Illinois lawmakers and Gov. JB Pritzker did not violate the state constitution by consolidating hundreds of local police and firefighter pension boards into two statewide funds, the Illinois Supreme Court has ruled.
On Jan. 19, the state high court sided with Pritzker and against local police and firefighter pension boards, who had challenged a state law that Pritzker and others said was needed to "alleviate ... spiraling property tax burdens" throughout Illinois caused by ever-mounting burdens to fund pensions for public workers.
In the unanimous ruling, the Illinois Supreme Court agreed with state officials, who argued the 2019 law did not violate either the Illinois state constitution's pensions protection clause nor did it amount to an unconstitutional "taking" of retirees' property by wresting control of investment decisions from more than 650 local pension boards and centralizing that power within two new statewide boards, one each for police pensions and firefighter pensions.
Illinois Supreme Court Chief Justice Mary Jane Theis
| Illinoiscourts.gov
"... The ability to vote in elections for local pension board members is not ... a constitutionally protected benefit, nor is the ability to have local board members control and invest pension funds," wrote state Supreme Court Chief Justice Mary Jane Theis in the court's opinion.
"It is axiomatic that, if plaintiffs have no constitutional right in how their local pension funds are funded or the adequacy of that funding, they similarly have no constitutional right regarding who invests local fund assets. The Act does not change plaintiffs’ right to elect members of their local funds’ boards or the local boards’ authority to determine the amount of benefits plaintiffs are entitled to receive. It only changes the local boards’ power to invest the assets of the local funds.
"Simply put, the 2020 amendment to the Pension Code has no impact on plaintiffs receiving their promised monetary benefits."
The decision ends a court battle that was joined following Pritzker's decision to sign into law the legislation known as Senate Bill 1000, or Public Act 101-610.
The law rewrote a portion of the state's Pension Code to create the Police Officers’ Pension Investment Fund and the Firefighters’ Pension Investment Fund, new entities that would pool pension funds from than 650 formerly independent local police and firefighter pension funds in suburban and downstate communities.
The funds would be governed by nine member boards. Three members would be chosen from officers or executives of the affected municipalities; three from active participants; two from beneficiaries; and one whom the Illinois Municipal League would nominate for gubernatorial appointment subject to state Senate confirmation.
At the time, Pritzker estimated the consolidation would allow the pension funds to raise an extra $2.5 billion in investment returns from 2020-2025.
While the legislation garnered some support from union leaders and groups representing Illinois cities, villages and counties, a collection of dozens of the local pension funds filed suit to challenge the law. They claimed the law violated the Illinois state constitution's pensions clause, in particular. That clause generally blocks state and local governments from taking action that would "diminish or impair" pension benefits enjoyed by government workers in Illinois.
In their lawsuit, the pension funds argued the consolidation diminished workers' and retirees' rights to vote over who controls the investment decisions for their pension funds.
They further argued the law amounted to an unconstitutional taking of their rights to control their property.
The pension funds lost in every court that heard the case, beginning in Kane County Circuit Court, then at the Illinois Second District Appellate Court, and ultimately before the Illinois Supreme Court.
In each court, the judges all agreed that the pension funds' arguments stretched too far, as they found the law does not result in any income loss for pensioners.
"... Although plaintiffs have a constitutional right to receive the benefit payments promised to them, which the Act does not change, they do not have a property right to any particular level of assets used to pay those benefits or in the way those assets are held or invested," Theis wrote, for the Illinois Supreme Court.