Ralph Martire, executive director for the Center for Tax and Budget Accountability, has a warning for the General Assembly: Most of the pension reform solutions you’re considering are unconstitutional, and would be overturned after a court challenge by state employees.
The bill garnering the most support currently would reduce the unfunded liability by cutting existing retirement benefits two key ways: Eliminating for six years cost-of-living adjustments retirees currently get annually and limiting how much salary a pension can be based on.
The legislation also would increase worker contributions to the systems. If permissible, these changes could save the state around $29 billion (actual savings will be less, since the proposal also includes some unknown, new costs for the state). That’s a big “if,” given the proposed benefit cuts do not appear permissible under the Illinois Constitution.
Martire cites a case from the 1980s, when the General Assembly passed a law changing the formula for determining judges’ pensions. It ran afoul of Article XIII, Section 5 of the Illinois Constitution, which states, “Membership in any pension or retirement system of the state…shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”
We Are One Illinois, a coalition of public employee unions, issued a similar warning, urging legislators to reject unconstitutional bills that failed during the veto session.
We encourage returning and newly elected legislators to abandon the pension schemes which dominated the last General Assembly. Those ill-advised plans were unfair and unconstitutional, and thus never received enough support to become law. Simply put, they failed in the legislature and, worse yet, failed the people of Illinois. The lame-duck session made it clear once again: Legally dubious proposals developed without working with those most directly affected--public employees and retirees--are a recipe for failure.
Today marks a welcome fresh start. Illinois lawmakers now have a second chance to work with our coalition to produce a thoughtful, reasonable, and legal solution to the state's fiscal problems. Although public employees did not cause Illinois' pension funding dilemma, they are problem solvers by trade and willing to do their part to fix it. Accordingly, we will continue to work diligently to organize a summit with legislators as the 98th General Assembly begins its work.
We Are One Illinois includes the AFL-CIO, the Illinois Education Association, AFSCME, the Service Employees International Union, the Illinois Federation of Teachers, and the Illinois Nurses Association.
Published at 8:58 AM CST on Jan 10, 2013