Illinois Supreme Court Finds Chicago Pension Reforms Unconstitutional

The Illinois Supreme Court on Thursday reversed a 2014 Chicago pension reform law that raised contributions for employees and cut benefits.

A portion of the court’s opinion, from the Chicago Sun-Times:

“These modifications to pension benefits unquestionably diminish the value of the retirement annuities the members . . . were promised when they joined the pension system. Accordingly, based on the plain language of the act, these annuity-reducing provisions contravene the pension protection clause’s absolute prohibition against diminishment of pension benefits and exceed the General Assembly’s authority,” the ruling states.

“A public employee’s membership in a pension system is an enforceable contractual relationship and the employee has a constitutionally-protected right to the benefits of that contractual relationship . . . Those constitutional protections attach at the time an individual begins employment and becomes a member of the public pension system. Thus, under its plain and unambiguous language, the clause prohibits the General Assembly from unilaterally reducing or eliminating the pension benefits.”

[…]

The deal that Emanuel painstakingly negotiated with scores of union leaders raised employee contributions by 29 percent — from 8.5 percent currently to 11 percent by 2019 — and ended compounded cost-of-living adjustments for retirees ineligible for Social Security that have been a driving force behind the city’s pension crisis.

The city’s lawyers thought the reforms would hold up in court because the benefit cuts were negotiated with unions.

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