Rauner’s plan B for pension reform: Amend the constitution

Rauner’s plan B for pension reform: Amend the constitution

While the state waits for the Supreme Court’s SB 1 ruling, Gov. Bruce Rauner and other lawmakers are working up a pitch to amend the state constitution.

The pension clause in the Illinois Constitution is the reason Senate Bill 1 – the reform bill the Illinois General Assembly passed and former Gov. Pat Quinn signed – is tied up in the courts. And it’s the reason the state will be sued if it does anything other than increase pension benefits, as Gov. Bruce Rauner noted in his recent meeting with the Tribune editorial board.

The debate over Illinois’ pension clause boils down to this: Should pension benefits be treated just like other contractual obligations or is the pension clause absolute – meaning benefits cannot be changed under any circumstances?

The Illinois Policy Institute filed an amicus brief with the Illinois Supreme Court earlier this year arguing in defense of the former. The clear purpose of the pension clause is to protect the state’s government pension benefits to the same extent the contract clauses of the U.S. Constitution and the Illinois Constitution protect all other contractual obligations. And although that protection is strong, it is not absolute.

Unfortunately, the Supreme Court denied all requests from outside groups to file briefs on the case. While the state waits for the Supreme Court’s SB 1 ruling, Gov. Bruce Rauner and other lawmakers are working up a plan B.

Rauner announced recently that he plans to put a constitutional amendment on the 2016 ballot that would allow the state to move forward with pension reform.

To appear on the ballot, the amendment would first need to pass out of the General Assembly with a three-fifths majority in the both the House and Senate. It would then need to be approved by either a majority of those voting in the election or three-fifths of those voting on the amendment itself.

If the amendment gains the approval of the General Assembly and Illinois voters, lawmakers would then have the green light to amend the Illinois Constitution and remove what is commonly referred to as the pension-protection clause.

Although Rauner hasn’t introduced specific language yet, he may pick up legislation that’s already been introduced by state Reps. Joe Sosnowski, R-Rockford, and Thomas Morris, R-Palatine, who introduced House Joint Resolution Constitutional Amendment 9 this legislative session. HJRCA 9 sets the stage for a move to amend the pension clause. Specifically, the bill strikes the following language from Section 5 of the Constitution:

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

If the Illinois Supreme Court strikes down SB 1, pension reform is still possible. Removing this language from the Constitution would make it much easier to pass a comprehensive pension-reform package.

Lawmakers can move forward today with two reforms that avoid constitutional conflict: moving all new workers into 401(k)-style, defined-contribution retirement plans going forward; and giving current government workers the opportunity to opt out of the defined-benefit pension system and participate in a 401(k)-style system going forward. Neither of these reforms would solve Illinois pension crisis, but they would help stop the bleeding.

A bolder reform would be to move government workers to 401(k)-style, defined contributions for future work. This reform would give employees control over their retirements going forward and wouldn’t diminish any already-earned benefits.

Image source. 

Want more? Get stories like this delivered straight to your inbox.

Thank you, we'll keep you informed!