By: Mark Glennon*

Not that it ever really did, but Illinois no longer has any excuse for not amending its constitutional pension protection clause.

That’s the subject of our monthly Crain’s article now out. Eventually, Illinois’ crisis will get so bad that even our Machine-controlled state government will be pressured to do it, so the sooner we get on with the discussion the better.

Crain’s editorial board already seems onboard, recently writing, “The ultimate solution may involve a constitutional amendment—a politically risky maneuver, but one that no longer seems unfeasible now….” Even Willam Daley, Chicago mayoral candidate said an amendment is “always a possibility.” I hope and expect others will follow.

The problem, however, is whether there would be political will to get it done right. That needs elaboration I couldn’t squeeze into the Crain’s article.

First, the basics from the article:

An amendment properly drafted and broad enough would eliminate all legal issues under Illinois law—it could be written to supersede not just the pension protection clause but all state constitutional issues. Previous Illinois Supreme Court pension decisions that effectively ruled our constitution to be a suicide pact wouldn’t matter. The amendment could be initiated by a three-fifths of both chambers of the General Assembly followed by a favorable election vote. See Section 2 of Article XIV of the Illinois Constitution. That’s all it would take.

Arizona. Where government apparently works.

If Arizona can do it, we can do it. Arizona’s state constitutional pension protection clause was worded identically with Illinois’ and, as in Illinois, its courts struck down pension reform efforts.

But this month, Arizona voters passed Proposition 125 to amend its constitution to reduce benefits for two of its major pensions, covering corrections officers and elected officials. In 2016, voters passed Proposition 124 for an amendment to reduce pension benefits for police and firefighters.

The world hasn’t ended in Arizona. The working class hasn’t been destroyed. Pensioners aren’t dumpster diving. Prospects for pensioners actually getting a fair, predictable benefit have improved.

Wouldn’t an amendment be challenged in court, making it a big waste of time?

Yes, it would be challenged, but that shouldn’t matter, for three reasons

First, the lawsuit would probably fail. We’re talking about a federal suit alleging violation of the Contract Clause in the U.S. Constitution. That clause prohibits states from passing any law that “impairs the obligation of contracts.” James Spiotto of Chapman Strategic Advisors in Chicago has been laying out the legal analysis. He is a nationally recognized insolvency lawyer, and his work is presented in a research paper he presented to the Brookings Institution and in a recent presentation to Truth in Accounting. So far in Arizona, no serious challenge has been made to undo the new amendments.

Second, even if an Illinois amendment ultimately failed in federal court, the pendency of the amendment during several years of litigation would provide needed leverage with public unions to obtain voluntary, negotiated reforms.

Third, we have no choice but to pursue all options with a reasonable chance of working. Nobody can honesty claim with certainty whether federal legal challenges would work. An amendment is worth a try.

Even if the amendment passed and survived in court, wouldn’t we have to wait until the 2020 election to see results?

Nor really. If Illinois were serious about reform, it could adjust its taxpayer pension contributions now to match what would be authorized under the reforms. That would send a firm message that, hell or high water, something is going to give. By the way, we are sort of doing that already by continuing to underfund pensions so badly that we are not even covering interest that effectively accrues on unfunded liabilities.

So much for the viability of an amendment, in concept. The real challenge, however, would be getting an amendment worded right.

Illinois lawmakers probably would try to draft an amendment narrowly to allow only for specific reforms, and they have a proven record of peddling petty reforms as if they are significant. The consideration model of pension reform and the new buyout plan are examples. Even SB-1, the supposedly serious attempt at reform that went up the Illinois Supreme Court, was a huge can kick that would have accomplished little.

Lawmakers are also adept at booby-trapping legislation they don’t really like so courts will knock it down. SB-1, again, is an example.

Furthermore, the state pension protection clause applies to all 671 statewide and local pensions in Illinois. They need different types and degrees of reform. It would not be feasible to address them all, specifically, in an amendment. In other words, on this issue, Arizona’s approach to wouldn’t work in Illinois. Arizona’s amendment specifically authorized previously invalidated legislation for three particular pensions. That won’t work here. We should hope for a simple amendment broadly authorizing any and all reforms lawmakers decide to make.

