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Is an Illinois Pension Agreement in the Works? We’ll Have to Wait for the Courts

Even if Rauner gets on board, Cullerton’s latest legal gambit would still have to pass judicial muster.

Bruce Rauner discusses his support of a Democratic-led pension reform bill earlier this month.   Photo: Antonio Perez/Chicago Tribune

Today’s State of the State address, Bruce Rauner’s second, was short on details—no details on the lack of a budget, for one thing, even though his budget address is in three weeks—and long on the reiteration of his favored policies. There was some softening on that note; as journalist Hannah Meisel noted, this time around his policies were presented as a menu, not as a prix fixe.

And there was this:

So as a first step toward bipartisan compromise, President Cullerton and I have agreed to support his pension proposal that will save $1 billion/year from four of the state pension plans.

I have instructed administration attorneys to work with the senate president’s staff to finalize language as soon as possible. When they do, I urge both chambers to pass it without delay.

Of course, an agreement looked close last week, but it wasn’t as close as it looked, and today John Cullerton poured some lukewarm water on the new plan. Nonetheless, there are subtle signs of a thaw and an endgame on pensions.

Cullerton’s proposal is simple: Employees can either keep their annual three-percent cost-of-living adjustment but give up the opportunity for future pay increases, or they can settle for the more conservative Tier 2 cost-of-living increase and let future pay increases bump their pensions.

“It’s challenging,” says Rep. Elaine Nekritz, a Democrat who has worked on various iterations of pension reform for years. “But it’s the consensus.” It would be a first step, but even if there’s a short distance for it to become a bill, there would be a long way to go before that bill would become a law. “It will absolutely be challenged in the courts,” she says.

​The savings are one aspect of it, but it’s also a legal gambit. Pensions can’t be diminished unilaterally; the Illinois Supreme Court was clear on this in its widely expected ruling last year. But if you offer a choice, accepting one option or the other makes it a contractual agreement, and thus constitutional. This has been Cullerton’s approach for a couple years now—and while it may be a more likely gambit than the one shot down by the Supreme Court, it’s still just a theory, and one vulnerable to an obvious challenge.

“In order for it to agree with the legal theory,” Nekritz says, “you could argue that the choice has to be free, and this is coerced.”

But unlike the predictable defeat of the last May’s pension reform effort, there might be a path through the law, as Capitol Fax Rich Miller flagged after the Supreme Court decision was released, suggesting that a footnote in the ruling paves the way for Cullerton’s plan. And Cullerton agreed.

It’s still not a sure thing, so even if Rauner and the General Assembly get on board, they’re facing another round with the Supremes—to finally give Cullerton’s idea the test that many Illinois Democrats have been waiting for.

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