Court Ruling May Foreshadow Overturningof Pension Reform Law

The Illinois Supreme Court ruled strongly in favor of protection of pension benefits.

IN A surprise to many court watchers and legal experts, the Illinois Supreme Court ruled 6-1 in Kanerva v. Weems that health insurance is indeed a pension benefit protected by the Illinois Constitution’s Pension Protection Clause for retired State employees.

RETIREES BEGAN paying a health insurance premium last year, and the Kanerva suit sought to restore the earlier situation of retirees not having to pay health insurance costs.

THE COURT wrote, “It is clear that if something qualifies as a benefit of the enforceable contractual relationship resulting from membership in one of the State’s pension or retirement systems, it cannot be diminished or impaired.” That protection extends to health insurance promised to retirees, the court ruled.

“WE ARE obliged to resolve that doubt in favor of the members of the State’s public retirement systems,” the court also wrote.

WHILE THE immediate result is that making retirees pay for part of their pension was ruled unconstitutional, the ruling has larger implications. Since the court ruled that health benefits were protected, if it follows its own precedent it also is likely to rule the State’s pension reform legislation, signed into law in December, unconstitutional as well. That law would reduce retirees’ cost-of-living adjustments, increase the retirement age for some employees, and cap pensionable earnings..

A SANGAMON County judge had postponed the pension reform law taking effect until courts make a final ruling on legal challenges to it.

THE STATE Universities Annuitants Association (SUAA) and the other plaintiffs believe that "Kanerva is a huge win in the battle for pension rights and a strong indication that pension rights will in the end be vindicated,” wrote Linda L. Brookhart, Executive Director, SUAA

UIC NEWS on July 8 wrote that the ruling “may foreshadow the success of challenges to pension legislation.”

“I THINK it’s very likely that the [pension reform] law is going to be massively overturned by the court,” said David Merriman, Professor of Economics and Public Administration, in that UIC News article.

“I BELIEVE this bodes very well for overturning most of the new pension law because this health insurance ruling will be used to argue in favor of not cutting the benefits,” said Brenda Russell, President of the UIC SUAA, in that UIC News article.

THE ARTICLE went on to note that Merriman said the recent ruling signals that the Supreme Court is unlikely to accept the State’s argument that changing the pension system is necessary because of financial emergency.

THE CHICAGO TEACHERS Union blog of July 3 said, “The law in Illinois is now crystal clear: Politicians cannot break the promises made…concerning retirement benefits,” and that legislators “cannot fix the past failures of politicians to fund adequately our retirement benefits by cutting those benefits…”

“THIS IS a major victory for members of State retirement systems,” said John Fitzgerald, a partner at Chicago law firm Tabet DiVito & Rothstein LLC, who represents retired State teachers and school administrators, in a July 3 article in Crain’s Chicago Business.