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IL Supreme Court decision may portend huge problem for pension reform law

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Today, the Illinois Supreme Court (ISC) ruled 6 to 1 that the 100% subsidized health insurance premiums for retired state employees is a constitutionally protected benefit. That ruling could be an indicator that the pension reform package enacted in the 2014 Veto Session that would have saved the state $160 billion over 30 years and help eliminate $100 billion in unfunded pension liability will not pass muster and make the General Assembly and Governor Quinn go back to the drawing board.

The case decided today goes back to a law enacted in 2012 that required retired state employees to have to start paying a portion of the premium for their state-subsidized health care. Previously, retirees with 20+ years of service did not have to pay any portion of their health insurance premiums. In an opinion for the ISC, Justice Charles Freeman wrote, "Given the language, it is plain and ordinary meaning, all of these benefits, including subsidized health care, must be considered to be benefits of membership in a pension or retirement system of the State and, therefore, within that provision's protections.”

In the strained and contentious negotiations to reach an agreement on how to address the pension reform issue in the Veto Session, it was argued that the core issue was overlooked at times, which is what Justice Freeman was referring to. That core issue is Article XIII, Section 5 of the Illinois Constitution which states “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.”

The pension reform package that was signed into law with the big savings included limits on cost-of-living increases, raised retirement ages for current workers and caps on the amount of salaries eligible for retirement benefits, which groups involved in pending lawsuits contend violates Article XIII, Section 5 of the Illinois Constitution. All along, Senate President John Cullerton thought that was a mistake. Today, the Illinois Supreme Court seemed to back-up Cullerton.

There isn’t a time-table on when the ISC will rule on the pension reform bill. But, it should be after the November 4th General Election. Regardless, voters should be like the Illinois Statehouse insiders and demand that Bruce Rauner and Governor Pat Quinn describe what their “Plan B” would be. Because after today’s ruling, their “Plan B” may have to become “Plan A”.

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