Illinois House Speaker Michael Madigan has introduced amendments to HB-1154 (amendment 1 and amendment 2), HB-1165, and HB-1166. The amendments are being referred to as the “scared straight” amendments. One amendment would eliminate all COLAs. One amendment would eliminate COLAs until the pension funds are 80% funded. One amendment would raise the retirement age to 67. One amendment would require state workers to contribute an additional 5% to their pensions. The amendments do not apply to downstate fire and police pension funds.
Yesterday, on February 26, 2013, Representative Tom Cross filed House Bill 3411. HB-3411 currently has over 31 co-sponsors. It applies to the State Pension systems excluding the Judges. Among other things, it creates a Tier 3 composite defined benefit and defined contribution plan for employees hired after Januar 1, 2014. For Tier 1 and Tier 3 employees, the bill increases retirement ages, increases employee contributions, and reduces COLAs. The bill also changes the funding provisions so that all systems are 100% funded by 2043 and it guarantees State funding.
The funding guarantee provides that the State would be contractually obligated to make the required annual contribution. Additionally, the contractual funding obligation would be guaranteed and enforceable under Article 1, Section 16 and Article XIII, Section 5 of the Illinois Constitution. If the State failed to make the required contribution, the System could file a mandamus action against the State in Sangamon County circuit court. However, the court would have to permit a reasonable payment plan without significantly imperiling the public health, safety, and welfare. Additionally, the pension contribution is expressly subordinated to the payment of principal, interest, and premium on any bonded debt obligation of the State.
On February 21, 2013 the Second District Appellate Court issued its Opinion in Lambert v. The Downers Grove Fire Department Pension Board. The Board denied the plaintiff’s application for a disability pension. The circuit court affirmed. The Appellate Court in a 2-1 decision reversed the Board’s decision denying the plaintiff a disability pension.
The plaintiff suffered an injury to his right knee during a training exercise and during a mandatory fitness program. All three pension board doctors concluded the plaintiff was disabled. The plaintiff underwent several FCEs which concluded the plaintiff could perform between 66% an 85% of the job functions of a firefighter. The Board admitted into evidence a surveillance video showing the plaintiff walking up steps and carrying household objects. The surveillance video was never made part of the record before the circuit court or the Appellate Court. The Board also questioned the plaintiff as to whether his house had steps. In its written decision, the Board denied the plaintiff’s application because it found the plaintiff was not credible. Because the plaintiff was not credible, the Board rejected the IME and FCE reports because they were predicated on the plaintiff’s subjective complaints.
The Appellate Court concluded the Board’s decision was against the manifest weight of the evidence. The Appellate Court held that the Board’s credibility findings were against the manifest weight of the evidence because they were “tangential at best to the issues before the pension board and did not impact the plaintiff’s veracity concerning his injury.” The Appellate Court noted that questions regarding the plaintiff’s inability to sit were not dispositive or significant where the plaintiff could not kneel, squat, crawl, climb a ladder, or carry heavy loads. Additionally, the Appellate Court found that it was immaterial that the plaintiff could control his pain with medication if he was prohibited from taking that medication while he was on duty. The Appellate Court also held that whatever was in the surveillance video (which was not part of the record on appeal) did not contradict the plaintiff’s testimony regarding his inability to squat, kneel, or climb ladders. The Appellate Court clarified the manifest weight of the evidence standard by holding that even if there is some evidence in the record to support the pension board’s decision, “regardless of how minuscule”, that decision will be reversed if it is implausible based on a review of the entire record.
Justice McLaren wrote a vigorous dissent. The dissent held that the Board’s credibility findings formed a proper basis to affirm the Board’s decision. The dissent also believed that the credibility issues were not “tangential” to the issue of disability because they addressed the plaintiff’s pain complaints and physical abilities. The dissent took issue with the majority’s opinion, writing, “What is any of this other than a naked attempt to discount evidence that supports the Board’s decision, reweigh the evidence, and substitute the majority’s judgment for that of the Board?”
Listen to Oral Argument HERE
The Chicago Teachers’ Pension Fund returned -0.4% for the year ended June 30, 2012. According to its 2012 Actuarial Report, CPS will have to contribute $600 million to the pension fund next year – compared to $534 million CPS expected. This year, CPS only contributed $195 million to the pension fund – a result of “pension payment holiday legislation.” The pension fund dropped from 60% funded to 54% funded.
On February 20, 2013 the Board of Trustees of the Firemen’s Annuity and Benefit Fund of Chicago rejected two motions backed by Mayor Rahm Emanuel. The Board rejected a motion to sell $173,000 worth of Smith & Wesson stock. The Board also rejected a motion to require disabled firefighters to undergo more frequent examinations and to provide the Board with more information regarding second jobs. One trustee, Chicago Comptroller Amer Ahmad, walked out of the meeting after the Board rejected the motion to sell Smith & Wesson stock.
Senators Althoff and Holmes filed a new pension reform bill on February 15, 2013. To read SB-2404 click HERE.