Pisani v. City of Springfield
73 N.E.3d 129
| Ill. App. Ct. | 2017Background
- The City of Springfield had a 2003 ordinance allowing employees to cash out unused vacation up to one year before retirement, producing a lump-sum that could inflate the Fund "final rate of earnings" and thus spike pensions.
- The Illinois Municipal Retirement Fund (IMRF or "Fund") pension formula uses a variable "final rate of earnings" based on the highest 48 months of pay within the last 10 years; lump sums during that period can increase annuities.
- State law contains anti-spiking measures (e.g., the 125% rule and an accelerated-payment provision requiring municipalities to pay the present value of pension increases caused by abnormal pay spikes).
- Because accelerated-payment liability rose substantially, Springfield enacted a 2015 ordinance repealing the early vacation buyback option effective May 31, 2016.
- Pisani (and her union) sued on behalf of similarly situated IMRF participants who did not cash out before repeal, alleging the repeal violated the Illinois Constitution's pension protection clause and contracts clause; the trial court granted the City summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether repeal of the City’s vacation buyback option violated the Illinois pension protection clause | The buyback was a pension-related benefit tied to IMRF membership; removing it "diminished or impaired" pension benefits | The buyback was a municipal employment policy (city ordinance), not a State/IMRF contractual pension benefit; its repeal only incidentally affected pension calculations | Repeal did not violate the pension protection clause because it changed an employment policy (indirect/incidental effect on pension inputs), not the State-regulated pension contract |
| Whether the contracts clause was violated | (Argued generally alongside pension clause) | (Defendant argued no impairment of the State pension contract) | Court treated the contracts clause argument as redundant and disposed of it with the pension-clause ruling |
Key Cases Cited
- Peters v. City of Springfield, 57 Ill. 2d 142 (1974) (holding a municipal change to employment terms that indirectly reduces pension amounts does not violate the pension protection clause)
- Miller v. Retirement Board of Policemen’s Annuity & Benefit Fund, 329 Ill. App. 3d 589 (2002) (distinguishing Peters where the General Assembly amended statutory pension formula and directly changed a variable of the pension contract)
- Buddell v. Board of Trustees, State University Retirement System of Illinois, 118 Ill. 2d 99 (1987) (State amendment to pension benefits impermissibly impaired vested pension rights)
- Felt v. Board of Trustees of the Judges Retirement System, 107 Ill. 2d 158 (1985) (constitutional protection bars legislative diminishment of pension benefits provided under statute)
- Kraus v. Board of Trustees of the Police Pension Fund, 72 Ill. App. 3d 833 (1979) (amending statutory pension terms would directly diminish pension benefits)