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updated: 7/4/2014 8:48 AM

Ruling deals big blow to teacher retirement cuts

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  • The Illinois Supreme Court today dealt a big setback to Gov. Pat Quinn and lawmakers who wanted to cut teachers' and state workers' retirement benefits.

       The Illinois Supreme Court today dealt a big setback to Gov. Pat Quinn and lawmakers who wanted to cut teachers' and state workers' retirement benefits.
    Mike Riopell | Staff Photographer

 
 

An Illinois Supreme Court ruling Thursday casts serious doubts on whether sweeping retirement benefit cuts for teachers and state workers will ever become reality.

But as union leaders praise the potential protection of their members' benefits, supporters of the cuts advanced by lawmakers and Gov. Pat Quinn caution against reading too far into Thursday's ruling and argue the real case is still to come.

The court Thursday allowed a complaint about cuts to state retirees' health care to move forward by a 6-1 vote.

At issue is a cost-cutting measure lawmakers passed in 2012. Illinois had paid premiums for some retirees with 20 years or more of service. Under the new law, retirees had to cover part of the cost.

The justices sent the case back to the lower court, where retirees can proceed with their challenge.

While Thursday's opinion was about health care and made no decisions about the state's new pension law, it included a handful of broader statements that could apply if the Supreme Court ultimately decides whether cuts to retirement benefits are constitutional.

The court opinion suggested the Illinois Constitution doesn't allow pension benefit cuts, no matter how broke the state is.

"(W)e have concluded that the provision was aimed at protecting the right to receive the promised retirement benefits, not the adequacy of the funding to pay for them," the opinion said.

Quinn and lawmakers have used the state's significant financial challenges as a key argument justifying cutting pension benefits, despite constitution wording that they "shall not be diminished or impaired."

A separate challenge to the new pension law is being discussed in a lower court for now but is widely expected to end up before the high court.

State Rep. Elaine Nekritz, a Northbrook Democrat and key negotiator of the law, said Thursday's opinion about retiree health care didn't address the specific arguments behind the new pension law. That remains open for review, she said.

State Sen. Linda Holmes, an Aurora Democrat, said the opinion backed up her decision to stand with union leaders and vote against the plan.​ Holmes was the only member of a panel of 10 lawmakers charged with writing a new pension law who didn't vote for it.

"I'm feeling much more comfortable being the one dissenting vote," she said.

Unions applauded Thursday's ruling. The head of the American Federation of State, County and Municipal Employees Council 31 said it means state workers "can count on the Illinois Constitution to mean what it says."

"Retirement security, including affordable health care and a modest pension, cannot be revoked by politicians," AFSCME Council 31 executive director Henry Bayer said.

Senate President John Cullerton, a powerful Democrat who has voiced doubts that pension cuts would survive a legal challenge, was already looking ahead Thursday.

"If the Court's decision is predictive, the challenge of reforming our pension systems will remain," Cullerton said in a statement.

Maura Possley, a spokeswoman for Illinois Attorney General Lisa Madigan, who is tasked with defending the pension law, said Thursday's decision "has no direct impact on the pension reform litigation arguments." Possley added that Madigan "will continue to vigorously defend the pension reform law."

Lawmakers are hoping for more than $1 billion in retirement savings from the plan that, among other things, reduces retirees' yearly benefit hikes. The savings could make a big difference for Illinois' already struggling finances.

But if the pension cuts don't work, lawmakers might be forced to look elsewhere. Democrats that control the Capitol approved a budget in May that puts off big decisions on both taxes and spending until at least after the November election, raising even more questions about the state's long-term fiscal health.

The ruling is a blow to Quinn and could also upend the ideas of Republican challenger Bruce Rauner, a Winnetka businessman who wants public employees' future benefits to be handled in 401(k)-style retirement plans.

• The Associated Press contributed to this story.

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