Illinois Supreme Court Upholds 2019 Municipal Pension Consolidation

In a significant ruling, the Illinois Supreme Court declared on Friday that a law passed in 2019, which aimed to merge municipal police and firefighter pensions into consolidated funds, is unconstitutional.

In a significant development, a new law has consolidated a total of 649 municipal pension funds into just two funds. These two funds will be specifically dedicated to serving the needs of police officers and firefighters. Chicago's pension funds were not included in the legislation.

Illinois Supreme CourtPhoto byWGEM

The legislation received widespread support from both sides of the aisle, as well as endorsements from the state's leading police and firefighter unions and the Illinois Municipal League.

During oral arguments on Nov. 21, 2023, Illinois Assistant Attorney General Richard Huszagh stated that the act aimed to significantly decrease unnecessary administration fees by tens of millions of dollars annually. Additionally, it was designed to simplify investing and consolidate investments to ultimately achieve higher returns in the long run.

Local pension boards will continue to oversee the administration of benefits. No shifting of assets and liabilities between local plans will occur. In a surprising turn of events, a coalition of local pension funds, spearheaded by the Arlington Heights Police Pension Fund, has taken legal action against the state.

In a heated debate, they claimed that the law infringed upon the rights of their members, as it would transfer the management of substantial funds from local boards to statewide elected ones. They argued that this move was in violation of the pension clause in the state constitution.

"According to Daniel Konicek, the attorney representing the plaintiffs, the new boards consisting of statewide individuals have significantly diminished the organization's capacity to appoint familiar faces to the five-person board."

They claimed that the dilution of voting rights is equivalent to a reduction in benefits, which they argue violates the pension clause.

The justices held differing opinions. In the court's decision, Chief Justice Mary Jane Theis stated that the pension clause does not extend its protection to voting rights. The law did not alter the protection of monetary benefits.

Illinois Governor JB Pritzker issued a statement on Friday in response to the court's decision.

The Illinois Supreme Court has affirmed the constitutionality of a significant bipartisan pension reform law. This decision serves as a testament to the fact that Illinois can achieve intelligent and well-considered pension reform. During my first term in office, my partners in the General Assembly and I were able to achieve significant reform after 70 years of attempts. A new era of responsible fiscal management has been introduced, with a focus on consolidating over 600 local pension systems. This move aims to enhance returns and lower fees, ultimately alleviating the burden on taxpayers. It is a step towards fulfilling another campaign promise. The recent ruling by the Supreme Court has been hailed as a triumph for the people of Illinois, local authorities, and the brave first responders.

The Source: wgem