Pension battle headed for SCOTUS?

Lisa Madigan

AG Madigan’s office seeks an extension to file request

By Mark Fitton
Illinois News Network

SPRINGFIELD — Attorney General Lisa Madigan is considering an appeal of the state high court’s May decision that tossed out the state’s 2013 Pension Reform Act.

Madigan’s office on Monday put in a request for a filing extension with the U.S. Supreme Court. The attorney general’s office asks that it be given until Sept. 10 to file for a writ of certiorari, or request for the high court to take the case.

Without an extension, the clock would toll on Aug. 6.

A spokeswoman for the attorney general said it’s not definite the state will appeal the Illinois Supreme Court’s decision, but the attorney general is considering every option.

“We have asked for an extension of the deadline to file a cert petition, which is fairly routine request,” said Annie Thompson of the attorney general’s office. “With the decision in the city of Chicago’s pension case late last week, we are continuing to consider all of the arguments and the best next step.”

The Illinois Supreme Court in May struck down as unconstitutional the Legislature’s 2013 attempt to rein in Illinois state pension costs. That act would have reduced annual increases in retiree benefits, raised the retirement age for younger government workers and capped salary amounts for pension purposes.

Similarly, a Cook County circuit judge last week tossed out a Chicago plan to shore up two of its troubled pension funds.

In both cases, jurists have ruled in favor of the suing employees and pensioners, essentially saying the state’s 1970 pension protection clause means exactly what it says:

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

Central to the state’s argument for upholding the 2013 act has been the concept of police powers, also known as reserve sovereign powers.

Police or sovereign powers let a state step outside normal contract law when its actions are meant to ensure it can continue to provide for society’s health, safety and welfare.

It has been argued the state and the city of Chicago are in financial crisis.

The state has an unfunded pension debt of more than $100 billion. Supporters of the 2013 act say the pension debt is economically strangling the state as its payments account for about $1 of every $4 the state collects in general revenue.

Chicago is in a similar spot. The laborer and municipal employee funds addressed in last week’s ruling are underfunded by more than $9 billion and are projected to fail in roughly a dozen years if nothing is done to address the shortfalls.

The attorney general’s filing indicates reserve powers would again be the central issue should the federal high court decide to consider the case.

The case “raises important issues regarding the reserved powers doctrine of the United States Constitution, which prohibits a state from surrendering ‘an essential attribute of its sovereignty,’ including’ its ‘police powers’ to modify contractual obligations…in particular when exercising those powers is ‘reasonable and necessary to serve an important public purpose,’” wrote Illinois Solicitor General Carolyn Shapiro.

The attorney general’s filing says the two central questions are:

-Whether the reserved powers doctrine prevents a state from abdicating its police powers authority to modify its own contractual obligations in extreme circumstances that impairs the general welfare, and:

-If not, whether the state Supreme Court identified the correct standard in judging the validity of the state exercising its police powers.

The attorney general’s request for an extension was filed with Justice Elena Kagan, whose duties including serving as the circuit justice for the Seventh Circuit of the U.S. Court of Appeals, which includes Illinois.

Aaron Maduff, one of the attorneys for the workers and pensioners, said Kagan is generally viewed as quite reasonable regarding requests for extension and would likely grant this one.

Should the attorney general file an actual request for the court to take up the case, plaintiffs’ attorneys will file their own response in objection, Maduff said.

“I think the case they’ve been citing (U.S. Trust Co. of New York v. New Jersey) … I don’t think it says quite what the state claims it says,” Maduff said.

“It provides that, under the contract clause, the state doesn’t necessarily by virtue of the contract clause of the United States Constitution, give up its reserve sovereign power.”

“This claim was brought under the Illinois contract clause and the Illinois pension protection clause,” Maduff said. “So I think they’re very different things, but we’ll see what the court says — or if they even actually file the petition.”

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