In re Pension Reform Litigation

                                       2015 IL 118585



                                          IN THE
                                 SUPREME COURT
                                              OF
                           THE STATE OF ILLINOIS



                                     (Docket No. 118585)

         In re PENSION REFORM LITIGATION (Doris Heaton et al., Appellees,
                v. Pat Quinn, Governor, State of Illinois, et al., Appellants).


                                  Opinion filed May 8, 2015.



        JUSTICE KARMEIER delivered the judgment of the court, with opinion.

        Chief Justice Garman and Justices Freeman, Thomas, Kilbride, Burke, and
     Theis concurred in the judgment and opinion.



                                          OPINION

¶1       At issue on this appeal is the constitutionality of Public Act 98-599 (eff. June 1,
     2014), which amends the Illinois Pension Code (40 ILCS 5/1-101 et seq. (West
     2012)) by reducing retirement annuity benefits for individuals who first became
     members of four of Illinois’ five State-funded pension systems prior to January 1,
     2011. Members of the retirement systems affected by Public Act 98-599 and groups
     representing those members brought five separate actions challenging the validity
     of the new law on the grounds that it violated numerous provisions of the Illinois
     Constitution of 1970, including article XIII, section 5 (Ill. Const. 1970, art. XIII,
     § 5), popularly known as the pension protection clause.
¶2       All five actions were consolidated in the circuit court of Sangamon County. On
     motions for partial summary judgment, judgment on the pleadings, and to strike an
     affirmative defense, the circuit court found plaintiffs’ challenge to be meritorious,
     declared Public Act 98-599 to be unconstitutional in its entirety as a violation of the
     pension protection clause, and permanently enjoined its enforcement. In so doing,
     the circuit court rejected defendants’ contention that the Act could be upheld,
     notwithstanding its violation of the pension protection clause, based on the State’s
     reserved sovereign powers. Because the circuit court’s judgment invalidated a
     statute of the State of Illinois, appeal lay directly to this court. Ill. S. Ct. R.
     302(a)(1) (eff. Oct. 4, 2011). At the request of the State, we expedited briefing and
     argument. 1 For the reasons that follow, we affirm.



¶3                                            BACKGROUND

¶4       Illinois has established five State-funded retirement systems for public
     employees: the General Assembly Retirement System (GRS) (40 ILCS 5/2-101
     et seq. (West 2012)); the State Employees’ Retirement System of Illinois (SERS)
     (40 ILCS 5/14-101 et seq. (West 2012)); the State Universities Retirement System
     (SURS) (40 ILCS 5/15-101 et seq. (West 2012)); the Teachers’ Retirement System
     of the State of Illinois (TRS) (40 ILCS 5/16-101 et seq. (West 2012)); and the
     Judges Retirement System of Illinois (JRS) (40 ILCS 5/18-101 et seq. (West
     2012)). These systems provide traditional defined benefit plans under which
     members earn specific benefits based on their years of service, income and age. All
     are subject to the pension protection clause of our state constitution, which
     provides: “Membership in any pension or retirement system of the State, any unit
     of local government or school district, or any agency or instrumentality thereof,



         1
           In retrospect, the State’s “Motion for Accelerated Docket” is perplexing. The State requested
     expedited briefing and argument on the grounds that a prompt decision by this court was necessary
     to assist the legislature and the Governor in formulating a budget for the next fiscal year. Because
     implementation of the law has already been enjoined, a decision by this court could alter the
     budgetary landscape for the upcoming fiscal year only if we allowed some or all of the law to take
     effect immediately. When the State ultimately filed its brief, however, that is not the relief it sought.
     Rather, its principal request was that we remand to the circuit court for further proceedings,
     including an evidentiary hearing, with respect to its claim that the legislation challenged here is a
     proper exercise of the State’s police powers. Even if the State had prevailed, there is no reasonable
     possibility that such proceedings, and the appeals which would inevitably follow, could be
     completed prior to the May 31, 2015, deadline for passage of the new State budget.
                                                      -2-
     shall be an enforceable contractual relationship, the benefits of which shall not be
     diminished or impaired.” Ill. Const. 1970, art. XIII, § 5.

¶5       Among the benefits which members of the five State-funded retirement systems
     are entitled to receive are retirement annuities. Kanerva v. Weems, 2014 IL 115811,
     ¶ 3. The amount of a member’s retirement annuity and how soon a member is
     eligible to begin receiving annuity payments depends on when the member first
     began making contributions into one of the retirement systems. Members who first
     contributed prior to January 1, 2011, receive what are known as “Tier 1” annuity
     benefits. Members first contributing on or after January 1, 2011, receive a lower
     level of benefits designated as “Tier 2.” See Pub. Act 96-889 (eff. Apr. 14, 2010).
     Public Act 98-599, the legislation challenged in this case, is directed primarily at
     Tier 1 annuities and is limited in its application to benefits earned under the GRS,
     SERS, SURS and TRS systems. Annuities paid to judges under the JRS system
     were intentionally excluded from the law and are not affected by it.

¶6      Tier 1 retirement annuity benefits and eligibility requirements differ somewhat
     between the various systems. Because they all operate in approximately the same
     way, however, we will choose just one, SERS, to illustrate their basic features.

¶7       Members of SERS are eligible to retire at age 60 if they have at least eight years
     of credited service. They may retire with full benefits at any age if their age plus
     years of service credit equal 85. They are also eligible to retire if they are between
     the ages of 55 and 60 and have at least 25 years of credited service, but their benefit
     will be reduced by half of 1% for each month they are under the age of 60. 40 ILCS
     5/14-107, 14-108 (West 2012).

¶8       The amount of the retirement annuity benefit under SERS is calculated based
     on (1) the member’s final average compensation, which is the average monthly
     compensation they received during their highest-paid 48 consecutive months of
     service over the previous ten years, (2) their total credited service, and (3) a
     multiplier, which changes depending on (a) whether or not the member is also
     covered by Social Security or (b) qualifies for an “alternative retirement annuity”
     (applicable to, e.g., pilots and state policemen). 40 ILCS 5/14-107, 14-108, 4-110
     (West 2012). For members who do have Social Security and are not subject to the
     alternative retirement annuity rules, the multiplier is 1.67% per year of credited
     service. 40 ILCS 5/14-108(b) (West 2012). Accordingly, a member of SERS who is
     eligible to retire, who has also paid into Social Security, and who has final average

                                              -3-
       compensation of $1800 per month and 30 years of credited service will receive a
       retirement annuity of $901.80 per month (30 x .0167 x $1800).

¶9          SERS members may earn a retirement annuity of up to 75% of their final
       average compensation (40 ILCS 5/14-108(d) (West 2012)), although for members
       covered by Social Security, it would take nearly 45 years of State service to do so.
       These annuity payments are subject to 3% automatic annual increases beginning
       after the member’s first full year of retirement, except that some members who
       retire before 60 and do not meet the rule of 85 will not receive the increases until
       they turn 60 and have been retired at least one full year. 40 ILCS 5/14-114(a) (West
       2012). The annual annuity adjustments are built-in to the pension benefit and are
       not tied to the cost of living. As a result, the real value of annuities may either
       increase or erode depending on economic conditions, notwithstanding the
       adjustments. 2

¶ 10       Funding to pay benefits under each of Illinois’ five State-funded systems is
       derived from three basic sources: contributions by the State through appropriation
       by the General Assembly; contributions by or on behalf of members based on their
       salaries; and income, interest and dividends derived from retirement fund deposits
       and investments. 40 ILCS 5/2-124 to 2-126, 14-131 to 14-133.1, 15-155 to
       15-157.1, 16-152, 16-154, 16-158, 18-131 to 18-133.1 (West 2012). The
       contributions to the systems by or on behalf of members of the systems have not
       been problematic. There is no dispute that employees have paid their full share as
       required by law at all times relevant to this litigation. That has not been the case
       with respect to the contributions owed by the General Assembly.

¶ 11       For as long as there have been public pension systems in Illinois, there has been
       tension between the government’s responsibility for funding those systems, on the
       one hand, and the costs of supporting governmental programs and providing
       governmental services, on the other. In the resulting political give and take, public
       pensions have chronically suffered. As long ago as 1917, a report commissioned by
       the General Assembly characterized the condition of State and municipal pension
       systems as “one of insolvency” and “moving toward a crisis” because of financial
       provisions which were “entirely inadequate for paying the stipulated pensions

           2
            By way of comparison, data published by the Social Security Administration show that Social
       Security increases, which are tied to the cost of living, averaged 3.98%, nearly a percentage point
       more than under the Illinois formula, between 1975 and 2014. http://www.ssa.gov/
       OACT/COLA/colaseries.html.
                                                     -4-
       when due.” Report of the Illinois Pension Laws Commission 272 (1917). Similar
       warnings were issued by the Illinois Public Employees Pension Laws Commission
       in biennial reports it published between 1947 and 1969. See, e.g., Report of the
       Illinois Public Employees Pension Laws Commission of 1949, 10 (1949) (revenues
       allocated to pension funds have not kept pace with obligations and, with few
       exceptions, “every fund in Illinois suffers at this time an actuarial insolvency”).

¶ 12       As the deficient contributions continued even during the post-WWII boom, the
       Commission wondered: “[i]f the State of Illinois and local governments are today
       resisting the full or substantial funding of pension obligations under present
       conditions of economic prosperity, how much more unfavorable will be the
       financial status of the funds when the obligations mature in greater proportions and
       economic conditions may not be as promising?” Report of the Illinois Public
       Employees Pension Laws Commission of 1957, 10 (1957). Still, nothing changed.
       More than a decade later, as the citizens of our State were about to take up the
       question of whether a new constitution should be adopted, the Illinois Public
       Employee Pension Laws Commission continued to sound the same alarm, noting
       that with respect to State-financed pension funds, appropriations “had been below
       mandatory statutory requirements as expressly provided in the governing law” and
       were “grossly insufficient.” Report of the Illinois Pension Laws Commission of
       1969, 106 (1969). At the time the Commission made those statements, the GRS,
       SERS, SURS, TRS and JRS systems had an overall funding rate of approximately
       41.8%. Id. at 32, Table 2.

¶ 13       Concern over ongoing funding deficiencies and the attendant threat to the
       security of retirees in public pension systems eventually led directly to adoption of
       article XIII, section 5, the pension protection clause, when the new constitution was
       adopted in 1970. Delegate Green, one of the provision’s sponsors, introduced it to
       the Constitutional Convention by reminding his fellow delegates of the poor job
       governmental entities had done in meeting their pension obligations over time. He
       pointed out that:

          “[i]n the past twenty-two years the unfunded accrued liabilities of these pension
          plans in Illinois have increased from about $359,000,000 to almost
          $2,500,000,000, and the unfunded accrued liabilities are real and are not
          theoretical obligations based upon service already rendered.



