Illinois Supreme Court Upholds Pension Loophole—Allows Former IFT Lobbyist to Keep His Teachers’ Retirement System Benefits

Earlier this month, a 4-3 majority of the Illinois Supreme Court concluded that a 2012 amendment to the Illinois Pension Code was unconstitutional, thereby allowing David Piccioli, an IFT lobbyist who served as a substitute teacher for one day in 1997, to keep his benefits under the Teachers Retirement System (“TRS”).

The lawsuit stems from the February 27, 2007, enactment of Public Act 94-1111 (the “Act”). The Act added a new provision to the article of the Pension Code governing the TRS, allowing an officer or employee of a statewide teachers’ union, such as the Illinois Federation of Teachers (“IFT”) or the Illinois Education Association (“IEA”), who was a certified teacher as of the effective date of the amendment, to establish service credit in TRS for his or her union work prior to becoming a certified teacher. To obtain the benefit, an individual had to meet three requirements: (1) be certified as a teacher on or before the effective date of the legislation (February 27, 2007); (2) apply in writing to the TRS within six months after the effective date of the legislation; and (3) pay into the system both the employee contribution and employer contribution, plus interest, for his or her prior union service.

Plaintiff David Piccioli worked as a lobbyist for the IFT from 1997 until his retirement in 2012. In December 2006, Piccioli obtained a substitute teaching certificate. On January 22, 2007, he worked for one day as a substitute teacher in the Springfield public schools. He never worked as a teacher again. By obtaining his substitute teaching certificate, Piccioli qualified as a certified teacher under the Pension Code. He then satisfied the remaining statutory requirements under the Act, including contributing $192,668 to the TRS for his union service from 1997 through May 31, 2007.

In October 2011, the media criticized both Piccioli and the law allowing him to become a member of TRS and qualify for a teacher’s pension. In response, the legislature amended the 2007 provision of the Pension Code, repealing it and declaring it void ab initio. The 2012 amendment also provided for a refund of the employee contributions to the TRS made pursuant to the 2007 provision. Pursuant to the 2012 amendment, the TRS eliminated Piccioli’s service credits and refunded his contributions.

Piccioli filed suit, asserting that the 2012 amendment violated the pension protection clause. The Board of Trustees of the TRS, on the other hand, argued that the 2007 amendment was unconstitutional special legislation, thus the 2012 Act repealing that provision was valid. The circuit court granted summary judgment in favor of the Board of Trustees, and Piccioli appealed directly to the Supreme Court.

On the issue of special legislation, the Court held that the cutoff date of February 27, 2007, was rationally related to a legitimate government interest in offering pension benefits to current employees while at the same time containing costs by excluding future employees from those benefits, thus the 2007 amendment was constitutional. The Court further held that the 2012 amendment improperly diminished Piccioli’s pension benefit and violated the pension protection clause.

In her dissent, Justice Theis, joined by Justices Thomas and Garman, noted that the 2007 amendment “smacks of special legislation.” The dissenting justices took particular issue with the way the IFT employees were made aware of the benefits they could potentially receive under the 2007 legislation—facts that the majority omitted. Indeed, employees were counseled by the IFT Director of Political Activities to preemptively satisfy the certification and teaching requirements in order to meet the requirements of a law that was not yet in existence. The Director further assured them that he would try to “slow down the bill signing process” so that they would be covered under a statute that had not yet gone into effect.

This particular pension loophole closed on February 27, 2007. However, this ruling appears to erode our Supreme Court’s well-settled jurisprudence regarding special legislation, and may impact future amendments to the Pension Code, among other things.

Sign up for our monthly Extra Mile newsletter. We go the extra mile so you don't have to. Subscribe