Lawyers for the state will try to convince a judge in state
capital Springfield that the law is crucial to save the state's
sinking finances. Attorneys for public labor unions and others will
argue the law is invalid because it trounces on state constitutional
protections for public worker retirement benefits.
Illinois has the worst-funded state retirement system and its huge
unfunded pension liability has helped pound its credit ratings to
the lowest level among states.
The law, enacted in December 2013, reduces and suspends
cost-of-living increases for pensions, raises retirement ages and
limits salaries on which pensions are based. Employees contribute 1
percent less of their salaries toward pensions, while contributions
from the state, which has skipped or skimped on its pension payments
over the years, are enforceable through the Illinois Supreme Court.
Although it was slated to take effect on June 1, Sangamon County
Circuit Court Judge John Belz in May put it on hold until five
lawsuits consolidated in his courtroom are resolved first by him and
ultimately by the state's high court.
The lawsuits claim the law violates the Illinois Constitution, which
protects public worker pensions from being diminished or impaired.
That argument was bolstered by a July 3 Illinois Supreme Court
ruling in an unrelated case that concluded health care for retired
state workers is a pension benefit protected by the constitution.
"The general consensus is the law is going to be struck down and
probably unanimously (by the Illinois Supreme Court)," said Kent
Redfield, professor emeritus of political science at the University
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In its defense of the pension reform law, Illinois is leaning
heavily on its so-called police powers trumping that constitutional
provision. Those powers include the state's ability to properly fund
education, healthcare and public safety.
The unfunded liability for Illinois' five state retirement systems
was $104.6 billion at the end of fiscal 2014, the state
legislature's Commission on Government Forecasting and
Accountability reported this month.
The law would shave about $1.1 billion from Illinois' fiscal 2016
contribution to the systems. Without the law, the state's $6.9
billion pension contribution in fiscal 2015 will climb to an
estimated $7.6 billion in fiscal 2016, which begins July 1, the
(Reporting By Karen Pierog; Editing by Cynthia Osterman)
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