Lawsuits challenging the constitutionality of pension benefit cuts for participants in Chicago Municipal Employees’ Annuity & Benefit Fund and Chicago Laborers’ Annuity & Benefit Fund have been put on hold pending an Illinois Supreme Court ruling on state pension cuts.
“Given the relative timing of the state and city cases, and because a decision upholding the (Sangamon County) Circuit Court in the state case could be determinative in the city case, the plaintiffs decided it is sensible to stay further proceedings until the Supreme Court’s ruling is received,” said Anders Lindall, spokesman for AFSCME Council 31, one of the plaintiffs in the Chicago case, in an e-mail. The judge handling the case in Circuit Court in Chicago agreed and put the case on hold, Mr. Lindall wrote.
The city pension fund lawsuits challenge the legality of a 2014 Chicago pension reform law that raises employee and employer contributions and reduces retiree cost-of-living adjustments for participants in the $5.1 billion Chicago Municipal Employees’ Annuity & Benefit Fund and $1.4 billion Chicago Laborers’ Annuity & Benefit Fund. A status hearing is scheduled for April 22.
The law took effect Jan. 1.
The municipal and laborers’ pension funds are about 38% and 58% funded, respectively, and have roughly $9.4 billion in unfunded liabilities combined, according to city documents.
Oral arguments in the state pension reform case are scheduled for March 11, which Mr. Lindall believes is an indication that the justices “are likely to rule sooner than later,” he wrote.
In November, a Sangamon County Circuit Court judge sided with employee and retiree organizations that argued a 2013 Illinois pension law violates the state’s constitutional clause that pension benefits “shall not be diminished or impaired.”
Attorney General Lisa Madigan’s office appealed that decision to the state Supreme Court, arguing that the law is a “reasonable and lawful response” to the state’s pension funding crisis.
