In a case with ominous implications for Illinois' pension reform law, the state Supreme Court ruled today that the state Constitution's pension protection clause prevents any diminishment of healthcare benefits for retired state employees.
According to the 6-1 decision, the pension protection clause -- which says that retirement benefits are a contractual agreement that “cannot be diminished or impaired” -- applies to other retirement benefits, not just pensions. That overrode the state's argument that its emergency powers, in dealing with its budget crisis, justified an increase in what retirees must pay for their health benefits.
The decision comes while the state is defending against challenges to an overhaul in December 2013 of pensions for state workers and schoolteachers outside Chicago. It also has implications for recent cutbacks in health care retiree benefits by the city of Chicago, which filed a friend-of-the-court brief supporting the state's position.
“This is a major victory for members of state retirement systems,” said John Fitzgerald, a partner at Chicago law firm Tabet DiVito & Rothstein who represents retired state teachers and school administrators. “I expect it will have a very significant effect on pending litigation” over the state's pension reform law. “It means that the Illinois Supreme Court is giving the pension protection clause the broad and liberal interpretation that the drafters intended.”