People ex rel. Sklodowski v. State

• Decision Date: 16 June 1994
• Docket Number: Nos. 73485,74181,s. 73485
• Citation: 642 N.E.2d 1180,162 Ill.2d 117,205 Ill.Dec. 63
• Parties: , 205 Ill.Dec. 63 The PEOPLE ex rel. Robert SKLODOWSKI et al., Appellants, v. The STATE of Illinois et al., Appellees.
• Court: Illinois Supreme Court

Page 1180

642 N.E.2d 1180

162 Ill.2d 117, 205 Ill.Dec. 63

The PEOPLE ex rel. Robert SKLODOWSKI et al., Appellants, v. The STATE of Illinois et al., Appellees.

Nos. 73485, 74181.

Supreme Court of Illinois.

June 16, 1994.

As Modified on Denial of Rehearing Nov. 15, 1994.

Clinton A. Krislov, and Jonathan Nachsin, Krislov & Associates, Ltd., and Kevin B. Rogers, Chicago, for appellants.

Roland W. Burris, Atty. Gen., Springfield, (Rosalyn B. Kaplan, Sol. Gen., Chicago, of counsel), for appellee State of Ill.

Susan Getzendannar, Skadden, Arps, Slate, Meagher & Flom, Chicago, for appellee Universities Retirement System.

William J. Campbell, Jr., Rudnick & Wolfe, Chicago, for appellee Teachers' Retirement System.

Justice McMORROW delivered the opinion of the court:

These consolidated appeals arise from an act of the legislature that directed the transfer of moneys from certain special funds in the State treasury to the general revenue fund, as part of an effort to balance the State's budget for fiscal year 1992. The named plaintiffs, participants in the five retirement systems funded by the State, seek review of the circuit court's denial of their motion for a temporary restraining order that would have prevented the State comptroller from transferring the money. Plaintiffs also seek to disqualify the Attorney General, on grounds of conflict of interest, from acting as legal representative of three of the retirement systems, which are nominal defendants in this litigation.

We affirm the circuit court's denial of plaintiffs' motion to disqualify the Attorney General in appeal No. 74181. Because the injunctive relief requested in appeal No. 73485 is no longer available, and the constitutional issues raised in the interlocutory appeal remain at issue in the litigation pending before the circuit court, we dismiss appeal No. 73485 for lack of justiciability. ¹

BACKGROUND

Plaintiffs are participants in and beneficiaries of the five retirement systems funded by the State of Illinois under the Illinois Pension Code (Ill.Rev.Stat.1991, ch. 108 1/2, par. 1--101 et seq.): the General Assembly Retirement System; the State Employees' Retirement System of Illinois; the State Universities Retirement System; the Teachers' Retirement System of the State of Illinois; and the Judges Retirement System of Illinois. Defendants are the State of Illinois, the Governor, the Comptroller, the Speaker of the House of Representatives, the President of the Senate, and the Treasurer. Nominal defendants are the trustees of the five retirement systems.

The instant, interlocutory appeal is ancillary to litigation currently pending in the circuit court and cannot be fully understood without reference to that litigation. In 1991 plaintiffs filed a mandamus action on behalf of themselves and a putative class consisting of all participants in and beneficiaries of the five retirement systems. Their complaint challenged the State's failure to comply with certain provisions of the Pension Code by "knowingly budgeting, appropriating and paying State contributions of less than the minimum amounts required by P.A. 86--273, and failing to reduce the unfunded pension liability of the [five retirement systems]." According to the complaint, each of the five retirement systems has been "significantly underfunded for many years; that is, each Fund has had assets totalling substantially less than 100% of the present values needed currently, based upon actuarial assumptions, to fund all existing Fund obligations." The legislature sought to remedy this underfunding by passing, in October 1989, legislation that required the State to increase its contributions to each of the five retirement systems by equal increments in each of the following seven years, in certain minimum amounts designed to meet the "normal cost" of the retirement funds (the increased and additional accrued benefits), plus amortize each fund's unfunded liability over 40 years.

Plaintiffs' mandamus complaint further alleged that despite the enactment of this remedial funding measure, the Governor in each year following 1989 has budgeted a lesser amount than the minimum contributions required by law and the legislators have similarly appropriated lesser amounts than required by law. According to compliance reports issued for each of the five retirement systems, there existed at the time of the filing of the 1991 mandamus complaint a combined deficit in these minimum contribution requirements that exceeded $500 million. Overall, plaintiffs charge, the "aggregate unfunded accrued actuarial liability" of the five retirement systems exceeds $10 billion, according to audit reports for the fiscal year 1991.

