Four labor unions, along with active and retired city workers, filed a lawsuit Tuesday that argues a Chicago pension reform law violates Illinois' constitutional clause that pension benefits should not be “diminished or impaired.”
The lawsuit was filed in the Cook County Circuit Court and challenges the constitutionality of pension benefit cuts for members of the $5.3 billion Chicago Municipal Employees' Annuity & Benefit Fund.
The law raises employee and employer contributions and reduces retiree cost-of-living adjustments for members of the municipal employees fund and the $1.4 billion Chicago Laborers' Annuity & Benefit Fund
“The constitution says clearly that pension benefits cannot be diminished or impaired, but that's exactly what this legislation does to the modest pensions earned by city workers and retirees,” said Roberta Lynch, executive director of plaintiff AFSCME Council 31, in a news release.
The court will hear the plaintiffs' arguments for an injunction on the law on Dec. 29, said Anders Lindall, spokesman for AFSCME Council 31. The law is scheduled to take effect on Jan. 1, 2015.
Chicago Mayor Rahm Emanuel maintains the law, which was passed by the state Legislature in April and signed by Gov. Pat Quinn on June 9, is constitutional.
“I pledged as mayor to address our pension funding shortfalls to protect the retirements of our workers and respect the hard work of our taxpayers. We believe SB1922 — which does nothing short of ensuring the future of 61,000 city workers and retirees — is also compliant with the Illinois Constitution. Without this reform, these two funds will run out of money in just a matter of years, which is why we must defend this law to protect the future of our workers, retirees, and taxpayers,” Mr. Emanuel said in an e-mailed statement provided by spokeswoman Elizabeth Langsdorf.
The municipal employees' fund was 36.9% funded as of Dec. 31, 2013, according to a fall 2014 newsletter from the pension fund.
Officials at the pension fund could not be reached for a comment by press time.
Meanwhile, the state Supreme Court will hear opening arguments in March over the legality of Illinois' 2013 pension law which decreases cost-of-living adjustments, caps pensionable salaries and raises retirement ages for members of the state's retirement systems.
Attorney General Lisa Madigan appealed the case to the state Supreme Court after a lower court ruled the law was unconstitutional last month.