Kanerva v. Weems
Ill.
Illinois Official Reports
Supreme Court
Kanerva v. Weems, 2014 IL 115811
Caption in Supreme ROGER KANERVA et al., Appellants, v. MALCOLM WEEMS
Court: et al., Appellees.
Docket No. 115811
Filed July 3, 2014
Held The State’s subsidization of health insurance for its retired employees
(Note: This syllabus is a benefit of membership in a State pension system within the
constitutes no part of the meaning of the pension protection clause of the Illinois Constitution of
opinion of the court but 1970; and where a 2012 enactment eliminated the statutory standards
has been prepared by the for the State’s contributions to that health care coverage and
Reporter of Decisions substituted instead a new system for administrative determinations as
for the convenience of to how much the State should pay, allegations that the challenged
the reader.) statute was void and unenforceable under the pension protection
clause should not have been dismissed for failure to state a cause of
action—remand.
Decision Under Appeal from the Circuit Court of Sangamon County, the Hon. Steven
Review H. Nardulli, Judge, presiding.
Judgment Circuit court judgment reversed.
Cause remanded.
Counsel on Stephen A. Yokich, of Cornfield & Feldman LLP, of Chicago, for
Appeal appellants Debra Bauer et al.
Edward J. Kionka, of Carbondale, and Thomas G. Maag and Peter J.
Maag, of Wood River, for appellants Gordon Maag et al.
George W. Tinkham, of Springfield, and Rodney V. Taylor, of
Christopher & Taylor, of Indianapolis, Indiana, for appellants Gary
McDonal et al.
John M. Myers and Barbara K. Myers of Rabin & Myers, P.C., and
Donald M. Craven and Esther J. Seitz, all of Springfield, for appellants
Robert Kanerva et al.
Lisa Madigan, Attorney General, of Springfield (Michael A. Scodro,
Solicitor General, and Richard S. Huszagh and Kate E. Pomper,
Assistant Attorneys General, of Chicago, of counsel), for appellees.
Clinton A. Krislov, of Chicago, for amicus curiae Certified Classes of
Participants in the City of Chicago Annuitant Healthcare Plans.
Stephen R. Patton, Corporation Counsel, of Chicago (Benna Ruth
Solomon, Myriam Zreczny Kasper and Sara K. Hornstra, Assistant
Corporation Counsel, and Michael B. Slade, R. Chris Heck and J.
Michael Jones, of Kirkland & Ellis LLP, of counsel), for amicus
curiae City of Chicago.
Justices JUSTICE FREEMAN delivered the judgment of the court, with
opinion.
Chief Justice Garman and Justices Thomas, Kilbride, Karmeier, and
Theis concurred in the judgment and opinion.
Justice Burke dissented, with opinion.
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OPINION
¶1 At issue in this appeal is the validity of Public Act 97-695 (eff. July 1, 2012), which
amended section 10 of the State Employees Group Insurance Act of 1971 (Group Insurance
Act) (5 ILCS 375/10 (West 2012)) by eliminating the statutory standards for the State’s
contributions to health insurance premiums for members of three of the State’s retirement
systems. In place of those standards, Public Act 97-695 requires the Director of the Illinois
Department of Central Management Services to determine annually the amount of the health
insurance premiums that will be charged to the State and to retired public employees. Plaintiffs
include members of the State Employees’ Retirement System (SERS), the State Universities
Retirement System (SURS), and the Teachers’ Retirement System of the State of Illinois
(TRS), which are the three state retirement systems that are affected by Public Act 97-695.
Plaintiffs brought four putative class actions challenging the constitutionality of Public Act
97-695. Each of the complaints alleged that Public Act 97-695 violates the pension protection
clause of the Illinois Constitution of 1970 (Ill. Const. 1970, art. XIII, § 5). Two of the
complaints alleged a violation of the contracts clause (Ill. Const. 1970, art. I, § 16), and one
complaint alleged a violation of the separation of powers clause (Ill. Const. 1970, art. II, § 1).
In addition, certain plaintiffs sought injunctive relief or damages for common-law claims
based on contract and promissory estoppel. On motion of defendants, the circuit court of
Sangamon County dismissed all of the complaints, and plaintiffs appealed. This court granted
a subsequent motion for direct review, pursuant to Supreme Court Rule 302(b) (eff. Oct. 4,
2011), and ordered that the appeals from the four consolidated cases be transferred to us. We
subsequently allowed “certified classes of participants in the City of Chicago’s annuitant
healthcare programs” to file a brief as amicus curiae on behalf of plaintiffs and the City of
Chicago to file a brief as amicus curiae on behalf of defendants (Ill. S. Ct. R. 345 (eff. Sept. 20,
2010)). For the reasons that follow, the judgment of the circuit court is reversed, and the cause
is remanded for further proceedings.
¶2 BACKGROUND
¶3 In addition to the wages they are paid, most public employees in Illinois receive additional
benefits, including subsidized health care, disability and life insurance coverage, eligibility to
receive a retirement annuity, and survivor benefits. Disability, retirement annuity and survivor
benefits are governed by the Illinois Pension Code (40 ILCS 5/1-101 et seq. (West 2012)). For
state employees, the program of group life and health insurance benefits, which is available to
active employees, certain of their dependents, and certain retirees and their dependent
beneficiaries, was previously governed by the State Employees’ Insurance Benefits Act (Ill.
Rev. Stat. 1969, ch. 127, ¶ 501 et seq.). Pursuant to that statute, the State was required to pay
50% of the health insurance premium for qualified employees and annuitants. Ill. Rev. Stat.
1969, ch. 127, ¶ 509(c). The program of disability, retirement and survivor benefits and the
program of group life and health insurance benefits were in effect when the provisions of
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Illinois Constitution of 1970 were formulated during the Sixth Constitutional Convention and
approved by the voters of Illinois. 1
¶4 Effective January 1, 1972, the State Employees’ Insurance Benefits Act was repealed (Pub.
Act 77-476 (eff. Jan. 1, 1972)) and superseded by the Group Insurance Act, which also
provided a program of group life and group health insurance to current state employees, retired
state employees, and certain of their dependents (Ill. Rev. Stat. 1971, ch. 127, ¶ 522).
¶5 The Group Insurance Act increased the health insurance benefit that had been granted
under the prior statute. Initially, it called for the State to pay the full cost “of the basic
non-contributory group life insurance and group health insurance on each eligible employee
and annuitant” (Ill. Rev. Stat. 1971, ch. 127, ¶ 530(a)), but that provision was later qualified.
Effective July 1, 1992, the General Assembly amended the law to authorize the Director to
require most members who were employees to begin contributing up to $12.50 per month for
their basic group health benefits (5 ILCS 375/10(a) (West 1992)), a cap which was removed in
1995 (5 ILCS 375/10(a) (West 1996)). With respect to retired members, the 1992 amendment
provided as follows:
“The State shall pay the cost of the basic program of group health benefits only after
benefits are reduced by the amount of benefits covered by Medicare for all retired
members and retired dependents aged 65 or older who are entitled to benefits under
Social Security or the Railroad Retirement system or who had sufficient
Medicare-covered government employment ***.” 5 ILCS 375/10(a) (West 1992).
The reach of this modification in annuitant benefits was prospective only, where the
amendment expressly provided that:
“such reduction in benefits shall apply only to those retired members or retired
dependents who (1) first become eligible for such Medicare coverage on or after the
effective date of this amendatory Act of 1992; or (2) remain eligible for, but no longer
receive Medicare coverage which they had been receiving on or after the effective date
of this amendatory Act of 1992.” Id.
¶6 In 1997 and 1998, the General Assembly made further changes with respect to the program
of group health benefits for SERS, SURS and TRS annuitants, retired members and survivors.
It did so through Public Acts 90-65 (eff. July 7, 1997) and 90-582 (eff. May 27, 1998). As with
the 1992 changes affecting retiree health benefits, the 1997 and 1998 legislative acts were
prospective. They applied only to “new SERS, SURS and TRS annuitants,” “new SURS
retirees,” or “new SERS, SURS and TRS survivors,” a group limited to persons who first
became annuitants, retired employees, or survivors under the three retirement systems on or
after specified dates in 1998. Existing retirees and survivors continued to have the cost of their
basic program of group health benefits paid in full by the State, subject to the Medicare-related
modifications that were enacted in 1992. With respect to new SERS, SURS and TRS
annuitants, retired members and their survivors, the law instituted a system under which the
retired member or member’s survivor would be responsible for the cost of the basic program of
1
The convention convened December 8, 1969, and adjourned September 3, 1970. The provisions of
the new constitution were submitted to the voters for ratification at a special election held December 15,
1970. 1 Record of Proceedings, Sixth Constitutional Convention, Introduction, vii-x.
