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Pisani v. City of Springfield

Pensions
 
Illinois Appellate Court
Pisani v. City of Springfield, 2017 IL App (4th) 160417 (March 3, 2017).

Overview
Plaintiffs, Pisani and her union, the International Brotherhood of Electrical Workers Local 193, sued the City of Springfield (City) on behalf of city employees who participated in the Illinois Municipal Retirement Fund (IMRF) and refrained from taking advantage of a vacation buy back provision enacted in the City’s ordinance. This buy back provision allowed city employees to cash in their unused vacation days prior to retirement, increasing their final rate of earnings and thereby boosting the amount of their retirement annuity. The trial court granted the City’s motion for summary judgment, and the appellate court affirmed.

Summary
In 2003, the City enacted an ordinance that allowed employees to collect a lump-sum vacation buy back payment before the final three months of their final earnings period.  The objective of the lump-sum payment was to make the final rate of earnings artificially high, so as to increase the amount of the annuity. Years later, the General Assembly created a deterrent against pension spiking whereby the pension spike would come out of the municipality’s budget in the form of an up-front payment to IMRF. (40 ILCS 5/7-172(k)). In 2015, the City passed an ordinance repealing the lump-sum vacation payout provision of the 2003 ordinance.  (Springfield Code of Ordinances § 36.58 (b)(13)).  As of June 1, 2016, city employees would no longer be allowed to cash their accrued vacation balances up to a year in advance of their retirement date.  

The plaintiffs brought suit, claiming that the elimination of the 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 first argued that the change in terms and conditions of employment that indirectly affected the amount of a pension by affecting a number that is used in the pension formula was a diminishment or impairment of pension benefits within the meaning of the pension protection clause.  The appellate court found that the City did not have a contractual obligation to pay plaintiffs a pension at all – it merely had a statutory duty to make contributions to IMRF as a participating municipality. Because the vacation buy back provision was in the City’s ordinance rather than Illinois statutory law, it was not a benefit of a contractual relationship to which the pension protection clause refers. Ill. Const. 1970, art. XIII, § 5  The appellate court cited Peters, from the Illinois Supreme Court, which held that the pension protection clause is inapplicable to a change in the terms and conditions of employment, even though the change would cause the employee to receive a smaller pension than s/he otherwise might receive. Peters v. City of Springfield, 57 Ill. 2d 142 (1974).

In affirming the trial court’s judgment, the appellate court noted that the plaintiffs did not explain why the contract clause would apply, thus their holding as to the pension protection clause was dispositive of both of plaintiffs’ claims.