Illinois AG: State can use 'police powers' to cut pensions

SPRINGFIELD - Attorney General Lisa Madigan is arguing that a landmark Illinois pension overhaul should be upheld because the state has "police powers" that allow it to change a contract in extraordinary circumstances.

Madigan is appealing a lower court ruling that found the 2013 law unconstitutional. She filed an opening brief to the Illinois Supreme Court Monday.

Several groups filed briefs supporting the state's arguments. They include the city of Chicago, the Illinois Municipal League and Chicago Public Schools.

Lawmakers approved the overhaul to address what's become a $111 billion pension shortfall. The law reduces benefits for retirees.

Labor unions and retirees sued, saying the Illinois Constitution prohibits pension benefits from being diminished.

Madigan argues that without the law, the state's annual pension payment could take up one-fourth of its revenue.