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 Sangamon County Circuit Court Judge John Belz, who heard oral
arguments for and against the state's pension reform law on
Thursday, said his written ruling will be issued at 2 p.m. CT.
The state is contending that its so-called police powers, which can
be invoked in an emergency, trump constitutional protections for
public worker retirement benefits. Public labor unions and
retirement groups argue the provision in Illinois' constitution
against the impairment or diminishment of those benefits has no
exceptions.
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 reform law was enacted in December 2013 to help save Illinois'
sinking finances. It 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.
Attorneys for opponents of the law argued that it was designed to
save Illinois money by impairing and diminishing retirement
benefits. They also said that if even one part of the law is found
to be unconstitutional, the whole law should be voided.
"The pension protection clause of the constitution is plain and
unambiguous. It has no exceptions," said Gino DiVito, an attorney
for one of the groups challenging the law.
But Illinois Assistant Attorney General Richard Huszagh argued that
public workers and retirees have a contract for pensions that can be
modified to protect the public welfare in the case of an emergency.
"They are saying that under the pension protection clause you can't
use the emergency exits, you can use the fire extinguisher," Huszagh
told the judge.
Opponents of the law also claimed their position was bolstered by a
July 3 Illinois Supreme Court ruling in an unrelated case that
concluded healthcare for retired state workers was a pension benefit
protected by the constitution.
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Some outside observers agree.
"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
of Illinois-Springfield.
Although the law was slated to take effect on June 1, Judge 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.
If Belz rules against the law, the appeal of the ruling will move
directly to the Illinois Supreme Court, said Donald Craven, an
attorney for one of the plaintiff groups. He said an ultimate ruling
by the high court could take until the summer, although the case
could be expedited.
A ruling by the judge in the state's favor will keep the case in his
court for further litigation by the parties, Craven added.
The unfunded liability for Illinois' five state retirement systems
hit $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 for fiscal 2015 will climb to an
estimated $7.6 billion in fiscal 2016, which begins July 1, the
report said.
(Reporting by Karen Pierog; Editing by Cynthia Osterman, Lisa Von
Ahn and Dan Grebler)
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