Two groups of retired state employees on Thursday became the latest organizations to pursue a court challenge of a new plan to eliminate Illinois' $100 billion public pension shortfall.
The Illinois State Employees Association Retirees and the Retired State Employees Association filed separate class-action lawsuits in Sangamon County circuit court on behalf of their members. They argue that the landmark plan approved by Illinois lawmakers last month violates a provision of the state constitution that says pension benefits may not be diminished. They also say the law is unfair to retirees who made their required contributions to their retirement funds, while the state for years did not, choosing to spend that money elsewhere.
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"For too long, our members have had to endure being scapegoated for the state's financial problems," said RSEA President Bruce Strom. "The complaint demonstrates not only that the General Assembly has violated the constitution, but has ignored its own statutes in using money owed (to the pension systems) to fund daily operations of state government."
The lawsuits also ask the court to create an escrow fund while the case is pending. The state would be required to deposit the difference between previously scheduled pension payments and the payments as scheduled under the new law.
Gov. Pat Quinn and other supporters of the pension law have said it is critical to getting the state back on sound financial footing and they're confident it will survive legal challenges.
Illinois has the nation's worst-funded public-employee pension systems -- a problem that led to the state having its credit rating downgraded and cuts to funding in areas such as education.
Lawmakers say the legislation approved in December will save the state about $160 billion and eliminate the unfunded liability over the next 30 years, largely by cutting annual cost-of-living increases, raising the retirement age and shifting more money into the pension funds.
Members of the Illinois Retired Teachers Association and the Illinois Association of School Administrators sued last week, and other lawsuits are expected to be filed.
The new law isn't scheduled to take effect until June 1, though lawmakers anticipated its implementation would be held up by legal action.