An overhaul of the city of Chicago's Municipal Employees and Laborers pension funds is "unconstitutional and void," a Cook County Judge ruled Friday.
Under the Chicago pension measure, which was signed into law last June, city workers had to pay more into their pension funds and cost-of-living increases were reduced for retirees. The city was required to pay more into the plans. Without the pension changes, the city says the two funds will become insolvent by 2026 and 2029.
Circuit Court Judge Rita Novak sided against the city's argument that the steps it was taking to "preserve and protect" the pension funds represented a "net benefit" for retirees.
Also, the judge essentially said it didn't matter that most of the affected unions agreed to the pension changes.
"There is no evidence that, in reaching an agreement with the city, the union officials followed union rules and bylaws in such a way as to bind their members," Novak wrote. "Nor is there evidence that the membership voted on the agreement ... Additionally, there is no showing that the unions could have acted as agents of retired members while at the same time acting as representatives of active employees."
Today's decision comes after the Illinois Supreme Court overturned the state's pension-cutting law in May. The state's high court ruled that the law violated the Illinois Constitution's pension clause, which states that contractual pension benefits cannot be reduced.
"Here, as in the case before the Supreme Court, There is simply no way that the annuity reduction provisions ... can be reconciled with the rights and protections established by the people of Illinois when they ratified the Illinois Constitution of 1970 and its pension protection clause," Novak wrote.
The city plans to appeal today's ruling.
"While we are disappointed by the trial court's ruling, we have always recognized that this matter will ultimately be resolved by the Illinois Supreme Court. We now look forward to having our arguments heard there," Stephen Patton, the city's corporation counsel, said in a statement. "We continue to strongly believe that the city's pension reform legislation, unlike the state legislation held unconstitutional this past spring, does not diminish or impair pension benefits, but rather preserves and protects them. This law not only rescues the municipal and laborer pension funds from certain insolvency, but ensures that, over time, they will be fully funded and the 61,000 affected City workers and retirees will receive the pensions they were promised."
One of the unions that brought the suit against Chicago's pension overhaul was AFSCME Council 31. After today's ruling, AFSCME Council 31 spokesman Anders Lindall said, "We would urge the city not to waste further time and taxpayer dollars on an appeal," adding that, "Judge Novak was very clear and unequivocal today, and the Supreme Court was just as unequivocal in the spring, that the constitution means exactly what is says and is without exception."
"We can know, as Chicagoans, that the highest law of our state, the constitution, has meaning, and its integrity has been upheld today -- that a pension is a promise, that the life savings of public service workers will not be diminished," Lindall said.