CHICAGO -A broad coalition of Illinois public employee unions accuses the state of pension "theft" in its
The complaint filed Tuesday by the We Are One coalition - which led the charge against the pension legislation -- marks the largest of the four lawsuits in terms of the number of unions and plaintiffs represented.
All four lawsuits filed since the reforms passed in early December challenge the constitutionality of the changes that are projected to save the state about $145 billion in contributions over the next 30 years.
The legislation limits cost-of-living increases, caps pensionable salaries, and raises the retirement age for some while cutting employee contributions by 1%, shifting contribution calculations to a more actuarially sound method, and gives the pension funds enforcement rights over state payments.
"Our suit makes clear that pension theft is not only unfair, it's clearly unconstitutional," Illinois AFL-CIO President Michael T. Carrigan said in a statement. "The legislature and governor shirked their responsibility to uphold the constitution, so we are seeking justice in court to right their wrongs. Promises must be kept, and the rule of law must prevail over politics."
The coalition filed the lawsuit in Sangamon County Circuit Court in Springfield, the state capital, naming Gov. Pat Quinn, other state constitutional officers, the state retirement systems, and their boards. Two previous lawsuits are pending in the same court and the third was filed in Cook County Circuit Court.
The new lawsuit asks the courts to overturn the legislation and seeks class action status to represent all active or retired members who began contributing to the system by Jan. 1, 2011. Previous legislation altered benefits for those hired after that date.
The 25 named plaintiffs reserve the right to seek an injunction against the changes as their litigation makes its way through the legal process.
The coalition includes the Illinois AFL-CIO; Illinois Federation of Teachers; Illinois Education Association; American Federation of State, County and Municipal Employees (AFSCME) Council 31; Service Employees International Union Local 73; Illinois Fraternal Order of Police State Lodge; Laborers' International Union of North America Local 2002; several Teamsters chapters, and others.
State budget spokesman Abdon Pallasch said the latest lawsuit was expected and the state continues to believe the overhaul will withstand a constitutional test.
"This law squarely addresses the most pressing fiscal crisis of our time by eliminating the state's unfunded pension debt it had to be done to ensure retirement security for those who have faithfully contributed to the pension systems and support economic growth," he said.
The coalition believes the class of active and retired members of the retirement system impacted may be around 621,000.
Like the other lawsuits, the coalition argues that the intent of those participating in the 1970 constitutional convention that added the state's pension clause was clear.
"Membership in any pension or retirement system of the state, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired," says the often cited constitutional language.
"Illinois did not make that promise lightly. Rather, the delegates to the 1970 Illinois Constitutional Convention purposefully crafted that promise concerned that without it the state and other governmental entities within the State would welch on pension payments to public," the lawsuit charges.
The lawsuit dismisses the assertion made by some that only accrued benefits are protected. "A public employee's contract right to the pension benefits, including the amount of pension, vests on the member's first day of membership in a state retirement system," it reads.
Much of the expected savings from the pension overhaul stem from changes to the automatic cost-of-living increases annuitants now receive. Illinois likely will argue that those automatic increases are not constitutionally protected.
Annuitants had long received an automatic increase and in 1978 the state raised the amount. In 1989, it added the "compounded" factor that is considered a big contributor to the rising state costs. The lawsuit asserts that system participants are entitled to that annual increase because they have long paid an additional amount into the system to help fund it.
The lawsuit also argues the reforms violate the contract clause that reads "No ex post facto law, or law impairing the obligation of contracts or making an irrevocable grant of special privileges or immunities, shall be passed."
In addition, the complaint also challenges the legality of the changes under the constitution's takings clause that reads: "Private property shall not be taken or damaged for public use without just compensation as provided by law."
The lawsuit also counters the state's argument that the legislation offers retirement participants "consideration" for the benefit cuts with positive changes saying they fall far short of offsetting the "impairment."
The state is seeking to consolidate the lawsuits as was done with a series of lawsuits last year challenging the state's overhaul of retiree healthcare benefits. That case is pending before the Illinois Supreme Court.
The complaint also lays out the severity of the impact for each of its named plaintiffs based on the changes. The coalition is represented by Freeborn & Peters LLP.
