The Illinois Supreme Court unanimously ruled Friday the Illinois pension reform law passed in 2013 is unconstitutional, affirming the decision reached in a Sangamon County Circuit Court in November.
The pension law — which reduced cost-of-living adjustments, capped pensionable salaries and raised retirement ages — violates the state's constitutional clause that pension benefits “shall not be diminished or impaired,” the Supreme Court affirmed Friday.
On Nov. 26, Attorney General Lisa Madigan appealed the Circuit Court's ruling to the state Supreme Court, maintaining pension benefits could be altered in light of Illinois' roughly $100 billion pension funding crisis.
The Supreme Court rejected that argument.
“In ruling as we have today, we do not mean to minimize the gravity of the state’s problems or the magnitude of the difficulty facing our elected representatives,” said Justice Lloyd Karmeier writing for the court. “It is our obligation, however, just as it is theirs, to ensure that the law is followed. That is true at all times. It is especially important in times of crisis when, as this case demonstrates, even clear principles and long-standing precedent are threatened. Crisis is not an excuse to abandon the rule of law.”
The Supreme Court faulted the state for underfunding the plans.
The pension funding crisis “is a crisis for which the General Assembly itself is largely responsible,” Mr. Karmeier said.
While acknowledging that “market forces” have “periodically placed significant pressures on public pension systems,” Mr. Karmeier maintained, “the law was clear that the promised benefits would therefore have to be paid, and that the responsibility for providing the state’s share of the necessary funding fell squarely on the Legislature’s shoulders.”
The law had been slated to go into effect June 1, but was put on hold by Sangamon County Circuit Court Judge John Belz to determine its legality.
Sean Smoot, attorney for one of the plaintiffs, We Are One Illinois, praised the Supreme Court’s ruling.
“We are thankful that the Supreme Court has unanimously upheld the will of the people, overturned this unfair and unconstitutional law, and protected the hard-earned life savings of our members and other public service workers and retirees,” Mr. Smoot said in an e-mail Friday. “I, along with our entire coalition, look forward to working with Illinois' political leaders in developing a fair and constitutional solution to pension funding, and I know we all remain ready to work with anyone of good faith to do so.”
State Rep. Elaine Nekritz, who supported the 2013 pension law, said the ruling makes the state’s path to pension reform “much more difficult.”
“Our goal from the beginning of our work on pension reform has been to strike a very careful, very important balance between protecting the hard-earned investments of state workers and retirees, and the equally important investments of all taxpayers in education, human and social services, health care and other vital state priorities,” said Ms. Nekritz in an e-mail. “In its ruling today, the Supreme Court struck down not only the law, but the core of that balance. Now our already dire pension problem will get that much worse and our options in striking that balance are limited. Our path forward from here is now much more difficult, and every direction will be more painful than the balance we struck in Senate Bill 1.”
A spokeswoman for Ms. Madigan said Friday: “The court has provided a definitive interpretation of the constitution that must now guide the Legislature and the governor going forward.”
It remains to be seen how the ruling will affect Chicago’s attempts at pension reform.
Chicago Mayor Rahm Emanuel maintained Friday that a 2014 pension reform law is constitutional.
The Chicago pension law passed in June raises employee and employer contributions and reduces retiree cost-of-living adjustments for the $5.1 billion Chicago Municipal Employees' Annuity & Benefit Fund and $1.4 billion Chicago Laborers' Annuity & Benefit Fund.
“That reform is not affected by today’s ruling, as we believe our plan fully complies with the state constitution because it fundamentally preserves and protects worker pensions rather than diminishing or impairing them,” Mr. Emanuel said in a statement.