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group health benefits offered by the State, but the State would contribute toward that expense
based on the length of the member’s service. Specifically, the law provided that:
“[T]he State shall contribute toward the cost of the annuitant’s coverage under the basic
program of group health benefits an amount equal to 5% of that cost for each year of
creditable service upon which the annuitant’s retirement annuity is based, up to a
maximum of 100% for an annuitant with 20 or more years of creditable service.”
5 ILCS 375/10(a-1) to (a-7) (West 1998).
The remainder, if any, of the cost of coverage under the basic program of group health benefits
was the responsibility of the annuitant or the survivor. Id. The terms of these provisions were
disseminated to affected state employees, annuitants and survivors through, among other
things, a benefit handbook published by the Illinois Department of Central Management
Services.
¶7 In 1998, the American Federation of State, County, and Municipal Employees, Council 31
(AFSCME), the labor union that serves as the exclusive bargaining representative for
approximately 40,000 state employees, negotiated a new collective bargaining agreement with
the State on behalf of its members. That agreement addressed the health insurance benefits that
would be provided to former employees who had retired and to then-current employees when
they retired in the future. Its substantive provisions were consistent with section 10 of the
Group Insurance Act, as amended by Public Acts 90-65 and 90-582. With respect to new
annuitants and their survivors, the agreement adopted the same service-based schedule of
graduated premium percentages set forth in section 10. The collective bargaining agreement
did not alter the State’s obligations regarding annuitants who had retired prior to January 1,
1998, or their survivors. As to those individuals, the State remained obligated to pay the cost of
their basic program of group health benefits in full, subject to the 1992 Medicare-related
modifications, just as it was with respect to annuitants and survivors not covered by the
collective bargaining agreement.
¶8 The collective bargaining agreement covered the period between 1997 and 2000. The same
terms governing the State’s obligation to pay the cost of the basic program of group health
benefits for annuitants and survivors were incorporated into successive collective bargaining
agreements covering the periods between 2000 and 2004, 2004 and 2008, and 2008 and 2012.
¶9 In 2002, the General Assembly enacted Public Act 92-566, effective June 25, 2002, which
offered an early retirement incentive program for members of SERS and TRS. 40 ILCS
5/14-108.3, 16-133.3 (West 2002). This statute amended Articles 14 and 16 of the Pension
Code to provide that members of these retirement systems could establish up to five years of
creditable service and age enhancements. The additional creditable service and, subject to
some limits, the age enhancements could be used to accelerate an employee’s eligibility to
receive a retirement annuity, allowing him or her to retire earlier than would otherwise have
been possible. Receipt of a retirement annuity would, in turn, qualify the new annuitant to
begin receiving the service-based contributions from the State toward the cost of his or her
coverage under the basic program of group health benefits as specified by Public Acts 90-65
and 90-582 and, in the case of employees who belonged to AFSCME, as required by the
collective bargaining agreements.
¶ 10 Participation in the statutory early retirement program was voluntary and subject to several
qualifications. In exchange for obtaining the benefits provided under the law, employees were
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required to file written applications and terminate their employment with the State before the
end of the year. Any employee who retired early under the program could not thereafter return
to state service, other than as a temporary employee, without forfeiting the age enhancement
and creditable service obtained through the program. Moreover, employees who wished to
obtain the age enhancement and additional creditable service had to make specified
contributions that were based on each individual employee’s rate of compensation and
retirement contribution rate as of June 1, 2002. See 40 ILCS 5/14-108.3, 16-133.3 (West
2002).
¶ 11 Prior to the deadline for making an election to take early retirement under that program, the
Department of Central Management Services and SERS distributed materials to state
employees describing the law’s provisions, including the impact on service credits under the
applicable Pension Code provisions. That information was disseminated in various ways,
including in a pamphlet and on an internet website. The SERS pamphlet stated, inter alia,
“[o]n the effective date of your retirement, your group health, dental and life insurance
continues automatically. *** If you have at least 20 years of creditable service with SERS,
your health coverage is provided at no cost.” The web page of the Department of Central
Management Services included a section designated as “Frequently Asked Questions,” which
stated “[i]f you have established at least 20 years of creditable service, either by having worked
20 years or by purchasing additional creditable service time under the Early Retirement
provisions ***, your health insurance coverage is provided at no cost when your pension
begins.” These representations accurately described the benefit eligibility rules under the
governing law in effect at the time.
¶ 12 Ten years after the 2002 early retirement program was implemented, the General
Assembly passed and the Governor signed into law Public Act 97-695, the legislation that is
the subject of this appeal. This new law, which took effect in July of 2012, fundamentally
altered the State’s obligation to contribute toward the cost of coverage under the basic program
of group health benefits for annuitants, retirees and survivors in SERS, SURS, and TRS. It did
so by repealing the statutory provisions that, subject to the 1992 Medicare-related
modifications, required the State to pay in full the cost of benefits for pre-1998 annuitants,
retirees and survivors in those three systems and to make specified contributions according to
the service-based graduated schedule for those who became new annuitants, retirees or
survivors under those systems beginning in 1998. In place of those provisions, the General
Assembly established a new system under which the amount the State will contribute toward
the basic program of group health benefits on behalf of SERS, SURS and TRS annuitants,
retirees and survivors is to be determined administratively, on an annual basis, by the Director
of the Department of Central Management Services. 5 ILCS 375/10(a-8.5) (West 2012).
¶ 13 To facilitate the implementation of the new system, Public Act 97-695 amended the Illinois
Administrative Procedure Act (5 ILCS 100/1-1 et seq. (West 2012)) to permit the contributions
paid by “the State, annuitants, survivors, retired employees, or any combination of those
entities” for group health benefits to be altered through emergency rules. 5 ILCS 100/5-45(c),
(c-5) (West 2012). Rules subsequently promulgated by the Department of Central
Management Services pursuant to this authority have adopted a two-part formula for
calculating premiums. 80 Ill. Adm. Code 2200.510 (2013). First (with limited exception for
certain SURS retirees and their survivors), annuitants, retirees and survivors must pay a
portion of the cost of their group health benefits based on the same service-based graduated
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schedule previously set forth in now-repealed sections of the statute for post-1998 annuitants,
retirees and survivors. 80 Ill. Adm. Code 2200.530 (2013). In addition, each annuitant,
survivor or retired employee with primary coverage under the State’s group health insurance
program must also pay an extra sum based on the total annual annuity they are receiving from
any and all of the State’s five retirement systems. Annuitants, survivors or retired employees
with primary coverage under Medicare, and those 65 or older whose primary coverage would
otherwise be under the federal Medicare health insurance program except for his or her
inability to contribute to Medicare while actively working, must pay an additional premium
equal to 1% of their total annual annuity. 80 Ill. Adm. Code 2200.520(b), (c) (2013). All others
are required to pay an additional premium equal to 2% of their total annual annuity. 80 Ill.
Adm. Code 2200.520(a) (2013).
¶ 14 Application of Public Act 97-695 and the rules promulgated thereunder is not limited to
those who become annuitants or survivors on or after the statute’s effective date. Unlike
previous changes to the Group Insurance Act, Public Act 97-695 makes no distinction based on
when a person first became an annuitant, retiree or survivor. The new two-part formula applies
to existing annuitants, retirees and survivors as well as those who retire or qualify as survivors
in the future. Moreover, the new law contains no exceptions for either annuitants, retirees or
survivors whose health benefit costs were negotiated by AFSCME and incorporated into
collective bargaining agreements or for those annuitants, retirees or survivors who elected to
participate in the early retirement program offered by the State in 2002.
¶ 15 Also, Public Act 97-695 does not require that the current two-part formula be retained, nor
does it impose any caps on the amount the Director may require annuitants, retirees or
survivors to pay toward their health insurance. Although annuitants, retirees and survivors may
waive or terminate their coverage (5 ILCS 375/10(a-8) (West 2012)), the law affords them no
offsetting benefit for doing so.
¶ 16 After Public Act 97-695 took effect, four separate lawsuits were filed challenging its
constitutionality and contesting the State’s right to charge premiums under the new system.
Bauer v. Weems, No. 12-L-35 (Cir. Ct. Randolph Co.); Kanerva v. Weems, No. 12-L-582 (Cir.
Ct. Sangamon Co.); Maag v. Quinn, No. 12-L-162 (Cir. Ct. Sangamon Co.); McDonal v.
