JOSEPHINE 'JODY' PISANI, on Behalf of Herself and a Class of Persons Similarly Situated; INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS LOCAL 193; INTERNATIONAL UNION OF PAINTERS & ALLIED TRADES COUNCIL 58; INTERNATIONAL ASSOCIATION OF MACHINISTS & AEROSPACE WORKERS DISTRICT 9; CARPENTERS LOCAL 270; and PLUMBERS, STEAMFITTERS & REFRIGERATION FITTERS LOCAL 137, Plaintiffs,
THE CITY OF SPRINGFIELD, Defendant-Appellee JOSEPHINE 'JODY' PISANI, on Behalf of Herself and a Class of Persons Similarly Situated; and INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS LOCAL 193, Plaintiffs-Appellants.
from Circuit Court of Sangamon County No. 15MR978 Honorable
Chris Perrin, Judge Presiding.
JUSTICE APPLETON delivered the judgment of the court, with
opinion. Justices Holder White and Knecht concurred in the
judgment and opinion.
1 Plaintiffs are Josephine "Jody" Pisani and her
union, the International Brotherhood of Electrical Workers
Local 193. Defendant is the City of Springfield, Illinois.
Pisani sues on behalf of herself and a class of
defendant's employees who (1) are participants in the
Illinois Municipal Retirement Fund (Fund) and (2) refrained
from taking advantage of a vacation buyback provision in
defendant's code of ordinances before the city council
passed an amendment, in 2015, that repealed the provision.
2 Before its repeal, the provision allowed defendant's
employees to cash in their unused vacation days several
months before their retirement. The lump sum boosted their
final rate of earnings, thereby boosting the amount of their
retirement annuity, payable out of the Fund. Plaintiffs
claimed that the elimination of this pension-spiking
opportunity violated the pension protection clause (Ill.
Const. 1970, art. XIII, § 5) and the contracts clause
(Ill. Const. 1970, art. I, § 16). They sought a
declaratory judgment to that effect as well as an injunction
against the enforcement of the 2015 amendment.
3 The parties filed cross-motions for summary judgment. The
trial court granted defendant's motion and denied
plaintiffs' motion. Plaintiffs appeal.
4 We conclude that the trial court's rulings are correct
because, instead of modifying the pension contract itself,
the 2015 amendment to defendant's code of ordinances
changed a vacation day policy-a change that had only an
incidental, indirect effect on pension benefits. Changes in
the terms and conditions of employment that indirectly affect
the amount of a pension by affecting a number that is plugged
into the pension formula are not "diminish[ments] or
impair[ments]" of pension benefits, within the meaning
of the pension protection clause. Ill. Const. 1970, art.
XIII, § 5.
5 Did the amendment, however, violate the contracts clause?
In their brief, plaintiffs do not explain why that clause
would call for a different result. They argue only the
pension protection clause, as if their theory of a violation
of the contracts clause were redundant and added nothing.
Therefore, our conclusion as to the pension protection clause
disposes of both counts of the complaint, and we affirm the
trial court's judgment.
6 I. BACKGROUND
7 In article 7 of the Illinois Pension Code (40 ILCS 5/7-101
et seq. (West 2014)), the General Assembly created
the Fund, a statewide public-pension system, which is
governed by a board of eight members (Board) (40 ILCS
5/7-174(a) (West 2014)). Defendant participates in the Fund.
Participating municipalities and their participating
employees contribute to the Fund (40 ILCS 5/7-172, 7-173
(West 2014)), and out of the invested contributions, the
Board pays annuities and other benefits (40 ILCS 5/7-195
8 Annuities are payable "during the life of the
annuitant" (40 ILCS 5/7-119 (West 2014)), and the amount
of the annuity depends on what the employee's earnings
were, among other factors. (Length of service is another
factor.) Take the retirement annuity as an example. Section
7-142(a)(1)(b) of the Pension Code (40 ILCS 5/7-142(a)(1)(b)
(West 2014)) provides a formula for calculating the monthly
amount of the retirement annuity, and the final rate of
earnings is a variable in that formula.
9 "Earnings" and "final rate of earnings"
are variables, having no fixed numerical value in article 7
of the Pension Code. They have fixed meanings (40 ILCS
5/7-114, 7-116 (West 2012)) but no fixed numerical
value-variables are variable. (Sometimes, in this opinion, we
will cite the 2012 edition of the Illinois Compiled Statutes
instead of the current, 2014 edition. The reason is that
certain sections of article 7 as they appear in the 2014
edition include language added by Public Act 98-599, §
15 (eff. June 1, 2014), which the supreme court struck down,
in its entirety, in In re Pension Reform Litigation,
2015 IL 118585, ¶ 96. Enacting an unconstitutional
amendment to a statute leaves the statute as it was before
the amendment-in this case, as it was in the 2012 edition of
the Illinois Compiled Statutes. See People v.
Gersch, 135 Ill.2d 384, 390 (1990).) Section 7-114(a)(1)
of the Pension Code defines " '[e]arnings'
" as "[t]he total amount of money paid to an
employee for personal services or official duties as an
employee ***, including compensation, fees, allowances, or
other emolument paid for official duties." 40 ILCS
5/7-114 (West 2012). In its amicus curiae brief, the
Board tells us it has passed a resolution stating that money
for unused vacation days meets the statutory definition of
earnings. The Board, however, does not provide us a copy of
this resolution, nor can we find this resolution on the
Board's website. It does not matter, because the parties
appear to agree that money for unused vacation days meets the
statutory definition of " '[e]arnings.' "
10 The definition of " '[e]arnings' "
remains the same regardless of the type of benefit.
Id. The definition of " '[f]inal rate of
earnings, ' " by contrast, depends on the type of
benefit. 40 ILCS 5/7-116(a), (b), (c) (West 2012). Again, we
will use the retirement annuity as our example. For purposes
of a retirement annuity, the " '[f]inal rate of
earnings' " is "the monthly earnings obtained
by dividing the total earnings received by the employee
during the period of either (1) the 48 consecutive months of
service within the last 120 months of service in which his
total earnings were the highest or (2) the employee's
total period of service, by the number of months of service
in such period." 40 ILCS 5/7-116(a) (West 2012).
11 This definition of the " '[f]inal rate of
earnings' " opens the door to a strategy known as
"pension spiking." The Board explains:
"Generally speaking, the amount of a [Fund]
retiree's pension is based upon the highest  years of
their last  years of [Fund] employment (the 'final
rate of earnings'), and this typically is an
employee's final  years of [Fund] employment. Pension
spiking occurs when payouts are made in excess of a
person's normal salary progression up to this period.
Lump-sum payments made during the
final[-]rate[-]of[-]earnings period are a common cause of
lump-sum payment could be in the form of money for unused
vacation days. In any event, regardless of what the lump sum
is for, the objective is to make the final rate of earnings