July 9, 2015
By: Hal Dardick
A Cook County judge will rule later this month on the legality of a Chicago pension law that would reduce cost-of-living increases, require workers to pay more and require the city to increase how much it puts into two of its employee retirement systems.
That was the bottom line after 2 1/2 hours of closing arguments in a packed Daley Center courtroom over a 2014 pension law that Mayor Rahm Emanuel pushed through the General Assembly and got then-Gov. Pat Quinn to sign.
Stephen Patton, the city’s top attorney, said the law would prevent pension funds covering laborers and city workers from going bust.
Clint Krislov, an attorney for four unions, city workers and retirees seeking to overturn the law, called Patton’s argument the “Chicken Little defense.” Krislov said the city, perhaps with an assist from the state, would be forced to bail out the pension funds if their trajectory toward insolvency continued.
Judge Rita Novak said she would issue a written decision July 24. Her decision, which is sure to be appealed, will affect 61,000 employees, retirees and their survivors who are members of city pension funds for workers and laborers.
The city faces an uphill legal battle after the Illinois Supreme Court in May unanimously struck down a separate state pension law that reduced cost-of-living increases provided by four state funds, saying it violated a provision of the Illinois Constitution that states government pension membership “shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”
Although the city pension law reduces future benefits, it for the first time would guarantee city funding for the worker and laborer funds, Patton said. The previous law provided no such guarantee, meaning that if the two funds went insolvent, as projected in the next 13 years or so, retirees would receive vastly diminished benefits.
“Quite the opposite of diminishing or impairing benefits, it preserves and protects them,” Patton said.
But Michael Freeborn, one of the attorneys challenging the city pension law, said that under the constitution, “the city is (already) on the hook,” perhaps with the state as a guarantor, to make sure the funds don’t become insolvent. Freeborn also noted that four city unions oppose the law and that unions cannot bargain on behalf of retired city workers.
Meanwhile, Krislov dismissed the city’s contention that the new law was a “net benefit” to workers and retirees because it saved the funds.
“This is the Chicken Little defense,” Krislov said. “It says the sky is falling, so we’re going to do what we’re going to do.”