Quinn, No. 12-L-987 (Cir. Ct. Madison Co.). All sought certification as class actions pursuant
to section 2-801 et seq. of the Code of Civil Procedure (735 ILCS 5/2-801 et seq. (West 2012)),
but none has yet been certified.
¶ 17 The named plaintiffs in the four cases include former state employees who retired and first
began to receive annuities from state retirement systems after January 1, 1998, some as the
result of an election to participate in the 2002 early retirement program. All of the post-1998
retirees in the Bauer v. Weems, Kanerva v. Weems, and McDonal v. Quinn cases are “new
annuitants” within the meaning of Public Acts 90-65 and 90-582, and throughout their
retirement, the cost of their basic program of group health benefits has been paid by the State in
accordance with the service-based schedule of graduated premium percentages set forth in that
statute.
¶ 18 All the named plaintiffs in the Bauer v. Weems case are current or retired union members
covered by the collective bargaining agreements negotiated by AFSCME, including the
provisions of those agreements requiring the State to contribute to the cost of their basic
program of group health benefits under the terms described above.
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¶ 19 The Kanerva v. Weems, Bauer v. Weems, and McDonal v. Quinn cases each name as a
defendant Malcolm Weems in his capacity as Director of the Department of Central
Management Services. The Department of Central Management Services is an additional
defendant in the Bauer v. Weems case, while the Board of Trustees of SERS and the State
Comptroller are additional defendants in the Kanerva v. Weems litigation. In the McDonal v.
Quinn case, the Governor and State Treasurer are named as additional defendants. The
Governor and the State Treasurer were initially the sole defendants in the Maag v. Quinn case,
though plaintiffs ultimately named Weems, the Board of Trustees of SERS, and the State
Comptroller as defendants in that case as well.
¶ 20 All four cases assert that the obligations under the prior law, requiring the State to make
specified contributions toward the health insurance premium for annuitants and survivors in
the State’s retirement systems, constitute a benefit of membership in those systems within the
meaning of article XIII, section 5, of the Illinois Constitution of 1970 (Ill. Const. 1970, art.
XIII, § 5). Plaintiffs contend that by amending the law to authorize a system under which
annuitants and survivors are required to contribute additional amounts toward the cost of their
health care, where those costs previously were borne by the State, Public Act 97-695 has
diminished or impaired this retirement system membership benefit.
¶ 21 The plaintiffs in the Kanerva v. Weems and Bauer v. Weems cases also challenge the
validity of Public Act 97-695 on additional grounds. The complaint filed in the Kanerva v.
Weems action asserts that Public Act 97-695 violates the separation of powers clause in the
Illinois Constitution (Ill. Const. 1970, art. II, § 1) as “an invalid delegation of legislative
authority to an administrative agency or officer” because it fails to provide the Director of the
Department of Central Management Services with intelligible standards by which to exercise
his statutory duty to determine the level of contributions by the State and the retired members
of the affected retirement systems.
¶ 22 The Kanerva v. Weems plaintiffs further claim that Public Act 97-695 violates the
contracts clause of the Illinois Constitution (Ill. Const. 1970, art. I, § 16), which provides that
“[n]o ex post facto law, or law impairing the obligation of contracts *** shall be passed.” The
Kanerva v. Weems complaint alleges that the provisions of the prior law constituted a promise
to provide health insurance coverage to retirees at no cost if they had at least 20 years of
creditable service on the effective date of their retirements and that Public Act 97-695 deprived
them of the benefit of the resulting contractual right in violation of article I, section 16.
¶ 23 Finally, the Kanerva v. Weems plaintiffs also assert a claim for promissory estoppel on
behalf of those among them who had elected to participate in the early retirement program in
2002. As to that subset of now-retired employees, they allege that the State promised
participants in that program that they would receive free health insurance if they established at
least 20 years of creditable service and that the subset of plaintiffs who took early retirement
reasonably and detrimentally relied on the State’s promise by, among other things, retiring
from state service and making cash payments to obtain the additional service credits. That
subset of plaintiffs claim that, under these circumstances, the State should not be permitted to
renege on its promise and should be enjoined from withholding health insurance premiums
from the annuity payments owed to the early retirees.
¶ 24 The complaint in the Bauer v. Weems case also challenges Public Act 97-695 on the
ground that it constitutes an impermissible impairment of contract in violation of the contracts
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clause (Ill. Const. 1970, art. I, § 16). The Bauer v. Weems plaintiffs allege that the
service-based schedule of graduated premium percentages, established by section 10 of the
Group Insurance Act, is a form of deferred compensation and that the terms of the collective
bargaining agreements, which incorporated that service-based schedule, created an
enforceable contractual right to collect this deferred compensation upon their retirement. The
Bauer v. Weems plaintiffs further assert that requiring contributions in excess of those required
under the service-based graduated schedule, as provided in the collective bargaining
agreements, constitutes a breach of contract under common-law principles, for which they are
entitled to an award of damages.
¶ 25 The Kanerva v. Weems and Maag v. Quinn cases were both filed in Sangamon County.
The action brought by the Bauer v. Weems plaintiffs was initiated in Randolph County. The
action filed by the McDonal v. Quinn plaintiffs was brought in Madison County. After the
cases were commenced, defendants filed motions, pursuant to Supreme Court Rule 384 (eff.
Nov. 1, 1990), requesting that the Bauer v. Weems and McDonal v. Quinn cases be transferred
to the circuit court of Sangamon County and consolidated with the Kanerva v. Weems and
Maag v. Quinn cases. We granted that motion, and all four cases were subsequently litigated in
the circuit court of Sangamon County.
¶ 26 Following consolidation, defendants filed a combined motion to dismiss all four
complaints, challenging the sufficiency of the pleadings under section 2-615 of the Code of
Civil Procedure (Code) (735 ILCS 5/2-615 (West 2012)) and seeking involuntary dismissal
under section 2-619 of the Code (735 ILCS 5/2-619(a)(1) (West 2012)). See 735 ILCS
5/2-619.1 (West 2012). Defendants argued that plaintiffs failed to state a cause of action for
violation of article XIII, section 5, because that provision protects only traditional pension
benefits and does not encompass the State’s obligations to contribute toward the cost of health
care benefits for retired state employees and their survivors, which was the subject of Public
Act 97-695. Defendants also asserted that plaintiffs failed to state a claim for violation of the
contracts clause in article I, section 16, because state employees, retirees and survivors have no
contractual right to the health care benefit subsidies that were abolished by Public 97-695.
Defendants further contended that Public Act 97-695 was not subject to challenge on the
ground that it constituted an impermissible delegation of legislative authority to an
administrative agency or officer, where it provided the requisite clarity and guidance.
¶ 27 The portion of defendants’ motion that sought involuntary dismissal under section 2-619 of
the Code (735 ILCS 5/2-619 (West 2012)), was premised on the contention that under the State
Lawsuit Immunity Act (745 ILCS 5/1 et seq. (West 2012)) the circuit court lacked jurisdiction
to consider any of plaintiffs’ claims except those seeking injunctive relief. Moreover, even as
to those claims, the State argued that because the Governor, the Treasurer, and the Comptroller
have no authority for enforcement of Public Act 97-695, the claims for injunctive relief should
be dismissed as to them, and those claims should proceed, if at all, only against the Director of
the Department of Central Management Services.
¶ 28 While defendants’ motion to dismiss was pending, the Maag v. Quinn and McDonal v.
Quinn plaintiffs requested leave to amend their complaints to add additional claims. The
proposed second amended complaint in the Maag v. Quinn case added a promissory estoppel
claim similar to one asserted by the Kanerva v. Weems plaintiffs. The McDonal v. Quinn
plaintiffs’ amended complaint sought to add claims sounding in contract and alleging that
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defendants had breached a promise to current and prospective employees that the State would
not charge them for medical and dental insurance for themselves and their dependents upon
retirement.
¶ 29 Following briefing and argument, the circuit court entered an order on March 19, 2013,
dismissing all of plaintiffs’ claims on the grounds asserted in defendants’ motion. After entry
of that dismissal order, the named plaintiff in the Maag v. Quinn case asked the court to rule on
his pending motion to amend his complaint. In response, the Kanerva v. Weems plaintiffs
stated that they did not want to delay appellate review and that they opposed “another round of
briefs and argument,” but would not oppose a decision to “grant leave to file the amended
complaints and then immediately dismiss them without briefs or argument and based on [the
circuit court’s] present ruling.” The circuit court responded as follows:
“It is not my intention to re-brief or re-argue the Motions to Dismiss. *** If no one
objects, I will simply enter an order granting the Motion for Leave to File the Amended
Complaint, note that it only raises issues that were addressed by the Motion to Dismiss,
and then immediately dismiss the Amended Complaint for the reasons set forth in my
March 19 Order.”
