Illinois judge: Pension reform unconstitutional

By Tyler Davis

An Illinois judge deemed a law intended to reform the state’s unfunded pension system unconstitutional on Friday.

Public Act 98-0599, or Senate Bill 1, was passed in December of 2013 and redistributed pension funds of public officials into health insurance accounts. Judge John Belz, of the Sangamon County Circuit, ruled in favor of unions and retirees who claimed the law infringed upon Article VIII, section 5 of the Illinois Constitution.

With one of the nation’s largest budget deficits and a shortfall of funds for pensions, Gov. Pat Quinn signed the act into law Dec. 5, 2013. Lobbyists for workers’ unions and retirees, including Bruce Appleby, president of the State University Annuitants Association, have since fought it.

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The association focuses on preserving pension and healthcare benefits for public universities and community colleges’ employees, both active and retirees, according to its website.

Appleby, a professor emeritus in English at SIU, said the ruling is a win for his organization, but he anticipates more legal action to follow.

“What happened today with the ruling is that they cannot do what they were trying to do in that Senate bill,” Appleby said. “Now the state will appeal that decision to the Supreme Court but for us, it’s a major victory.”

Appleby said the SUAA has committed more than $400,000 to fight whatever court action ensues. He said Gov.-elect Bruce Rauner’s position on the matter is not clear as he has not stated if he’ll support the state or the union.

In a statement Friday, Rauner said the matter will have to be decided by the state’s Supreme Court.

“Today’s ruling is the first step in a process that should ultimately be decided by the Illinois Supreme Court,” Rauner wrote. “It is my hope that the court will take up the case and rule as soon as possible. I look forward to working with the legislature to craft and implement effective, bipartisan pension reform.”

Other state officials, including Rep. Michael Madigan, have called for swift action by the Supreme Court as the legislature will have to work on new pension reform early in 2015.

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Appleby said the state has taken 18 percent of his pension to pay for his healthcare, and for employees without Social Security, more than 20 percent was taken. He said his organization’s injunction is what incited this ruling.

“The SUAA saw an injunction and got that injunction that said [the law] was unconstitutional because the Constitution Article VIII, section 5 says that they cannot diminish or impair our benefits, and our health insurance is one of our benefits,” he said.

Now that the law will have to be adjusted, the state will have to repay this amount with interest, Appleby said.

When Quinn signed the law nearly a year ago, he said it was security for those who regularly added to the pension system.

“This bill will ensure retirement security for those who have faithfully contributed to the pension systems, end the squeeze on critical education and healthcare services and support economic growth,” Quinn wrote last year in a press release.

Tyler Davis can be reached at [email protected] or on Twitter @tdavis_DE.

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