The Illinois Supreme Court rules pension cuts unconstitutional
May 11, 2015
The Illinois Supreme Court ruled a 2013 law, which cut pension benefits for state employees, unconstitutional Friday.
Public Act 98-599, or Senate Bill 1, was signed into law on Dec. 5, 2013, by former Gov. Pat Quinn. The law aimed to solve the state’s current financial crisis by reducing or eliminating pension benefits for state employees — University employees included.
According to the legislation, the state has accrued approximately $100 billion in debt due to the pension system, causing reductions in funding for other state programs.
President Robert Easter expressed the importance of public pensions for University employees in a press release issued Friday.
“Pensions are a key element in a competitive compensation program that is critical in recruiting and retaining faculty and staff,” Easter said in the release. “The U of I will continue to track this important issue and provide its input and expertise to those who must chart a new path to a sustainable pension system.”
The court first determined the law violated the Illinois Constitution, citing Article XIII of the state constitution, which states any state pension or retirement system is “an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”
As a result, the court ruled, pensions should be honored just as any other contractual agreement.
The act proposed an annual increase in retirement annuity
The court stated in its analysis Friday “there is simply no way” the provisions in the Public Act could be found in agreement with the Illinois Constitution’s pension protection clause established in 1970. The analysis stated the General Assembly overstepped its power in enacting the provisions.
Additionally, a pensionable salary cap would be imposed on employees who had not yet received
Employees 45 years old and under would be required to work an additional four months for each year under 46, resulting in a “minimal” increase in retirement age. Current employees would receive a one percent reduction in required employee contributions.
The overturned law states this system would allow the state pension fund to become fully funded by 2044. Additionally, the state would make increased contributions to help reduce the current debt.
The supreme court ruled the law unconstitutional in its entirety, stating all other provisions fall with the unconstitutionality of the annuity provision.