SPRINGFIELD - Requiring public sector retirees to pay more on their health care benefits is unconstitutional, the Illinois Supreme Court ruled Thursday. Citing Article XIII of the 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.
Legislation passed and signed by the Governor will be null and void with this ruling. As the Court noted:
“although some of the benefits are governed by a group health insurance statute and others are covered by the Pension Code, eligibility for all of the benefits is limited to, conditioned on, and flows directly from membership in one of the State’s various public pension systems. Given the language of article XIII, section 5, its plain and ordinary meaning, all of these benefits, including subsidized health care, must be considered to be benefits of membership in a pension or retirement system of the State and therefore, within that provision’s protections.”
It doesn't matter if the State has the money or not, they MUST pay public employees benefits and cannot minimize any benefits:
“We have concluded that the provision was aimed at protecting the right to receive the promised retirement benefits, not the adequacy of the funding to pay for them.”
The Illinois Supreme Court consists of four Democrats and three Republicans that were elected and backed by competing interests in this decision. Not one of the justices recused themselves in the opinion. The vote was 6 to 1.
John Tillman of the Illinois Policy Institute issued the following statement after the decision was made public:
“We disagree with today’s ruling by the Illinois Supreme Court regarding how much the state is required to pay toward retired state worker health-insurance benefits. Here’s why:
1. Illinois has more than $56 billion in retiree health insurance debt for former state workers. Illinois has no money set aside to pay for this benefit. Today, most retired state workers pay almost nothing for this generous benefit that allows them to retire in their 50s with full health coverage, or to supplement Medicare coverage in their later retirement years.
2. The law in question would have required employees to pay more toward their health insurance in retirement, which is not an unreasonable request; most states that even offer this benefit ask retirees to pay half of the premium. This benefit is unheard of in the private sector. However, the Illinois Supreme Court ruled that the state cannot ask retirees to pay more for this very generous benefit because that would violate the Pension Clause of the Illinois Constitution, which prohibits pension benefits from being “diminished or impaired.”
From a legal standpoint, the ruling is incorrect because retiree health-insurance benefits aren’t found in the pension code. These benefits were created separately from the pension systems, are not administered by the pension systems, receive no contributions from the pension systems, have no impact on how a pension is calculated and are not protected in other states whose constitutional language Illinois borrowed for the state’s Pension Clause. These are not benefits of a pension system, but rather are, as their name implies, other post-employment benefits.
3. The practical implication of this ruling is that the primary purpose of government now is to fund public employees and their benefits —not to serve the common good. This is wrong and deeply unfair, especially since paying for these unsustainable benefits will fall on the backs of Illinois taxpayers.
Tillman says the court battles are not over with the Supreme Court's decision, and that other pension issues will be decided in the courts in the days to come.