Jones v. Municipal Employees' Annuity & Benefit Fund, 2016 IL 119618

Background

Public Act 98-641 (eff. June 9, 2014) amended the Illinois Pension Code for two Chicago municipal pension funds (MEABF and LABF), increasing employee contributions and changing annual annuity adjustments (replacing 3% compounded COLAs with a capped, non‑compounding CPI‑based formula, suspensions, and delayed starts).
The Act also phased in larger employer (City) contributions and added enforcement mechanisms (Comptroller deductions; mandamus with limits) to move funds toward actuarial funding targets.
Plaintiffs (current employees, retirees, and unions) sued in Cook County, alleging the Act diminishes pension benefits in violation of the Illinois Constitution pension protection clause (Ill. Const. 1970, art. XIII, § 5).
The circuit court granted plaintiffs’ summary judgment, held the Act unconstitutional in whole, rejected the State/City defenses ("net benefit" and bargained‑for exchange), and found the statute’s severability clause made the Act unenforceable in its entirety.
The Illinois Supreme Court affirmed, applying its recent precedent that the pension clause protects prospective and vested pension benefits from unilateral legislative diminishment.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Act diminishes constitutionally protected pension benefits	Jones: The Act’s COLA modifications, suspensions, and loss of compounding reduce the value of promised annuities for current and future members	State/City: Changes are offset by funding reforms and enforcement; overall a "net benefit" that preserves solvency	Held: The COLA and benefit reductions unconstitutionally diminish protected benefits; funding changes are not "benefits" under the clause
Whether funding increases/enforcement in the Act create an enforceable contractual funding right	Jones: Members already have enforceable right to promised benefits; statute cannot convert funding measures into protected benefits	City: Act creates an actuarial funding guarantee and enforceable remedies, offsetting benefit reductions	Held: Funding choices are not protected "benefits"; no clear legislative intent created an enforceable contractual funding guarantee
Whether members waived constitutional rights by union negotiations	Jones: Individual members did not give mutual assent; unions did not act in a binding collective‑bargaining agency capacity here	City: Legislation codified a bargained‑for exchange reached with unions representing members	Held: As a matter of law, plaintiffs did not bargain away constitutional protections; negotiations were legislative advocacy, not a binding collective‑bargaining waiver
Whether the unconstitutional provisions are severable from the Act	Jones: Invalid COLA provisions are tied to the funding/enforcement package; legislature’s severability clause shows those provisions are dependent	City: (not disputed below)	Held: Severability clause and legislative intent show the invalid provisions are mutually dependent; the Act is invalid in its entirety

Key Cases Cited

Heaton v. Rauner, 2015 IL 118585 (Ill. 2015) (invalidating similar annuity reductions under Illinois pension protection clause)
Kanerva v. Weems, 2014 IL 115811 (Ill. 2014) (scope of pension protection clause and when protections attach)
People ex rel. Illinois Federation of Teachers v. Lindberg, 60 Ill. 2d 266 (Ill. 1975) (funding choices are not enforceable pension benefits)
McNamee v. State, 173 Ill. 2d 433 (Ill. 1996) (statute does not create contractual right to specific funding method)
People ex rel. Sklodowski v. State, 182 Ill. 2d 220 (Ill. 1998) (pension clause protects benefits, not funding mechanisms)
Buddell v. Board of Trustees, State University Retirement System, 118 Ill. 2d 99 (Ill. 1987) (pension rights modifiable by contract principles when there is mutual assent)
National R.R. Passenger Corp. v. Atchison, Topeka & Santa Fe Ry. Co., 470 U.S. 451 (U.S. 1985) (legislatures do not ordinarily bind future legislatures; statutes not presumed to create vested contractual rights)
Maddux v. Blagojevich, 233 Ill. 2d 508 (Ill. 2009) (courts must declare unconstitutional statutes invalid regardless of perceived public benefit)