Gino DiVito, attorney for the Illinois Retired Teachers Association, successfully arguing against pension theft before the Illinois Supreme Court.
A few weeks ago I wrote some blog posts about an op-ed piece and a longer article penned by attorney Eric Madiar.
Who is Eric Madiar?
He is the former lawyer for Democratic Illinois Senate President John Cullerton and advised him on pension law.
Madiar has a history of correctly warning the Illinois legislature that the Illinois Constitution and contract law give them limited options for messing around with our pension benefits.
The Article XII, Section 5 pension protection clause prohibits any diminishment or impairment of our benefits. The Illinois Supreme Court upheld the broad application of the pension protection clause in its historic ruling in May of 2015.
But now Madiar offers legal support for Cullerton’s pension reform, an idea that provides hope to Mayor Emanuel and Governor Rauner in their pursuit of cutting a deal reducing current employees’ future benefits.
Cullerton’s reform, supported by Madiar, is an attempt to meet the contractual legal requirement of consideration.
What is Consideration? Consideration requires that any agreement to change a contractual arrangement, such as retiree pension benefits, provide in exchange something of equal or greater value.
Madiar believes that public employee unions could bargain pension benefits using the consideration of forced choice.
Cullerton would have current employees choose between COLA increases in retirement or pensionable salary.
How does a choice between two diminishments meet the definition of consideration?
Dino DiVito and John M. Fitzgerald are lawyers who represented the Illinois Retired Teachers Association (IRTA) in the case against pension theft in Senate Bill 1. DiVito made the main oral argument before the Illinois Supreme Court when the Court ruled in our favor.
Yesterday CapitolFax posted an opinion by DiVito and Fitzgerald challenging the constitutionality of Cullerton’s forced choice proposal and disagreed with Madiar’s legal arguments.
DiVito and Fitzgerald write:
Mr. Madiar concedes that Illinois decisions have “invalidated legislation that unilaterally narrowed the statutory definition of pensionable salary,” but he argues that none of those decisions “involved an express offering of future salary increases on a non-pensionable basis” (emphasis in original). To us, that is a distinction without a difference. Changing the law to provide that future salary increases will not count towards one’s pensionable salary constitutes a diminishment of one’s constitutionally protected pension rights. Such a change would suffer the same fate as other changes to the Pension Code’s formulation of one’s pensionable salary.
Nor is the outcome different simply because a pension system member is given a “choice” between two alternative pension diminishments. Mr. Madiar argues that a diminishment of pension rights may be constitutionally valid if it is part of a “bargained-for exchange.” This argument may have persuasive force if a pension system member is being offered some new benefit in exchange for surrendering a pension right. In the Cullerton proposal, however, there is no new benefit. Under that proposal, at best, a pension system member is permitted to keep the current statutory treatment of his or her pensionable salary.
Mr. Madiar also argues that the “choice” imposed on pension system members by the Cullerton proposal is not tantamount to duress. Even if true, that point would be irrelevant. If both options presented by the Cullerton proposal are unconstitutional pension diminishments, then the proposal would be invalid regardless of whether it constitutes duress in the legal sense.
In conclusion, we applaud Mr. Madiar for his continued scholarship on this crucial legal subject. We also agree that creative ideas will be necessary to address the chronic problem of pension system underfunding in this State. We strongly believe, however, that this particular proposal is unconstitutional.
What DiVito and Fitzgerald do not say in their CaptiolFax opinion is that the only real creative idea that will work is to fully fund the pension systems by raising adequate revenue.