PENSION VOCABULARY of the WEEK by John Dillon May 27th – Pension Education

27 May

Emolument Increase …or “Pay No Attention to That Man Behind the Curtain”

Noun – in short, the lawful gain, profit, or benefit which arises from holding an office. SEE ALSO: commission, recompense, remuneration, revenue increase, reward…

In historical law, the term “emolument” is connected to Article I, Section 6, Clause 2, of the United States Constitution and is most often referred to as the “Ineligibility Clause.” To oversimplify, the clause prohibits members of one branch of government Executive from serving in another Legislative. For example, when Hillary Clinton accepted her current position as Secretary of State, she was forced to receive a pay cut of nearly $5000 for her new appointment because the office had experienced an increase in wages since Ms. Clinton had been in the Congress. In other words, Ms. Clinton might have been instrumental in increasing the pay for Secretary of State and then sought the office for monetary gain. http://www.huffingtonpost.com.2008/12/11/hillary-clintons-pay-cut-_n_150302.html. In theory,the clause prevents a member of Congress or other political office from setting a new and higher level of compensation and then securing that position for gain. The framers spent considerable time reconsidering and revising to get the clause correct, and even today it remains an ambiguous point of contention in determining the fairness of enhancements. Who would reach back into the early 1600’s to unearth such a concept? What kind of legal, labrynthine mind might find an advantage with such an idea?

Enter Speaker Madigan, stage right. 

In May of 2012, both houses of the Illinois General Assembly, under the orchestration of Speaker Madigan and Senate President John Cullerton, passed a proposed Constitutional Amendment (HJRCA0049), which will be placed on the ballot for the general election in November of 2012, a mere six months from now.  The amendment is designed, according to Mr. Madigan, to prevent “pension sweetners”  without a three fifths (60%) approval of both houses.  When asked, Speaker Madigan explained, “It [Amendment HJRCA0049] is intended to be tough medicine because review the actions of the Legislature and governors over the last several years…The record would say we need this medicine” (www.foxillinois.com/internal?st=print&id=147900555&path=/news/illinois).  Of course, Speaker Madigan has been present and presiding for more-than-the-last several years as pension obligations went unfunded by the legislature.  When one does enter stage right, good theatre demands an attractive protagonist, and Speaker Madigan has certainly cast himself as a man of action for the general public; however, some suspect that Madigan is once again “the master politician (creating) the appearance that he is doing something about pensions” (www.saukvalley.com/2012/05/09/speaker-hopes-his-amendment-fools-the-voters/all013a/).  Governor Quinn may believe himself “put on earth to solve this pension problem,” but our Speaker is indeed the deus ex machina 

 

HJRCA0049 is an attempt to demonstrate Madigan’s own purpose and resolve in the continuing problem of the state’s consistent pension underfunding.  In fact, such a constitutional amendment is probably pointless, except for show. Remember, after all, Madigan controls the House Rules Committee “with an iron hand” from which any pension increase bill must survive even to be considered (saukvalley.com), so the amendment to stop pension sweeteners is most unnecessary, but it looks so very, very proactive.   On the other hand, the proposed amendment may certainly prove very injurious to one smaller section of the captive audience: those younger professionals entering the field of teaching in Illinois after January of 2011.   The planned amendment does herald continued fiscal pain for those tied to the Tier Two rack of paying 9.4% of their salary for their own pensions, far above the 6% that reflects the true return on their eventual pensions.  Recall also that Tier Two teachers’ increased contributions are paying down the state’s earlier unfunded liability for payments not made since 1953.  Should Illinois voters approve Madigan’s amendment in November, the likelihood of the General Assembly ever reducing its unfair, inequitable, and punitive payment for Tier Two pension contributions is not promising.  

 

In a recent communication from Region 28, Addison Woodward warns that the abstruse wording of the amendment should raise alarm because “anything other than a salary or wage increase that could increase a pension or annuity would need a 60% vote supporting the increase from the governing body and/or both chambers of the General Assembly.”   Indeed, vague and ambiguous wording within the proposed amendment is unsettling and likely to create an opportunity for an eager  lawmaker to suggest that COLA’s fall outside the usual range of salary and wage benefits and are also to be considered emoluments requiring the 60% approval from both houses of the General Assembly (Woodward).   

Several additional sections in the proposed amendment are quite disconcerting as a result of unclear and formless wording. “For purposes of this subsection, the term “emolument increase” means the creation of a new or enhancement of an exisiting advantage, profit or gain that an official or employee receives by virtue of holding office or employment, including, but not limited to, compensated time off, bonuses, incentives, or other forms of compensation” (www.ilga.gov. Full text HJRCA0049).  Is the COLA a new enhancement?  That depends on how a lawyer may wish to see it.  It is certainly not new if one considers the three per cent cost of living as part of a continuing package that is an accrued benefit given to retirees when they end their careers.  On the other hand, if each yearly compounded cost of living is considered a new enhancement, it will require a 60% approval of both houses of the General Assembly for currently retired teachers to receive that COLA.  How will the courts perceive this argument?  Hard to say?  But rest assured, they will have to say…

 

And if the amendment does pass – and with phrases like stopping pension sweetners, why wouldn’t it? – what might also be up for a new interpretation?  As Woodward warns again, the totality of Article XIII, Section 5 could be at stake.  “Nothing in this section shall prevent the passage or adoption of any law, ordinance, resolution, rule, policy or practice that further restricts the ability to provide a ‘benefit increase,’ ’emolument increase,’ or ‘beneficial determination’ as those terms are used under this section” (www.ilga.gov. Full text HJRCA0049).  “It is this clause that many believe will be used to neutralize the pension protection clause” (Woodward).   

In order to be approved, the amendment must receive a three-fifths approval by those voting on the proposed amendment in November or by a majority of those voting in the election.  Some voters choose not to vote on amendments at all, while others choose to vote only on them; thus, the need for a fractional difference as per the Illinois Constitution (see Article XIV, Section 4).  In sum, the amendment can be passed either of two ways, so it is imperative we educate our citizenry as to the inequities of the amendment.

 Vote NO on HJRCA0049. 

Are you worried yet?  Do you need some heart, brains, or courage…c’mon just get involved.

via PENSION VOCABULARY of the WEEK by John Dillon May 27th – Pension Education.

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