Judge says Chicago pension overhaul unconstitutional

This is an archived article and the information in the article may be outdated. Please look at the time stamp on the story to see when it was last updated.

CHICAGO — A Cook County judge has ruled that a 2014 law aimed at reducing multibillion-dollar shortfalls in two of Chicago's pension funds is unconstitutional.

Judge Rita Novak issued her written ruling on Friday.

The overhaul approved by lawmakers sought to eliminate a $9.4 billion unfunded pension liability by cutting benefits and increasing contributions. It would affect about 61,000 city employees and retirees.

A group of workers, retirees and their labor unions sued, saying the law violated a clause of the Illinois constitution that says pension benefits cannot be reduced.

Mayor Rahm Emanuel argued that without the changes the funds will be insolvent in a matter of years.

Chicago has the worst-funded pension systems of any major U.S. city.

The Emanuel administration says the city will appeal Judge Novak's ruling.

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

16 comments

    • Linda

      And you think these people don’t pay taxes??? Pensioners deserve better…it’s the fault of the city and state …take the pensions of the politicians who didn’t make the payments and see if that helps the pension funds…bet they’d find the money fast if they weren’t getting any themselves!!

      • Chitownlady Emj

        They do deserve pensions Linda. but at the same time NOT A YEARS SALARY ! Sorry. That’s bs. EVen with my hubby’s pension and soc soc, he is NO where near his yearly salary. Where do city workers get off thinking they are? They retire at what 50, and I am am still slaving away to 65 and payiong their pensions? Screw that. Let them go bankrupt. CITY AND STATE! call it day! I have had enough of the prima donna teachers and city and state employees…..And that includes the politcians too. They are all over paid anyway. I just saw a guy crying on tv about his 50k pension a year and how he is gonna survive. Really …..there are alot of people who would love just to make that a year and he is crying about as a pension. give me a fricken break………

      • joe

        The taxes pensioners pay also comes from taxpayers. Your GROSS pay comes from taxpayers. How much the government takes from your GROSS pay is considered taxes paid on your behalf, by the taxpayers.

      • Jon B.

        @CHITOWNLADY EMJ

        “Membership in any pension or retirement system of the State, any unit of local government or school district, or
        any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which
        shall not be diminished or impaired.” — Illinois Constitution, Article XIII, Section 5

        The bottom line is, these promises were made and they need to be kept. It doesn’t matter if the promises were ridiculous; we crossed that line decades ago. People made life decisions based around those promises. Presumably, the city and the state saw a benefit in terms of attracting and retaining people by offering them in the first place. They don’t just get to unilaterally decide they aren’t paying anymore, and the Illinois Constitution could not possibly be more clear on that.

        I have no idea why the city is going to appeal a decision so clearly correct according to the law and waste millions of dollars in lawyer fees to lose again and again. Perhaps that kind of financial mismanagement is why they can’t afford to make the promised pension payments in the first place.

      • Mike

        Unions pay into their own pension. You don’t like like it get a better job. Don’t be upset some people actually get to retire nowadays

  • Retiree's Wife

    Shame on you all for thinking that these retirees do not deserve their pension. They worked hard for it and do not retire at age 50. I’m sure if your employer was trying to take away your pension, you would be fighting just as hard. These retirees depend on that income to survive!

  • Linda

    There’s got to be some give on the part of the unions. They are the ones creating this mess because they insist on keeping the contracts intact while the rest of us pay dearly for their pensions. When you’ve got to work past retirement just to be able to pay the taxes while someone who made less money than you is living well on their pensions, this city has a serious problem. Too many politicians and union execs. live in la-la land.

  • robert

    Teachers and other Illinois public employees should be warned: Be careful, you are getting exactly what you asked for, and in all likelihood, should the pension trusts become insolvent, you will be getting what you want good and hard. If the courts have ruled that pension benefit formulas and conditions cannot be changed, even if only to keep them solvent, the courts have yet to ever rule that the State of Illinois is directly obligated to fund the pension trusts.

