What might follow pension showdown at state Supreme Court

A climax in the battle over teachers' and state workers' retirement benefits played out Wednesday when the Illinois Supreme Court heard arguments on the law to cut those benefits.

The seven justices' eventual decision could have a big impact on taxes and Illinois' budget for years to come, as well as on the retirement futures of thousands of working teachers and retirees.

Here's why lawmakers, teachers, state workers and taxpayers watched:

What if it's struck down?

If the court strikes down the 2013 law, teachers and state workers would see no changes in their benefits. The law cutting pensions was never implemented because it has been tied up in the courts since being enacted.

They're likely to be thrilled if that's the result because teachers have been watching lawmakers debate cutting retirement benefits for years.

"I was honestly elated to know that my retirement security was safe for now," Mike Sayre, a special-education teacher at Crystal Lake Central High School, said when a lower court ruled benefit cuts are unconstitutional late last year.

The state's argument

State Rep. Elaine Nekritz, a Northbrook Democrat and a key negotiator of the law the Supreme Court is weighing, says she hopes the justices will rule that lawmakers should have so-called police powers to change pension benefits because the state is in such deep financial trouble.

"They read the newspapers. They know the dire situation that we're in," Nekritz said.

If the court does just that, it could send the case back to a county judge for further arguments about whether the state's pension-cutting law is reasonable.

Blow to the budget

A rejection from the Supreme Court would mean Illinois leaders of both parties immediately will be faced with a legal opinion that declares one of their biggest moves to try to save state money has failed.

Lawmakers face a large debt in Illinois' pension funds, and the monthly payments on that debt is what causes the state immediate budget headaches.

The state's pension payment is set to rise by about $700 million this year if no laws change, adding to the ongoing budget crunch the state faces. For perspective, that's $30 million more than the state took in from the Illinois Lottery last year.

What would follow

How lawmakers would respond is anyone's guess. The proposal approved by Democrats took years to work out after a number of fits and starts in Springfield that included former Gov. Pat Quinn stripping lawmakers' salaries at one point because they hadn't approved anything.

Gov. Bruce Rauner has proposed his own idea for cutting benefits. He wants, among other things, for future teachers' and state workers' retirement savings to be handled in 401(k)-style accounts.

The governor has argued his proposal would be legal because it wouldn't touch benefits that have already been earned. In Elgin last week, Rauner called the idea that he is anti-union "horse manure."

Unions promise they'll sue if his ideas became law, which perhaps would tie up the issue up in court again. Plus, Rauner's intentions could suffer a serious blow if the court's ruling signals his ideas won't work, either.

Getting to that point by winning approval from a legislature controlled by Democrats could be difficult for Rauner, too.

Other targets

The Illinois Constitution says pensions are a "contract" that can't be "diminished or impaired."

If the court definitively rules that pension benefits can't be touched, lawmakers who want to get costs under control would have to look elsewhere.

In previous years, House Speaker Michael Madigan and others have proposed that suburban school districts pay a bigger share of teachers' pension costs.

And a few weeks ago, state Sen. Matt Murphy, a Palatine Republican, used the idea of freezing teacher salaries as an example of measures some lawmakers might examine.

"The areas we can go into to solve the problem become more difficult," Murphy said.

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