Lawmakers probably would also try to tie it to something else taxpayers wouldn’t like, perhaps an amendment allowing for a progressive income tax. The risk would be that, on balance, Illinois’ uncompetitive total tax burden wouldn’t improve. That must be resisted.

Keep this overarching reality in mind, as I put it in Crain’s:

Illinois and many of its municipalities have no way to end their fiscal crises without reducing unfunded pension liabilities. If you doubt that, ask why nobody has ever laid out even a rough outline of a plan to do so. Nobody will. Nobody can. The math is insurmountable. And those unfunded liabilities are mostly untouchable for now under our state court rulings.

None of this is to say a constitutional amendment would reduce the need for the dozens of other reforms, small and large, that Illinois needs and what we’ve called for here. Pensioners cannot and should not be expected to shoulder the entire burden of returning Illinois to fiscal stability.

Nor is any of this to say I am naïve enough to think an amendment will happen soon. But don’t you be naïve enough to think things won’t get much, much worse in Illinois. Days of reckoning will come, and they will be ugly. A constitutional amendment to allow for pension reform will be unavoidable. Sooner is better.

*Mark Glennon is founder of Wirepoints.

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world with end

Any constitutional amendment to make pensions more reasonable should include workers already retired. IL teachers are retiring in their 50s with large pensions; then, they live another 30-40 years with the three percent raise compounded annually. If the amendment doesn’t include workers already retired, it’ll take many years to put a serious dent in the amount of the unfunded liability. In other words, many of us wouldn’t live to see any significant changes for the better in terms of lower taxes and user fees.


You are very correct. This is, in fact, why we need to accelerate to insolvency, so those binding pensions are reduced.


I think Illinois is trying to load the boat up with as many suckers as possible before scuttling it. The more people who would suffer under an Illinois bankruptcy or the more damage it would do to the national economy means a greater likelihood of a federal bailout, which is what the Democrats/unions need. They need access to that federal money printer

The chances of a federal bailout are Slim and None, and I am pretty sure Slim is out of town…..


Oh good grief Rex, you sound like Bob Brinker…


Illinois’ day of reckoning will arrive the moment investors refuse to buy its soon-to-be junk bonds, regardless of rates of return offered. One has to believe this will come sooner, rather than later. I mean, would you lend more money to this state at this point??

Mike Williams

I’m surprised the lending lasted this long. At some point lenders must realize that just because Illinois has the ability to tax, that doesn’t guarantee the taxpayer has the ability to pay…. or is willing to stick around.

I’m surprised the lending lasted this long. Same here! When the $10.2 BILLION pension obligation bond was floated I was thinking who in their right mind would buy this garbage???? One strategy that MAY have been behind POB’s is that the pensioners would be made whole by the bonds, and then when BK comes the BOND holders take it in the shorts, not the pensioners. No one with a brain functioning at even 50% would be stupid enough to buy POB’s from Chi-Town or IL (or NJ, KY or CA either) …. Puerto Rico today is exactly what would/is going… Read more »

Mike Williams

Exactly Rex. Illinois politicians will care more about the voting pensioneers than the faceless bond holders, hence the bond holders will, as you so elegantly put it, “take it in the shorts”. This will trigger “judgement day” in Illinois, which is when nobody is willing to lend to Illinois, and everyone ends up in court.


A Constitutional Amendment is desperately needed but I fear it is a loooong way off. The Democrats haven’t yet imposed a progressive income tax, a statewide property surcharge, a financial transaction tax, a vehicle mileage tax, a retirement income tax, a massive POB issuance, a Chicago earnings tax, an exit tax, and other taxes yet to be conceived. The Democrats are going to tax the Illinoisans that remain into poverty before they even think about considering reducing the outrageous benefits they promised the greed-crazed unions

Connie Cain

Don’t forget the dozens of municipalities across the state that will be unable to fulfill their obligations to police and firefighters.

