The Illinois Supreme Court on Tuesday heard arguments in a case alleging the state鈥檚 2019 law that consolidated nearly 650 individual police and firefighter pension funds actually hurt retirees by diluting their voting power.
The nearly three-dozen pensioners and 17 individual pension funds that sued over the law have already lost twice in lower court. But their attorney on Tuesday was insistent the retired police and firefighters were wronged when Gov. JB Pritzker signed the law 鈥� passed with overwhelming bipartisan majorities in the General Assembly 鈥� that consolidated the 649 funds into two.
The pair of funds 鈥� one that manages pensions for retired police and the other for retired firefighters 鈥� were consolidated in order for them to access bigger investments previously not available to the hundreds of small individual funds, all in the hopes of yielding larger returns.
Consolidation also eliminated administrative costs paid out of the individual pension funds.
But attorney Daniel Konicek said his clients鈥� objection wasn鈥檛 about the money, but rather their say in how the money is managed.
鈥淚t completely, undeniably diluted their ability to put people on a five-person board that they knew, versus these new boards of people that are statewide and (they) don't know,鈥� Konicek told the justices.
But nearly before he was done speaking, Justice Mary K. O鈥橞rien cut in.
鈥淗ow does that impact whether or not they get a check at the end of the month or on the 19th of the month?鈥� she asked.
Konicek didn鈥檛 directly answer, noting that interpretation was what the lower courts had relied on. Instead, he urged the justices to look at the court鈥檚 previous decisions in pension-related cases, particularly in the last decade.
In 2014, for example, six of the seven justices on the court ruled the 鈥減ension protection clause鈥� in Illinois鈥� constitution prevented the state from reducing health care benefits to retirees. The constitution stipulates that membership in any government retirement system in Illinois is 鈥渁n enforceable contractual relationship, the benefits of which shall not be diminished or impaired.鈥�
So, Konicek argued, in ruling that the pension protection clause extends to more than just pension benefits alone, the court should also find that voting rights for local pension funds is also a benefit that members are guaranteed.
鈥淚sn't it accurate that even in (the 2014 case) we were talking about something that鈥educed the financial benefit?鈥� Justice Joy Cunningham asked. 鈥淚t was about money, not voting.鈥�
In 2015, the court unanimously ruled that Illinois鈥� constitution prevented the General Assembly from enacting a massive pension overhaul plan that would鈥檝e cut state retirees鈥� annual three percent compounded cost of living adjustments 鈥� one of the main drivers of the state鈥檚 ever-growing unfunded pension liabilities.
Chief Justice Mary Jane Theis, the only justice left who was on the court a decade ago, asked the bulk of questions to Konicek, and even toward the end of his rebuttal still was unclear about the 鈥渂enefit鈥� he was arguing was impaired in this case.
鈥淪o again 鈥� let鈥檚 be real clear 鈥� what is the benefit that has been diminished?鈥� Theis asked. 鈥淭hat members no longer have a vote as to who makes the investment decisions?鈥�
Konicek affirmed her assertion before wrapping up his arguments.
Assistant Attorney General Richard Huszagh sought to further bolster justices鈥� apparent skepticism about financial benefits to pensioners not being affected by the law.
鈥淚t does not reduce by a penny the payments made to any member,鈥� he said, further noting the individual pension funds are still able to determine for themselves whether, for example, a member is eligible for disability, and the formula for those payments.
Huszagh also told the justices that Konicek and his clients are 鈥渁sking the court to overrule 50 years of its own precedent鈥� that he argues defines 鈥渧ery clearly鈥� what benefits are and are not protected by Illinois鈥� constitution.
He warned that the court ruling in the plaintiffs鈥� favor would 鈥渙pen up a giant can of worms鈥� as such a ruling would then call into question many other changes made to pension fund administration in the last 50 years since the state constitution was ratified 鈥� including a state law that requires pension funds to hire investment advisors.
鈥淲ell, that would be unconstitutional because somebody would consider it a benefit not to have investment advisors and not to incur those expenses,鈥� Huszagh said. 鈥淭here's no stopping point for where they want to go with this case.鈥�
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