Eye On Illinois: Pension consolidation challengers complete state court losing streak

The third time was not the charm for challengers to a pension consolidation effort.

Lawmakers in the 101st General Assembly approved Senate Bill 1300 in November 2019. The final version passed the House 96-14-3 and 42-12 in the Senate. The law consolidated 649 local police and fire pension boards into two. When Gov. JB Pritzker signed it into law on Dec. 18, he projected an extra $2.5 billion in investment returns in five years.

Almost three-dozen pensioners and 17 individual funds sued in Kane County Circuit Court, according to Capitol News Illinois’ Hannah Meisel, Kane County Circuit Court Judge Robert Villa granted summary judgement to the state. In February 2023, the Second District Appellate Court affirmed that ruling. On Friday, the Illinois Supreme Court did the same, with Chief Justice Mary Jane Theis writing the 7-0 opinion.

It is possible, as I did 11 months ago, to categorize this ruling among other instances of the state deciding local control impedes a larger goal. But that argument fell flat in court, repeatedly, and so we might more rightly consider it proof that lawmakers are capable of reforming the state’s burdened pension systems in a way that squares with the stout protections enshrined in the 1970 constitution.

The objectors said the consolidation cost them their right to vote on local board members and for those trustees to decide on investments. Theis’ opinion echoed the lower courts, succinctly framing the issue:

“Plaintiffs have failed to identify any property right under Illinois law that is affected by the 2020 amendment to the Pension Code,” Theis wrote. “It is undisputed that the Act does not impact the pension payments that plaintiffs are entitled to receive. … The Act simply changes how local fund assets are managed and invested without affecting the ultimate use of those assets to pay the benefits of local fund members.”

When the court struck down a 2014 pension reform effort, it did so because challengers successfully argued the illegality of reducing retirees’ promised health care benefits. Balancing that outcome against the current result should help define frameworks for future attempts, and future attempts are most certainly in order given the magnitude of unfunded pension liability and the resulting implications for government operations at nearly every level.

“Working together, we are helping hundreds of cities across the state of Illinois to alleviate their spiraling property tax burdens, and just as importantly, we’re showing that Illinois can tackle its most intractable problems,” Pritzker said in 2019.

It was a bold statement, even if it took almost 1,500 days to clear this hurdle. If the pension problems that have frustrated leaders for decades actually are manageable, it’s safe to assume a long, arduous road remains.

• Scott T. Holland writes about state government issues for Shaw Media. Follow him on X, the platform formerly known as Twitter, @sth749. He can be reached at sholland@shawmedia.com.