The Illinois Retired Teachers Association filed suit Friday challenging the constitutionality of the state’s historic but controversial plan to deal with the nation’s most underfunded public employee pension system.þþThe lawsuit is the first of what could be many filed on behalf of state workers, university employees, lawmakers and teachers outside Chicago. The legal challenge argues the law, which limits cost-of-living increases, raises retirement ages for many current workers and caps the amount of salaries eligible for retirement benefits, violates the state Constitution.þþThe lawsuit, filed in Cook County Circuit Court on behalf of eight non-union retirees, teachers and superintendents who are members of the state’s Teacher Retirement System, contended the constitutional “guarantee on which so many relied has been violated.”þþ“Countless careers, retirements, personal investments and medical treatments have been planned in justifiable reliance not only on the promises that were made in collective bargaining agreements and the Illinois Pension Code, but also on the guarantee of the (state constitution’s) Pension Protection Clause,” the lawsuit said.þþBut a spokeswoman for Democratic Gov. Pat Quinn, who signed the pension changes into law this month after years of political stalemate, said that just as a lawsuit had been expected, the administration “(expects) this landmark reform will be upheld as constitutional.”þþAt issue is a provision of the 1970 Illinois Constitution which states that public pensions represent“an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”þþThe new law, however, scales back what had been annual 3 percent compounded cost-of-living increases to retirees. Instead, retirees would get 3 percent, non-compounding yearly bumps based on a formula that takes into account their years of service multiplied by $1,000. The $1,000 factor would be increased by the rate of inflation each year.þþThe measure also requires many current workers to skip up to five annual cost-of-living pension increases when they retire. For current workers, it also would boost the retirement age by up to five years, depending on how old they are.þþIn an attempt to make the new law constitutional by offering workers and retirees some trade offs, under a legal theory known as “consideration,” current workers would pay 1 percentage point less toward their pensions. In addition, pension systems could sue to force the state to pay its required employer share toward retirement and a limited number of workers could join a 401(k)-style defined contribution plan.þþBut the lawsuit contended the constitutional “guarantee, perhaps more so than anything else in the Illinois Constitution, was used by countless families across Illinois to plan careers, retirements and financial futures.”þþIt argues the state Supreme Court has consistently struck down attempts to change the state’s pension laws when benefits are diminished and that justices have warned that constitutional requirements cannot be suspended for economic reasons.þIllinois state government’s shaky finances were the prime reason that after years of inaction, lawmakers this month passed the law in an attempt to deal with a $100 billion unfunded public pension liability. About 20 cents of every dollar paid in state taxes goes to fund public pensions and the amount was increasingly taking money away from education and other social services. Backers have said the new law could save an estimated $160 billion over the next 30 years.þþAt the same time, Illinois government’s inability to deal with the growing pension liability resulted in downgrades of the state’s credit rating, which boosted taxpayers’ borrowing costs for public works projects. Credit rating agencies heralded the new law, but also recognized that it would be challenged in court.þþ“We believe the new law is as constitutionally sound as it is urgently needed to resolve the state's pension crisis,” Quinn spokeswoman Brooke Anderson said in a statement.þþ“This historic law squarely addresses the most pressing fiscal crisis of our time by eliminating the state's unfunded pension debt, a standard set by the governor two years ago. It will ensure retirement security for those who have faithfully contributed to the pension systems, end the squeeze on critical education and human services and support economic growth,” she said.þþRepresentatives of the “We Are One” coalition of public employee unions, including the state’s two major teachers’ unions, have said they expect to file suit after the New Year. Their lawsuit is expected to be filed outside of Cook County — in part reflecting a concern that powerful Democratic House Speaker Michael Madigan plays a powerful political interest in determining judgeships in the Chicago area.þþJudicial pensions are not included in the new law, an effort to try to avoid a conflict of interest on the constitutional issue. Pensions for Chicago teachers are not part of the new law since they are funded by city property taxpayers.
Source: Chicago Tribune
