Why Illinois Pension Reform May Be Constitutional
From Crain's Chicago Business
Forecasting court rulings is risky—just ask those who predicted so confidently that the U.S. Supreme Court would overturn Obamacare.
A similar sense of doom surrounds the law that the Illinois General Assembly enacted last year to shore up state employee pension plans. The law is headed for review by the Illinois Supreme Court after a trial judge late last month ruled it unconstitutional.
It may be the most important decision the justices will face in their careers. A pension funding shortfall estimated at more than $100 billion has metastasized into a fiscal crisis for the state. The law in question attempts to reduce the gap in a variety of ways, including reducing cost-of-living increases for retirees and raising the age at which state workers can retire with full pensions.
Trouble is, those measures appear to violate an Illinois constitutional provision declaring state pensions a contract right that can't be “diminished or impaired.” That was enough for Illinois Circuit Court Judge John Belz to dispatch the statute, writing, “Any attempt to diminish or impair pension rights is unconstitutional.”
Belz's action, along with a Supreme Court ruling last summer on state retiree medical benefits, has many writing off the pension reforms. There's no question the clean, simple logic of Belz's ruling may appeal to the justices. Also, Arizona's Supreme Court followed essentially the same reasoning in striking down similar pension changes under a constitutional provision like Illinois'.
But neither ruling is binding on the Illinois Supreme Court. And its decision in the medical benefits case didn't address the central argument Illinois Attorney General Lisa Madigan is likely to advance in support of the law.
Read more in our daily News Update...
From Crain's Chicago Business
Forecasting court rulings is risky—just ask those who predicted so confidently that the U.S. Supreme Court would overturn Obamacare.
A similar sense of doom surrounds the law that the Illinois General Assembly enacted last year to shore up state employee pension plans. The law is headed for review by the Illinois Supreme Court after a trial judge late last month ruled it unconstitutional.
It may be the most important decision the justices will face in their careers. A pension funding shortfall estimated at more than $100 billion has metastasized into a fiscal crisis for the state. The law in question attempts to reduce the gap in a variety of ways, including reducing cost-of-living increases for retirees and raising the age at which state workers can retire with full pensions.
Trouble is, those measures appear to violate an Illinois constitutional provision declaring state pensions a contract right that can't be “diminished or impaired.” That was enough for Illinois Circuit Court Judge John Belz to dispatch the statute, writing, “Any attempt to diminish or impair pension rights is unconstitutional.”
Belz's action, along with a Supreme Court ruling last summer on state retiree medical benefits, has many writing off the pension reforms. There's no question the clean, simple logic of Belz's ruling may appeal to the justices. Also, Arizona's Supreme Court followed essentially the same reasoning in striking down similar pension changes under a constitutional provision like Illinois'.
But neither ruling is binding on the Illinois Supreme Court. And its decision in the medical benefits case didn't address the central argument Illinois Attorney General Lisa Madigan is likely to advance in support of the law.
Read more in our daily News Update...