                                               -5-
              Despite the consistent warnings from the Pension Laws Commission, the
          current budgeting of pension costs necessary to ensure the financial stability of
          these funds, the General Assembly has failed to meet its commitments to
          finance the pension obligations on a sound basis. In 1967 the General Assembly
          approved Senate Bill 515 which provided for the appropriation to one state
          university retirement system, to at least equal to an amount which would be
          necessary to fund fully the current service costs and to cover the interest on the
          past service; and despite this legislative mandate, the General Assembly
          refused to appropriate the necessary funds. Now, during this two-year period
          alone the appropriations under this system were $67,000,000 less than the
          minimum required by the senate bill.

              Now, what we are proposing is being carried out in some other states ***.
          Our language is that language that is in the New York Constitution which was
          adopted in 1938, really under a similar circumstance. In 1938 you were about at
          the end of the Depression, but there was a great consideration on the part of the
          New York General Assembly to really cut out some of the money that they
          were giving to the pension programs in New York; and it was for this reason
          that the New York Constitution adopted the language that we are suggesting.
          Since that time, the state of New York—the pension funds for public employees
          have been fully funded, and so I think we have good reason to believe that this
          type of language will be a mandate to the General Assembly to do something
          which they have not previously done in some twenty-two years.” 4 Record of
          Proceedings, Sixth Illinois Constitutional Convention 2925 (statements of
          Delegate Green) (hereinafter Record of Proceedings).

¶ 14       Delegate Green’s remarks were followed by statements from Delegate Kinney,
       who noted in further support of the provision that the proposed creation of broad
       home rule powers for municipalities had led to concerns that, unless they were
       constrained, municipalities who preferred to use retirement money for other public
       purposes such as street repair might abandon their pension obligations, leaving
       police officers, firefighters and other civil servants unprotected. Id. at 2926
       (statements of Delegate Kinney). Delegate Bottino, in turn, observed that:

          “participants in these pension systems have been leery for years of the fact that
          the—this matter of the amount the state has appropriated [for pensions] has
          been made a political football, in a sense. In other words, in order to balance
          budgets, you see, the party in power would just use the amount of the state
                                              -6-
           contribution to help balance budgets, and this had gotten to the point where
           many of the socalled pensioners under this system were very concerned; and I
           think this is the reason that pressure is constantly being placed on the legislature
           to at least put a fair amount of state resources into guaranteeing payment of
           pensions.” Id. at 2930-31 (statements of Delegate Bottino).

¶ 15        The solution proposed by the drafters and ultimately approved by the people of
       Illinois was to protect the benefits of membership in public pension systems not by
       dictating specific funding levels, but by safeguarding the benefits themselves. As
       we discussed in Kanerva v. Weems, 2014 IL 115811, ¶¶ 46-47, Delegate Green
       explained that the pension protection clause does this in two ways: “[i]t first
       mandates a contractual relationship between the employer and the employee; and
       secondly, it mandates the General Assembly not to impair or diminish these rights.”
       4 Record of Proceedings 2925 (statements of Delegate Green). Subsequent
       comments by other delegates reaffirmed that the provision was designed to confer
       contractual protection on the benefits of membership in public retirement systems
       and afford beneficiaries, pensioners or their dependents “ ‘a basic protection
       against abolishing their rights completely or changing the terms of their rights after
       they have embarked upon the employment—to lessen them.” Kanerva v. Weems,
       2014 IL 115811, ¶ 46 (quoting 4 Record of Proceedings 2929 (statements of
       Delegate Kinney)).

¶ 16       The purpose of the clause and its dual features have never been in dispute. As
       we noted in People ex rel. Sklodowski v. State, 182 Ill. 2d 220, 228-29 (1998), the
       clause “served to eliminate any uncertainty as to whether state and local
       governments were obligated to pay pension benefits to the employees,” and its
       “plain language” not only “makes participation in a public pension plan an
       enforceable contractual relationship,” but also “demands that the ‘benefits’ of that
       relationship ‘shall not be diminished or impaired.’ ” The “politically sensitive area”
       of how the benefits would be financed was a matter left to the other branches of
       government to work out. Id. at 233. 3 That article XIII, section 5, created an
       enforceable obligation on the State to pay the benefits and prohibited the benefits
       from subsequently being reduced was and is unquestioned.
           3
            Consistent with an earlier opinion by this court in McNamee v. State, 173 Ill. 2d 433 (1996),
       and comments at the Constitutional Convention, we did not, however, foreclose the possibility that a
       direct action could be brought by pension system members to compel funding if a pension fund were
       on the verge of default or imminent bankruptcy. Sklodowski, 182 Ill. 2d at 232-33.


                                                      -7-
¶ 17        Despite Delegate Green’s hope that prohibiting the State from diminishing
       retirement benefits would induce the General Assembly to meet its funding
       obligations, as the legislature in New York State had done when the same pension
       protection provision was adopted there, that did not occur. Until 1982, the State
       funded its pensions using an approach which the United States Securities and
       Exchange Commission (SEC) has characterized as bearing “no relation to actuarial
       calculation.” In re State of Illinois, SEC Order Instituting Cease-and-Desist
       Proceedings Pursuant to Section 8A of the Securities Act of 1933, Making
       Findings, and Imposing Cease-and-Desist Order, Securities Act of 1933, Release
       No. 9389, at 3, 2013 WL 873208 (Mar. 11, 2013) (hereinafter, SEC order). 4

¶ 18       In 1989, the General Assembly enacted a new funding plan to take effect in
       1990, but it failed as well. In the years that followed, Dawn Clark Netsch, then
       comptroller of the State, noted that the State failed to adhere to the new statutory
       funding levels and exacerbated the problem by diverting funds earmarked for State
       employee pensions into the General Revenue Fund. In testimony before the United
       States Congress, which was investigating the use of public pension funds, she
       stated:

           “ ‘My concern is for the future health of our state retirement systems and for the
           deferral of obligations to future generations. Underappropriated pension
           contributions are like unpaid credit card bills. The liability does not go away
           just because you choose not to pay the bill when it is due. You still owe the
           unpaid balance, plus interest.[’]

               ‘Eventually, the cost of rectifying the problem becomes too great. Our
           problems might be more understandable if our retirement systems provided
           extravagant benefits, but they do not. We are having trouble facing our
           obligations for systems that have some of the lowest benefit levels in the
           country.’ ” Dawn Clark Netsch, State Pension Raids Rampant in the 1990s, Ill.
           Mun. Rev. 15, 15 (Feb. 1993).

¶ 19      Starting in 1995, yet another funding plan was implemented by the General
       Assembly. This one called for the legislature to contribute sufficient funds each
       year to ensure that its contributions, along with the contributions by or on behalf of
       members and other income, would meet the cost of maintaining and administering

           4
            The SEC order is a matter of which we may take judicial notice. See May Department Stores
       Co. v. Teamsters Union Local No. 743, 64 Ill. 2d 153, 159 (1976).
                                                   -8-
       the respective retirement systems on a 90% funded basis in accordance with
       actuarial recommendations by the end of the 2045 fiscal year. 40 ILCS 5/2-124,
       14-131, 15-155, 16-158, 18-131 (West 2012). That plan, however, contained
       inherent shortcomings which were aggravated by a phased-in “ramp period” and
       decisions by the legislature to lower its contributions in 2006 and 2007. As a result,
       the plan failed to control the State’s growing pension burden. To the contrary, the
       SEC recently pointed out:

           “the Statutory Funding Plan’s contribution schedule increased the unfunded
           liability, underfunded the State’s pension obligations, and deferred pension
           funding. The resulting underfunding of the pension systems (‘Structural
           Underfunding”) enabled the State to shift the burden associated with its pension
           costs to the future and, as a result, created significant financial stress and risks
           for the State.” SEC order, at 3.

¶ 20       That the funding plan would operate in this way did not catch the State off
       guard. In entering a cease-and-desist order against the State in connection with
       misrepresentations made by the State with respect to bonds sold to help cover
       pension expenses, the SEC noted that the State understood the adverse implications
       of its strategy for the State-funded pension systems and for the financial health of
       the State. Id. at 10. According to the SEC, the amount of the increase in the State’s
       unfunded liability over the period between 1996 and 2010 was $57 billion. Id. at 4. 5
       The SEC order found that “[t]he State’s insufficient contributions under the
       Statutory Funding Plan were the primary driver of this increase, outweighing other
       causal factors, such as market performance and changes in benefits.” (Emphasis
       added.) Id. at 4.

¶ 21       By the end of June, 2013, the five State-funded retirement systems contained a
       total of only 41.1% of the funding necessary to meet their accrued liabilities based
       on the market value of fund assets. Commission of Government Forecasting &
       Accountability, Illinois State Retirement Systems: Financial Condition as of June
       30, 2013, 27 (Mar. 2014). The funding rate was thus nearly unchanged from the
       41.8% funding rate prior to ratification of the 1970 Constitution and its pension
       protection clause. By contrast, as of December 30, 2013, the Illinois Municipal
       Retirement Fund (IMRF), another major public pension plan which operates in the

           5
             It appears from the record before us that the total unfunded liabilities for the five State-funded
       retirement systems approached $100 billion by the time this litigation commenced. While the State
       has pursued this appeal, it has no doubt grown larger.
                                                        -9-
       same market environment as the five State-funded systems, but which is managed
       separately and not funded by the State, had an aggregate funding rate of 96.7%
       based on the market value of its assets. Illinois Municipal Retirement Fund,
       Comprehensive Annual Financial Report for the Years Ended December 31, 2013
       and December 31, 2012, 8 (May 30, 2014). 6

¶ 22       As the continued deficiencies in the legislature’s pension funding efforts
       became apparent to financial markets, federal regulators and the public, the State
       was also experiencing significant difficulties in meeting its other obligations. To
       address these budgetary pressures, the State implemented a variety of measures,
       including delaying payments to creditors and vendors who do business with the
       State, reducing or eliminating a variety of governmental programs, enacting a
       temporary income tax increase (which was recently allowed to expire), and
       significantly lowering benefits for anyone first contributing to State pension
       systems after January 1, 2011 (the so-called Tier 2 plan for new hires, supra ¶ 5). 7

¶ 23        Following downgrades in the State’s credit rating and facing the prospect that
       its credit rating would be reduced even further, the General Assembly engaged in
       heated and protracted debate over possible legislative strategies for dealing with the
       State’s fiscal problems through further changes to its pension obligations. After
       numerous failed attempts to reach consensus, the General Assembly ultimately
       enacted what became Public Act 98-599, the legislation challenged in this case.