First Emergency Budget Act, Public Act 87--14

While plaintiffs' mandamus action was pending, the Governor and the legislature adopted a budget for fiscal year 1992, which was discovered to be $50 million short of the amount needed to balance the budget as required by the Illinois Constitution of 1970. (Ill. Const. 1970, art. VIII, § 2.) To remedy the shortfall, the legislature enacted the Governor's First Emergency Budget Relief Act (Pub. Act 87--14, eff. July 24, 1991) purporting to delegate to the Governor the authority to transfer up to $50 million from any of the special funds in the State treasury to the general revenue fund. Acting on this authority, the Governor directed the Comptroller to transfer $42 million from certain special funds to the general revenue fund. Of this amount, $21 million was to be transferred from the State Pensions Fund.

In response to the Governor's directive to the Comptroller, to transfer $21 million from the State Pensions Fund to the general revenue fund, plaintiffs immediately sought entry of a temporary restraining order. Shortly thereafter, plaintiffs amended their mandamus complaint to add a count for injunction against the transfer and a count for declaratory relief as to the constitutionality of Public Act 87--14. Plaintiffs' emergency motion for a temporary restraining order (TRO) was granted on August 5, 1991, but later dissolved upon the circuit court's denial of plaintiffs' motion for preliminary injunction. The circuit court stayed dissolution of the TRO, however, to enable plaintiffs to seek relief in the appellate court through a motion for stay pending review of the interlocutory appeal from the denial of the TRO. The appellate court denied the motion, but the circuit court extended its stay to permit plaintiffs to seek review in this court.

In September 1991, this court granted direct appeal (No. 72451) and stayed, pending appeal, the transfer of the $21 million from the State Pensions Fund to the general revenue fund. Plaintiffs' challenge to the transfer purportedly authorized by Public Act 87--14 was twofold: (1) allowing the Governor to determine the source and amount of money to be diverted from the special funds was an unconstitutional delegation of the legislature's power of appropriation; and (2) the diversion of the pension fund money to nonpension purposes, especially in light of the billions of dollars of unfunded liability, was an impairment of pension benefits prohibited by the State and Federal Constitutions.

Second Emergency Budget Act, Public Act 87--838

Before this court rendered a decision in appeal No. 72451, the legislature abandoned Public Act 87--14 and enacted in its stead Public Act 87--838, which was titled the Emergency Budget Act of Fiscal Year 1992 (Pub. Act 87--838, eff. January 24, 1992). This Act directed the transfer of moneys from 39 special funds to the general revenue fund. To implement these transfers, Public Act 87--838 amended provisions of the various statutes that governed the use of the special funds.

The source of the moneys in the State Pensions Fund is unclaimed property that escheats to the State by law. Pursuant to a provision of the State Finance Act:

"The moneys in the State Pensions Fund shall be used exclusively for the administration of the 'Uniform Disposition of Unclaimed Property Act', * * * and for the reduction of the accrued actuarial reserve deficiency in each of the annuity and benefit funds established under the [five retirement systems in issue in the instant case].

* * *

* * * [T]he moneys so appropriated from the State Pensions Fund shall be applied exclusively for the reduction of the accrued actuarial reserve deficiencies occasioned by the inadequacies of the appropriations heretofore made to such funds." Ill.Rev.Stat.1991, ch. 127, par. 144.12.

To permit the transfer of the $21 million from the State Pensions Fund, Public Act 87--838 amended the above statute by adding the following paragraph:

"In addition to any other permitted use of moneys in the [State Pensions] Fund, and notwithstanding any restriction on the use of the Fund, moneys in the State Pensions Fund may be transferred to the General Revenue Fund as authorized by this amendatory Act of 1992. The General Assembly finds that an excess of moneys exists in the Fund. On February 1, 1992, the Comptroller shall order transferred and the Treasurer shall transfer $21,000,000 * * * from the Fund to the General Revenue Fund." Pub. Act 87--838, § 270, eff. January 24, 1992.

Following the legislature's enactment of Public Act 87--838, defendants filed a motion in this court to dismiss the interlocutory appeal in No. 72451 on the ground that plaintiffs' challenge to the transfer authorized by Public Act 87--14 had been mooted by the legislature's abandonment of that act. In April 1992, this court granted defendants' motion to dismiss and vacated its previous order that had stayed the circuit court's dissolution of the TRO pending appeal. At that time, the new act was not in issue before this court.

Subsequently, plaintiffs returned to the circuit court to seek a TRO against the transfer of the Pension Fund moneys pursuant to the newly enacted Public Act 87--838. Plaintiffs' motion for TRO against the...