Illinois asks state's top court to revive pension overhaul

Reuters News
Posted: Nov 26, 2014 4:54 PM

By Jonathan Stempel

(Reuters) - Illinois, which is struggling to bolster a shaky public pension system weighed down by a $104.6 billion shortfall, has asked the state's highest court to reverse a lower court ruling that declared a planned overhaul unconstitutional.

The expedited appeal to the Illinois Supreme Court, which was expected, seeks to overturn a Nov. 21 ruling by Judge John Belz of the Sangamon County Circuit Court.

Belz said a December 2013 law reducing benefits for some public sector workers violated a provision of the Illinois constitution that made membership in a state pension or retirement system an "enforceable contractual relationship" that the state could not take away.

Unions and retirees were among those opposed to the law, which also suspended cost-of-living adjustments and raised retirement ages.

In the state's appeal, officials led by Governor Pat Quinn and Attorney General Lisa Madigan asked that Belz's ruling be reversed and that claims challenging the law be reviewed more closely and in light of the state's defenses.

Belz had rejected Illinois' arguments that pensions could be cut to protect the public welfare in an emergency, including the state's precarious financial straits.

Illinois has one of the most strained public pension systems in the country and the lowest credit rating of any U.S. state.

The shortfall for its five state retirement systems reached $104.6 billion at the end of the fiscal 2014 year.

Governor-elect Bruce Rauner, a Republican who will take office in January after defeating Quinn in a Nov. 4 election, has said he will work with the Democratic-controlled legislature to implement "effective, bipartisan" pension reform.

The case is In re: Pension Reform Litigation, Illinois Supreme Court, No. 2014-MR-1.

(Reporting by Jonathan Stempel in New York; Editing by Cynthia Osterman)