Landmark State Pension Law Struck Down By Illinois Judge

Landmark State Pension Law Struck Down By Illinois Judge

By Ray Long, Chicago Tribune (TNS)

SPRINGFIELD, Ill. — An Illinois judge on Friday struck down a landmark state law aimed at fixing Illinois’ worst-in-the-nation $100 billion government worker pension system, putting a union-led legal challenge on track for a likely showdown in the Illinois Supreme Court.

Sangamon County Circuit Court Judge John Belz agreed with public employee unions and retirees who challenged the December 2013 law and issued a summary judgment ruling it violated the Illinois Constitution’s pension protection clause.

Belz wrote that the law was “unconstitutional and void in its entirety.”

Under the state constitution, public employee pension benefits are a contractual obligation that cannot be “diminished or impaired.”

Belz ruled that the constitution’s language is clear and unambiguous. “The court finds that, on its face, the act impairs and diminishes the benefits of membership in the state retirement systems in multiple ways,” Belz wrote.

The ruling by Belz sets the stage for what is expected to be an appeal eventually heard by the Illinois Supreme Court on the law, which curbs annual cost-of-living adjustments for current and future retirees and sets later retirement ages.

Illinois Attorney General Lisa Madigan plans to ask the state Supreme Court to quickly hear the appeal.

“We plan to immediately appeal the decision to the Illinois Supreme Court so that we can obtain a final resolution of these important issues and allow the governor and General Assembly to take any necessary action. We will ask the Court to expedite the appeal given the significant impact that a final decision in this case will have on the state’s fiscal condition,” she said in a statement.

Gov. Pat Quinn’s administration issued a statement urging the state’s high court to “take the matter up as soon as possible.”

“This historic pension reform law eliminates the state’s unfunded liability and fully stabilizes the systems to ensure retirement security for employees who have faithfully contributed to them,” the statement read. “We’re confident the Illinois Supreme Court will uphold this urgently needed law that squarely addresses the most pressing fiscal crisis of our time.”

Dan Montgomery, head of the Illinois Federation of Teachers, which also includes the Chicago Teachers Union, called Belz ruling “a clear and total victory.”

“How many people have said, ‘Let’s see what the court gives us, what advice?’ The language in the constitution couldn’t be clearer,” said Montgomery, whose group is a member of the union-umbrella We Are One coalition. “The guidance from this court is explicit: the (pension) language in the constitution is clear, plan, unambiguous and absolute.”

Belz appeared to foreshadow his ruling earlier this year after the Illinois Supreme Court in a 6-1 decision in July ruled unconstitutional a law attempting to force public retirees to pay for what had been state-subsidized health care benefits. The court ruled that those benefits were protected under the constitution’s pension clause.

Justice Charles Freeman, writing for the court’s majority in the health care case, said, “We have concluded that the (pension) provision was aimed at protecting the right to receive the promised retirement benefits, not the adequacy of the funding to pay for them.”

Quinn, who signed the much-hyped pension bill into law, once maintained he was “put on earth” to fix the state’s retirement systems and made a pension fix a top priority of his administration. The law was projected to cut the size of the pension debt and put the state on a 30-year road to eliminating the backlog fed by decades of underfunding by prior governors and lawmakers.

But the changes enacted in the law drew immediate condemnations and lawsuits, including from the We Are One Illinois coalition that includes the Illinois AFL-CIO, the American Federation of State, County and Municipal Employees, the Service Employees International Union, the Illinois Federation of Teachers, the Illinois Education Association and other public unions.

Republican Gov.-elect Bruce Rauner had maintained the Quinn-backed law was unconstitutional. At the Capitol Thursday, the incoming governor said he hoped the high court would give guidance on what would and would not meet constitutional muster.

Asked Friday before the ruling how much the decision matters when it’s assumed to be going to the Supreme Court, Rauner said: “It sets a precedent for the Supreme Court’s process. I think they’ll give us indications on what’s doable and what’s not that we can begin to factor in. Because we need to begin some planning now and it’ll be great to get some feedback from this court ruling. It’s going to be a lot work and we need to do a lot of planning.”

After the ruling came out, Rauner issued a statement.

“Today’s ruling is the first step in a process that should ultimately be decided by the Illinois Supreme Court,” the statement read. “It is my hope that the court will take up the case and rule as soon as possible. I look forward to working with the legislature to craft and implement effective, bipartisan pension reform.”

Democratic state Sen. Kwame Raoul of Chicago, who led a legislative pension panel, said the legal battle is not over.

“Today’s ruling sends yet another signal that – as I have always maintained – our constitution does not allow state government to run roughshod over contractual rights, even in times of great financial hardship. The judicial evaluation of last year’s compromise pension reform plan is far from complete, and I await the guidance of the Illinois Supreme Court,” Raoul said in a statement.

Photo: Scott* via Flickr