Tuesday, January 28, 2014

Union coalition challenges
new public pension law

By Jamey Dunn

A coalition of public employee and teachers' unions has filed a lawsuit challenging the new law that makes changes to the state’s pension systems.

The We Are One Coalition today filed a class action lawsuit in the Circuit Court for the Seventh Judicial Circuit, which is in Sangamon County. The suit has 25 named plaintiffs, who have worked in the public sector in a variety of jobs, from all over the state.
“Our suit makes clear that pension theft is not only unfair, it’s clearly unconstitutional,” Illinois AFL-CIO President Michael Carrigan said in a prepared statement. “Teachers, nurses, emergency responders and other workers and retirees will not stand by while politicians try to take away their life savings illegally. The legislature and governor shirked their responsibility to uphold the Constitution, so we are seeking justice in court to right their wrongs. Promises must be kept, and the rule of law must prevail over politics.”

 The suit claims that the new law violates the pension clause in the state’s Constitution. That clause says, “Membership in any pension or retirement system of the state, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”

Union officials have been vowing to sue since Senate Bill 1 was approved my lawmakers and signed by Gov. Pat Quinn in December. The measure is projected to save $160 billion over 30 years and fully fund the pension systems, which are currently underfunded by an estimated $100 billion, by 2043. The plan will cut annual cost of living adjustments (COLAs) for current and future retirees. The law also increases the retirement age for employees under 46. For each year an employee is younger than 46, an additional four months would be tacked onto the time he or she would have to work to receive full benefits. The proposal will also cap pensionable salary at $109,971, but that number would increase annually based on inflation.

The law will reduce the employee contribution toward retirement benefits by one percentage point and allow the systems to sue the state if it does not make its required payment. However, lawmakers could vote to change the payment schedule and reduce the annual payment. Some who support the measure argue that the reduction in employee contribution and the guaranteed payment from the state make the legislation constitutional because employees are getting a form of consideration for the reduction in their benefits. Supporters of the plan have also made the case that the state should be granted special powers to contain pension costs because Illinois is enduring a fiscal crisis.

 The employees and retirees who filed suit today do not agree. Their compliant says the state failed to meet its obligation to fund the system and that the new law violates the pension protection written into the state’s Constitution. “The state chose to forgo funding its pension systems in amounts the state now claims were needed to fully meet the state’s annuity obligations. Now, the state expects the members of those systems to carry on their backs the burden of curing the state’s longstanding misconduct. Specifically, [the law] unlawfully strips from public servants pension amounts to which they otherwise are entitled as a matter of law, let alone fundamental fairness,” the complaint said. “That is the very threat against which the pension clause [in the Illinois Constitution] protects.”

 The group says it reserves the right to seek an injunction to prevent the law from going into effect while the unions and the state fight it out in court. Quinn's office did not respond to a request for comment.

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