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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, ruled that the law both diminishes and impairs
retirement benefits for public sector workers in violation of a
state constitution provision. The judge rejected the state's
argument that its ability to invoke its sovereign powers in an
emergency trumps protections in the state constitution for
pensions.
"In summary, the state of Illinois made a constitutionally
protected promise to its employees concerning their pension
benefits," Belz's ruling stated. "Under established and
uncontroverted Illinois law, the state of Illinois cannot break
this promise."
The sweeping ruling will send the case to the Illinois Supreme
Court for a final determination on the law's constitutionality.
The state had 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 and that Illinois' dire
financial situation constitutes an emergency.
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 unfunded liability
for Illinois' five state retirement systems hit $104.6 billion
at the end of fiscal 2014.
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.
Although the law was slated to take effect on June 1, Belz put
it on hold in May, until five lawsuits consolidated in his
courtroom are resolved, first by him and ultimately by the
state's high court.
(Reporting by Karen Pierog, editing by Matthew Lewis)
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