The defendants advised the court that they had no objection to the suggested resolution,
explaining their agreement was “[i]n light of your indication of how you intend to proceed if no
party objects to the *** motions to file amended complaints ***, as well as the lack of any
objection by any of the plaintiffs’ counsel (including in Maag v. Quinn and McDonal v. Quinn)
to that manner of proceeding.” Counsel in the Maag v. Quinn case also responded that his
client had no objection to the suggested procedure, but did not waive objections to the
dismissal of that case.
¶ 30 On March 21, 2013, the circuit court entered a “corrected order” that granted the Maag v.
Quinn and McDonal v. Quinn plaintiffs leave to file amended complaints and dismissed those
complaints for the reasons set forth in its March 19, 2013 order. The order further stated that
the circuit court had “considered the Motions to Dismiss in regards to the Amended
Complaints” and that “[t]here is no reason to delay the enforcement or appeal of this Order.”
This appeal followed.
¶ 31 ANALYSIS
¶ 32 The central issue in this appeal, which is common to all four cases before us, is whether the
circuit court erred in dismissing plaintiffs’ claims that Public Act 97-695 violates the pension
protection clause of the Illinois Constitution of 1970 (Ill. Const. 1970, art. XIII, § 5). Those
claims were challenged by defendants and dismissed by the circuit court under section 2-615
of the Code (735 ILCS 5/2-615 (West 2012)).
¶ 33 A motion to dismiss under section 2-615 challenges the legal sufficiency of a complaint.
Bonhomme v. St. James, 2012 IL 112393, ¶ 34. In ruling on such a motion, a court must accept
as true all well-pleaded facts in the complaint, as well as any reasonable inferences that may
arise from them. Id. The critical inquiry is whether the allegations of the complaint, when
construed in the light most favorable to the plaintiff, are sufficient to establish a cause of action
upon which relief may be granted. Id. A cause of action should not be dismissed under section
2-615 unless it is clearly apparent from the pleadings that no set of facts can be proven that
would entitle the plaintiff to recover. Khan v. Deutsche Bank AG, 2012 IL 112219, ¶ 47. Our
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review of an order granting a section 2-615 motion to dismiss is de novo (id.), as is our review
of a determination as to the constitutionality of a statute (Cwik v. Giannoulias, 237 Ill. 2d 409,
416 (2010)).
¶ 34 Statutes are presumed to be constitutional, and the party challenging the validity of a
statute bears the burden of rebutting this presumption. Hope Clinic for Women, Ltd. v. Flores,
2013 IL 112673, ¶ 33. In addition, this court has a duty to construe a statute in a manner that
upholds its validity and constitutionality if such a construction is reasonably possible. Cwik,
237 Ill. 2d at 416.
¶ 35 The question of whether the pension protection clause applies to an Illinois public
employer’s obligation to contribute to the cost of health care benefits for employees covered
by one of the state retirement systems presents an issue of first impression in this court.2
Resolution of this issue requires that we determine the scope of the protections afforded by
article XIII, section 5, which presents a question of constitutional interpretation.
¶ 36 The construction of constitutional provisions is governed by the same general principles
that apply to statutes. People ex rel. Chicago Bar Ass’ n v. State Board of Elections, 136 Ill. 2d
513, 526-27 (1990). Our objective when construing a constitutional provision is to determine
and effectuate the common understanding of the citizens who adopted it (Committee for
Educational Rights v. Edgar, 174 Ill. 2d 1, 13 (1996)), and courts will look to the natural and
popular meaning of the language used as it was understood when the constitution was adopted
(Hamer v. Board of Education of School District No. 109, 47 Ill. 2d 480, 486 (1970)). Where
the language of a constitutional provision is unambiguous, it will be given effect without resort
to other aids for construction. Graham v. Illinois State Toll Highway Authority, 182 Ill. 2d 287,
301 (1998). In addition, it is proper to consider constitutional language “in light of the history
and condition of the times, and the particular problem which the convention sought to address
***.” Client Follow-Up Co. v. Hynes, 75 Ill. 2d 208, 216 (1979). “Moreover, *** to the extent
there is any question as to legislative intent and the clarity of the language of a pension statute,
it must be liberally construed in favor of the rights of the pensioner.” Prazen v. Schoop, 2013
IL 115035, ¶ 39; accord Shields v. Judges’ Retirement System,204 Ill. 2d 488
, 494 (2003);
Matsuda v. Cook County Employees’ & Officers’ Annuity & Benefit Fund, 178 Ill. 2d 360,
365-66 (1997).
¶ 37 In this case, plaintiffs contend that, by eliminating the statutory standards in the prior
version of section 10 of the Group Insurance Act and requiring annuitants and survivors to
contribute additional amounts toward the cost of their health care, Public Act 97-695 has
diminished or impaired this retirement system membership benefit, in violation of the pension
protection clause. Defendants respond by asserting that State contributions to retiree health
insurance premiums, which are not codified in the Pension Code and are not paid from the
assets of the retirement funds established in the Pension Code, are fundamentally different
from pension annuities and, therefore, are not included within the protections afforded by
article XIII, section 5.
2
Two trial courts have addressed this issue and reached divergent conclusions. See Marconi v. City
of Joliet, No. 10-MR-165 (Cir. Ct. Will Co. July 21, 2011), rev’d and remanded on other grounds, 2013
IL App (3d) 110865; Underwood v. City of Chicago, No. 13 C 5687,2013 WL 6578777
, at *5-11 (N.D.
Ill. Dec. 13, 2013).
- 11 -
¶ 38 Article XIII, section 5, provides that “[m]embership in any pension or retirement system of
the State *** shall be an enforceable contractual relationship, the benefits of which shall not be
diminished or impaired.” Ill. Const. 1970, art. XIII, § 5. Under the language of this provision,
which was based on a nearly identical provision of the New York constitution (see Felt v.
Board of Trustees of the Judges Retirement System, 107 Ill. 2d 158, 163 (1985); Kraus v.
Board of Trustees of the Police Pension Fund, 72 Ill. App. 3d 833, 845 (1979)), it is clear that
if something qualifies as a benefit of the enforceable contractual relationship resulting from
membership in one of the State’s pension or retirement systems, it cannot be diminished or
impaired. Thus, the question presented is whether a health insurance subsidy provided in
retirement qualifies as a benefit of membership.
¶ 39 As noted above, Illinois law affords most state employees a package of benefits in addition
to the wages they are paid. These include subsidized health care, disability and life insurance
coverage, eligibility to receive a retirement annuity and survivor benefits. These benefits were
provided when article XIII, section 5, was proposed to Illinois voters for approval, as they are
now.
¶ 40 Although some of the benefits are governed by a group health insurance statute and others
are covered by the Pension Code, eligibility for all of the benefits is limited to, conditioned on,
and flows directly from membership in one of the State’s various public pension systems.
Giving the language of article XIII, section 5, its plain and ordinary meaning, all of these
benefits, including subsidized health care, must be considered to be benefits of membership in
a pension or retirement system of the State and, therefore, within that provision’s protections.
See Duncan v. Retired Public Employees of Alaska, Inc., 71 P.3d 882, 887 (Alaska 2003)
(giving comparable provision of Alaska constitution “its natural and ordinary meaning,” there
“is little question” that it encompasses “health insurance benefits offered to public employee
retirees”).
¶ 41 No principle of statutory construction supports a contrary view. Defendants contend that
the reach of article XIII, section 5, is confined to the retirement annuity payments authorized
by the Pension Code, but there is nothing in the text of the constitution that warrants such a
limitation. Just as the legislature is presumed to act with full knowledge of all prior legislation
(People v. Jones, 214 Ill. 2d 187, 199 (2005)), the drafters of a constitutional provision are
presumed to know about existing laws and constitutional provisions and to have drafted their
provision accordingly (see 16 Am. Jur. 2d Constitutional Law § 35 (2009); Plymouth
Township v. Wayne County Board of Commissioners, 359 N.W.2d 547, 552 (Mich. App.