¶ 24       Introduced as Senate Bill 1 and passed during the legislature’s fall, 2013, “veto
       session,” Public Act 98-599 was described as an attempt to address the State’s large
       debts and deficits, plummeting credit ratings, and imperiled discretionary spending
           6
             Several neighboring states also managed to achieve far higher funding rates than Illinois’
       State-funded systems during a similar time frame. The “fair value” based funding ratio for the
       Wisconsin Retirement System was 105.3%. Wisconsin Dept. of Employee Trust Funds,
       Comprehensive Annual Financial Report for the Year Ended Dec. 31, 2013, 3 (Dec. 15, 2014). In
       Iowa, the funded ratio was 82.7% as of June 30, 2013. Iowa Public Employees’ Retirement System,
       An Annual Summary For the Fiscal Year Ended June 30, 2014, 7 (2014). The Indiana Public
       Retirement System, which administers 8 separate “pre-funded” plans, reported an aggregate funded
       percentage of 87.9%. Indiana Public Retirement System, 2014 Comprehensive Annual Financial
       Report For the Fiscal Year Ended June 30, 2014, 11 (Dec. 17, 2014). The funded ratio for Missouri’s
       various plans averaged 73.3%. Missouri State Employees’ Retirement System, Summary Annual
       Financial Report Fiscal Year Ended June 30, 2014, 6 (Oct. 17, 2014).
            7
              It also attempted to reduce the health care premium subsidies it was required to pay for
       annuitants, survivors and retired employees under the SERS, SURS and TRS systems. The
       legislation authorizing that reduction was declared unconstitutional by this court in Kanerva v.
       Weems, 2014 IL 115811, for the same reason Public Act 98-599 is being challenged here, namely,
       that it violated the pension protection clause.
                                                     - 10 -
       programs “that are essential to the people of Illinois” and to help shore up the
       long-term fiscal stability of both the State and its retirement systems. Pub. Act
       98-599, § 1 (eff. June 1, 2014). The mechanism chosen under the Act to accomplish
       those purposes was restructuring State-funded retirement systems. The law does
       not pertain to all five of the State-funded retirement systems, however. As noted
       earlier, JRS, the Judges Retirement System, was deliberately excluded. 8

¶ 25        Public Act 98-599 contains numerous provisions. Among these are a new
       payment schedule to replace the one in effect since 1995 (40 ILCS 5/2-124, 14-131,
       15-155, 16-158 (West Supp. 2013)); a mechanism authorizing pension boards to
       initiate mandamus proceedings in our court if the State fails to make required
       contributions to their respective systems (40 ILCS 5/2-125, 14-132, 15-156,
       16-158.2 (West Supp. 2013)); and special directives with respect to certain
       payments to the pension systems, when the payments are to be made and in what
       amounts (30 ILCS 122/20, 25 (West Supp. 2013); 40 ILCS 5/2-125, 14-132,
       15-156, 16-158.2 (West Supp. 2013)).

¶ 26       The Act provides a limited number of Tier 1 plan participants with the
       opportunity, at a future date, to participate in a defined contribution plan. 40 ILCS
       5/2-165, 14-155, 15-200, 16-205 (West Supp. 2013). It affords a nominal reduction
       in the percentage of their salaries Tier 1 plan participants are required to contribute
       toward the employee share of annuity costs. 40 ILCS 5/2-126, 14-133, 15-157,
       16-152 (West Supp. 2013). Going forward, it bars persons hired by certain
       nongovernmental organizations from participating in the public pension system (40
       ILCS 5/7-109, 15-106, 16-106 (West Supp. 2013)) and prohibits new hires from
       using accumulated sick or vacation time to boost their pension benefits (40 ILCS
       5/7-116, 7-139, 9-219, 9-220, 14-104.3, 14-106, 15-112, 15-113.4, 16-121, 16-127,
       17-134 (West Supp. 2013)). Public Act 98-599 also eliminates the duty of
       employers to engage in collective bargaining or interest arbitration “over matters
       affected by the changes, the impact of changes, and the implementation of
       changes” made to the SERS, SURS and TRS systems by the new law. 5 ILCS
       315/7.5 (West Supp. 2013).




           8
            The decision to exclude the JRS was unrelated to the economic health of that system, whose
       funding percentage, 29.8%, is second worst among the five State-funded systems. Commission on
       Government Forecasting and Accountability, Illinois State Retirement Systems: Financial
       Condition as of June 30, 2013, 27 (Mar. 2014).
                                                   - 11 -
¶ 27       The centerpiece of Public Act 98-599, however, is a comprehensive set of
       provisions designed to reduce annuity benefits for members of GRS, SERS, SURS
       and TRS entitled to Tier 1 benefits, i.e., members who belonged to those systems
       prior to January 1, 2011. The new law utilizes five different mechanisms for
       achieving this goal. First, it delays, by up to five years, when members under the
       age of 46 are eligible to begin receiving their retirement annuities. 40 ILCS
       5/2-119(a-1), 14-107(c), 14-110(a-5), 15-135(a-3), 16-132(b) (West Supp. 2013).
       Second, with certain exceptions and qualifications, it caps the maximum salary that
       may be considered when calculating the amount of a member’s retirement annuity.
       40 ILCS 5/2-108, 2-108.1, 14-103.10(h), 15-111(c), 16-121 (West Supp. 2013).
       Third, it jettisons the current provisions under which retirees receive flat 3% annual
       increases to their annuities and replaces them with a system under which annual
       annuity increases are determined according to a variable formula and are limited.
       40 ILCS 5/2-119.1(a-1), 14-114(a-1), 14-115(d), 15-136(d-1), 16-133.1(a-1),
       16-136.1(b-1) (West Supp. 2013). Fourth, it completely eliminates at least one and
       up to five annual annuity increases depending on the age of the pension system
       member at the time of the Act’s effective date. 40 ILCS 5/2-119.1(a-2),
       14-114(a-2), 15-136(d-2), 16-133.1(a-2), 16-136.1(b-2) (West Supp. 2013).
       Finally, with respect to the TRS and SURS systems, the Act also alters how the
       base annuity amount is determined for purposes of what is known as the “money
       purchase” formula, something available to members of those two systems who
       began employment prior to July 1, 2005, as an alternative to the standard formula
       for calculating pensions. See 40 ILCS 5/15-136, 16-133 (West Supp. 2013).
       Because of this change, which involves use of a different interest rate, affected
       members of TRS and SURS will have smaller base pensions.

¶ 28       Senate Bill 1, which became Public Act 98-599, was explained to the Senate
       through presentation of a conference committee report by one of the bill’s chief
       sponsors, Senator Kwame Raoul. Senator Raoul described the various provisions of
       the bill as “all part of an integral bipartisan package” designed to reduce unfunded
       liabilities in the pension systems which had resulted, principally, from “the State
       not contributing what it should have” to those systems. 98th Ill. Gen. Assem.,
       Senate Proceedings, Dec. 3, 2013, at 4 (statements of Senator Raoul). He noted
       prior government reports which had found that “the reality is that the primary cause
       of the State[’s unfunded] liability is Illinois’ decades-long failure to make its full
       actuarial required employer contributions to the five pension systems.” Id. at 5. He
       advised his colleagues that the bill would reduce the unfunded pension liability by

                                               - 12 -
       $21.4 billion, and then summarized the specific provisions of the law that would
       make that possible, including the critical benefit reductions described above. Id. at
       5-7.

¶ 29       During discussion of the bill, Senator Hutchinson asked: “Am I correct that the
       legislation intends to and will have a direct and substantial impact on the benefits of
       current employees and retirees by reducing their benefits?” Id. at 40 (statements of
       Senator Hutchinson).

              Senator Raoul responded: “Yes. You are correct.” Id. at 40 (statements of
              Senator Raoul).

¶ 30      This colloquy followed:

          “SENATOR HUTCHINSON:

                  I know that one of the objectives of this legislation is really to improve
              the State’s credit rating. Is that correct? I mean, that’s why we’re here.

                  ***

          SENATOR RAOUL:

                 It—it’s one of—one of—one of the State’s fiscal issues, yes, and
              one—one of the objectives.

                  ***

          SENATOR HUTCHINSON:

                 So, then, is it fair to say that we are sacrificing a substantial amount of
              people’s pension benefits to protect the State’s finances?

                  ***

          SENATOR RAOUL:

                 Yeah, I—you know, that’s a harsh characterization, but—but I—I
              suppose yes.

                                               ***


                                               - 13 -
SENATOR HUTCHINSON:

      The bill’s legislative statement states in the fourth paragraph that this ‘is
  intended to address fiscal issues facing the State and its retirement systems
  in a manner that’s feasible’. So, by using the word ‘feasible’, does that
  mean that there are other feasible alternatives to this bill?

      ***

SENATOR RAOUL:

      Certainly there are. I mean, certainly, you know, as has been mentioned,
  a lot of these levers are—are levers that can be tweaked one way or the
  other, and there are other proposals that were entertained by the conference
  committee. But—but, you know, we’re trying to move from a stalemate.
  So, yes, there are other alternatives, but, you know, this is an effort to move
  from a—from a stalemate.

                                   ***

SENATOR HUTCHINSON:

      Would another alternative be the proposal that the Center for Tax and
  Budget Accountability outlined before the conference committee, which
  would have re-amortized the current unfunded liabilities to a new gradual
  [level] dollar payment schedule to achieve well over eighty percent by
  2059?

      ***

SENATOR RAOUL:

      Yes. *** So that—that and many other things could have been possible
  alternatives.

                                   ***

SENATOR HUTCHINSON:

     [The last sentence of the fourth paragraph of the report contains the
  phrase] that the legislation is ‘minimizing the impact on current and retired

                                   - 14 -
              State employees’. So by using ‘minimizing’, does that mean that the
              legislation is somehow the least restrictive means available to us?

                  ***

          SENATOR RAOUL:

                  Yeah, I—you know,—I don’t know what the least restrictive means are.
              I—I think what we’re doing just reflects what the political climate is.
              Again, I’ve—I’ve—I’ve said, time and again, that we’ve been cemented in
              a stalemate, and I, for my part, don’t want to see the State sink as a result of
              that stalemate. So, it may not be the least restrictive means, but the political
              climate, I believe, allows for us to—to—to take the step that we’re—we’re
              hopefully now taking.” Id. at 41-46 (statements of Senators Hutchinson and
              Raoul).

¶ 31       Following this exchange and remarks by Senator Hutchinson, the Senate’s
       presiding officer recognized one final speaker, Senator Christine Radogno, another
       of the bill’s sponsors. In urging passage of the legislation, Senator Radogno
       characterized it as “the one opportunity that we have to finally, finally address the
       most important economic issues that are facing this State, and that includes our
       credit ratings, our financial position, our jobs climate, and, frankly, our reputation
       in the global economy.” Id. at 48 (statements of Senator Radogno).