Illinois Entrepreneur

Buh-bye is 100% correct. The only grievance I’ve had with everyone “proposing solutions” is that these solutions will NEVER be implemented before the whole thing implodes anyway. The unions will fight to the death on this, and absolutely NONE of our democrat (and many republicans) state legislators have any courage to buck the public employee unions. These state legislators are themselves in it for a paycheck, and their own cushy retirement pension checks. They fear the unions more than the taxpayers, and fear rules. They also know that the footsoldier army that the public employee unions dredge up every two… Read more »


An agreement to pay a pension is a contract to return the money invested by person and employer and the interest it earned — not an agreement to make liable uninterested groups –i.e., the taxpayer/citizen– in the fiduciary embellishment of the same. And, no, the citizen did not de facto employ the government officials.


Jake, I’m confused about your last sentence. It seems wishful thinking on your part to make that statement rather than one based on logic. After all, isn’t it true that we elect our governmental official to act as our agents and presumably due business in our common interests? I think that’s the case legally, isn’t it? We may not agree to those decisions, but still the obligations they create are made in our stead and become our obligations as IL citizens. We’d all like to believe otherwise, of course. But, where is it logical not to agree with that statement?


You cannot morally or logically justify transgenerational debt for services. There may be some level of justification for capital assets but not for services. And Illinois various public employee pensions plans amount to transgenerational debt, in other words future generations of Illinois residents are born into bondage. It is slavery in the broader sense of the word. Future generations are born in defacto pension slavery, they are born into debt for benefits received by previous generations that they themselves receive no benefit from. The debts they are forced to pay is for services that were long ago consumed, they are… Read more »

Wow, there it is in FULL FORCE, the gov employee “Entitlement Mentality”. James, your pension is underfunded (vast majority at a minimum) because of multiple unearned, un-worked for, fraudulent pension hikes over the last 20+ years. Now, if that were NOT the case you MAY have a point. But that is the case. And in any event what cannot be paid, will not be paid. Time to wake up from sleepy sleepy dreamland and face the truth. Welcome to reality.


So, as a IDOC retiree, I should suffer because the state failed to do what they said they would? They took my money for over 20 years no problem, the fact they failed to do their part should not come back and bite me in the A$$, what should be the question is where all the money that was supposed to be in the pension fund gone to? It’s not an entitlement mentality if it’s something they said they would give you in exchange for working for them, it’s a contract.


I think you meant to say that for over 20 years the state took MY money. And I’m not giving more.

Joseph Hillström

A good part of the money was used to pay salary raises negotiated by your union, telling your employer it could kick the pension contribution down the road as long as they gave you a pay raise. Your pay raises and benefit increases (including health care costs beyond your control) was a big part of the cause that the pension contributions weren’t made. To that extent, your union sold you down the river. This leaves you in a sad situation along with a lot of citizens who depend on various government services such as filling pot holes. There is no… Read more »

“It’s not an entitlement mentality if it’s something they said they would give you in exchange for working for them, it’s a contract.” Michael- Here is my reasoned response to your comment. If you were, like everyone else in Chicago, IL (and the rest of the country) were gifted/took multiple pension hikes; gifted out for NO reason at all; retroactively; with little to NO contribution towards those hikes out of your own pocket; hikes that were NEVER worked for nor earned; a pension for which you contributed at BEST 5%; a pension that pays multiples of SS but required LESS… Read more »


And never forget the way Social Security bend points work to curtail higher payment to high earners…to give you some idea if you maxed out you SS contributions each year (i.e. had the highest taxable salary(128K on which you would pay $15,872 a year in contributions ) a year, for 35 years AND then delayed taking SS until you are 70 the maximum benefit you can receive is $44,376 a year. Oh course they can only pay about 70% of promised benefits and you have no grantee the benefits will be paid as they have revised the benefits downward several… Read more »


Just to make the point clear, review the example. It assumes you started your career earning 128K a year, work a full 35 years and then delay taking SS until you are 70. You would have paid in $555,529 by the time you are 70, and if you manage to die when expected you will have taken out $710,016. Of course what may not leap out is if you went to college in order to qualify for such a high salary when you begin your career, which essentially means you are giving the Government a free loan for 13 years.… Read more »


It was you who put blind faith and trust in government to fund your retirement and acted like a spectator to the whole process. It was you who outsourced your retirement to government and your union, the most corrupt and dishonest gangs of lying feral pigs to ever walk on land. You really though that government and your union would work in your best interest and not theirs?