1984). If they had intended to protect only core pension annuity benefits and to exclude the
various other benefits state employees were and are entitled to receive as a result of
membership in the State’s pensions systems, the drafters could have so specified. But they did
not. The text of the provision proposed to and adopted by the voters of this State did not limit
its terms to annuities, or to benefits conferred directly by the Pension Code, which would also
include disability coverage and survivor benefits. Rather, the drafters chose expansive
language that goes beyond annuities and the terms of the Pension Code, defining the range of
protected benefits broadly to encompass those attendant to membership in the State’s
retirement systems. Then, as now, subsidized health care was one of those benefits. For us to
hold that such benefits are not among the benefits of membership protected by the constitution
would require us to construe article XIII, section 5, in a way that the plain language of the
provision does not support. We may not rewrite the pension protection clause to include
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restrictions and limitations that the drafters did not express and the citizens of Illinois did not
approve. See Prazen, 2013 IL 115035, ¶¶ 37-38.
¶ 42 Defendants contend that their position is supported by the debates at the constitutional
convention preceding the adoption of article XIII, section 5. This contention is unpersuasive.
When construing and applying article XIII, section 5, in the past, we have considered the
history underlying that provision and the convention debates preceding its adoption. See
McNamee v. State of Illinois, 173 Ill. 2d 433, 439 (1996); Buddell v. Board of Trustees, State
University Retirement System, 118 Ill. 2d 99, 102 (1987); Felt v. Board of Trustees of the
Judges Retirement System, 107 Ill. 2d 158, 160-63 (1985); Peters v. City of Springfield,57 Ill. 2d
142, 150-52 (1974). Yet, none of those cases involved the question of whether certain
benefits attendant to membership in a state retirement system are covered by the protections
guaranteed by article XIII, section 5. Because we find that this issue can be decided based on
the plain language of the provision, “the debates can have little or no bearing or effect” with
respect to how we construe that language. People ex rel. Watseka Telephone Co. v. Emmerson,
302 Ill. 300, 311 (1922).
¶ 43 Even if reference to the convention debates were appropriate, it would not aid the State’s
position. Section 5 of article XIII had no antecedent in the prior constitution and was not
included in the report of any committee of the Sixth Constitutional Convention, where the
provisions of the Constitution of 1970 were formulated. It was proposed on the floor of that
convention for the first time without a formal hearing, and there is no committee report to aid
in its interpretation. See Peters v. City of Springfield, 57 Ill. 2d 142, 150-51 (1974); ILCS Ann.,
1970 Const., art. XIII, § 5, Constitutional Commentary, at 665 (Smith-Hurd 2006).
¶ 44 The floor debates on the new provision have previously been characterized by the courts as
“confused” (Kraus, 72 Ill. App. 3d at 843) and reflecting “uncertainty as to the scope of the
restriction which the section imposed on legislative bodies” (Peters v. City of Springfield, 57
Ill. 2d 142, 151 (1974)). Accordingly, we must be circumspect in attempting to draw
conclusions based on what was said during the course of the debates.
¶ 45 Some insight is provided by the context in which the provision which ultimately became
article XIII, section 5, was proposed to the constitutional convention. At the time of the
convention, Illinois adhered to the traditional classification of pension plans as either
mandatory or optional. Where an employee’s participation in a pension plan was mandatory,
the rights created in the relationship were considered to be in the nature of a gratuity that could
be revoked at will. Where the employee’s participation in a pension plan was optional, the
pension was considered enforceable under contract principles. This distinction created
uncertainty regarding the enforceability of pension rights, a concern exacerbated by the
proposed creation of broad home rule powers for municipalities, which some delegates to the
convention feared could lead municipalities into debt and result in their abandoning their
pension obligations to public employees, including police officers and firefighters. McNamee,
173 Ill. 2d at 440. Delegates were also mindful that in the past, appropriations to cover state
pension obligations had “been made a political football” and “the party in power would just use
the amount of the state contribution to help balance budgets,” jeopardizing the resources
available to meet the State’s obligations to participants in its pension systems in the future. 4
Record of Proceedings, Sixth Illinois Constitutional Convention 2930-31 (statements of
Delegate Bottino).
- 13 -
¶ 46 Delegate Green, who first proposed the provision which became article XIII, section 5,
began his presentation to the convention by stating that it does two things: “[i]t first mandates a
contractual relationship between the employer and the employee; and secondly, it mandates
the General Assembly not to impair or diminish these rights.” 4 Record of Proceedings 2925
(statements of Delegate Green). It does so, he explained, in order to protect “public employees
who are beginning to lose faith in the ability of the state and its political subdivisions to meet
these benefit payments” and to address the “insecurity on the part of the public employees
[which] is really defeating the very purpose for which the retirement system was established
***.” Id. Delegate Kemp, who spoke in support of the measure, viewed its purpose as
“mak[ing] certain that irrespective of the financial condition of a municipality or even the state
government, that those persons who have worked for often substandard wages over a long
period of time could at least expect to live in some kind of dignity during their golden years
***.” Id. at 2926 (statements of Delegate Kemp). In subsequent comments, other delegates
reaffirmed that the provision was designed to confer contractual protection on pension benefits
(see, e.g., id. at 2929-30 (statements of Delegate Whalen)) and give beneficiaries, pensioners
or their dependents “a basic protection against abolishing their rights completely or changing
the terms of their rights after they have embarked upon the employment—to lessen them” (id.
at 2929 (statements of Delegate Kinney)).
¶ 47 When asked for a summation, Delegate Green stated:
“What we are trying to do is to mandate the General Assembly to do what they have not
done by statute. ***
Now, I think they either ought to live up to the laws that they pass or that very
quickly we ought to stop when we are hiring public employees by telling them that they
have any retirement rights in the state of Illinois. If we are going to tell a policeman or
a school teacher that, ‘Yes, if you will work for us for your thirty years or until
whenever you reach retirement age, that you will receive this,’ if the state of Illinois
and its municipalities are going to play insurance company and live up to these
contributions, then they ought to live by their own rules. And this is all in the world this
mandate is doing.” Id. at 2931 (statements of Delegate Green).
¶ 48 The foregoing remarks demonstrate that article XIII, section 5, was intended to eliminate
the uncertainty that existed under the traditional classification of retirement systems and to
guarantee that retirement rights enjoyed by public employees would be afforded contractual
status and insulated from diminishment or impairment by the General Assembly. In light of the
constitutional debates, we have concluded that the provision was aimed at protecting the right
to receive the promised retirement benefits, not the adequacy of the funding to pay for them.
People ex rel. Sklodowski v. State of Illinois, 182 Ill. 2d 220, 232 (1998);McNamee, 173 Ill. 2d at 446
. To infer more, however, would require more than the reports of the floor debate
reasonably support. While there was some discussion regarding how the provision would work
in practice, the specific issue of health care benefits received by state annuitants under the
predecessor provision to the Group Insurance Act was not raised or addressed, and nothing in
the debates evinces an intention to treat annuitant health care benefits differently from the
other benefits of pension and retirement system membership then in effect.
¶ 49 Our conclusion that health insurance subsidies are constitutionally protected by the
pension protection clause is supported by the recent decision in Everson v. State of Hawai’i,
- 14 -
228 P.3d 282 (Haw. 2010), which addressed the reach of a provision in the Hawaii state
constitution that is similar to article XIII, section 5, and shares the same origin. That provision
states that “[m]embership in any employees’ retirement system of the State or any political
subdivision thereof shall be a contractual relationship, the accrued benefits of which shall not
be diminished or impaired.” Haw. Const., art. XVI, § 2. Like Illinois, Hawaii state law confers
on public employees a package of benefits which includes both health insurance and eligibility
for retirement annuities. Everson, 228 P.3d at 288, 292-93. As in Illinois, health coverage is
addressed in a separate statute from the law governing retirement annuities, but eligibility for
health care coverage following retirement is conditioned on membership in one of specified
public retirement systems. Id. at 294. When a challenge was raised to the validity of a statutory
change affecting health care benefits for retired public employees, the Supreme Court of
Hawaii concluded, as we have, that because the health care benefits arise from and are
conditioned on membership in a public retirement system, they qualify as a benefit of
membership in the retirement system and fall within the protections of Hawaii’s constitutional
counterpart to article XIII, section 5. Id. at 295-97.
¶ 50 In urging a contrary result, defendants place significant reliance on an earlier opinion by
the New York Court of Appeals, that state’s highest court of review, in In re Lippman, 487
N.E.2d 897 (N.Y. 1985). At issue in Lippman was a decision by a local school board to
substantially reduce the amount it would contribute toward the health care premiums for its
retired employees and their dependents by lowering those contributions to the minimum
amounts permitted by state law. That decision was challenged on the grounds that it violated
article V, section 7 of New York’s constitution, which was the model for article XIII, section 5
of our constitution, and provided that “[a]fter July first, nineteen hundred forty, membership in
any pension or retirement system of the state or of a civil division thereof shall be a contractual
relationship, the benefits of which shall not be diminished or impaired.” Id. at 899.
