Unions file lawsuit over pension changes

January 28, 2014

Alex Keefe and Tony Arnold

(AP/M. Spencer Green)
Illinois Gov. Pat Quinn smiles during the signing of the pension overhaul legislation bill Thursday, Dec. 5, 2013, in Chicago.

A dozen of Illinois' most powerful public employees’ unions filed a lawsuit Tuesday, challenging the constitutionality of the controversial new state pension overhaul signed into law in December.

The plaintiff in the long-expected suit is the We Are One Illinois Coalition, which includes the American Federation of State, County and Municipal Employees, the Service Employees International Union, and the Illinois Federation of Teachers, among others.

In all, the organized labor groups say they represent 621,000 members.

At issue is the pension law passed by the General Assembly and signed by Democratic Gov. Pat Quinn last month. It aims to ease the financial impact of Illinois’ massive public pension shortfall by scaling back yearly benefit increases and raising retirement ages for younger workers.

In return, workers would pay slightly less toward their pensions, and advocates say their retirement plans will be more financially secure, even though the pension funds had been shorted by Springfield policy-makers for years.

But Tuesday’s civil complaint argues the new law violates a part of the Illinois Constitution that says pension benefits “shall not be diminished or impaired.” It also contends that a state employee’s pension is a contract, and that the legislation violates the state constitution’s Contracts Clause that states no law “impairing the obligation of contracts or making an irrevocable grant of special privileges or immunities, shall be passed.”

The lawsuit goes on to blame current and previous lawmakers for the current state of finances facing Illinois.

“The State chose to forgo funding its pension systems in amounts the State now claims were needed to fully meet the State’s annuity obligations,” the lawsuit reads. “Now, the State expects the members of those systems to carry on their backs the burden of curing the State’s longstanding misconduct.”

Quinn's administration quickly defended the law on Tuesday.

"The lawsuits come as no surprise," said Quinn's assistant budget director, Abdon Pallasch. "We believe that pension reform is contstitutional and we will defend the interest of taxpayers."

Tuesday’s lawsuit comes on the heels of other similar lawsuits that the Illinois Attorney General’s office has asked be consolidated into one case to be heard in Cook County. But the We Are One Illinois coalition filed its case in Sangamon County, home to Springfield, the state Capitol, and thousands of public workers.

The difference in location could prove significant in the outcome of the case. House Speaker Michael Madigan takes credit for negotiating the compromise and putting the needed votes on the bill for approval. Critics of the law express concerns about whether the suit could come before a Cook County judge who has connections to Madigan, who also serves as the chairman of the state’s Democratic Party.

The case is expected to eventually be argued in front of the Illinois State Supreme Court.

Recent studies have shown the legislation may not save the state as much money as originally projected. Supporters have said the pension overhaul will save $160 billion over the next 30 years. That number may have been exaggerated, and a report from the University of Illinois projected Illinois will still have a $13 billion deficit 10 years from now even if the pension law takes full effect.