    The “Pension Clause” of the Illinois Constitution is found at Article 13, Section 5. It reads as follows: “Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”

    Two legal questions are germane to the discussion as to the extent to which the State of Illinois is obligated to pay the unfunded pension liabilities of public employees in Illinois: First, just who or what legal entity is the party obligated to pay pension benefits who stands on the opposite side of public employees in the “contractual relationship” that is referenced in the Pension Clause? Second, just what pension or retirement “benefits” are intended to be protected (i.e. do protected “benefits” include only accrued benefits for past service contributed to the government, or do they include both accrued benefits plus any unearned but future benefits as well)?

    It is important to note that the Pension Clause refers to “membership.” I don’t understand why the Illinois courts have not paid any attention to the legal significance of this. “Membership” is the clear subject matter of the Pension Clause, and membership refers only to the legal relationship existing between each public employee and the public employee pension trust by which their benefits are to be funded. “Membership” is what is clearly referenced by the Illinois constitution to set the scope or outer boundary as to what constitutes the “enforceable contractual relationship” that is to be protected by the Pension Clause. Therefore, the Pension Clause does not denote anything more than this. It does not refer to any rights of public employees vis-a-vis the State of Illinois and so does not impose a direct obligation on the State of Illinois to make these contributions.

    Any argument that a greater reach was intended for the Pension Clause beyond mere membership rights in the pension trust must provide an answer why was the language of the Pension Clause did not follow the language first proposed by lobbyists for public employee unions during the Illinois constitutional convention in 1970.

    Lobbying efforts to constitutionalize pension benefits at the Convention began in early March 1970 when a group of University of Illinois retirees wrote the Convention President and each of its committee chairs on two occasions. The Illinois Education Association (public school teachers) sent a virtually identical letter to the same delegates in April 1970. The University of Illinois retirees requested the inclusion of the following language in the proposed constitution: “Pension rights of public employees are an integral part of the contract of employment, and these rights are vested in the employee at the time he accepts each employment contract. The General Assembly shall have the responsibility of implementing and preserving the value of these vested rights both during the period of employment and after retirement.” This clause expressly made it the obligation of the State itself, by its General Assembly, to fund public pension trusts.

    But, this language was not adopted by the Convention. This is informative, because what is conspicuous about the final version of Article 13, Section 5 of the Illinois Constitution is the fact that the last sentence of the wording for the Pension Clause excluded any reference to the obligation of the Illinois General Assembly as had been proposed by the public employee unions.

    Moreover, when the Illinois General Assembly enacted the Illinois Pension Code, it enacted Section 22-403 of the Code which states that any “pension payable under any law . . . shall not be construed to be a legal obligation or debt of the State . . . but shall be held to be solely an obligation of such pension fund, unless otherwise specifically provided in the law creating such fund.” This section invites scrutiny of the law creating each fund to see if these statutes made the fund obligations the obligations of the State. But, none of the statutes creating the public pension trusts specifically states that the State will pay pension benefits if the pension fund cannot.

    For example, the law that created the police pension fund for municipalities of 500,000 and under provided that these cities need only take reasonable efforts to insure that benefits are funded, but said that if “there still remain insufficient funds, the beneficiaries shall be paid pro rata from the available funds, but no allowance or order … shall be held to create any liability against the municipality, but only against the pension fund.”

    There have been numerous, unsuccessful attempts by pension plan participants to require the State adequately to fund pension plans at the levels specified in the Pension Code. None of these Illinois cases hold that the State has a guarantor obligation to pay pensions if a pension fund runs out of assets. No case has held that the State is subject to suit to enforce a guarantor obligation to pay pension benefits.

    • Karen Fatlewis

      Good points but do you think that any of these union loving gold digging I dont want to work I just want a paycheck people could really understand what you were saying. He!! most probably can’t read. They are just like the UAW ie United Against Work people that almost ran the car companies out of business.

  • LindaH

    Changed my name cuz I don’t want to be mistaken for Linda who says the unions are creating this mess..and wonder what happened to the comment I posted in reply to ChitownLady & Joe?

  • Rob

    Reading your comments below make think that yeah let the system go broke, but on the other hand the people that worked for those pensions deserve it. But let’s look at the top. How often have we heard about the politicians and their friend’s double and triple dipping into the system. Now they don’t want reform for themselves but for the people who thought by working for the state and city were going to be able to live comfortable when they retired. The politicians in our state and city are the one’s taking us for a ride over the cliff. Keep asking us to pay higher taxes so they can give themselves the excuse for a big pay raise. Come on people open your eyes and see who the real thieves are.