¶ 51 The New York Court of Appeals rejected the challenge and held that the protections
afforded by article V, section 7, extended only to benefits directly related to the terms of the
retirement annuity, that retired employees receive subsidies for health insurance premiums
“not as a benefit of membership in the retirement system but because he or she was an
employee of the State of New York or participating employer,” and that the premium increase
involved was within the amounts permitted by state statute. Id. at 899-900.
¶ 52 The Supreme Court of Hawaii found the New York high court’s ruling distinguishable and
unpersuasive. Everson, 228 P.3d at 297-98. We agree. As set forth above, when article XIII,
section 5, was proposed, the benefits afforded state employees included subsidized health care
both while they were working and after they retired, life insurance, eligibility for a retirement
annuity, disability coverage and survivor benefits. Because an employee’s eligibility for
subsidized health care following retirement, as well as his or her eligibility for an annuity,
disability coverage and survivor benefits, is conditioned on membership in one of the State’s
various public pension systems, all of the benefits that flow from that relationship are
constitutionally protected under article XIII, section 5.
¶ 53 There is nothing in the text of article XIII, section 5, its history, or the convention debates
that would support a conclusion that only the retirement annuity itself falls within the
provision’s protections. For the reasons previously discussed, the other benefits, including
subsidized health care, are also properly regarded as benefits of membership in the public
- 15 -
pensions systems and therefore likewise protected. Moreover, unlike the action challenged in
the Lippman case, enactment of Public Act 97-695 did not involve a mere increase in
contribution levels within boundaries authorized by existing state law. In this case, the fixed
standards established under the existing law were eliminated completely once Public Act
97-695 took effect.
¶ 54 Defendants observe that health care costs and benefits are governed by a different set of
calculations than retirement annuities. While that is unquestionably true, it is also legally
irrelevant. The criterion selected by the drafters and approved by the voters is status based.
Whether a benefit qualifies for protection under article XIII, section 5, turns simply on whether
it is derived from membership in one of the State’s public pension systems. If it qualifies as a
benefit of membership, it is protected. If it does not, it is not. How the benefit is actually
computed plays no role in the inquiry.
¶ 55 Finally, we point out again a fundamental principle noted at the outset of our discussion.
Under settled Illinois law, where there is any question as to legislative intent and the clarity of
the language of a pension statute, it must be liberally construed in favor of the rights of the
pensioner. This rule of construction applies with equal force to our interpretation of the
pension protection provisions set forth in article XIII, section 5. Accordingly, to the extent that
there may be any remaining doubt regarding the meaning or effect of those provisions, we are
obliged to resolve that doubt in favor of the members of the State’s public retirement systems.
¶ 56 CONCLUSION
¶ 57 For the foregoing reasons, we conclude that the State’s provision of health insurance
premium subsidies for retirees is a benefit of membership in a pension or retirement system
within the meaning of article XIII, section 5, of the Illinois Constitution, and the General
Assembly was precluded from diminishing or impairing that benefit for those employees,
annuitants, and survivors whose rights were governed by the version of section 10 of the Group
Insurance Act that was in effect prior to the enactment of Public Act 97-695. Accordingly, the
circuit court erred in dismissing plaintiffs’ claims that Public Act 97-695 is void and
unenforceable under article XIII, section 5.
¶ 58 Our holding that plaintiffs are entitled to proceed on their pension protection clause claims
obviates the need to address the sufficiency of their remaining claims. Because plaintiffs have
obtained all the relief that they seek, any comment on their other claims would be advisory and
in conflict with traditional principles of judicial restraint. See In re Alfred H.H., 233 Ill. 2d 345,
351 (2009) (recognizing that Illinois courts generally do not consider issues where the outcome
will not be affected, regardless of how those issues are decided).
¶ 59 The judgment of the circuit court of Sangamon County is reversed, and the cause is
remanded for further proceedings.
¶ 60 Circuit court judgment reversed.
¶ 61 Cause remanded.
¶ 62 JUSTICE BURKE, dissenting:
¶ 63 I disagree with the majority’s holding that the pension protection clause protects more than
pensions. I also disagree with the majority’s disposition of this case, which is unclear. I
- 16 -
therefore respectfully dissent.
¶ 64 Pension Protection Clause
¶ 65 The primary issue presented in this case is the scope of article XIII, section 5, of the Illinois
Constitution (Ill. Const. 1970, art. XIII, § 5). That provision, which is titled “Pension and
Retirement Rights,” is commonly referred to as the pension protection clause. The clause
provides: “Membership in any pension or retirement system of the State *** shall be an
enforceable contractual relationship, the benefits of which shall not be diminished or
impaired.” Ill. Const. 1970, art. XIII, § 5.
¶ 66 The meaning of a constitutional provision depends on the common understanding of the
citizens who adopted it. League of Women Voters of Peoria v. County of Peoria, 121 Ill. 2d
236, 243 (1987); Kalodimos v. Village of Morton Grove,103 Ill. 2d 483
, 492-93 (1984). To
determine that understanding, courts look first to the plain and generally understood meaning
of the words used in the provision. League of Women Voters of Peoria, 121 Ill. 2d at 243;
Kalodimos, 103 Ill. 2d at 493. If doubt remains after the language of the provision has been
considered, it is appropriate to consult the debates of the constitutional convention to ascertain
the meaning that the delegates attached to the provision since it is only with the consent of the
convention that such provisions are submitted to the voters in the first instance. League of
Women Voters of Peoria, 121 Ill. 2d at 243-44;Kalodimos, 103 Ill. 2d at 493
.
¶ 67 As its title states, the pension protection clause protects “pension and retirement rights.”
Commonly understood, a pension or retirement system is a plan or fund that provides
retirement income to employees. As the United States Supreme Court has stated, the “ordinary
meaning” of a pension is “ ‘a fixed sum ... paid under given conditions to a person following
his retirement from service (as due to age or disability) or to the surviving dependents of a
person entitled to such a pension.’ ” Rousey v. Jacoway, 544 U.S. 320, 330 (2005) (quoting
Webster’s Third New International Dictionary 1671 (1981)); see also, e.g., In re Marriage of
David, 367 Ill. App. 3d 908, 914 (2006) (“The term ‘pension’ means ‘[r]etirement benefit paid
regularly (normally, monthly), with the amount of such based generally on length of
employment and amount of wages or salary of pensioner.’ ” (quoting Black’s Law Dictionary
1134 (6th ed. 1990))).
¶ 68 More specifically, this court has held that the pension protection clause does two things.
First, it makes “[m]embership in any pension or retirement system of the State” an
“enforceable contractual relationship.” (Internal quotation marks omitted.) People ex rel.
Sklodowski v. State of Illinois, 182 Ill. 2d 220, 228-29 (1998). This contractual relationship, we
have explained, “is governed by the actual terms of the Pension Code at the time the employee
becomes a member of the pension system.” Id. at 229. Second, the clause provides that the
benefits of the contractual relationship “governed by the actual terms of the Pension Code”
shall not be “diminished or impaired.” (Internal quotation marks omitted.) Id. Stated
otherwise, by its plain language, the pension protection clause prohibits legislative action that
diminishes or impairs pension benefits by altering the terms of the contract governing the
pension.
¶ 69 In this case, plaintiffs contend that the schedule of subsidized health insurance premiums
provided under the former version of section 10 of the State Employees Group Insurance Act
of 1971 (5 ILCS 375/10 (West 2012)), are benefits protected from impairment or
- 17 -
diminishment under the pension protection clause. Plaintiffs further contend that Public Act
97-695 (eff. July 1, 2012), which eliminated the statutory schedule under the Group Insurance
Act, impaired or diminished those benefits and, therefore, violated the pension protection
clause.
¶ 70 It is clear, however, that the subsidized health insurance premiums provided under the
Group Insurance Act are not pension benefits. Health insurance premiums under the Group
Insurance Act are not provided by any state pension or retirement system and, thus, cannot
constitute a contractual relationship “governed by the actual terms of the Pension Code”
(Sklodowski, 182 Ill. 2d at 229). Moreover, as the circuit court below observed, pension
benefits differ substantially from subsidized health insurance premiums. Pension benefits are
provided to retirees in the form of a fixed income. They are paid from protected pension funds
and the amount of the benefit is fixed at the time of retirement based on a formula that
considers, among other things, the length of the retiree’s service and salary during
employment. See, e.g., Rousey, 544 U.S. at 330. The cost of subsidized health care premiums,
on the other hand, is variable and cannot be predicted using the actuarial analysis employed in
pension calculations. Unlike fixed pension distributions, health care costs are not within the
control of the legislature and are subject to change depending on advancements in medical
technology, increases in the costs of treatments, and the availability of insurance plans offered
by insurance providers. State-subsidized health insurance premiums are benefits, and may, in
certain circumstances, be entitled to legal protection. They are not, however, in the plain and
ordinary meaning of the word, “pension” benefits.