As for your contract line, good luck enforcing that. Go ahead and raise income taxes to 30% to fund your pension and see who’s left in Illinois to pay for it. I left 3 years ago and don’t regret it for a second


Yes, you should suffer. This happens in the private sector all the time. Why do Government employees think they are a privileged class of citizen? Your payment was made at the time service was rendered. You are the one who decided to accept an IOU from a party not part of the transaction. If a 15 year old kid agrees to mow my lawn for $20 dollars I guarantee you he camps out on my doorstep until I pay him, he does not accept my word that some unidentified person or persons somewhere on my block or the next block… Read more »

Mike Williams

A sixty year old man says, “Mike, please mow my grass this summer. I’ll pay you a dollar a month for the rest of my life, and then my daughter Eve will continue to pay you.” Eve is unaware of the agreement.

Twenty years later Mike sues Eve for payment. Judge says Eve is not liable.
Moral of the story: Mike is a fool.

Tough Love

Next-up ……………..NJ !

Joseph Hillström

Would pension benefits accrued to the effective date of the amendment have to be protected? Let’s say I have $10K per month based on my spiking and credit purchases. I am also expecting a COL adjustment every year. Could the system cancel future COL adjustments? Could the system roll back early retirement subsidies and cut off or diminish my retiree health? This may depend on wording, but how far can benefits be cut in an ex post facto sense? I am assuming that there is doubt on most of the really helpful cutbacks, so bankruptcy would still be necessary. Bankruptcy… Read more »

This may depend on wording, but how far can benefits be cut in an ex post facto sense?
Legally not 1 penny from accrued pensions can be cut. ONLY pensions going forward could be adjusted. In REALITY, the $$ to pay these pie in the sky accrued pensions is not there. It is NOT going to be there. Not yesterday. Not today. Not tomorrow. So past pensions accrued will be cut, NOT based on any legal ruling or precedent, but on reality-there is no $$ to pay these accrued pensions.

Could the system cancel future COL adjustments? Could the system roll back early retirement subsidies and cut off or diminish my retiree health?
Typically these benefits are not part of the pension contract, at least NOT in my state of CA. I doubt they are in Chicago either. In CA these benefits have been cut. Some benefits, such as purchase of service year credits (aka airtime), are being litigated before the CA Supreme Court right now and will have a ruling very likely before the end of the year.


Rex the wonder dog is from CA? I missed that apparently.

I bailed out of CA when CA started taxing pensions nationwide based on source origination. Shortly after I relocated my business Congress passed a bill to outlaw the practice.

I mention this is taxpayers, as a whole, really dodged a bullet on that one. But it told me all I ever needed to know about CA.

reference: Jan. 10, 1996, P.L. 104-95

Mike Williams

Good article Mark. I agree, it would be better sooner than later to pass a pension reform amendment. Like you, I don’t see that happening. The Illinois public has been conditioned to think that the solution is more taxes or federal bailouts since there is little discussion about solving problems through any other method. The public is going to have to feel more financial pain before it starts asking questions and looks for somebody to blame. Perhaps the real pain will start when the banks make it more difficult to get credit for someone who lists their income as a… Read more »

Mark M

Mike – as a point of reference, I pay 8,000 dollars in property taxes on my 800 thousand dollar home on nearly one acre in an area where schools are equal to or better than the North Shore of Chicago. Not only is it a nice home, the tax burden is such that I i long ago paid off the mortgage and don’t have a rapacious government draining my equity. There are fewer levels of government where I live than in Illinois but I think the largest driver of the tax disparity is the lack of public sector unions. Of… Read more »

Mike Williams

In Illinois, the purpose of the private sector is to support the public sector. For now, the private sector is still allowed to keep just a little bit for their own expenses, but that will change soon with the pension debt coming due.


I don’t think tying the pension reform with a progressive income tax would be viewed favorably by the unions, but it would make things interesting.


I feel like George Clooney in “The Perfect Storm.”