How will Illinois court rule on pension reform? >Crain’s Chicago Business

27 Jan

How will Illinois’ high court rule on pension reform?

After years of contentious debate and a close vote in the General Assembly, resolving the Illinois pension crisis is now up to seven men and women who do most of their work behind closed doors.

The members of the Illinois Supreme Court are difficult to predict on any one issue but tend to follow clear voting patterns, according to Crain’s statistical analysis of decisions. They are also politicians, four Democrats and three Republicans, who face the voters every 10 years in increasingly costly elections in which business interests, personal injury lawyers, unions and political parties play key roles, the publication found.

Legal experts say it’s a tough call whether a majority of the justices will uphold the ruling in November of a circuit judge in Springfield who voided the pension law, saying it violated the Illinois Constitution.

Beyond the legal issues, the reality for a former Chicago Bears kicker, the wife of a powerful Chicago alderman and the other justices is that Illinois as well as Chicago and many other localities will need staggering budget cuts or steep tax increases—more likely, both—to cope with woefully underfunded pension plans if the law is struck down.

“This is one of the court’s most important decisions, if not the most important decision in probably the last 25 to 30 years, because the enormity of the pension crisis is just overwhelming,” says James Thompson, senior chairman of law firm Winston & Strawn in Chicago and Illinois’ governor from 1977 to 1991. On further reflection, “I can’t remember any one as important as this” in his 55-year legal career, he adds.

Story continues below . . .



Click to see each justice’s top contributors and how much they gave


The debate over the constitutionality of the pension law began before it was passed in December 2013 with the support of Gov. Pat Quinn. Benefits for four state retirement plans are projected to exceed assets by $111.18 billion. To help close the gap, the law reduces benefits in exchange for guaranteed, increased contributions by the state.

Public employee unions opposed the law, arguing in part that it violates the state constitution, which says pension benefits for public employees cannot be “diminished or impaired.”

Some experts say the court tipped its hand last year with its 6-1 decision in Kanerva v. Weems, which held that health care benefits for retired state workers are constitutionally protected. However, that case didn’t address the question of whether the pension law was justified by the state’s police powers, which give broad authority to the General Assembly to act for the general welfare, for example by properly funding education, health care and public safety, especially in light of a pension crisis that threatens to engulf the state’s finances.

While the justices say they base decisions on the law, there’s a political dimension to their roles in a system where judges are elected. Three justices represent Cook County, while four districts in the rest of the state elect one each.

“To get on the Supreme Court of Illinois, you have to be very good with politics, the people and the press,” says Michael McCuskey, a retired federal district judge in central Illinois who was a state circuit and appellate judge in the 1990s. He is back as a circuit judge in Peoria, where he began his career.

• • •To gauge the influence of contributions, Crain’s examined the records of the Supreme Court campaigns of each justice, going back to 1989, when Charles Freeman began his run for the high court.

Union-related groups were four of the top five contributors to Justice Thomas Kilbride, accounting for nearly $750,000, or 20 percent, of the $3.7 million he has raised. The Rock Island Democrat was elected in 2000. Ten years later, he won retention, in which voters cast “yes” or “no” votes on whether to keep a judge on the bench.

It’s hard to say whether—or how—the Pension Reform Litigation, as it is called, will be viewed through a partisan lens by the justices. Backed strongly by business, the law passed with crucial votes from Democrats but scant support from Republicans after GOP Gov. Bruce Rauner, elected Nov. 4, opposed it.

The Illinois Democratic Party has been the largest contributor to Kilbride and Freeman, who once shared law offices with Harold Washington. A third Democrat, Anne Burke, wife of Chicago Ald. Ed Burke, chairman of the Chicago City Council’s Finance Committee, raised so much money that she gave partial refunds totaling $660,400, which were factored into Crain’s calculations. She was appointed in 2006 by the justices, who fill between-election vacancies, and ran unopposed in 2008.



Click for a larger version of this graphic


Since 2000, two justices—Kilbride and Republican Lloyd Karmeier—have faced tough races to get elected and retained (see the PDF). Each won in districts that long had been represented by the other party, in races that pitted business interests against trial lawyers and unions.

In his retention race last year, Karmeier barely won the 60 percent needed after a group of trial lawyers funded a $2 million ad campaign to unseat him, answered by a nearly $1 million counteroffensive from a Republican group.

“I would caution you from trying to draw conclusions from campaign contributions,” says Joseph Tybor, the court’s spokesman.

• • •The court sits in Springfield, where the justices live in apartments on the third floor of the courthouse, eating meals together and generally avoiding the state capital’s bars and restaurants filled with lawyers, lobbyists and lawmakers. At $216,000 a year, their salaries were second only to California justices’ as of 2013, according to the National Center for State Courts.

In court, disputes among the justices are rare. They were unanimous in 185 cases, or 61 percent, of the 302 appeals they’ve decided since October 2010, when the court’s newest member, Mary Jane Theis, was appointed. That includes 19 cases decided by 6-0 or 5-0 votes. Forty-three cases saw only one dissent, according to Crain’s analysis.

Roughly half the time they reversed the appellate court.



Click for a larger version of this graphic Click to see the actual percentages


The publication’s analysis included cases in which the court issued written opinions but did not include cases decided with unpublished orders, where the rate of unanimity is even higher.

A 4-3 split is rare, occurring in only 5 percent of the 302 judgments handed down since Theis joined the court. A few more also were decided by four votes, but recusals or concurring opinions reduced the number of justices who didn’t join the majority. Four votes are needed for a decision, but the makeup of those four votes varies widely.

The three Republicans—current Chief Justice Rita Garman, former Chicago Bear Thomas and Karmeier—voted with each other at least 73 percent of the time.

The swing vote often comes from Theis, a Democrat whose father, Kenneth Wendt, was a longtime Cook County judge with a playlot park named for him in Lakeview. Among 23 cases decided by four votes, she was in the majority 16 times, more than any other justice.

“You hope to begin with a centrist core of Garman, Karmeier and Thomas,” says Kirk Jenkins, who chairs law firm Sedgwick’s appellate practice in Chicago. “Generally, your best shots at getting the fourth vote are Justice Theis and Justice Burke.”

The most frequent dissenters were Democrats—Burke, Freeman and especially Kilbride. Burke and Kilbride, a former solo practitioner before he ran for the Supreme Court in 2000, vote in tandem only 18 percent of the time.

More than 86 percent of the time, Burke votes with Freeman, the court’s only African-American. In Kanerva, last year’s health care benefits case, Freeman wrote the opinion, suggesting he may be a difficult vote for the state to win in the pension case. Burke was the sole dissenter.

• • •The pension case involves both public employee benefits and constitutional issues, two areas in which the court often has been skeptical about plaintiffs’ cases in recent years.

In seven cases involving public employee benefits since Theis was named to the bench, the court reversed two-thirds of the appellate decisions won by defendants but 75 percent of those won by plaintiffs, according to Jenkins, who tracks the court’s civil cases. Three cases, including two combined into one decision, were reversed on 4-3 votes. The others were more lopsided, but the majority varied from case to case.

The court also has reversed almost half of the constitution-related civil cases that plaintiffs won at the appellate level and none of the cases won by defendants, according to Jenkins.

In March, after the court hears arguments in the pension case, the justices likely will face two unattractive options, says former Gov. Thompson.

“Pensions are going to swallow the budget and will necessitate extremely higher taxes or a gutting of support for many items in the budget, especially education and Medicaid because that’s where the money is,” he says. At the same time, “it’s a slippery slope—if police powers can override this constitutional provision, what else can it override?”

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