¶ 71 The majority concludes, however, that the schedule of subsidized health insurance
premiums provided under the former section 10 of the Group Insurance Act is protected under
the pension protection clause. In so holding, the majority reads the clause as stating that
“something” qualifies as a constitutionally protected benefit if it “result[s] from” (supra ¶ 38),
is “conditioned on” (supra ¶ 40), “flows directly from” (supra ¶ 40), or is “attendant to” (supra
¶ 41), membership in one of the State’s pension or retirement systems. Thus, according to the
majority, because the health care subsidies under the Group Insurance Act were provided to
members of the retirement system, those benefits “flowed from” membership and are an
enforceable contractual right under the pension protection clause. I disagree.
¶ 72 To reach its result, the majority must read into the pension protection clause language that
is not there. Nowhere in the clause does it state that every benefit which “results from,” is
“conditioned on,” “flows directly from” or “is attendant to” being a member of a pension
system is provided constitutional protection. These phrases, which form the crux of the
majority’s opinion, are simply crafted out of whole cloth. It is fundamental that the judiciary
may not add language to a constitutional provision that was not approved by the voters of this
state. To do so is to usurp the sovereign power of the people. The majority’s addition of
language to the clause is error.
¶ 73 Moreover, by adding language to the pension protection clause, the majority
fundamentally changes its meaning. The clause no longer protects the statutory benefits
provided by a pension or retirement system. Instead, it provides constitutional protection to
any statutory benefit—however unrelated to pensions—if the recipient of the benefit is a
member of a pension system. And the majority provides no limit to this holding. Should the
city of Springfield enact an ordinance which states that the members of the municipal pension
- 18 -
system will receive an honorary plaque upon retirement, that benefit would “flow from” or be
“conditioned on” membership in the system. The plaque, under the majority’s reasoning,
would be a constitutionally protected contractual right that could not be diminished or
impaired. I do not think this is what the drafters of the pension protection clause intended.
¶ 74 Unsurprisingly, nothing in the constitutional debate regarding the pension protection
clause supports the majority’s reading of the provision. As the majority candidly
acknowledges, the constitutional debate contains no references to health insurance premiums
or other non-pension benefits for retirees. To the contrary, the unambiguous statements of the
sponsoring delegates reflect that it was designed to protect a public retiree’s right to collect
postretirement income in the form of an annuity and to ensure that the terms under which an
employee acquired that right could not be altered to his or her detriment. Delegate Kinney, who
sponsored the proposed pension protection clause, described the scope of the benefits
protected under the provision:
“Benefits not being diminished really refers to this situation: If a police officer
accepted employment under a provision where he was entitled to retire at two-thirds of
his salary after twenty years of service, that could not subsequently be changed to say
he was entitled to only one-third of his salary after thirty years of service, or perhaps
entitled to nothing. ***
***
*** It is simply to give [beneficiaries] a basic protection against abolishing their
rights completely or changing the terms of their rights after they have embarked upon
the employment—to lessen them.” (Emphasis added.) 4 Proceedings 2929 (statements
of Delegate Kinney).
No comment from any delegate suggests anything to contradict this understanding.
¶ 75 Nor can it reasonably be suggested that the delegates’ silence regarding health insurance
benefits supports the majority’s reading of the clause. At the time of the drafting of the 1970
Constitution, all of the provisions of the Pension Code pertained to the benefits provided by a
pension or retirement system, that is, a fixed retirement income. No provisions addressed, or
related to, subsidized health care premiums or any other non-pension benefits. It is
unreasonable to assume that the delegates had health care benefits in mind when discussing the
protection of pension rights when no such benefits were provided for in any pension or
retirement system then in existence. It is, however, reasonable to assume that something as
financially significant as subsidies for health insurance premiums, which cost the State many
millions of dollars, would have been mentioned at least once during the constitutional debate,
even if only in passing. They were not. In short, then, there is no support in the constitutional
debate for the majority’s reading of the pension protection clause.
¶ 76 Nor is there any support in our case law. As this court has stated, the contractual
relationship protected by the pension protection clause is the relationship which “is governed
by the actual terms of the Pension Code at the time the employee becomes a member of the
pension system.” Sklodowski, 182 Ill. 2d at 229 (citing Di Falco v. Board of Trustees of the
Firemen’s Pension Fund of the Wood Dale Fire Protection District No. One, 122 Ill. 2d 22, 26
(1988), and Kerner v. State Employees’ Retirement System, 72 Ill. 2d 507, 514 (1978)). The
subsidized insurance premiums at issue here are not part of any pension or retirement system
and, thus, cannot constitute a contractual relationship governed by the terms of the Pension
- 19 -
Code. Further, this court has repeatedly observed that the pension protection clause protects
not health benefits or other non-pension benefits, but the public employees’ contractual rights
to “receive the money due them at the time of their retirement.” (Emphasis added.) People
ex rel. Illinois Federation of Teachers v. Lindberg, 60 Ill. 2d 266, 271 (1975); see also
Sklodowski, 182 Ill. 2d at 230 (same);McNamee, 173 Ill. 2d at 444
(same). At no time has this
court suggested that the pension protection clause protects any and all statutory benefits
received by a person who is a member of a pension system.
¶ 77 Relevant case law from other jurisdictions also fails to support the majority’s reading of the
clause. Illinois courts have repeatedly looked to New York decisions in determining the scope
of the protection granted under the pension protection clause since the clause was patterned on
a similar provision in the New York constitution. See, e.g., Buddell v. Board of Trustees, State
University Retirement System, 118 Ill. 2d 99, 106-07 (1987); Felt v. Board of Trustees of the
Judges Retirement System, 107 Ill. 2d 158, 163-64 (1985). In In re Lippman,487 N.E.2d 897
(N.Y. 1985), the New York Civil Service Law authorized a system of health insurance benefits
for public employees and retirees. Id. at 898. Pursuant to that statute, each participating
employer was required to pay no less than 50% of the cost of premiums for employees, and
35% for their dependents, but state employers were authorized to provide greater contributions
at their discretion. Id. The statute further provided that any employee or retiree contributions
toward individual or dependent coverage were to be deducted from salary payments or
retirement allowance as the case may be. Id.
¶ 78 In accordance with the terms of the statute, a board of education adopted a resolution
providing for its payment of 100% of the health insurance premiums for its retired employees,
as well as for 50% of the premiums for retirees’ dependents. Id. Subsequently, the board of
education adopted a new resolution that reduced its level of contributions to the statutory
minimums of 50% of the health insurance premium for retirees and 35% of the premium for
dependents. Id. The reduction in premium contributions was challenged as a violation of the
New York constitution’s pension protection clause, which is virtually identical to that of
Illinois. Id.
¶ 79 The Lippman court held that the reduction did not offend the pension protection clause
because the insurance premium payments did not constitute “retirement benefits” within the
meaning of the constitutional provision. Id. at 899. In reaching this conclusion, the court noted
that the relevant statute did not establish a direct relationship between the insurance coverage
and retirement benefits, stating that “the only relation between health benefits and retirement
benefits is the purely incidental one that the latter provides the means by which the former is
paid.” Id. at 900. The Lippman court concluded that “more than an incidental relationship to
the retirement system must be found before an employee benefit will be held to be within the
area of action prohibited by the Constitution.” Id. at 899.
¶ 80 In addition, the court observed that previous cases finding violations of the pension
protection clause all involved changes that were “directly related to the retirement benefit.”
(Emphasis omitted.) Id. (citing, inter alia, Kleinfeldt v. New York City Employees’ Retirement
System, 324 N.E.2d 865, 868 (N.Y. 1975) (holding that a limitation on the rate of
compensation, which “is the most significant part of the formula” for determining retirement
benefits, was constitutionally prohibited)); Birnbaum v. New York State Teachers Retirement
System, 152 N.E.2d 241, 245 (N.Y. 1958) (invalidating a change in mortality tables that
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directly affected the calculation of retirement annuities and observing that “it is the money
payments [received] from either a pension or retirement system that is the principal if not the
sole benefit the system affords”). The Lippman court further reasoned that the health coverage
at issue was an employment benefit, not a retirement benefit, because the relevant statutory
provision was not contained in the pension statute, but was set forth in a separate statute, which
provided health benefits “not only to retired employees but also to employees still in service.”