¶ 32       After being approved by both houses of the General Assembly, Senate Bill 1
       was signed into law by then-Governor Quinn as Public Act 98-599 on December 5,
       2013. Five separate lawsuits challenging the law were filed almost immediately.
       These are Retired State Employees Ass’n Retirees v. Quinn, No. 2014 MR 1 (Cir.
       Ct. Sangamon Co.) (hereinafter RSEA), Illinois State Employees Ass’n v. Board of
       Trustees of State Employees Retirement System, No. 2014 CH 3 (Cir. Ct. Sangamon
       Co.) (hereinafter ISEA), and Harrison v. Quinn, No. 2014 CH 48 (Cir. Ct.
       Sangamon Co.) (hereinafter Harrison) all of which were filed in Sangamon
       County; State Universities Annuitants Ass’n v. State Universities Retirement
       System, No. 2014 MR 207 (Cir. Ct. Champaign Co.) (hereinafter SUAA), originally
       filed in Champaign County; and Heaton v. Quinn, No. 13 CH 28406 (Cir. Ct. Cook
       Co.) (hereinafter Heaton), originally filed in Cook County. In March of 2014, this
       court entered an order pursuant to Supreme Court Rule 384 (Ill. S. Ct. R. 384)
       transferring Heaton to Sangamon County and consolidating it with RSEA, ISEA
       and Harrison. We subsequently entered a similar order with respect to SUAA.
                                               - 15 -
¶ 33        Plaintiffs in these five consolidated cases are individual members of the four
       retirement systems affected by Public Act 98-599, both current employees and
       retirees, as well as organizations representing such members and their interests
       under Illinois pension law. 9 Defendants include the Governor, Treasurer and
       Boards of Trustees of GRS, SERS, SURS and TRS. Judy Baar Topinka was also
       made a nominal defendant in her capacity as Comptroller. The Attorney General
       has noted in the record, however, that prior to her death in office, Comptroller
       Topinka disavowed the Attorney General’s arguments in support of Public Act
       98-599.

¶ 34       The complaints in all five consolidated actions focused their challenges on the
       core provisions of Public Act 98-599 we have just described, namely, those which
       would reduce the retirement annuities of individuals entitled to Tier 1 benefits by
       raising the age at which members under the age of 46 are eligible to begin receiving
       their retirement annuities, capping the maximum salary that may be considered
       when calculating the amount of a member’s retirement annuity, abolishing the
       existing fixed 3% annual annuity increases, eliminating at least one and up to five
       annual annuity increases under the new formula, and altering how the base annuity
       amount is determined for purposes of the “money purchase” formula.

¶ 35       Plaintiffs’ challenges to the new law were predicated on the Illinois
       Constitution of 1970. In all five actions, plaintiffs’ principal contention was that the
       reduction in retirement annuity benefits for Tier 1 employees was void and
       unenforceable as a violation of the constitution’s pension protection clause (Ill.
       Const. 1970, art. XIII, § 5). Four of the complaints (RSEA, ISEA, Harrison, and
       SUAA) also alleged that the annuity reduction provisions violated article I, section
       16, of the Illinois Constitution (Ill. Const. 1970, art. I, § 16), which provides,
       inter alia, that no law impairing the obligation of contracts shall be passed. Two of
       those four complaints (RSEA and ISEA) included separate impairment of contract
       claims on behalf of a specific subset of employees who elected to participate in
       early retirement programs offered by the State in 1991, 2002 and 2005. Violations
       of article I, section 15, of the Illinois Constitution (Ill. Const. 1970, art. I, § 15),
       which prohibits the taking or damaging of private property for public use without
       just compensation, were alleged in Harrison and SUAA. In addition, RSEA and
       ISEA asserted that the annuity reductions violated equal protection under article I,

           9
              Although the plaintiffs in RSEA, ISEA, Harrison and Heaton initially sought class
       certification, they ultimately withdrew their class action allegations, and no questions regarding
       class certification are at issue.
                                                    - 16 -
       section 2, of the Illinois Constitution (Ill. Const. 1970, art. I, § 2) because they did
       not also include members of the JRS system, i.e., judges. 10

¶ 36       By its terms, Public Act 98-599 was scheduled to take effect June 1, 2014. On
       plaintiffs’ motion, the circuit court entered a preliminary injunction on May 14,
       2014, staying implementation of the law and enjoining defendants from enforcing
       or administering any of its provisions pending further order of the court. That
       injunction remained in effect throughout the circuit court proceedings.

¶ 37       The State answered plaintiffs’ complaints and raised as an affirmative defense
       that because of “unanticipated exigencies contributing to the Systems’ unsound
       financial condition and the State’s related fiscal crisis” and “[i]n light of the
       measures already taken by the General Assembly to address the Systems’ financial
       condition and the State’s fiscal crisis, and in light of the serious negative effects”
       other alternatives would entail, the reduction in Tier 1 retirement annuities by the
       General Assembly was justified as an exercise of the State’s “reserved sovereign
       power,” i.e., its “police power.” More specifically, the State argued that plaintiffs’
       claims under the Illinois Constitution should be rejected as a matter of law because
       (1) through the State’s police power, the General Assembly possesses inherent
       authority to override and modify obligations imposed on it by the Illinois
       Constitution when, in its judgment, such action is reasonable and necessary to
       advance an important public purpose; (2) because of the “dramatic squeeze on the
       State’s finances” caused by the Great Recession, the strain on the State’s revenues
       which would result from having to meet current pension obligations, the poor
       condition of the State’s economy, and the continued deterioration of the State’s
       credit rating, notwithstanding the State’s attempts to employ other remedial
       measures, action was needed in the interest of the public good; and (3) the reduction
       in retirement annuity benefits which would result from implementation of Public
       Act 98-599 to these fiscal challenges is fair and reasonable under the
       circumstances.

¶ 38       Plaintiffs in SUAA moved to strike the State’s “reserved sovereign power”
       affirmative defense pursuant to section 2-615 of the Code of Civil Procedure (735
       ILCS 5/2-615 (West 2012)). A similar, but separate motion was filed by the
       plaintiffs in the other four cases. The plaintiffs in RSEA and ISEA moved for
       summary judgment pursuant to section 2-1005 of the Code of Civil Procedure (735

           10
              There were other variations between the cases, but they are not germane to our resolution of
       this appeal and require no further discussion.
                                                     - 17 -
       ILCS 5/2-1005 (West 2012)) with respect to the claim that Public Act 98-599
       violated equal protection under the Illinois Constitution. All plaintiffs filed a joint
       motion for partial summary judgment addressed to their claims that the Act was
       void and unenforceable under the pension protection clause. The State, in turn, filed
       its own motion for summary judgment, arguing that its reserved sovereign powers
       defense was fatal to all of plaintiffs’ claims.

¶ 39        Following a hearing, the circuit court granted the plaintiffs’ joint motion for
       partial summary judgment on their claims that Public Act 98-599 was void and
       unenforceable under the pension protection clause, allowed the various motions by
       plaintiffs for judgment on the pleadings as to the State’s affirmative defense or to
       strike that defense and denied the motion for summary judgment filed by the State.
       The court specifically found that, on its face, the Act would diminish the benefits of
       membership in the four affected State-funded retirement systems by reducing
       retirement annuities in each of the five ways alleged by plaintiffs. The court further
       concluded, based on existing case law, that the pension protection clause contains
       nothing to support the contention that the legislature possessed implied or reserved
       power to diminish or impair pensions. “[T]he State of Illinois made a
       constitutionally protected promise to its employees concerning their pension
       benefits,” the court ruled. “Under established and uncontroverted Illinois law, the
       State of Illinois cannot break that promise.”

¶ 40       Because it believed that the constitutionally-infirm annuity reduction
       provisions were an important part of the overall legislative package, the court
       declared the Act to be unconstitutional in its entirety and permanently enjoined its
       enforcement. In light of that result, the court concluded that there was no need to
       address the other issues raised in the case, including plaintiffs’ challenges based on
       other provisions of the Illinois Constitution.

¶ 41       The circuit court subsequently made the express written findings required by
       Supreme Court Rule 18 (Ill. S. Ct. R. 18 (eff. Sept. 1, 2006)) where, as here, a
       statute is declared unconstitutional. The State appealed. Because the circuit court’s
       judgment invalidated a statute of the State of Illinois, the appeal was taken directly
       to this Court. Ill. S. Ct. R. 302(a) (eff. Oct. 4, 2011).




                                               - 18 -
¶ 42                                              ANALYSIS

¶ 43       Three issues are presented for our review: (1) does Public Act 98-599’s
       reduction of retirement annuity benefits owed to members of the GRS, SERS,
       SURS and TRS retirement systems violate the pension protection clause set forth in
       article XIII, section 5, of the Illinois Constitution of 1970 (Ill. Const. 1970, art.
       XIII, § 5); (2) if so, can the law’s reduction of those benefits nevertheless be upheld
       as a proper exercise of the State’s police power; and (3) if not, are the invalid
       provisions of Public Act 98-599 severable from the remainder of the statute? These
       are all questions of law. 11 Our review is therefore de novo. Kanerva v. Weems,
       2014 IL 115811, ¶ 33.



¶ 44                                                     I

¶ 45        The first issue, whether Public Act 98-599’s reduction of retirement annuity
       benefits violates this State’s pension protection clause, is easily resolved. The
       pension protection clause clearly states: “[m]embership in any pension or
       retirement system of the State *** shall be an enforceable contractual relationship,
       the benefits of which shall not be diminished or impaired.” (Emphasis added.) Ill.
       Const. 1970, art. XIII, § 5. This clause has been construed by our court on
       numerous occasions, most recently in Kanerva v. Weems, 2014 IL 115811. We held
       in that case that the clause means precisely what it says: “if something qualifies as a
       benefit of the enforceable contractual relationship resulting from membership in
       one of the State’s pension or retirement systems, it cannot be diminished or
       impaired.” Id. ¶ 38.

