CHICAGO — A retired Illinois judge has
Retired appellate court Justice Gordon Maag argues in his litigation that the measure recently signed by Gov. Pat Quinn violates the state constitution’s rules against diminishing or impairing promised retirement benefits.
Maag is also seeking class-action status to represent all retirees impacted by the law. The complaint was filed in Sangamon County, home of Springfield, the state capital.
Illinois Attorney General Lisa Madigan’s office will defend the state in the lawsuit. A Madigan spokeswoman had no immediate comment and said the office is reviewing the lawsuit.
The state has stepped cautiously on altering pension benefits for current employees and retirees because of the Constitution’s impairment clause, but officials contend that retiree health care benefits are not protected.
Previously, the state fully covered the premiums for those who retired prior to 1998. For retirees after that date, it provided a 5% subsidy for retirees’ health care premium coverage for every year of service.
Under the new law, the Illinois Department of Central Management Services will determine the subsidy based a sliding scale that will take into consideration length of service and a retiree’s ability to pay.
The benefit levels are subject to collective bargaining negotiations with state unions, but CMS ultimately can impose a decision in the event an agreement with unions can’t be reached. The law took effect July 1.
The state had covered the full cost for about 90% of more than 78,000 retirees in the group insurance program that covers a total of 357,800 when current employees are counted. Illinois projects the subsidies will cost more than $877 million fiscal 2013.
The state funds the benefits, which fall under the category of other post-employment benefits, on a pay-as-you-basis. As of June 30, 2011, the state carried a $33.3 billion unfunded OPEB liability. The state expects the changes will cut that number by at least $9 billion and also save about $250 million annually.
Unions are still weighing their reaction to the new law, according to published reports.
