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 The case before the state's highest court involves a 2012 Illinois
law that allowed the state to impose healthcare insurance premiums
on its retired workers.
Retirees and others appealed a March 2013 ruling by Sangamon County
Circuit Court Associate Judge Steven Nardulli, who found that
state-sponsored health insurance is not a guaranteed pension benefit
protected by the Illinois Constitution. In doing so, Nardulli
dismissed class-action challenges backed by the state's labor
unions.
The constitutional provision in question states that membership in
any public sector pension or retirement system "shall be an
enforceable contractual relationship, the benefits of which shall
not be diminished or impaired."
The same provision in the Illinois Constitution is also the center
of attention in lawsuits pending in Sangamon County Circuit Court
against the pension reform law the Illinois legislature passed in
December.
 The pension reform law reduces and suspends cost-of-living increases
for pensions, raises retirement ages and limits the salaries on
which pensions are based.
Christopher Mooney, director of the Illinois Institute of Government
& Public Affairs at the University of Illinois, said a reversal of
Nardulli's ruling by the high court would indicate the pension
reform law could also be ruled unconstitutional.
"If you can't do health insurance, you can't do pensions either,"
Mooney said.
The preamble to Illinois' pension reform law concludes that
Illinois' fiscal problems cannot be solved without changes to the
retirement system. But Mooney said the argument is "not going to
fly" because the state could raise revenue rather than cut benefits.
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If the high court upholds Nardulli's ruling, that would give the
state the option to use retiree healthcare as a bargaining chip with
labor unions in an effort to win support for pension reform.
Judge John Belz, who is hearing the consolidated lawsuits, in May
stopped the pension law from taking effect on June 1 until the
challenges are resolved.
Illinois has had the worst-funded pension system among all U.S.
states after decades of skipping or skimping on pension payments. As
a result, credit rating agencies have slapped Illinois with the
lowest ratings among states.
Illinois' unfunded pension liability is $100 billion, while its
unfunded liability for retiree healthcare stood at nearly $34.5
billion in fiscal 2013.
(Reporting by Karen Pierog; Editing by Dan Grebler)
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