July 24, 2015

Unions win court ruling that Chicago pension cuts are unconstitutional

The City of Chicago’s pension-cutting Senate Bill 1922 has been declared unconstitutional and void in its entirety. The ruling came July 24 from the Cook County Circuit Court in the Jones v. MEABF case brought by AFSCME and three other unions.

The Court ruled that SB 1922’s steep cuts to the pension benefits of active and retired participants in the city of Chicago Municipal Employees Annuity and Benefit Fund (MEABF) violate the state Constitution, which prohibits any measure that would diminish pension benefits already promised to active and retired public employees.

The Illinois Supreme Court had previously cited similar grounds in striking down Senate Bill 1, legislation that would have cut the pensions of active and retired state and university employees, as well as teachers outside Chicago.

Action on the unions’ lawsuit over the Chicago pension cuts had been on hold until the Supreme Court ruled in the state case.

“This ruling that overturns city pension cuts and protects the life savings of city workers is a win for all Chicago,” AFSCME Council 31 executive director Roberta Lynch said. “All city residents can be reassured that the Constitution—our state's highest law—means what it says and will be respected, while city employees and retirees can be assured that their modest retirement income is protected.”

The Chicago pension debt was caused by the city’s deliberate choice to avoid its funding obligations habitually over a period of years, even as city employees always paid their share.

Under the ruling, the entirety of SB 1922 is void, and employees and retirees are entitled to recoup what they have already lost in higher contributions and lower benefits since the bill was implemented on January 1.

In addition, in a critically important part of the decision, the judge rejected the city’s threat to abandon the pension funds if the cuts were overturned. The city’s argument is not correct that the pension funds alone are subject to the constitution’s pension protection clause, the court ruled, writing that “the city’s argument … is fundamentally at odds with the Supreme Court’s teachings” and making clear that the employer—in this case, the city—has an “enforceable obligation to pay the benefits.”

“Public service workers in city government help children in our libraries and schools, provide health care in neighborhood clinics, keep our streets and water supply safe and clean, and do much more,” Lynch noted. “Their modest pension benefit is just $32,000 a year on average, and they aren't eligible for Social Security.”

In light of the strong and clear ruling of the Circuit Court in this case and the Supreme Court ruling in the state case, AFSCME urged the Emanuel Administration not to waste further time and taxpayer dollars on an appeal. Unfortunately, the city almost immediately announced its intention to take the case to the Supreme Court, where AFSCME will be prepared to defend the integrity of the state Constitution and the modest pensions that city employees and retirees have earned, paid into and rely on in retirement.

Related News