Well, that didn't take long.
Just last month, we reported on the great State of Illinois' attempt to take away free healthcare benefits from retirees. Another earlier post highlighted the constitutionality of changing the benefits for future employees, but didn't address past employees. After all, the language pretty explicitly prohibits such a move.
Really, you didn't have to be Ms. Cleo to see this lawsuit coming. Anyone with a high school education can read the arguably applicable provision in the Illinois State Constitution.
SECTION 5. PENSION AND RETIREMENT RIGHTS 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.
Pretty self-explanatory, right? It essentially means that once someone has earned their pension and benefits, it cannot be reduced or taken away. The new law does exactly that. You really do have to wonder what the lawmakers were thinking.
Beyond the unconstitutionality, basic contract law would probably prohibit such a move as well. A bargain was struck, exchanging state employees' work for their pay and promises of lifetime benefits. The state cannot simply say, "nevermind" and renege on a contractual agreement, especially when the other party has already performed and relied upon the existence of the deal.
Gordon Maag, a former Fifth District Appellate Court justice, filed a class-action lawsuit on behalf of all of the aggrieved retirees. If his argument that the law is unconstitutional is sustained, it would immediately be reviewed by the State Supreme Court.
Furthermore, if the lawsuit is successful, it could mean refunds for all of the retirees that are now about to begin paying for their benefits.
For the state, if the law is found unconstitutional, it could mean hefty legal expenses and refunds for an already overburdened pension system and state budget.
- Consult a Chicago Employment Law Attorney (FindLaw)
- Pension Plans and ERISA (FindLaw)
- House Approves Proposal that Raises the Bar for Pension Increases (FindLaw's Chicago Employment Law Blog)
- Public Schools on the Verge of Insolvency Choose to Spend More (FindLaw's Chicago Employment Law Blog)