February 25, 2015
Two lawsuits seeking to overturn a pension reform law for the Chicago Municipal and Laborers’ funds have been put on hold pending the outcome of State pension litigation at the Illinois Supreme Court. Oral arguments for the State pension case have been scheduled for March 11, 2015.
In December 2014, two lawsuits were filed in Cook County Circuit Court that challenge the constitutionality of pension reforms for the Chicago Municipal and Laborers’ funds that were signed into law in June 2014. The plaintiffs were also seeking an injunction on the implementation of the provisions of the law that went into effect on January 1, 2015. However, after the Illinois Supreme Court announced it would hear oral arguments on the State pension litigation on March 11, 2014, the plaintiffs in the Chicago cases asked for their suits to be stayed pending the Supreme Court’s decision.
The lawsuits maintain that Public Act 98-0641 violates a provision of the Illinois Constitution that protects public pensions from being “diminished or impaired.” In a statement, one of the plaintiffs said that they asked for the stay because the decision in the State case “could be determinative in the city case.” The State law is also being challenged as a violation of the Illinois Constitution’s pension protection clause and was struck down as unconstitutional by a judge in a lower court in November 2014. The Illinois Attorney General subsequently sought immediate and expedited appeal at the Illinois Supreme Court. The State defends the law’s constitutionality primarily on the basis of its police powers, which allow states to take actions necessary to preserve public safety, order and welfare.
Legal arguments by plaintiffs and defendants in the State pension case can be found on the Illinois Supreme Court website. While no friend of the court briefs were allowed by the Supreme Court due to time constraints, links to the briefs submitted by groups supporting the State’s case, including a brief filed by the Civic Federation, can be found on the same page.
Lawyers for the City of Chicago have argued that the Supreme Court’s decision with regard to the State pension reforms will not necessarily also apply to the Chicago pension reforms because the City of Chicago’s arguments are not only about police powers, but also hold that the reforms do not diminish or impair pension benefits because without reforms the funds will run out of money in a few years. Instead, the City argues that the reforms actually improve the pensions’ sustainability and will prevent them from going insolvent. The FY2013 market value funded ratios of the Municipal and Laborers’ funds were 39.1% and 61.0%, respectively.
No litigation has yet been filed against the pension reform law for Chicago Park District employees and retirees.