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Illinois Supreme Court strikes down Chicago pensions plan

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SPRINGFIELD, Ill. — The Illinois Supreme Court has struck down a state law designed to narrow multibillion-dollar deficits in Chicago's employee pension funds.

The court released the decision Thursday.

The Legislature and former Gov. Pat Quinn approved the plan in 2014, to rescue two of the city's chronically underfunded pension programs that cover 61,000 current and retired municipal civil servant workers.

The two accounts are short by about $8 billion. Workers such as librarians, health care aides and non-teaching public school employees are covered by one fund, while city laborers are covered by another.

The law reduced pension benefits and required significantly higher city contributions. The city warned the funds would be insolvent within 15 years without the change.

Affected workers said the law violated the Illinois Constitution's protection against reducing promised benefits.

The four unions—the American Federation of State, County and Municipal Employees (AFSCME) Council 31, the Chicago Teachers Union, the Illinois Nurses Association and Teamsters Local 700 - issued this statement.

Today’s ruling strengthens the promise of dignity in retirement for those who serve our communities, and reinforces the Illinois Constitution, our state’s highest law.

Politicians caused the pension debt by failing to set aside adequate contributions, in effect borrowing from future retirees to avoid raising revenue or cutting spending instead. At the same time, city workers such as librarians and truck drivers, school social workers and nurses were faithfully paying their share. They earned, contributed to and counted on a modest pension—just $32,000 on average—instead of Social Security, for which city employees are not eligible.

Like last year’s decision that prevented pension cuts to teachers, state employees and university employees in state pension systems, this ruling makes clear again that the politicians who ran up the debt cannot run out on the bill or dump the burden on public-service workers and retirees instead.

It’s long past time for elected officials to stop trying to end-run the constitution and shirk their duty. Pension funding challenges require funding solutions that must be constitutional and fair to all. Our unions are committed to working with anyone of good faith toward that goal.”

 

Chicago Mayor Rahm Emanuel released the following statement after the ruling:

“Though disappointing, this ruling does not change my commitment to ensuring employees and retirees have a secure retirement without placing the full burden on Chicago taxpayers.  While I believe SB1922 was the right pension reform plan for retirees and taxpayers, my administration will continue to work with our labor partners on a shared path forward that preserves and protects the municipal and laborers’ pension funds, while continuing to be fair to Chicago taxpayers and ensuring the City’s long-term financial health.”