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 If you are trying to understand why Illinois’ pension systems
are such a mess, it helps to know the Illinois Supreme Court agrees a former
union lobbyist can double his pension by spending one day as a substitute
teacher.
On April 4, the Illinois Supreme Court ruled 4-3 that David Piccioli is entitled
to apply the hours worked during his 10-year career as a lobbyist for the
Illinois Federation of Teachers union to the Teachers’ Retirement System because
he spent a single day in the classroom in 2007.
The decision comes after TRS board members unanimously slammed Gov. J.B.
Pritzker’s pension plan as inadequate. TRS’ debts stack beyond $75 billion –
highest among the five state-run pension funds – and the system is only about 40
percent funded.
The Piccioli case shows why fixing the state’s pension systems requires fixing
the Illinois Constitution.
Piccioli received certification and completed his day of substitute teaching in
the narrow window between when disgraced former Gov. Rod Blagojevich received a
bill in December 2006 creating a pension spiking loophole and when the loophole
took effect in February 2007. The law allowed a select group of union leaders
who logged teaching time to retroactively factor their years as a union employee
toward a teacher pension, but they had to enroll in the pension system before
Blagojevich signed the law. Two lobbyists scurried to get certified, teach a day
in Springfield schools and enroll in TRS, but only Piccioli went ahead and took
advantage of the law.
 Piccioli’s IFT had endorsed Blagojevich for governor, contributing more than
$515,000 to his campaign. The bill was presented to Blagojevich right after he
was reelected in November 2006.
Piccioli’s one day of teaching allowed him to double his pension, according to
NPR. Piccioli paid about $198,000 into the TRS system over four years to
retroactively cover pension contributions for his 10 years with the union.
In 2012 lawmakers eliminated the loophole, arguing the 2007 law that only
benefited one person was unconstitutional. Pension payments plus interest were
to be returned to Piccioli.
Piccioli sued, arguing that because the Illinois Constitution does not allow for
the diminishment or impairment of a public pension benefit once it is granted,
the state’s action was illegal.
A circuit judge in Springfield rejected Piccioli’s argument, in 2017 ruling the
overgenerous perk as unconstitutional. A separate law granted Piccioli a TRS
pension for his union work after the single day in the classroom, but the judge
said Piccioli didn’t deserve pension credit for the 10 years of union work from
before his day of teaching.
Illinois Supreme Court Justice Ann Burke has now agreed with Piccioli. Writing
in the majority opinion, Burke cited the passage in the Illinois Constitution’s
pension clause denying pension benefits – earned and unearned – from being
“diminished or impaired.” That is the same clause the high court cited in
rejecting bipartisan pension reforms passed by a Democratic supermajority and
Democratic governor in 2013.
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The dissenting justices countered that the repealed
law which awarded Piccioli his inflated pension was unconstitutional
“special legislation,” and therefore disqualifying.
While it’s not yet known exactly how much Piccioli’s pension boost
will be, the Chicago Tribune estimated in 2015 the extra benefit
would amount to more than $36,000 a year. That would come on top of
his $35,436 TRS pension for teacher union work after being a
substitute for a day and $33,780 from the State Employee Retirement
System, or SERS, for his time as a legislative aide, according to
data received through the Freedom of Information Act. In total, that
would put Piccioli’s annual pension benefit at more than $105,000
per year. That amount would rise to more than $190,000 by the end of
a typical 20-year retirement, as a result of 3% compounding annual
increases received by state retirees.
Piccioli has already received $188,622 from SERS and $194,152 from
TRS, after retiring at age 63 in 2012. Assuming the same 20-year
retirement, his total payout will exceed $3 million.
Expressing satisfaction with the ruling, Piccioli told AP, “Without
this ruling, the Illinois Constitution’s pension-protection clause
would be a hollow promise.”
But Piccioli has it exactly backwards: This latest ruling
illustrates how the constitution’s pension clause – or the court’s
interpretation of it – is precisely what imperils the state’s
pension promises.
Since fiscal year 2000, state spending on pensions has grown more
than 677 percent, and today consumes more than 25 percent of state
revenues. Even with that burden, Illinois is still nearly $134
billion behind in paying what is owed to its five statewide pension
systems.
Piccioli’s pension boost again shows how little can change until the
Illinois Constitution is amended to allow reasonable changes in
future benefits. Illinois should protect current benefits and ensure
it can meet future obligations by increasing retirement ages for
younger workers, capping maximum pensionable salaries, replacing
compounding benefit increases with true cost-of-living adjustments,
letting inflation catch up to past increases and enrolling new
employees in defined contribution retirement plans rather than
defined benefit plans. Absent reform, taxpayers will face
accelerating tax hikes as politicians try to refill the state’s
retirement funds before they run dry.
Pritzker’s signature policy goal – scrapping the state’s flat income
tax and replacing it with a progressive tax – also requires amending
the state constitution. Unfortunately, that would do nothing to
secure workers’ retirements or deliver taxpayers relief.
Instead, Pritzker should find the political will to lead the push
for constitutional pension reform. Otherwise, the governor will fail
to keep his promises to both taxpayers and pensioners as long as the
high court can demand Illinois be true to even a promise like the
one made to Piccioli.
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