¶ 46       This construction of article XIII, section 5, was not a break from prior law. To
       the contrary, it was a reaffirmation of principles articulated by this court and the
       appellate court on numerous occasions since the 1970 Constitution took effect.
       Under article XIII, section 5, members of pension plans subject to its provisions
       have a legally enforceable right to receive the benefits they have been promised.
       People ex rel. Sklodowski v. State, 182 Ill. 2d 220, 229-32 (1998); McNamee v.
       State, 173 Ill. 2d 433, 444-46 (1996). The protections afforded to such benefits by

           11
              Severability presents a legal question because assessing whether invalid provisions of a
       statute are severable from the remainder is a matter of statutory construction (People ex rel. Chicago
       Bar Ass’n v. State Board of Elections, 136 Ill. 2d 513, 534 (1990)), and statutory construction is a
       question of law (Solon v. Midwest Medical Records Ass’n, 236 Ill. 2d 433, 439 (2010)).
                                                      - 19 -
article XIII, section 5 attach once an individual first embarks upon employment in a
position covered by a public retirement system, not when the employee ultimately
retires. See Di Falco v. Board of Trustees of the Firemen’s Pension Fund of the
Wood Dale Fire Protection District No. One, 122 Ill. 2d 22, 26 (1988).
Accordingly, once an individual begins work and becomes a member of a public
retirement system, any subsequent changes to the Pension Code that would
diminish the benefits conferred by membership in the retirement system cannot be
applied to that individual. Buddell v. Board of Trustees, State University
Retirement System, 118 Ill. 2d 99, 105-06 (1987) (pension protection clause barred
statutory change in Pension Code which prevented current pension system member
from purchasing service credit for time spent in military); Felt v. Board of Trustees
of the Judges Retirement System, 107 Ill. 2d 158, 162-63 (1985) (amendment to
Pension Code adversely affecting base salary used to compute annuity
impermissibly reduced retirement benefits of existing retirement system members
in violation of pension protection clause); Kraus v. Board of Trustees of the Police
Pension Fund, 72 Ill. App. 3d 833, 844-48 (1979) (change in Pension Code’s
method of computing a police officer’s pensionable salary in a way that would
reduce the amount of the pension could not, under the pension protection clause, be
applied to persons who were members of the retirement system prior to the
amendment’s effective date); Miller v. Retirement Board of Policemen’s Annuity &
Benefit Fund, 329 Ill. App. 3d 589 (2001) (amendments to Pension Code which
reduced benefits of existing retirement system members with respect to eligibility
for automatic annual increases unconstitutional under pension protection clause);
Schroeder v. Morton Grove Police Pension Board, 219 Ill. App. 3d 697 (1991)
(finding invalid, as violation of pension protection clause, amendment to Pension
Code reducing pension benefits based on receipt of workers’ compensation
benefits). 12


    12
       Additional benefits may always be added, of course (see Kraus v. Board of Trustees of the
Police Pension Fund, 72 Ill. App. 3d at 849), and the State may require additional employee
contributions or other consideration in exchange (see Gualano v. City of Des Plaines, 139 Ill. App.
3d 456, 459 (1985). However, once the additional benefits are in place and the employee continues
to work, remains a member of a covered retirement system, and complies with any qualifications
imposed when the additional benefits were first offered, the additional benefits cannot be
unilaterally diminished or eliminated. See, e.g., Taft v. Board of Trustees of the Police Pension
Fund, 133 Ill. App. 3d 566, 572 (1985); Carr v. Board of Trustees of the Police Pension Fund, 158
Ill. App. 3d 7, 9-10 (1987); cf. Kuhlmann v. Board of Trustees of the Police Pension Fund, 106 Ill.
App. 3d 603, 609 (1982) (member not eligible for increase in benefits where he had ceased
contributing to the pension fund prior to the change in the law).
                                              - 20 -
¶ 47       Retirement annuity benefits are unquestionably a “benefit of
       contractually-enforceable relationship resulting from membership” in the four
       State-funded retirement systems. Indeed, they are among the most important
       benefits provided by those systems. If allowed to take effect, Public Act 98-599,
       would clearly result in a diminishment of the retirement annuities to which Tier 1
       members of GRS, SRS, SURS and TRS became entitled when they joined those
       systems. As described earlier in this opinion, the new legislation directly reduces
       the value of retirement annuities for those members in no fewer than five different
       ways. While we presume statutes to be constitutional and must construe enactments
       by the legislature so as to uphold their validity whenever it is reasonably proper to
       do so (Wilson v. Department of Revenue, 169 Ill. 2d 306, 310 (1996)), there is
       simply no way that the annuity reduction provisions in Public Act 98-599 can be
       reconciled with the rights and protections established by the people of Illinois when
       they ratified the Illinois Constitution of 1970 and its pension protection clause.
       Those provisions contravene the clear requirements of article XIII, section 5, as set
       forth in the provision’s plain and unambiguous language and construed by the
       legion of cases we have just discussed. In enacting the provisions, the General
       Assembly overstepped the scope of its legislative power. This court is therefore
       obligated to declare those provisions invalid. Maddux v. Blagojevich, 233 Ill. 2d
       508, 528 (2009).

¶ 48        In Fields v. Elected Officials’ Retirement Plan, 320 P.3d 1160, 1165-68 (Ariz.
       2014), the Arizona Supreme Court recently reached the same conclusion in similar
       circumstances based on the analogous provision of their state’s constitution. As
       under our pension protection clause, the Arizona constitution provides that public
       retirement system benefits “shall not be diminished or impaired.” Ariz. Const., art.
       XXIX, § 1(C). Applying that provision, the Arizona Supreme Court held that
       legislative changes to the statutory formula for pension benefit increases which
       diminished benefit payments violated this constitutional provision, and the court
       expressly rejected the argument that the term “benefit” in the constitutional
       provision “only includes the right to receive payments in the amount determined by
       the most recent calculation.” Fields, 320 P.3d at 1165-68. The court reasoned that
       accepting such an argument would place even the base pension benefit outside the
       reach of constitutional protection because the base benefit is produced by the same
       statutory formula that includes benefit increases. See id. at 1166.

¶ 49      The “benefit” protected by the Arizona constitution’s Pension Clause, the court
       explained, “necessarily includes the right to use the statutory formula” that
                                             - 21 -
       determines the amount of pension annuity payments, and that formula includes the
       statutory benefit increases. Id. The court held that the plaintiff, a retired Arizona
       judge, “has a right in the existing formula by which his benefits are calculated as of
       the time he began employment and any beneficial modifications made during the
       course of his employment.” Id. Accordingly, the Arizona statutory benefit increase
       formula was a protected pension “benefit” for purposes of the Arizona
       constitution’s substantially identical pension protection clause. Id.

¶ 50       The Arizona Supreme Court added that its decision comported with judicial
       decisions “in other states that have similar constitutional provisions protecting
       public pension benefits,” including Illinois. Id. Significantly, the court observed
       that Illinois courts have “determined that benefit calculation formulas are entitled
       to constitutional protection,” and cited Miller, 329 Ill. App. 3d 589, for the
       proposition that “benefit increases” are “constitutionally protected.” Fields, 320
       P.3d at 1166.



¶ 51                                             II

¶ 52       That the annuity reduction provisions of Public Act 98-599 violate the pension
       protection clause’s prohibition against the diminishment of the benefits of
       membership in a State-funded retirement system is one the State has now all but
       conceded. After this court reaffirmed in Kanerva v. Weems that the pension
       protection clause means precisely what it says, the State shifted its focus to an
       argument it did not raise and we did not consider in Kanerva. The State’s position
       now rests on its affirmative defense that funding for the pension systems and State
       finances in general have become so dire that the General Assembly is authorized,
       even compelled, to invoke the State’s “reserved sovereign powers,” i.e., its police
       powers, to override the rights and protections afforded by article XIII, section 5, of
       the Illinois Constitution in the interests of the greater public good. This argument
       must also fail.

¶ 53       The circumstances presented by this case are not unique. Economic conditions
       are cyclical and expected, and fiscal difficulties have confronted the State before.
       In the midst of previous downturns, the State or political subdivisions of the State
       have attempted to reduce or eliminate expenditures protected by the Illinois
       Constitution, as the General Assembly is attempting to do with Public Act 98-599.

                                               - 22 -
       Whenever those efforts have been challenged in court, we have clearly and
       consistently found them to be improper.

¶ 54       During the Great Depression, for example, the city of Chicago omitted from its
       annual appropriations for 1932, 1933 and 1934 a portion of the funds necessary to
       pay the full salaries of the chief justice and 36 associate judges of the city’s
       municipal court. The affected judges were subject to a provision of the Illinois
       Constitution that prevented their compensation from being diminished during their
       terms of office. Their salaries were also protected from reductions by a provision of
       the Municipal Court Act then in effect. The judges sought relief by way of
       mandamus to compel the city to comply with the law. People ex rel. Lyle v. City of
       Chicago, 360 Ill. 25, 26-27 (1935).

¶ 55       For its defense, the city claimed that a large part of the taxes from 1929 to 1932,
       inclusive, were not and could not be collected, and because of “the reassessment of
       property in Cook county the levies and extensions of taxes were overdue from two
       to three years.” Id. at 27. As a result, it faced a financial emergency which left it
       unable to comply with the above-noted provisions without curtailing the essential
       functions of government. According to the city, requiring it to pay the judges’ full
       salaries as required by law would necessitate the cutting of other appropriations and
       “crippl[e] activities for the prevention of crime, fire, and the spread of disease.” Id.
       at 28-29.

¶ 56       In rejecting the city’s position, we acknowledged that legitimate efforts to
       relieve the city’s difficulties were commendable. We held, however, that any
       departure from the law is impermissible unless justification for that departure is
       found within the law itself. Exigent circumstances are not enough. “Neither the
       legislature nor any executive or judicial officer may disregard the provisions of the
       constitution even in case of a great emergency.” Id. at 29. Because the provisions
       prohibiting reduction in judicial salaries were plain and unequivocal and contained
       nothing that expressly or impliedly authorized deviation from their terms, we
       concluded that the city had no authority to change the judges’ salaries during the
       terms for which they were elected. “Municipal authorities are charged by law with
       making all appropriations for the expenses of the municipality,” we held, “and it
       was manifestly their duty to make the necessary appropriations for the full amount
       of the salaries of [these judges]. If appropriating such amounts will curtail other
       funds and hamper some needed activity of the city, that situation is, of course,
       unfortunate but does not justify the violation of the law.” Id. at 30.
                                                - 23 -
¶ 57       A similar situation was presented more recently in Jorgensen v. Blagojevich,
       211 Ill. 2d 286 (2004), where the governor attempted to use his veto power to
       eliminate a cost of living adjustment to salaries for the State’s judges as part of an
       austerity plan. Because the adjustments were a vested component of the salaries
       authorized by law, however, the governor’s attempt to undo them violated the
       prohibition against diminishment of judicial salaries set forth in article VI, section
       14, of the Illinois Constitution (Ill. Const. 1970, art. VI, § 14). When the judges
       challenged the governor’s actions on that basis in circuit court, they prevailed. On
       direct review, we affirmed.

¶ 58      As we had in People ex rel. Lyle, nearly 70 years earlier, we acknowledged that:

          “substantial budgetary challenges currently confront the Governor and the
          General Assembly. The adverse economic conditions facing so many of our
          fellow citizens have taken an inevitable toll on the state’s treasury. Revenues
          are not keeping pace. Despite ongoing efforts by the Governor and legislature,
          shortfalls persist. We do not mean to diminish the seriousness of the situation or
          appear insensitive to the difficulties faced by our coordinate branches of
          government. Those difficulties are undeniable, and we are highly cognizant of
          the need for austerity and restraint in our spending. As administrators of the
          judiciary, we make every effort to economize whenever and however we can.
          One thing we cannot do, however, is ignore the Constitution of Illinois.”
          Jorgensen, 211 Ill. 2d at 316.

