An Illinois judge has ruled unconstitutional a controversial plan to reduce state employees’ retirement benefits.
Labor groups sued the State of Illinois for passing a bill reducing their members’ pension benefits. The unions representing downstate and suburban teachers, university employees and most other state workers argued the state constitution says, specifically, that retirement benefits can’t be diminished. On Friday, Sangamon County Circuit Court Judge John Belz agreed.
Belz quoted directly from the state constitution in his six-page decision, citing the passage that states retirement benefits “shall not be diminished or repaired.” He singled out components of the bill that narrowly passed the state legislature last year to explain why he was ruling against the state. For instance, the law changed cost-of-living increases certain employees receive in retirement, and put a cap on some employees’ pensionable salary.
“The State of Illinois made a constitutionally protected promise to its employees concerning their pension benefits,” Belz wrote in his decision. “Under established and uncontroverted Illinois law, the State of Illinois cannot break this promise.”
Labor unions representing employees who are in those retirement systems celebrated the decision.
“The court granted us everything. The court saw it our way,” said Dan Montgomery, president of the Illinois Federation of Teachers. “This is an unambiguous, unequivocal victory for the constitution and for working people.”
“Retirees who earned their modest security in retirement, they always paid their share. And they should not be punished for the failures of politicians,” said Anders Lindall, a spokesman for the We Are One Coalition, a group of labor unions.
Attorneys who defended the bill acknowledged that it reduced benefits, but argued it is needed to deal with a $105 billion unfunded pension liability. Studies have shown that massive debt tied to Illinois’ retirement payments is the worst of any state in the country.
Gov. Pat Quinn, and those who supported the legislation, argue basic functions of state government are in danger if the pension law is found to be unconstitutional.
“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,” Quinn said in a statement.
The Democratic governor was defeated in this month’s election by Republican Bruce Rauner, who also released a statement asking the state’s Supreme Court to take up the case as soon as possible.
The office of Illinois Attorney General Lisa Madigan is defending the law in court. Her office said Friday that it will ask the state Supreme Court to expedite an appeal “given the significant impact that a final decision in this case will have on the state’s fiscal condition.”
Meantime, Democratic Senate President John Cullerton is considering a plan, in case the state Supreme Court agrees with Judge Belz and throws out the law. Cullerton had pushed for a separate pension proposal that would ask employees to choose between earning state-funded health care coverage in retirement or receiving pay increases.
“If they throw it out, we’ll be back to square one and then we go back again to the alternative that already passed the Senate and when that passes, save some money that we can then pass on to education funding and whatever else we want to utilize that savings,” Cullerton said Friday.
Legislators would have to re-visit Cullerton’s proposal in a new General Assembly, after January’s inauguration.
Tony Arnold covers Illinois politics for WBEZ. Follow him @tonyjarnold.