Court shoots down bid by IL judges to undo Tier 2 pension reforms

CHICAGO — Two Illinois state court judges can't significantly sweeten their retirement pensions by overturning a key Illinois state pension reform measure, an appeals court has ruled.

On March 5, a three-member panel of Illinois state appellate court justices turned aside the bid by Cook County Judge Natasha Toller and retired St. Clair County Judge Patricia Kievlan to overturn limitations on judges' pensions enacted in Illinois' so-called Tier 2 pension reform law.

In the ruling, the appeals panel said the judges' claims against the Tier 2 law fell short because they became judges after the law took effect, and can't now try to escape the terms and limits in place when they essentially signed the contracts governing their pension benefits.

That ruling backed up and echoed the decision rendered by Cook County Judge Allison Conlon when she first disposed of the case more than a year earlier.

Kievlan and Toller filed suit together in March 2024, taking aim directly at the then-14-year-old state law that many state officials and other observers have credited, in part, with helping the state move toward sustaining its troubled public worker pension system.

Officially known as Public Act 96-0889, the law was approved in 2010 by state lawmakers who said they intended to reduce pension obligations owed by the state and taxpayers to future government workers enrolled in pension systems controlled by the state of Illinois.

Under the Illinois Supreme Court's interpretation of the Illinois state constitution's so-called pensions protection clause, lawmakers are generally forbidden from reducing any retirement benefits for current public employees, whether those benefits have already been earned or merely promised.

However, under the reform measure, lawmakers created a new "tier" of reduced pension earnings available to those hired by state and local governments after the new law took effect in 2011. Specifically, the law removed the ability of Tier 2 participants to reap massive returns on relatively smaller pension plan contributions, thanks to compound interest annually until death. That compound interest was replaced with smaller scheduled annual increases.

The law also capped benefits, while altering how future payments could be calculated.

The law has been credited with helping the state begin to better balance its financially-troubled pension system, a boast commonly made by Gov. JB Pritzker and others. Critics, however, have asserted the Tier 2 reforms have resulted in a system in which Tier 2 workers are now subsidizing the retirements of Tier 1 public employees, while the state's Tier 2 contributions to the newer workers' retirement accounts threaten to fall short of what those workers might receive from Social Security, if they worked in the private sector.

Public worker unions and their Democratic allies in the General Assembly have taken aim legislatively in recent years at the Tier 2 reforms, attempting to pass laws to undermine the measure.

However, in their lawsuit, Toller and Kievlan sought to sweep away the reforms entirely.

Essentially, they argued that the reforms unconstitutionally limited their abilities to enhance their Tier 2 judicial pension benefits using pension benefits they earned while working in other government jobs before becoming judge and prior to the Tier 2 reforms.

They noted that under the "Tier 1" pension systems, public employees could use all of their years of state government employment to calculate their final pension payout, no matter the number of different taxpayer-funded agencies for which they may have worked, under the Illinois law known as the Retirement Systems Reciprocal Act.

Since those Tier 1 benefits were in place at the time they began working for public employers in Illinois, Toller and Kievlan argued the Tier 2 reforms violated the state constitution's pension protection clause by limiting their ability to use their "pension credits" for prior service in other government work to boost their pensions as judges.

The lawsuit notes that Kievlan worked for "many years" as an instructor at a public community college in Belleville, and also served for years as a member of the St. Clair County Board. She was appointed as a judge in 2013, and retired in 2023.

According to the lawsuit, Toller was appointed to the Cook County judicial bench in 2023. Before that, she had worked for 17 years as a Cook County Assistant State's Attorney, including as a top assistant to Cook County State's Attorney Kim Foxx. Toller then worked for more than a year for the Illinois Judicial Inquiry Board.

In their complaint, Toller and Kievlan said the Judges Retirement System board's decision not to count their "service credits" would cost them at least tens of thousands of dollars per year.

