Pension bill expected to head to courts soon after Quinn signs it
SPRINGFIELD — After narrowly passing the Senate with no votes to spare and the House with two votes more than needed, a controversial pension reform bill is headed to Gov. Pat Quinn, who says he will sign it.
Next stop after that: the courts.
Senate Bill 1, a product of a 10-member bipartisan House-Senate conference committee and the four top legislative leaders, barely cleared the General Assembly on Tuesday with a 30-24 roll call in the Senate and 62-53 in the House.
Thirty votes were need in the Senate and 60 in the House.
But opponents of the measure, including labor unions, legislators, and public employee and retiree groups, said they believe that the legislation is unconstitutional and that it will be tossed out by the courts.
The most commonly cited reason is that the bill, which supporters say will save the state $160 billion in pension costs over the next 30 years, represents a violation of the Illinois Constitution's clause that says that membership in a pension system is considered "an enforceable contractual relationship, the benefits of which shall not be diminished or impaired."
One provision of the legislation pushes back the retirement age for workers ages 45 and younger, on a sliding scale.
Most significantly, annual 3 percent cost-of-living increases for retirees are replaced with a less-costly system that only provides the increases on a portion of benefits, based on how many years a beneficiary was on the job. Supporters of the reform bill said the 3 percent COLA was the biggest factor in the state's estimated $100 billion pension shortfall.
Sen. Dale Righter, R-Mattoon, hesitated to say how he thought the courts would rule.
"I think that it faces a stiff challenge, to say the least," said Righter, a lawyer.
Others were insistent that if the bill wasn't unconstitutional, it was immoral.
"We as a body of lawmakers can't look at this and say that this is inherently wrong, this is inherently unfair, this is a promise broken?" said Sen. Linda Holmes, D-Aurora. "This is actually no different than a thief coming into your house in the night and stealing your valuables. The difference is this isn't a thief coming in the night; this is your elected representatives coming to you, looking you straight in the eye and saying I'm going to take away your future. That is more than a promise broken. That is reprehensible."
Sen. William Delgado, D-Chicago, said the bill was "morally wrong, morally corrupt, and we should not be robbing the benefits of these hard-working people."
Linda Brookhart, executive director of the State Universities Annuitants Association, said the legislation "violates long-standing principles of contract law and the Illinois Constitution."
Tom Ryder, a former state representative who is now a lobbyist for the Illinois State Employees Association Retirees, said that "those who retire expected the rules on the day that they retired to be in effect for their retirement. They planned for it, they paid for it and they earned it.
"To now suggest that the rule changes that are part of this bill, for those folks who have already retired, are in some way appropriate does not face those facts for one simple reason: The retirees have no options."
But others said they believed the legislation would be upheld by the courts.
"I do believe that this bill is constitutional," said Rep. Elaine Nekritz, D-Northbrook. "And while that will certainly be up to the Supreme Court to make that decision, we've given our lawyers a number of tools to argue this case so that it will be considered constitutional."
Those tools, lawmakers said, included provisions that allow for a defined contribution option for a limited number of state employees, a 1 percent cut in employee contributions to the pension funds and more aggressive funding of the pension systems.
Madigan also said that the judges retirement system was exempted from the pension reform bill "to eliminate the possibility of a judicial conflict during the adjudication of this matter through the courts system."
Rep. David Leitch, R-Peoria, a member of the House since 1986, noted the 3 percent compounded cost-of-living adjustment was approved by lawmakers in 1989.
"It didn't take this long to adopt that bill," Leitch said. "Clearly that is much easier to pass than to deal with what we're dealing with today. It was my opinion then and I've been vindicated now that in the course of adopting a 3 percent compounded COLA we were putting dynamite into a pension system."
Leitch was one of the few downstaters to vote for the pension reform.
"Today we have to confront the fact that I don't believe there will be a defined benefit system in the future if we don't have the courage today to step up and do what has to be done and rescue this system," he said. "It's not a matter of whether you'd like to or you'd not like to. It's a matter of fundamental mathematics. It's a matter of compound interest. It's what Einstein referred to as the eighth wonder of the world. Compound interest is wonderful when it's on your side. It's devastating when it's not."