Thursday, April 5, 2012

An Illinois Legislator Confirmed that This Is a Constitutional Test Case

Representative Michael Connelly stated today in a meeting that "HB 4513 is a constitutional test case." 

"[HB 4513] amends the Metropolitan Water Reclamation District Article of the Illinois Pension Code. [HB 4513] increases the required employee contributions of persons who first became employees of the Fund or certain reciprocal systems before January 1, 2011. [HB 4513] changes the manner in which the District calculates its required contribution and tax levy. The new contribution amount is calculated as the employer's normal cost plus the annual amount needed to amortize the unfunded liability by the year 2050 as a level percent of payroll, but shall not exceed an amount equal to the total employee contributions 2 years prior multiplied by 4.19 (currently 2.19)…" 

from the IEA
Unconstitutional pension bill advances

"HB 4513 (Nekritz, D-Northbrook) is a piece of legislation that amends the Metropolitan Water Reclamation District (MWRD) article of the Pension Code. The pension board of MWRD proposed legislation that it felt would stabilize its financial position. The fund is roughly 60 percent funded. There are an estimated 2,400 active participants in this pension fund and those employees reside in the Chicagoland area. It is one of the smallest public pension funds in the state. The legislation increased the active employee pension contribution by 3 percent of salary over the next 3 years (beginning in 2013). Currently, members of MWRD pay 9 percent of their salary toward their pension but after these increases, that would rise to 12 percent of their salary. The legislation also required the employer to increase its contribution amount and requires the fund to be 90 percent funded by 2050.

"The IEA took a position of opposition to this legislation along with the Illinois Federation of Teachers, the Teamsters’ Union, and the Fraternal Order of Police. The Teamsters’ Union was the only opponent that actually represented members in this pension fund. The other unions that represented members in this pension fund either took no position or were proponents of the bill. The IEA’s opposition to this legislation was based on our constitutional view that contributions by members cannot be increased unless there is a corresponding benefit modification. Some will argue that the funding of the pension benefit is a “benefit.” That line of thinking was ruled unconstitutional recently in Arizona, which has a protection in its Constitution that is almost verbatim to Illinois’. The bill passed the Illinois House unanimously and is now in the Senate."

See "Antedated Court Cases: Challenging the Pension Clause, Article XIII, Section 5" (May 18, 2011)

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