       Once the salaries were implemented according to law, article VI, section 14, of the
       constitution precluded their diminishment and required that they be paid. “No
       principle of law permits us to suspend constitutional requirements for economic
       reasons,” we held, “no matter how compelling those reasons may seem.” Id. So it is
       with the case before us today.

¶ 59       The State seeks to avoid this conclusion by arguing that because membership in
       public retirement systems is an enforceable contractual relationship under article
       XIII, section 5, it should be subject to the same limitations as all other contractual
       rights; that under “a century and a half of federal and state law defining contractual
       relationships,” these rights remain subject to modification—even invalidation—by
       the General Assembly through the exercise of the State’s police power; and that the
       reduction in retirement annuity benefits under Public Act 98-599 is a valid exercise


                                               - 24 -
       of police power because it is necessary and reasonable to secure the State’s fiscal
       health and the well being of its citizens.

¶ 60       This argument was rejected by the circuit court. We reject it as well. As a
       preliminary matter, the precedent on which the State relies does not involve the
       pension protection clause under article XIII, section 5. It arises, instead, under
       article I, section 16 (Ill. Const. 1970, art. I, § 16), and that provision’s counterpart
       in the United States Constitution (see U.S. Const., art. I, § 10, cl. 1). Those
       provisions, which are popularly referred to as the “contracts clause,” provide that
       the State shall not pass any “law impairing the obligation of contracts.” The State
       points out that case law interpreting these provisions has recognized that the
       prohibition against impairment of contracts is not absolute and “does not immunize
       contractual obligations from every conceivable kind of impairment or from the
       effect of a reasonable exercise by the States of their police power.” George D.
       Hardin, Inc. v. Village of Mount Prospect, 99 Ill. 2d 96, 103 (1983). The police
       power is “incapable of alienation” (City of Chicago v. Chicago Union Traction Co.,
       199 Ill. 259, 270 (1902)), the State observes, and it has long been recognized that it
       may, in the exercise of its police powers, enact “regulations reasonably necessary
       to secure the health, safety, morals or general welfare of the community, even
       though contracts may thereby be affected” (City of Chicago v. Chicago & North
       Western Ry. Co., 4 Ill. 2d 307, 317 (1954)).

¶ 61       While these principles sound expansive, legislation impairing contracts has
       actually been upheld against contract clause challenges only rarely. George D.
       Hardin, Inc. v. Village of Mount Prospect, 99 Ill. 2d at 104. When the legislation
       has been directed at reducing pension benefits of State employees, this court has
       expressly held that it is “not defensible as a reasonable exercise of the State’s police
       powers” and declared it invalid under the contracts clause, as well as for other
       reasons. Felt v. Board of Trustees of the Judges Retirement System, 107 Ill. 2d at
       167; Bardens v. Board of Trustees of the Judges Retirement System, 22 Ill. 2d 56,
       61-62 (1961).

¶ 62       This is not surprising. While impairment of a contract may survive scrutiny
       under the contracts clause if reasonable and necessary to serve an important public
       purpose, “ ‘[t]he severity of the impairment measures the height of the hurdle the
       state legislation must clear.’ ” Felt v. Board of Trustees of the Judges Retirement
       System, 107 Ill. 2d at 166 (quoting Allied Structural Steel Co. v. Spannaus, 438


                                                - 25 -
       U.S. 234, 245 (1978)). Changes in the factors used to compute public pension
       benefits constitute an impairment which is “obviously substantial.” Id.

¶ 63       Moreover, the United States Supreme Court has held that particular scrutiny of
       legislative action is warranted when, as here, a state seeks to impair a contract to
       which it is itself a party and its interest in avoiding the contract or changing its
       terms is financial. Committing to a contract does implicate the state’s sovereign
       power, but:

          “[w]hatever the propriety of a State’s binding itself to a future course of
          conduct in other contexts, the power to enter into effective financial contracts
          cannot be questioned. Any financial obligation could be regarded in theory as a
          relinquishment of the State’s spending power, since money spent to repay debts
          is not available for other purposes. Similarly, the taxing power may have to be
          exercised if debts are to be repaid. Notwithstanding these effects, the Court has
          regularly held that the States are bound by their debt contracts.” United States
          Trust Co. of New York v. New Jersey, 431 U.S. 1, 24 (1977).

¶ 64       In addition, because the state’s self-interest is at stake whenever it seeks to
       modify its own financial obligations, the United States Supreme Court has made
       clear that it is not appropriate to give the state’s legislature the same deference it
       would otherwise be afforded with regard to whether the impairment is reasonable
       and necessary to serve an important public purpose. “A governmental entity can
       always find a use for extra money,” the Court observed, “especially when taxes do
       not have to be raised. If a State could reduce its financial obligations whenever it
       wanted to spend the money for what it regarded as an important public purpose, the
       Contract Clause would provide no protection at all.” Id. at 25-26.

¶ 65       In assessing claims by the state that impairment of a contract is “necessary” to
       advance the public interest, courts consider whether the provisions which the state
       seeks to change had effects which were unforeseen and unintended by the
       legislature when initially adopted and whether the state could achieve its purposes
       through less drastic measures. Id. at 30-32. In this case, the State seeks remand to
       permit it to develop a more complete evidentiary record on these questions. Such a
       remand, however, would serve no purpose. Based on the facts already of record and
       the matters of which we can take judicial notice, it is manifest that the State could
       not, as a matter of law, clear the threshold imposed under contemporary contract
       clause jurisprudence.

                                               - 26 -
¶ 66       As this opinion has previously observed, our economy is and has always been
       subject to fluctuations, sometimes very extreme fluctuations. Throughout the past
       century, market forces have periodically placed significant pressures on public
       pension systems. The repercussions of underfunding those pension systems in such
       an environment have been well-documented and were well-known when the
       General Assembly enacted the provisions of the Pension Code which Public Act
       98-599 now seeks to change. The General Assembly had available to it all the
       information it needed to estimate the long-term costs of those provisions, including
       the costs of annual annuity increases, and the provisions have operated as
       designed. 13 The General Assembly understood that the provisions would be
       subject to the pension protection clause. In addition, the law was clear that the
       promised benefits would therefore have to be paid, and that the responsibility for
       providing the State’s share of the necessary funding fell squarely on the
       legislature’s shoulders. Accordingly, the funding problems which developed were
       entirely foreseeable. The General Assembly may find itself in crisis, but it is a crisis
       which other public pension systems managed to avoid and, as reflected in the SEC
       order, it is a crisis for which the General Assembly itself is largely responsible.

¶ 67       Moreover, no possible claim can be made that no less drastic measures were
       available when balancing pension obligations with other State expenditures
       became problematic. One alternative, identified at the hearing on Public Act
       98-599, would have been to adopt a new schedule for amortizing the unfunded
       liabilities. The General Assembly could also have sought additional tax revenue.
       While it did pass a temporary income tax increase, it allowed the increased rate to
       lapse to a lower rate even as pension funding was being debated and litigated.

¶ 68       That the State did not select the least drastic means of addressing its financial
       difficulties is reinforced by the legislative history. As noted earlier in this opinion,
       the chief sponsor of the legislation stated candidly that other alternatives were
       available. Public Act 98-599 was in no sense a last resort. Rather, it was an
       expedient to break a political stalemate.

¶ 69      The United States Supreme Court has made clear that the United States
       Constitution “bar[s] Government from forcing some people alone to bear public

           13
             While the automatic annual increases have sometimes exceeded changes in the cost of living,
       these adjustments are not cost of living adjustments, and as indicated earlier in this disposition, the
       increases have actually lagged the average increases granted by the Social Security Administration,
       which are tied to the cost of living.
                                                       - 27 -
       burdens which, in all fairness and justice, should be borne by the public as a whole
       [citations].” (Internal quotation marks omitted.) United States v. Winstar Corp.,
       518 U.S. 839, 883 (1996). Through Public Act 98-599, however, the General
       Assembly addressed the financial challenges facing our State by doing just that. It
       made no effort to distribute the burdens evenly among Illinoisans. It did not even
       attempt to distribute the burdens evenly among those with whom it has contractual
       relationships. Although it is undisputed that many vendors face delays in payment,
       the terms of their contracts are unchanged, and under the State Prompt Payment
       Act, vendors are actually entitled to additional compensation in the form of
       statutory interest if their bills are not paid within specified periods. 30 ILCS
       540/3-2 (West 2012). In no sense is this comparable to the situation confronted by
       members of public retirement systems under Public Act 98-599, which, if allowed
       to take effect, would actually negate substantive terms of their contractual
       relationships and reduce the benefits due and payable to them in a real and absolute
       way. Under all of these circumstances, it is clear that the State could prove no set of
       circumstances that would satisfy the contracts clause. Its resort to the contracts
       clause to support its police powers argument must therefore be rejected as a matter
       of law.

¶ 70       The State’s police powers defense is fatally flawed for other reasons as well.
       Just as the legislature is presumed to act with full knowledge of all prior legislation,
       the drafters of a constitutional provision are presumed to know about existing laws
       and constitutional provisions and to have drafted their provision accordingly.
       Kanerva v. Weems, 2014 IL 115811, ¶ 41. The contracts clause had antecedents in
       the very first Illinois Constitution and in the Constitution of the United States.
       When the time came to address the protection for public pensions, the drafters of
       the 1970 Constitution therefore presumably knew of the substantial body of case
       law involving that clause, including the case law holding that, when warranted, the
       protections afforded contracts could be modified through the exercise of the State’s
       police powers. That, however, is not the standard they chose with respect to the
       benefits of membership in public pension systems.

¶ 71      There are numerous instances in the Constitution of 1970 where the drafters
       specifically provided that particular constitutional guarantees were to remain
       subject to the authority of the State to step in when public safety and welfare
       required. See Ill. Const. 1970, art. I, § 22 (right of individual citizens to keep and
       bear arms shall not be infringed “[s]ubject only to the police power”); Ill. Const.
       1970, art. I, § 9 (privilege of writ of habeas corpus shall not be suspended “except
                                                 - 28 -
       in cases of rebellion or invasion when the public safety may require it”); Ill. Const.
       1970, art. I, § 3 (rights of religious freedom shall not be construed to “justify
       practices inconsistent with the peace or safety of the State”); Ill. Const. 1970, art.
       XI, § 2 (right to healthful environment “subject to reasonable limitation and
       regulation as the General Assembly may provide by law”). When it came time to
       address the rights conferred by membership in public pension systems, however,
       the drafters included no similar reservation of authority.

