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Illinois Supreme Court Rejects Pension Reform Law

The Illinois Supreme Court has struck down legislation that tried to cut retirement benefits for thousands of state workers.

In a unanimous decision, the high court says lawmakers overstepped their power when they sought to cut pension benefits for state employees, university workers and public school teachers.

Credit illinoiscourts.gov
Justice Lloyd Karmeier

Illinois pensions are protected by the state Constitution, but the state argued a financial emergency meant those protections could be disregarded.

The court rejected that, 7-0.

Justice Lloyd Karmeier writes there are plenty of less drastic solutions — like raising taxes or changing the repayment schedule for pension debt.

Karmeier writes that the law "was in no sense a last resort. Rather, it was an expedient to break a political stalemate."

The decision calls into question a major part of Governor Bruce Rauner’s budget plan, which was premised on making further changes to Illinois’ pension system.

Rauner’s spokesman Lance Trover issued the following statement:

“The Supreme Court’s decision confirms that benefits earned cannot be reduced. That’s fair and right, and why the governor long maintained that SB 1 is unconstitutional," he said. "What is now clear is that a Constitutional Amendment clarifying the distinction between currently earned benefits and future benefits not yet earned, which would allow the state to move forward on common-sense pension reforms, should be part of any solution.”

The law was struck down last November by Sangamon County Circuit Judge John Belz, who ruled that state constitutional protections were "absolute and without exception." The state then appealed to the Supreme Court.

Credit ilga.gov
State Rep. Elaine Nekritz

State Rep. Elaine Nekritz, D-Northbrook, was instrumental in the negotiations that resulted in the pension reform law, knows as Senate Bill 1. She issued a statement expressing disappointment with the decision.

“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," she said. "In its ruling today, the Supreme Court struck down not only the law but the core of that balance."

She predicted that the Illinois pension problem will get that much worse and the path forward will be much more difficult.

"We are now going to be facing this problem for the next 50 years," Nekritz said, "and that makes me sad for Illinois.

State Senate Pres. John Cullerton

Illinois Senate President John Cullerton, D-Chicago, says the state must act to adopt ``true reforms'' now that the Supreme Court threw out the 2013 pension overhaul law.

He called the court ruling a ``victory'' for retirees and public employees who would have lost benefits under the law. Cullerton previously had expressed concern that the plan was unconstitutional. 

Senate Republican Leader Christine Radogno of Lemont said, "I am committed to working with everyone to find a solution that adheres to the Constitution. We must to work together in bipartisan cooperation with Gov.  Rauner, who has demonstrated his commitment to tackle the most difficult problems facing Illinois.''

A spokesman for House Speaker Michael Madigan, D-Chicago, says the speaker will consider the court's ruling as the General Assembly continues to work on a solution to the state's pension crisis.

"We have a lot more clarity now and that's valuable," said State Sen. Daniel Biss, D-Evanston. "There are a lot of limitations placed on the Legislature by this ruling. We need to think carefully about what the options are, what rules can be utilized and design something accordingly.''

The chief executive officer of the Illinois Policy Instituite, a conservative think tank, offered this solution: "Ultimately, the only way Illinois can break the cycle of siphoning more and more tax dollars and sacrificing more and more state programs to pay for pensions is to follow the lead of the private sector and move new employees to a 401(k)-style system,'' said John Tillman.

For decades, the state failed to allocate enough money into the public employee pension systems that cover most state workers, university employees, and public-school teachers.

Current state spending on pensions uses up almost a quarter of every state tax dollar received.

  • Illinois Public Radio's Brian Mackey contributed to this article.
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