CHICAGO (CN) - Signaling trouble for Gov. Pat Quinn's pension-reform law, the Illinois Supreme Court on Thursday tossed a new requirement for retired state employees to contribute to their health insurance premiums.
The 2012 overhaul of the state's health insurance payments eliminated the statutory standards for state contributions to pensioners' health insurance premiums, instead allowed the director of the Department of Central Management Services to make an annual determination as to the amounts charged to the state and to retirees.
Pensioners claimed in a lawsuit that the change violated the pension protection clause of the Illinois Constitution, which provides that "membership in any pension or retirement system of the State shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired."
The Illinois Supreme Court was nearly unanimous in finding for the retirees Thursday.
"The [constitution] drafters chose expansive language that goes beyond annuities and the terms of the Pension Code, defining the range of protected benefits broadly to encompass those attendant to membership in the state's retirement systems," Justice Charles Freeman wrote for the six-member majority. "Then, as now, subsidized health care was one of those benefits. For us to hold that such benefits are not among the benefits of membership protected by the constitution would require us to construe article XIII, section 5, in a way that the plain language of the provision does not support. We may not rewrite the pension protection clause to include restrictions and limitations that the drafters did not express and the citizens of Illinois did not approve."
Gov. Quinn's pension-reform law, passed in December 2013 and already the target of several class
actions, may now have trouble staying afloat.
The law reduces cost-of-living increases for pensioners, gradually raises the retirement age for employees, and caps their "pensionable salary," in an effort to patch up a $100 billion deficit in the state pension system.
Last year, the state devoted 22 percent of its general revenue fund to public employee pensions.
"Today, the Illinois Supreme Court made it very clear that the Pension Clause means what it says," state Senate president John Cullerton said in a statement. "If the court's decision is predictive, the challenge of reforming our pension systems will remain."
But a spokeswoman for the Attorney General's office told
the Chicago Tribune the decision "has no direct impact" on the pension litigation.
"While this decision is very clear on the fact that the pension clause covers health care benefits, the arguments in the pension reform litigation are different than the ones in this healthcare case," Attorney General spokeswoman Maura Possley said. "We will continue to vigorously defend the pension reform law."