IS WELCHING ON PUBLIC PENSION PROMISES AN OPTION FOR ILLINOIS?
AN ANALYSIS OF ARTICLE XIII, SECTION 5 OF THE ILLINOIS CONSTITUTION
By Eric M. Madiar
Illinois has the largest unfunded public pension liabilities of any state in the nation. This article
considers whether the Illinois General Assembly may, without violating Article XIII, Section 5 of the
1970 Illinois Constitution unilaterally cut the pension benefits of current public employees as a means
to reduce the $84.2 billion the State owes to its five public pension systems. Article XIII, Section 5
(i.e., the “Pension Clause”) of the Illinois Constitution provides that: “Membership in any pension or
retirement system of the State, any unit of local government or school district, or any agency or
instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not
be diminished or impaired.”
This article concludes that legislation enacted to unilaterally reduce the pension benefits of
current employees would violate the Pension Clause based on the Clause’s text and origins,
constitutional convention debates revealing the framers’ intent, contemporaneous news articles
demonstrating voters’ understanding of the Clause, and a host of court decisions construing the Clause.
Indeed, at the time of the 1970 Illinois Constitutional Convention (“Convention”), the State pension
systems were no better funded than they are today. This circumstance, coupled with the fact that the
legislature already had a poor track record of making its actuarially-required pension contributions,
caused public employee groups to lobby Convention delegates to include the Pension Clause. These
groups reasoned that constitutional protection was necessary because the General Assembly would
renege on its pension obligations to public servants during a financial crisis. Convention delegates
agreed and included the Clause to foreclose that result.
The article finds that the Pension Clause not only makes a public employee’s participation in a
pension system an enforceable contractual relationship, but also constitutionally protects the pension
benefit rights contained in the Illinois Pension Code when an employee joins a pension system,
including employee contribution rates. The Clause also safeguards pension benefit enhancements that
are later added during employment. Further, the Clause ensures that pensions will be paid even if a
pension system defaults or is on the verge of default. Finally, while the Clause bars the General
Assembly from adversely changing the benefit rights of current employees via unilateral action, these
rights are “contractual” in nature and may be modified through contractual principles. In sum, while
welching on public pension promises is not an option for Illinois as some legal and civic commentators
have suggested, legitimate contract principles provide a solution to mitigate this crisis.
Eric M. Madiar is the Chief Legal Counsel to Illinois Senate President John J. Cullerton and Parliamentarian
of the Illinois Senate. B.A.,Truman State University; J.D. Chicago-Kent College of Law. All rights reserved.