Be sure to read your legislator's reactions, appended to the bottom of he article.
Tom
The following news article is reprinted from the Chicago Tribune at:
Tom
The following news article is reprinted from the Chicago Tribune at:
(ICCTA Note: The Illinois Supreme Court's decision is available online at http://www.illinoiscourts.gov/Opinions/SupremeCourt/2015/118585.pdf.)
Illinois Supreme Court rules landmark pension law unconstitutional
By Rick Pearson and Kim Geiger
Clout Street
May 8, 2015 10:35 AM
The
Illinois Supreme Court on Friday unanimously ruled unconstitutional a
landmark state pension law that aimed to scale back government worker
benefits to erase a massive, $105 billion pension debt.
At
issue is a law approved by the legislature and signed in December 2013
by then-Democratic Gov. Pat Quinn which was aimed at gradually reducing
Illinois' worst-in-the-nation unfunded public employee pension
liability.
The
law called for curbing automatic and compounded annual cost-of-living
increases for retirees, extending retirement ages for current state
workers and limiting the amount of salary used to figure pension
benefits.
In
November, Sangamon County Circuit Judge John Belz struck down the law,
ruling that state constitutional protections to pension benefits were
"absolute and without exception," prompting the state to appeal to the
high court.
For
decades, governors and state lawmakers failed to put enough money into
the public employee pension systems covering most state workers,
university employees, as well as suburban and downstate teachers.
Now,
state spending on pensions amounts to almost a quarter of every tax
dollar that goes into the state's general bank account.
The
decision by the high court came almost two months after justices heard
oral arguments from the state, contending the constitutional pension
protection clause was not an absolute guarantee, particularly at a time
of great financial emergency.
But
lawyers for public employee unions and retirees argued cuts to
retirement benefits shouldn’t occur because of decades of financial
mismanagement by the state for failing to adequately fund the
employer’s share of pension costs.
The
decision not only affects Illinois, but taxpayers in Chicago and towns
throughout Illinois struggling to cope with growing pension debts that
are straining government budgets.
Previously,
the state’s highest court ruled an effort to make state retirees pay
more for their state-subsidized health care violated the constitution's
pension protection clause.
In
that case, the court found that the constitutional guarantee was "aimed
at protecting the right to receive the promised retirement benefits,
not the adequacy of the funding to pay for them."
# # # # #
Here are some of the legislators reactions:
*Speaker Madigan- spokesman said his boss will “take it under review” and continue to work on the issue, which he said was of vital importance to the state’s future.
* Senate President John Cullerton- From the beginning of our pension reform debates, I expressed concern about the constitutionality of the plan that we ultimately advanced as a test case for the court. Today, the Illinois Supreme Court declared that regardless of political considerations or fiscal circumstances, state leaders cannot renege on pension obligations. This ruling is a victory for retirees, public employees and everyone who respects the plain language of our Constitution.
That victory, however, should be balanced against the grave financial realities we will continue to face without true reforms. If there are to be any lasting savings in pension reform, we must face this reality within the confines of the Pension Clause. I stand ready to work with all parties to advance a real solution that adheres to the Illinois Constitution.”
*Rahm Emanual- “Since taking office, our goal has been to find a solution to Chicago’s pension crisis that protects taxpayers while ensuring the retirements of our workers are preserved — something we achieved with Chicago’s pension reform for the Municipal and Laborers funds. 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. While the State plan only reduced benefits, the City’s plan substantially increases City funding which will save both funds from certain insolvency within the next ten to fifteen years and ensure they are secured over the long-term. Further, unlike the State plan, the City’s plan was the result of negotiation and partnership with 28 impacted unions to protect the retirements of the 61,000 city workers and retirees in these funds and ensure they will receive the pensions promised to them.”
* House Republican Leader Jim Durkin- “I respect the Illinois Supreme Court, but disagree with the ruling. I am prepared to continue working on meaningful legislative reforms to save our public pension systems.”
* Senate Republican Leader Christine Radogno…“Illinois has the nation’s worst-funded pension system and the biggest pension deficit of any state. Nearly a quarter of our budget goes directly to pensions or to pay off past loans used to cover short-term pension costs. 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 Governor Rauner – who has demonstrated his commitment to tackle the most difficult problems facing Illinois"
* State Rep. Elaine Nekritz- “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. 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.”
Moody’s…“Moody’s is currently reviewing the Illinois Supreme Court pension reform decision and analyzing its potential impact on the credit condition of the State of Illinois, the City of Chicago, public universities, and other Illinois municipalities and school districts. For the state, Moody’s current rating and outlook did not factor in the proposed pension reforms, but the ruling provides additional evidence that pension benefit reductions will not be permitted.”
Here are some of the legislators reactions:
*Speaker Madigan- spokesman said his boss will “take it under review” and continue to work on the issue, which he said was of vital importance to the state’s future.
* Senate President John Cullerton- From the beginning of our pension reform debates, I expressed concern about the constitutionality of the plan that we ultimately advanced as a test case for the court. Today, the Illinois Supreme Court declared that regardless of political considerations or fiscal circumstances, state leaders cannot renege on pension obligations. This ruling is a victory for retirees, public employees and everyone who respects the plain language of our Constitution.
That victory, however, should be balanced against the grave financial realities we will continue to face without true reforms. If there are to be any lasting savings in pension reform, we must face this reality within the confines of the Pension Clause. I stand ready to work with all parties to advance a real solution that adheres to the Illinois Constitution.”
*Rahm Emanual- “Since taking office, our goal has been to find a solution to Chicago’s pension crisis that protects taxpayers while ensuring the retirements of our workers are preserved — something we achieved with Chicago’s pension reform for the Municipal and Laborers funds. 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. While the State plan only reduced benefits, the City’s plan substantially increases City funding which will save both funds from certain insolvency within the next ten to fifteen years and ensure they are secured over the long-term. Further, unlike the State plan, the City’s plan was the result of negotiation and partnership with 28 impacted unions to protect the retirements of the 61,000 city workers and retirees in these funds and ensure they will receive the pensions promised to them.”
* House Republican Leader Jim Durkin- “I respect the Illinois Supreme Court, but disagree with the ruling. I am prepared to continue working on meaningful legislative reforms to save our public pension systems.”
* Senate Republican Leader Christine Radogno…“Illinois has the nation’s worst-funded pension system and the biggest pension deficit of any state. Nearly a quarter of our budget goes directly to pensions or to pay off past loans used to cover short-term pension costs. 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 Governor Rauner – who has demonstrated his commitment to tackle the most difficult problems facing Illinois"
* State Rep. Elaine Nekritz- “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. 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.”
Moody’s…“Moody’s is currently reviewing the Illinois Supreme Court pension reform decision and analyzing its potential impact on the credit condition of the State of Illinois, the City of Chicago, public universities, and other Illinois municipalities and school districts. For the state, Moody’s current rating and outlook did not factor in the proposed pension reforms, but the ruling provides additional evidence that pension benefit reductions will not be permitted.”
(30,091)
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