Judge Finds Overhaul of Chicago Pension Funds Unconstitutional

A Cook County judge has ruled that a 2014 law aimed at reducing multibillion-dollar shortfalls in two of Chicago's pension funds is unconstitutional.

Judge Rita Novak issued her written ruling on Friday.

Novak said earlier this month she would issue a written decision after labor unions, workers and retirees argued the plan pushed by Mayor Rahm Emanuel violates the state constitution.  

Stephen Patton, the city's legal counsel, said in a statement he was "disappointed by the trial court's ruling" but noted the matter will "ultimately be resolved by the Illinois Supreme Court."

"We continue to strongly believe that the City’s pension reform legislation, unlike the State legislation held unconstitutional this past spring, does not diminish or impair pension benefits, but rather preserves and protects them,"  the statement read. "This law not only rescues the municipal and laborer pension funds from certain insolvency, but ensures that, over time, they will be fully funded and the 61,000 affected City workers and retirees will receive the pensions they were promised.”

The ruling was called a "win for Chicago" by labor union nurses Friday. 

The Chicago Tribune reported that if the judge tossed out the changes, taxpayers could end up paying millions into the two retirement funds.

Chicago's overhaul of pension systems for city laborers and workers took effect this year.

The overhaul approved by lawmakers sought to eliminate a $9.4 billion unfunded pension liability by cutting benefits and increasing contributions. It would affect about 61,000 city employees and retirees.

Opponents, including unions, say they filed the lawsuit based on the Illinois Supreme Court's decision in May finding a 2013 statewide pension law unconstitutional. Emanuel argued that without the changes the funds will be insolvent in a matter of years.

City attorney Stephen Patton says if the law is voided, the pension systems will run out of money. 

Chicago has the worst-funded pension systems of any major U.S. city.

Copyright AP - Associated Press
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