Judge Rules Chicago Pension Reforms Unconstitutional

Chicago Pension Reforms

Nearly everybody in Chicago has been waiting for the other shoe to drop ever since the Illinois Supreme Court overturned state pension reforms, but Mayor Rahm Emanuel has been hoping against hope.

On Friday, July 24th, Cook County Court Judge Rita Novak upset the apple cart by overturning the city’s recent reforms to two pension plans.

In her ruling, Judge Novak cited the “crystal-clear direction” given by the Illinois Supreme Court in its interpretation of the Illinois Constitution that members in a government employee pension system “shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”

Pensioners across the Windy City celebrated as the city started collecting higher pension payments as part of the reforms on January 1st of this year.

More on judge’s ruling against Chicago pension reforms

Novak’s ruling continued to note: “Here, as in the case before the Supreme Court, ‘There is simply no way that the annuity reduction provisions…can be reconciled with the rights and protections established by the people of Illinois when they ratified the Illinois Constitution of 1970 and its pension protection clause.”

Emanuel had put a huge effort and a lot of political capital into the deal he negotiated with union leaders that boosted employee contributions by 29% (from 8.5% to 11% by 2019) and cut off the cost-of-living adjustments for retirees ineligible for Social Security that was draining the not-fully-solvent pension funds.

The city had argued that the new Chicago pension reforms were fundamentally different than the state reforms that had been imposed “arbitrarily.”

Corporation counsel Stephen Patton had also argued that the reforms did not “diminish or impair” the two funds, as the city has made a commitment to “preserve and protect” them that is a “massive net benefit” for the funds.

Novak did not buy it, responding that the “net benefit” theory “does not survive scrutiny” as it relies on “several premises that are wholly inconsistent with constitutional teachings.”

Chicago Pension – Statement from Chicago’s legal representative

Patton said in an emailed statement that he’s “disappointed” by Friday’s ruling, but has “always recognized” that the Illinois Supreme Court is the ultimate arbiter. His statement did not note the fact the Supreme Court recently overturned state pension reforms on apparently similar grounds.

“We now look forward to having our arguments heard there. We continue to strongly believe that the City’s pension reform legislation, unlike the State legislation held unconstitutional this past spring, does not diminish or impair pension benefits, but rather preserves and protects them,” his statement continued.

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