The opinion of the court was delivered by: Justice Nickels
Beneficiaries in various state employee pension systems brought suit seeking to compel the state and its officials to appropriate monies necessary to meet statutory funding obligations contained in the Illinois Pension Code (40 ILCS 5/1-101 et seq. (West 1994)). The Cook County circuit court dismissed the action on the pleadings, finding that the requested relief is barred by the separation of powers clause of the Illinois Constitution of 1970 (Ill. Const. 1970, art. II, §1). The appellate court reversed. 284 Ill. App. 3d 809. We granted defendants' petition for leave to appeal. 166 Ill. 2d R. 315.
This action began when six members of various state retirement systems filed a complaint seeking mandamus, declaratory and injunctive relief in the circuit court of Cook County. Plaintiffs included Robert Sklodowski, Thomas Hanahan, Sandee Hanahan, Susan Lillis, Robert Negronida, and Mark Warden. Plaintiffs subsequently filed a second-amended complaint, purporting to be both a class action and a derivative action, naming as defendants the State of Illinois and its officials: Governor Jim Edgar; the President of the Senate, Philip Rock; the Speaker of the House of Representatives, Michael Madigan; the Comptroller, Dawn Clark Netsch; and the Treasurer, Patrick Quinn. Also named as nominal defendants were the Judges' Retirement System of Illinois (JRS), the State Employees' Retirement System of Illinois (SERS), the State Universities Retirement System (SURS), the Teachers' Retirement System of the State of Illinois (TRS), the General Assembly Retirement System (GARS), and their trustees.
In substance, plaintiffs' complaint alleged that the state failed to comply with the funding provisions contained in Public Act 86-273, eff. August 23, 1989. These provisions controlled funding of the five state retirement systems governed by the Pension Code. See Ill. Rev. Stat. 1989, ch. 108½, pars. 2-124, 14-131, 15-155, 16-158, 18-131. The funding provisions contained in Public Act 86-273 required that, starting in 1990, the state would contribute additional incremental amounts each year, that along with employer contributions, would in seven years meet the annual normal cost for each fund, as well as satisfy the amount necessary to amortize the unfunded liability for each fund over the next 40 years.
Plaintiffs' complaint first alleged that the State of Illinois and the trustees of the pension funds, by failing to insure funding occurred in accordance with Public Act 86-273, violated fiduciary duties owed to participants. Plaintiffs' complaint also alleged that the state and its officials, in failing to appropriate monies sufficient to satisfy Public Act 86-273, violated the pension protection clause of the Illinois Constitution of 1970 (Ill. Const. 1970, art. XIII, §5) and impaired the contract rights of fund participants in violation of the contract clauses of the United States Constitution (U.S. Const., art. I, §10) and the Illinois Constitution (Ill. Const. 1970, art. I, §16). Plaintiffs' complaint also alleged that defendants, in budgeting and appropriating less than is required under the Pension Code, deprived them of property under color of law in violation of 42 U.S.C. §1983 (1982).
Three of the nominal defendants, TRS, SERS, SURS, filed counterclaims against the State of Illinois and its officials. These counterclaims were similar to plaintiffs' claims. The trial court granted permission to intervene in the proceedings to the Illinois Retired Teachers Association (IRTA), a not-for-profit corporation whose purpose is to protect the interests of retired teachers. IRTA's complaint also contained claims similar to those of plaintiffs and counterplaintiffs.
The trial court granted defendants' motions to dismiss each of these claims. The trial court determined that all the claims were insufficient as a matter of law because the requested relief, a judicial order requiring the state through its legislative and executive officials to appropriate monies, would violate the separation of powers clause of the Illinois Constitution (Ill. Const. 1970, art. II, §1). The trial court therefore dismissed plaintiffs' second-amended complaint, intervenor IRTA's complaint, and the counterclaims of SURS, SERS, TRS. Each appealed.
During the pendency of the appeal, the General Assembly passed Public Act 88-593, which repealed Public Act 86-273 and amended the funding provisions for each of the retirement systems at issue. See Public Act 88-593, eff. August 22, 1994. This amendment required a lower level of state contributions than previously required by Public Act 86-273, by reducing the ultimate funding target from 100% to 90%, and by extending the time to reach that target from 40 to 50 years. See 40 ILCS 5/2-124, 14-131, 15-155, 16-158, 18-131 (West 1994). The amendment further provided for continuing automatic appropriations for each pension system. See Pub. Act 88-593, eff. August 22, 1994 (adding 40 ILCS 15/1.1, 1.2 (West 1994)).
Based on this amendment, defendants moved in the appellate court to dismiss the appeal as moot. This motion was taken with the case and summarily denied by the appellate court without explanation.
In its opinion, the appellate court first determined that the state itself should be dismissed from the lawsuit because the State Lawsuit Immunity Act (745 ILCS 5/1 (West 1994)) grants the state immunity. However, the appellate court concluded that the remaining state defendants could be made parties in their official capacities. The appellate court reasoned that these claims were not against the state, but were instead seeking only to require that state officials meet statutory obligations set upon their offices.
The appellate court then examined whether the trial court erred in dismissing all the claims on the basis that the requested relief, a judicial order directing an appropriation of state monies to fund the retirement systems, would violate separation of powers principles. The appellate court concluded that issuing an order of mandamus compelling state officials to comply with the funding requirements contained in the Pension Code would not violate the separation of powers provision. The appellate court reasoned that the funding required by Public Act 86-273 represents a mandatory duty for state officials. Furthermore, a court could, consistent with separation of powers principles, order the disbursement of the state funds necessary to meet this duty without requiring a specific legislative appropriation that meets constitutional standards (see Ill. Const. 1970, art. VIII, §2(b)).
After determining that the doctrine of separation of powers does not bar the requested relief, the appellate court then examined plaintiffs' claims that they had a contractual right protected by the pension protection clause of the Illinois Constitution (Ill. Const. 1970, art. XIII, §5) to have the state contribute the funds necessary to meet the level of pension funding required by Public Act 86-273. The appellate court concluded that the pension protection clause created a contractual relationship under the Pension Code between the pension beneficiaries and the state. Thus, the appellate court reasoned that the beneficiaries were entitled to enforce the statutory funding levels contained in Public Act 86-273 as a contractual right.
After the appellate court issued its opinion, this court decided McNamee v. State of Illinois, 173 Ill. 2d 433 (1996). In McNamee, participants in police pension funds brought an action arguing that an amendment to the Pension Code changing the method of computing the annual amount necessary to amortize the unfunded accrued liability of police pension funds violated the participant's constitutional pension rights by making the funds less secure. The McNamee court reviewed the debates from the constitutional convention and determined that the pension protection clause created a contractual right only to receive benefits, but did not control funding.
The appellate court subsequently issued a modified opinion which sought to distinguish McNamee. The appellate court apparently reasoned that, even if the framers did not intend to control funding with the passage of the pension protection clause, the legislature's unilateral action of passing a ...