Illinois pension ruling could have implications for California

A landmark pension ruling in Illinois could have implications in California and other states exploring changes to pension law.

The Illinois Supreme Court voted unanimously to strike down a law passed in December of 2013 that was meant to rescue the state’s pension system.

The state Legislature and governor passed a series of pension changes to help deal with the state’s multi-billion dollar budget deficit. But the court ruled that the deficit alone was not reason enough to break the state’s contract with its employees.

The changes would have limited future cost-of-living adjustments for workers, raised the retirement age for many public employees and capped pensions for workers with the highest salaries. The court ruled the 2013 changes were a violation of the state Constitution, which states that benefits promised as part of a pension system for public workers “shall not be diminished or impaired.”

Illinois has stronger pension language than California. It says that public workers have a contractual right and their pension benefits cannot be impaired or diminished.

But the state case is another rejection of the nation that future benefits can be altered for existing workers. That notion is central to pension changes passed in San Jose and San Diego, and being explored by former San Jose Mayor Chuck Reed for a potential statewide ballot initiative.

“Crisis is not an excuse to abandon the rule of law,” Justice Lloyd A. Karmeier wrote in an opinion. “It is a summons to defend it.”


Comments

Finance

Monday, July 27, 2020 - 15:51

COVID-19 has made it difficult to estimate even the near-term revenue shortfalls for your jurisdiction, but there are opportunities to identify specific revenue streams that will help offset the de