In the complaint, Kievlan said the JRS board's determination would cost her $73,000 per year.

Toller didn't make such a calculation, as she is currently serving as a judge.

However, both said the Tier 2 determinations unconstitutionally "diminish" their potential retirement earnings.

They also asserted the application of the Tier 2 law by the JRS and other public pension organizations violate their rights to equal protection under the law, because it treats public employees differently, based on the public employment jobs they may hold.

In court, however, judges have taken a dim view of their colleagues' attempts to increase their retirement take and overturn the state law, as first Conlon and now, a state appeals panel, have said Toller and Kievlan are wrong.

The appellate decision was authored by Justice Lance Peterson. Justices John C. Anderson and Matthew G. Bertani concurred. All three justices are normally assigned to hear appeals in Illinois' Third Appellate District, which includes suburban Will County and is based in downstate Ottawa.

The Third District justices were assigned to the case by the Illinois Supreme Court after all justices on the First District court recused themselves from the appeal.

In the appellate ruling, Peterson and his Third District colleagues agreed that the Reciprocal Act does not mean what Toller and Kievlan claim.

They noted Toller and Kievlan's position was endorsed in so-called amicus briefs filed in support by other associations, including the Illinois Retired Judges Association. Those supporters are identified in the ruling as "amici."

"Nothing in the Reciprocal Act grants plaintiffs the right to access Tier 1 JRS benefits based upon their participation in a reciprocal pension system prior to the January 1, 2011, effective date of the Public Act (Tier 2 reforms)," Peterson wrote. "The language of section 20-101 of the Reciprocal Act ... is clear and unambiguous. It provides solely for the continuation and preservation of 'pension credit' and not for the continuation and preservation of 'pension benefits' as plaintiffs and amici contend."

The justices noted the Reciprocal Act included references to both "credits" and "benefits," indicating lawmakers considered them "two different things."

"We may not depart from the plain language of the Reciprocal Act and read into it exceptions, limitations, or conditions that are not consistent with the express legislative intent," Peterson wrote.

Further, they rejected the attempt to work around the Reciprocal Act's "clear" language by addressing "the Pension Code as a whole."

They said the Pension Code treats the Judicial Retirement System and other public worker pension systems as separate from each other, "with separate statutory provisions, separate funds, and separate administrations."

"... Plaintiffs did not decide to serve as judges until well after the effective date of the Public Act date and were, therefore, properly classified as Tier 2 members by JRS," Peterson wrote. "As the amici point out, the law in existence at the time a contract is entered is presumed to be part of that contract. At the time plaintiffs entered their agreements with the State of Illinois to accept their positions in the judiciary, the law designating them as Tier 2 members and the formula to be applied to calculate their pension annuity was in existence.

"Accordingly, the Board did not err in denying plaintiffs’ requests to be reclassified as Tier 1 JRS members."

And the justices rejected Toller's and Kievlan's attempt to argue the Tier 2 reforms violate their rights to equal protection. The justices said the Tier 2 reforms did not treat them differently from those still under the Tier 1 system, because state lawmakers' enactment of the Tier 2 pension reforms created an entirely new group of workers, distinct from those that came before the reforms were instituted, in a "rational" and constitutional attempt to shore up the state's financially troubled pension systems.

"Contrary to plaintiffs’ underlying assertion throughout this case, the Illinois public pension system is not a single unified system," Peterson wrote. "Rather, there are multiple individual pension systems benefitting employees working in different units of government, and each one of those systems has its own fund, its own administrators, its own requirements, and its own benefits.

"In addition, unlike the persons in the comparison group, persons who later transfer into JRS ... will generally be moving into more prestigious positions with much higher salaries. It cannot be stated, therefore, that plaintiffs’ group and the comparison group are similarly situated."

Toller and Kievlan were represented in the action by attorneys Terrence J. Sheahan and Jill C. Anderson, of the firm of Smith Gambrell & Russell, of Chicago.