Chicago Braces For Illinois Supreme Court Ruling On Pension Fund Reforms

The Illinois Supreme Court is reportedly set to release its ruling in Chicago's pension reform appeal Thursday. Last year, a state high court overturned a 2014 state law aimed at boosting funding for two of Chicago's pension funds.

Chicago’s City Hall officials await a ruling over the constitutionality of a bill that would require city workers and laborers to increase their retirement contributions and in exchange the city would increase its annual contributions to the pension funds by hundreds of millions of dollars a year. The proposed law also would lower the annual cost-of-living hikes in pensions for retired workers.

While a majority of the unions affected by the changes have agreed to the proposal, some opposing unions and a group of retired workers challenged the bill in court last year. In July 2015, a lower court overturned the state rule.

During oral arguments before the court in November last year, Chicago officials reportedly asserted that the bill actually benefited workers and retirees by taking steps to ensure the funds are well-stocked. Disapproval by the state Supreme Court Thursday could spell the end for Mayor Rahm Emanuel's attempt to shore up the city’s pension funds.

Chances of Thursday’s vote swinging toward Chicago city officials are slim, according to local media as two of the seven justices on the Illinois Supreme Court have recused themselves from deciding whether changes to the retirement plans violate the state’s pension protection clause. This leaves only five members to consider the fate of the law. However, city officials are required to secure at least four votes in their favor to overturn the earlier state high court judgment according to the constitution.

Laborer and municipal employees' funds are responsible for half of the city's $20 billion unfunded pension liabilities, according to a report in Bondbuyer.com. Moody's Investors Service dropped the city to junk in May last year over its pension strains.

“If SB1922 [the 2014 pension law] is found unconstitutional by the Illinois Supreme Court, the city would continue to work on a responsible solution that protects taxpayers, while also funding the city’s statutory obligation to the pension funds,” Emanuel’s administration reportedly said in a statement last year.