Lippman, 487 N.E.2d at 900. Finally, the court observed that nothing in the statutory language
indicated that employers were precluded from reducing contributions to the statutory
minimum after that level had once been exceeded, or that the separately enacted provisions of
the health insurance statute were intended to be a retirement benefit within the meaning of the
constitutional provision. Id.
¶ 81 The primary factors that guided the Lippman court are also present in this case. The
provision of health insurance premium subsidies is set forth in the Group Insurance Act, not in
the Pension Code. Also, as with the New York law involved in Lippman, any contribution
toward health insurance premiums that must be paid by a retiree is to be deducted from the
individual’s retirement annuity. In addition, the statements made by the delegates during the
convention debate do not indicate an intent to protect other benefits that are unrelated to
postretirement income. Lippman is thus squarely on point and persuasive.
¶ 82 Seeking to avoid the logic of Lippman, the majority relies on Everson v. State of Hawai’i,
228 P.3d 282 (Haw. 2010), and Duncan v. Retired Public Employees of Alaska, Inc.,71 P.3d 882
(Alaska 2003), in which the supreme courts of Alaska and Hawaii held that provisions in
their constitutions applied to state-subsidized health insurance provided to retired public
employees. These cases are not persuasive.
¶ 83 Duncan is distinguishable on its facts. In that case, the Alaska Supreme Court held that
health insurance benefits for retired public employees were constitutionally protected, as rights
of membership in a public pension system. Duncan, 71 P.3d at 888. Underlying this ruling was
the determination that retiree health benefits, which were granted by the same statute that
governed public pensions, constituted a component of an employee’s “retirement benefit
package,” which becomes part of the employment agreement at the time the employee is hired.
Id. at 887-88. Thus, the court concluded that “whatever benefits might be provided by state
retirement systems” were meant to be constitutionally protected. Id. at 887. The Duncan court
distinguished Lippman on the ground that it “involved a medical plan that was separate from
the state retirement system,” and “Alaska’s retirement system includes a system of retirement
benefits that include more than just a pension.” Id. at 894. The decision in Duncan does not
govern the present case. Here, the Group Insurance Act is entirely separate from the Pension
Code, which is similar to the statutory structure of New York. Also, there is no language in the
Group Insurance Act or the constitutional debates evincing an intent to include statutory health
insurance benefits among the benefits of membership in a pension or retirement system.
¶ 84 In Everson, the Hawaii Supreme Court held that statutory health insurance benefits for
retired public employees were protected by a provision in Hawaii’s constitution that is similar
to our pension protection clause. Everson, 228 P.3d at 295-96. Although the retiree health
benefits at issue were provided for, paid and administered outside the pension system, the court
concluded that Hawaii’s constitutional provision applied to all statutory benefits “derived
from,” “arising from,” or “conditioned” on the status of “membership” in a public retirement
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system. Id. at 295-98. In so holding, the Everson court specifically noted and relied upon the
comments of the constitutional delegates indicating that they intended to protect any additional
benefits granted by the legislature in the future that derive from such membership. Id. at
295-96. The court concluded that the Hawaii legislature did, after the adoption of the
constitution, change the system and that it did so “to prevent a diminishment of existing health
benefits for public employees and retirees.” (Internal quotation marks omitted.) Id. at 296-97.
¶ 85 Unlike Hawaii, nothing in our constitutional debate indicates that the framers of the 1970
Constitution authorized the General Assembly to extend constitutional protection to any
additional non-pension benefits at some time in the future. Moreover, the reasoning employed
by the Hawaii Supreme Court is contrary to our long-standing interpretation of Illinois’s
pension protection clause as protecting postretirement income.
¶ 86 In addition, defendants correctly point out that acceptance of the view adopted by the
Hawaii Supreme Court in Everson disregards the fundamental difference between pensions
and health insurance. As was suggested by the concurring opinion in Everson, the court’s
holding, taken to its logical conclusion, would afford constitutional protection to the “array of
health plan services most advantageous to the employee during his or her service,” which
could never be changed. See Everson, 228 P.3d at 303 (Acoba, J., specially concurring). Yet, a
health benefit package cannot be fixed at its “most advantageous” level. Flexibility is
necessary in the provision of health benefits, which are “subject to fluctuating and
unpredictable variables.” Moore v. Metropolitan Life Insurance Co., 856 F.2d 488, 492 (2d
Cir. 1988). Therefore, “medical insurance must take account of inflation, changes in medical
practice and technology, and increases in the costs of treatment independent of inflation. These
unstable variables prevent accurate prediction of future needs and costs.” Id.
¶ 87 In sum, neither the plain language of the pension protection clause, the constitutional
debate, our own case law, or case law from other jurisdictions supports the majority’s position.
The pension protection clause protects pensions, not subsidized health care premiums.The
fact that the General Assembly has the power to grant retirees supplemental benefits, in
addition to pension annuities, does not mean that those additional benefits are constitutionally
protected and cannot be modified or reduced by future legislation. As defendants have
acknowledged, the legislature has the ability to ensure that such additional benefits fall within
the pension protection clause, but it must do so explicitly. The legislature could have expressly
mandated that the provision of state-funded premium subsidies, pursuant to the graduated
schedule, constitutes a contract right and is protected by the constitution, but it did not do so. In
fact, the legislature has repeatedly modified the terms of the benefits provided under the Group
Insurance Act, including reducing them on multiple occasions.
¶ 88 For the foregoing reasons, I would hold that the statutory provision of health insurance
premium subsidies is not a benefit of membership in a pension or retirement system.
Accordingly, the circuit court did not err in dismissing the plaintiffs’ claims based on the
pension protection clause in article XIII, section 5, of the Illinois Constitution.
¶ 89 The Majority’s Disposition of This Case
¶ 90 The majority holds that “the State’s provision of health insurance premium subsidies for
retirees is a benefit of membership in a pension or retirement system within the meaning of
article XIII, section 5, of the Illinois Constitution” and, as a result, these subsidies are
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constitutionally protected from any diminishment or impairment. Supra ¶ 57. Accordingly, the
majority finds that “the circuit court erred in dismissing plaintiffs’ claims that Public Act
97-695 is void and unenforceable under article XIII, section 5,” and remands the cause for
further proceedings. Id. As stated above, I disagree with this holding. I am also concerned,
however, because the majority fails to address the remaining claims in plaintiffs’ complaints,
which were dismissed in the circuit court and are now before this court on direct review.
¶ 91 In addition to alleging that Public Act 97-695 violates the pension protection clause of the
Illinois Constitution, two of the complaints before the circuit court alleged a violation of the
contracts clause (Ill. Const. 1970, art. I, § 16); one complaint alleged a violation of the
separation of powers clause (Ill. Const. 1970, art. II, § 1); and certain complaints alleged
common-law claims based on contract and promissory estoppel. The majority does not address
any of these claims, stating that “[o]ur holding that plaintiffs are entitled to proceed on their
pension protection clause claims obviates the need to address the sufficiency of their remaining
claims.” Supra ¶ 58.
¶ 92 I do not see how the majority’s determination regarding the pension protection clause
claims obviates the need to address the remaining claims or provides plaintiffs with all the
relief they seek. The merits of plaintiffs’ pension protection clause claims remains an open
question. As the Attorney General points out in her brief, “because the circuit court held that
the rights claimed by the plaintiffs were not protected by the Pension Protection Clause, it had
no reason to explore whether Public Act 97-695 would be an unconstitutional diminishment or
impairment of those rights, or whether they were subject to a justifiable exercise of a power to
adjust private contractual rights, including in contracts with the government itself.” Moreover,
the majority has not determined here whether Public Act 97-695 impairs or diminishes
retirees’ pension benefits and, thus, unconstitutionally violates the pension protection clause.
That is the issue that will be decided by the circuit court on remand.
¶ 93 Because we have expressed no opinion on the merits of plaintiffs’ pension protection
clause claims, there remains the possibility that defendants could yet prevail on these claims.
In that event, the parties would need to know whether plaintiffs may go forward on any of the
other claims raised in their complaints. These additional claims were dismissed by the circuit
court and plaintiffs have sought reversal of the dismissals in this court. Yet the majority does
not discuss them. What does the majority’s silence here mean? Does the majority mean to
affirm the circuit court’s dismissal of these claims? Or are they still viable because they have
not been reviewed? To avoid delay and additional expense for the parties, the dismissal of
these claims, which have been fully briefed and argued, should be addressed by this court.
¶ 94 For the foregoing reasons, I respectfully dissent.
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