¶ 72       This decision was not inadvertent. During the convention on the 1970 Illinois
       Constitution, the suggestion was made that public pensions be addressed through
       the same “impair[ment] [of] the obligation *** contracts” provision now included
       in article I, section 16 (Ill. Const. 1970, art. I, § 16). 4 Record of Proceedings 2930
       (statements of Delegate Whalen). That proposal, however, was rejected in favor of
       the separate, more specific provisions of article XIII, section 5 (Ill. Const. 1970, art.
       XIII, § 5). Those provisions not only created a new right of constitutional
       dimension, conferring enforceable contractual status on the benefits of membership
       in public retirements systems, they also defined the scope of the protection afforded
       such benefits. Under the plain language of article XIII, section 5, not only may the
       benefits not be impaired, they also may not be “diminished.” That is same term
       used in article VI, section 14 (Ill. Const. 1970, art. VI, § 14), which protects the
       salaries of judges against reduction during their terms of office and which was
       enforced by this court in Jorgensen v. Blagojevich, 211 Ill. 2d 286 (2004),
       discussed earlier in this opinion, notwithstanding the State’s claims of economic
       hardship.

¶ 73        We note, moreover, that after the drafters of the 1970 Constitution initially
       approved the pension protection clause, a proposal was submitted to Delegate
       Green by the chairperson of the Illinois Public Employees Pension Laws
       Commission, an organization established by the General Assembly to, inter alia,
       offer recommendations regarding the impact of proposed pension legislation. See
       Ill. Rev. Stat. 1969, ch. 108½, ¶¶ 22-801, 22-802, regarding the wording of the new
       provision. The proposal criticized the language approved by the drafters on the
       grounds that it would curtail the powers of the legislature and limit its authority. It
       recommended that additional introductory language be added specifying that the
       rights conferred thereunder were “[s]ubject to the authority of the General
       Assembly to enact reasonable modifications in employee rates of contribution,
       minimum service requirements and the provisions pertaining to the fiscal
       soundness of the retirement systems.”
                                               - 29 -
¶ 74       Delegate Green subsequently advised the chairman that he would not offer it
       because “he could get no additional delegate support for the proposed amendment.”
       Report of the Illinois Public Pension Laws Commission 66 (1971). Shortly
       thereafter, a member of the Pension Laws Commission sent a follow-up letter to
       Delegate Green requesting that he read a statement into the convention record
       expressing the view that the new provision should not be interpreted as reflecting
       an intent to withdraw from the legislature “the authority to make reasonable
       adjustments or modifications in respect to employee and employer rates of
       contribution, qualifying service and benefit conditions, and other changes designed
       to assure the financial stability of pension and retirement funds” and that “[i]f the
       provision is interpreted to preclude any legislative changes which may in some
       incidental way ‘diminish or impair’ pension benefits it would unnecessarily
       interfere with a desirable measure of legislative discretion to adopt necessary
       amendments occasioned by changing economic conditions or other sound reasons.”
       Letter and Enclosed Statement of Rubin G. Cohn, Member of the Illinois Public
       Employees Pension Laws Commission to Delegate Henry Green (Aug. 27, 1970),
       Papers of Henry I. Green, Box 1, Folder 13 (University of Illinois Library at
       Urbana-Champaign, Illinois History and Lincoln Collections). This effort also
       proved unsuccessful. The statement was not read and no action was taken during
       the convention to include language allowing a reasonable power of legislative
       modification. Kraus v. Board of Trustees of the Police Pension Fund, 72 Ill. App.
       3d at 851.

¶ 75       Given the history of article XIII, section 5, and the language that was ultimately
       adopted, we therefore have no possible basis for interpreting the provision to mean
       that its protections can be overridden if the General Assembly deems it appropriate
       (see id.), as it sometimes can be under the contracts clause. To confer such authority
       on the legislature through judicial fiat would require that we ignore the plain
       language of the constitution and rewrite it to include “restrictions and limitations
       that the drafters did not express and the citizens of Illinois did not approve.”
       Kanerva v. Weems, 2014 IL 115811, ¶ 41. Indeed, accepting the State’s position
       that reducing retirement benefits is justified by economic circumstances would
       require that we allow the legislature to do the very thing the pension protection
       clause was designed to prevent it from doing. Article XIII, section 5, would be
       rendered a nullity.

¶ 76      The State protests that this conclusion is tantamount to holding that the State
       has surrendered its sovereign authority, something it may not do. The State is
                                             - 30 -
       incorrect. Article XIII, section 5, is in no sense a surrender of any attribute of
       sovereignty. Rather, it is a statement by the people of Illinois, made in the clearest
       possible terms, that the authority of the legislature does not include the power to
       diminish or impair the benefits of membership in a public retirement system. This
       is a restriction the people of Illinois had every right to impose.

¶ 77        Unlike Great Britain, where the sovereignty of the nation resides in Parliament,
       “[u]nder our institutions this sovereignty or transcendent power of government
       resides in or with the people.” Hawthorn v. People, 109 Ill. 302, 305-06 (1883). See
       33A Ill. L. and Prac. State Government § 3 (2012). Sovereignty is lodged in the
       people (People ex rel. Dickinson v. Board of Trade, 193 Ill. 577, 589 (1901)), and
       the people are the sovereign power (Field v. People ex rel. McClernand, 3 Ill. 79,
       110-11 (1839)). The people therefore possess all power originally, including all
       legislative power. Harder’s Fire Proof Storage & Van Co. v. City of Chicago, 235
       Ill. 58, 68 (1908).

¶ 78       As the ultimate sovereign, the people can, “within constitutional restrictions
       imposed by the Federal constitution, delegate the powers of government to whom
       and as they please. They can withhold or [e]ntrust it, with such limitations as they
       choose.” Hawthorn v. People, 109 Ill. at 306; accord City of Eastlake v. Forest City
       Enterprises, Inc., 426 U.S. 668, 672 (1976) (“all power derives from the people”
       who can delegate it to representative instruments which they create or reserve to
       themselves the power to deal directly with matters which might otherwise be
       assigned to the legislature). 14 The powers they have reserved are shown in the
       prohibitions set forth in their state constitutions. Munn v. Illinois, 94 U.S. 113, 124
       (1876).

¶ 79       The people of Illinois give voice to their sovereign authority through the Illinois
       Constitution. It is through the Illinois Constitution that the people have decreed
       how their sovereign power may be exercised, by whom and under what conditions
       or restrictions. Where rights have been conferred and limits on governmental action
       have been defined by the people through the constitution, the legislature cannot
       enact legislation in contravention of those rights and restrictions. Our court made
       this clear in an opinion published 186 years ago in the very first volume of our

           14
             We note, moreover, that which reserved powers a state government may exercise is a question
       for the people of that state (see U.S. Term Limits, Inc. v. Thornton, 514 U.S. 779, 847-48 (1995)
       (Thomas, J., dissenting, joined by Rehnquist, C.J., and O’Connor and Scalia, JJ.)), not the federal
       courts (see Chisholm v. Georgia, 2 U.S. (2 Dall.) 419, 457 (1793)).
                                                     - 31 -
       official reports. As we explained then, the constitution “is the form of government
       instituted by the people in their sovereign capacity, in which first principles and
       fundamental law are established. [It] is the supreme, permanent and fixed will of
       the people in their original, unlimited and sovereign capacity, and in it are
       determined the condition, rights and duties of every individual of the community.”
       Phoebe v. Jay, 1 Ill. 268, 271 (1828). “From the decrees of the constitution there
       can be no appeal, for it emanates from the highest source of power, the sovereign
       people. Whatever condition is assigned to any portion of the people by the
       constitution, is irrevocably fixed ***.” Id.

¶ 80       These constraints apply to the legislature. While the constitution grants general
       legislative authority to the General Assembly, the General Assembly must exercise
       that authority in conformity with the constitution’s provisions. Neiberger v.
       McCullough, 253 Ill. 312, 322 (1912). It cannot exceed the bounds imposed by the
       constitution or, through legislative decree, seek to alter them, for the constitution
       “can establish no tribunal with power to abolish that which gave and continues such
       tribunal in existence.” Phoebe v. Jay, 1 Ill. 2d at 271. In contrast to a constitutional
       mandate, a legislative act is but “the will of the legislature, in a derivative and
       subordinate capacity. The constitution is their commission, and they must act within
       the pale of their authority, and all their acts, contrary or in violation of the
       constitutional charter, are void.” (Emphasis added.) Id.

¶ 81        In accordance with these principles, we have repeatedly held that the General
       Assembly cannot enact legislation that conflicts with provisions of the constitution
       unless the constitution specifically grants it such authority. O’Brien v. White, 219
       Ill. 2d 86, 100 (2006); Thies v. State Board of Elections, 124 Ill. 2d 317, 325-26
       (1988) (where constitution sets forth qualifications for office, legislature cannot
       change or add to those qualifications unless the constitution gives it that power).
       Police powers are no exception to this rule. Although the police powers of the
       legislature are broad and far-reaching, our case law makes clear that their exercise
       must not conflict with the constitution. City of Belleville v. St. Clair County
       Turnpike Co., 234 Ill. 428, 437 (1908). If the constitution mandates that something
       be done or not done, the legislature may not rely on its police powers to violate that
       mandate (People v. Adams, 149 Ill. 2d 331, 339-40 (1992); People v. Warren, 11
       Ill. 2d 420, 424 (1957)) or override express constitutional guarantees (see
       Heimgaertner v. Benjamin Electric Manufacturing Co., 6 Ill. 2d 152, 158-59
       (1955)). See also Client Follow-Up Co. v. Hynes, 75 Ill. 2d 208, 215 (1979)

                                                - 32 -
       (“limitations written into the Constitution are restrictions on legislative power and
       are enforceable by the courts”).

¶ 82        Article XIII, section 5, of the Illinois Constitution (Ill. Const. 1970, art. XIII,
       § 5) expressly provides that the benefits of membership in a public retirement
       system “shall not be diminished or impaired.” Through this provision, the people of
       Illinois yielded none of their sovereign authority. They simply withheld an
       important part of it from the legislature because they believed, based on historical
       experience, that when it came to retirement benefits for public employees, the
       legislature could not be trusted with more. As we discussed in Kanerva v. Weems,
       2014 IL 115811, ¶ 45, and noted earlier in this opinion, delegates to the
       constitutional convention were “mindful that in the past, appropriations to cover
       state pension obligations had ‘been made a political football’ and ‘the party in
       power would just use the amount of the state contribution to help balance budgets,’
       jeopardizing the resources available to meet the State’s obligations to participants
       in its pension systems in the future.” They understood that steps were necessary “in
       order to protect ‘public employees who are beginning to lose faith in the ability of
       the state and its political subdivisions to meet these benefit payments’ and to
       address the ‘insecurity on the part of the public employees [which] is really
       defeating the very purpose for which the retirement system was established ***.’ ”
       Id. ¶ 46 (quoting 4 Record of Proceedings 2925 (statements of Delegate Green)).
       And they wanted to make certain “that irrespective of the financial condition of a
       municipality or even the state government, that those persons who have worked for
       often substandard wages over a long period of time could at least expect to live in
       some kind of dignity during their golden years ***.” (Internal quotation marks
       omitted.) Id.

