  
• Con-Con basics (PowerPoint presentation)
• Q&A with a 1970 delegate (print only; See Illinois Issues, January 2008, page 13)
  
• Separation of powers between the executive and legislative branches (print only; See Illinois Issues, January 2008, page 19)
  
• The revenue article and tax reforms (print only; See Illinois Issues, February 2008, page 27)