¶ 83      When Delegate Green presented article XIII, section 5, to the Convention, he
       summed it up as follows:

          “ ‘What we are trying to do is to mandate the General Assembly to do what they
          have not done by statute. ***

              Now, I think they either ought to live up to the laws that they pass or that
          very quickly we ought to stop when we are hiring public employees by telling
          them that they have any retirement rights in the state of Illinois. If we are going
          to tell a policeman or a school teacher that, “Yes, if you will work for us for
          your thirty years or until whenever you reach retirement age, that you will

                                                - 33 -
          receive this,” if the state of Illinois and its municipalities are going to play
          insurance company and live up to these contributions, then they ought to live by
          their own rules. ***.’ [Citation.]” Id. ¶ 47.

¶ 84       The concerns of the delegates who drafted article XIII, section 5, and the
       citizens who ratified it have proven to be well founded. Even with the protections of
       that provision, the General Assembly has repeatedly attempted to find ways to
       circumvent its clear and unambiguous prohibition against the diminishment or
       impairment of the benefits of membership in public retirement systems. Public Act
       98-599 is merely the latest assault in this ongoing political battle against public
       pension rights. As we noted earlier, through that legislation the General Assembly
       is attempting to do once again exactly what the people of Illinois, through article
       XIII, section 5, said it has no authority to do and must not do.

¶ 85       The General Assembly may not legislate on a subject withdrawn from its
       authority by the constitution (see Hunt v. Rosenbaum Grain Corp., 355 Ill. 504, 509
       (1934); City of Chicago v. County of Cook, 370 Ill. 301, 306 (1938)), and it cannot
       rely on police powers to overcome this limitation. As we have already explained,
       there simply is no police power to disregard the express provisions of the
       constitution. It could not be otherwise, for if police powers could be invoked to
       nullify express constitutional rights and protections whenever the legislature (or
       other branches of government) felt that economic or other exigencies warranted, it
       is not merely pension benefits of public employees that would be in jeopardy. No
       rights or property would be safe from the State. Today it is nullification of the right
       to retirement benefits. Tomorrow it could be renunciation of the duty to repay State
       obligations. Eventually, investment capital could be seized. Under the State’s
       reasoning, the only limit on the police power would be the scope of the emergency.
       The legislature could do whatever it felt it needed to do under the circumstances.
       And more than that, through its funding decisions, it could create the very
       emergency conditions used to justify its suspension of the rights conferred and
       protected by the constitution. If financial markets were rational, this prospect
       would not buoy our economy, it would ruin it.

¶ 86       Adherence to constitutional requirements often requires significant sacrifice,
       but our survival as a society depends on it. The United States Supreme Court made
       the point powerfully nearly a century and a half ago when it struck down as
       unconstitutional President Lincoln’s use of executive authority to suspend the writ
       of habeas corpus during the Civil War, a period of emergency that, by any measure,
                                               - 34 -
       eclipsed the one facing our General Assembly today. In rejecting the government’s
       argument that wartime concerns justified the curtailment of the constitutional
       protections, the Supreme Court employed language which seems appropriate to this
       case:

               “Time has proven the discernment of our ancestors; for even these
           provisions, expressed in such plain English words, that it would seem the
           ingenuity of man could not evade them, are now, after the lapse of more than
           seventy years, sought to be avoided. Those great and good men foresaw that
           troublous times would arise, when rulers and people would become restive
           under restraint, and seek by sharp and decisive measures to accomplish ends
           deemed just and proper; and that the principles of constitutional liberty would
           be in peril, unless established by irrepealable law. The history of the world had
           taught them that what was done in the past might be attempted in the future. The
           Constitution *** is a law for rulers and people, equally in war and in peace, and
           covers with the shield of its protection all classes of men, at all times, and under
           all circumstances. No doctrine, involving more pernicious consequences, was
           ever invented by the wit of man than that any of its provisions can be suspended
           during any of the great exigencies of government. Such a doctrine leads directly
           to anarchy or despotism ***.” (Emphasis in original.) Ex parte Milligan, 71
           U.S. 2, 120-21 (1866).

¶ 87       The financial challenges facing state and local governments in Illinois are well
       known and significant. In ruling as we have today, we do not mean to minimize the
       gravity of the State’s problems or the magnitude of the difficulty facing our elected
       representatives. It is our obligation, however, just as it is theirs, to ensure that the
       law is followed. That is true at all times. It is especially important in times of crisis
       when, as this case demonstrates, even clear principles and long-standing precedent
       are threatened. Crisis is not an excuse to abandon the rule of law. It is a summons to
       defend it. How we respond is the measure of our commitment to the principles of
       justice we are sworn to uphold.

¶ 88       More than two centuries ago, as adoption of the Constitution of the United
       States was being considered by the citizens of our new nation, James Madison
       wrote:

           “If men were angels, no government would be necessary. *** In framing a
           government which is to be administered by men over men, the great difficulty

                                                - 35 -
          lies in this: you must first enable the government to control the governed; and in
          the next place oblige it to control itself.” James Madison, Federalist No. 51
          (1788).

¶ 89       Obliging the government to control itself is what we are called upon to do
       today. The Constitution of Illinois and the precedent of our court admit of only one
       conclusion: the annuity reduction provisions of Public Act 98-599 enacted by the
       legislature and signed into law by the Governor violate article XIII, section 5’s
       express prohibition against the diminishment of the benefits of membership in
       public retirement systems. The circuit court was therefore entirely correct when it
       declared those provisions void and unenforceable.



¶ 90                                            III

¶ 91       We come, then, to the third and final issue presented by this appeal: are the
       invalid annuity reduction provisions of Public Act 98-599 severable from the
       remainder of the statute? The issue of severability involves a question of statutory
       construction, which primarily involves ascertaining and giving effect to the intent
       of the legislature. In determining whether a statutory provision containing an
       unconstitutional portion may be severed from the rest of a statute, we look first at
       the statute’s own specific severability provision, if it has one. People v. Mosley,
       2015 IL 115872, ¶ 29. Public Act 98-599 does.

¶ 92       The Act includes a provision dealing with the “severability and inseverability”
       of the law’s numerous components. Set forth in section 97 of the statute, this
       severability provision states that the various sections of the law are severable under
       section 1.31 of the Statute on Statutes (5 ILCS 70/1.31 (West 2012)), with the
       exception of certain specific sections. Under the Act, those particular sections, 39
       of them in all, “are mutually dependent and inseverable from one another but are
       severable from any other provision of this Act.” Pub. Act 98-599, § 97 (eff. June 1,
       2014).

¶ 93       Among the 39 sections deemed “inseverable” are some of the specific
       provisions which impermissibly reduce retirement annuity benefits in violation of
       the pension protection clause. These include sections 2-119.1(a-1), 14-114(a-1),
       15-136(d-1), and 16-133.1(a-1) (40 ILCS 5/2-119.1(a-1), 14-114(a-1),
       15-136(d-1), 16-133.1(a-1) (West Supp. 2013)), which adversely affect the value of

                                               - 36 -
       annual annuity increases. Under the express terms of section 97 of the Act itself, all
       39 of the “inseverable” provisions must therefore fall with the provisions we have
       declared unconstitutional. When one eliminates those 39 provisions along with all
       the other annuity-reducing portions of the law that are void and enforceable under
       the pension protection clause, Public Act 98-599 all but evaporates.

¶ 94       Severability principles would doom the statute in any case. Under Illinois law,
       severability clauses are not conclusive. That is because a court’s authority to
       eliminate invalid elements of an act and yet sustain its valid provisions derives not
       from legislative fiat, but from powers inherent in the judiciary. The practice of
       holding statutory provisions severable from those that are found to be invalid
       originated in the courts long before severability clauses were adopted by
       legislatures. Although the use of severability clauses has now become common
       practice, we have noted that they are regarded as little more than a formality.
       Cincinnati Insurance Co. v. Chapman, 181 Ill. 2d 65, 81 (1998).

¶ 95       Even when a statute contains an express severability clause, the clause is
       merely viewed as reflecting a rebuttable presumption of legislative intent. Best v.
       Taylor Machine Works, 179 Ill. 2d 367, 460 (1997). The presumption of
       severability reflected in an express severability clause will be overcome, and the
       entire statute will be held unconstitutional, if the legislature would not have passed
       the law without the provisions deemed invalid. To determine whether the
       legislature would not have passed the law without the invalid parts, the courts
       consider whether the legislative purpose in passing the act is significantly undercut
       or altered by the elimination of those invalid sections. Even in cases where the valid
       sections of an act are complete and capable of being executed, the entire act will be
       declared void if, after striking the invalid provisions, the part that remains does not
       reflect the legislature’s purpose in enacting the law. Id. at 461-62.

¶ 96        Applying these principles to the case before us, there can be no serious question
       that, with invalidation of those provisions of Public Act 98-599 which reduce the
       retirement annuities Tier 1 members of the GRS, SERS, SURS and TRS are
       entitled to receive, the entire statute must fall. As noted earlier in this opinion, the
       legislation’s proponents described its numerous provisions as “all part of an
       integral bipartisan package.” The overarching purpose of the law was to shore up
       State finances, improve its credit rating and free up resources for other purposes by
       reducing, i.e., diminishing, the amount of retirement annuity benefits paid to Tier 1
       members of GRS, SERS, SURS, and TRS, particularly annual annuity increases,
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       which the speaker of the House of Representatives himself referred to as the chief
       cause of the financial problems the Act was intended to address. 98th Ill. Gen.
       Assem., House Proceedings, Dec. 3, 2013, at 7 (statements of Representative
       Madigan). The annuity reduction provisions are therefore not merely central to the
       statute, they are its very reason for being. Without them, the legislature would not
       have enacted the law at all. To leave those remaining provisions standing once the
       core sections are stripped away would, under these circumstances, yield a
       legislation package that no longer reflects the legislature’s intent. The circuit court
       was therefore correct when it concluded that Public Act 98-599 is void and
       unenforceable in its entirety. 15



¶ 97                                           CONCLUSION

¶ 98       For the foregoing reasons, the judgment of the circuit court declaring Public
       Act 98-599 to be unconstitutional and permanently enjoining its enforcement is
       affirmed.



¶ 99       Affirmed.




           15
             The legislature is, of course, free to reenact any provisions of Public Act 98-599 that do not
       violate the constitution. See Lebron v. Gottlieb Memorial Hospital, 237 Ill. 2d 217, 250 (2010).


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