PRESS RELEASE: Illinois pension reforms would survive federal constitutional challenges
Gov. Pritzker’s declaration of comprehensive pension reform as a “fantasy” is wrong. Case law and other states’ experiences show reforms would survive federal constitutional challenges.
Properly-crafted comprehensive pension reforms would survive state and U.S. Constitutional challenges, according to a new report by Wirepoints.
“Success in states such as Rhode Island and Arizona show Illinois can craft reforms that are in compliance with the U.S. Constitution,” says Wirepoints Executive Editor and Founder Mark Glennon.
Pension reform opponents claim that the pursuit of a state amendment would be futile because any subsequent reform would be struck down due to the U.S. Constitution’s Contract Clause. Gov. Pritzker has even made that argument, calling the pursuit of reform “a fantasy.”
Federal case law shows that simply isn’t true. The United States Supreme Court and lower federal courts have long made clear that the Contract Clause is not an absolute. Contracts can be adjusted if it serves an important public purpose. Accordingly, modifications to Illinois pension benefits could be made as long as they are narrow, reasonable and meet the threshold of achieving an important public purpose. The fiscal impact of the pandemic and recession seal the case that pension reform is permissible.
Those are the key points in “Why Pension Reform is Legal,” part three of Wirepoints’ new Special Report: “Solving Illinois’ Pension Problem: Why It’s Legal, Why It’s Necessary, and What it Looks Like.”
The following are some of the facts included in Wirepoints’ report:
- Various U.S. Supreme Court cases, including Home Building & Loan Association v. Blaisdell, show the court does not consider the Contract Clause to be absolute. Contracts can be impaired if the impairment serves an important public purpose.
- Cranston, Rhode Island’s successful defense of pension reforms is a clear example of courts making exceptions to the federal Contract Clause for a higher public purpose. The city’s reduction of benefits was upheld by Rhode Island Supreme Court, which found that the clause and other U.S. constitutional matters are not blanket rules against reforming contracts.
- The state of Arizona has twice amended a pension protection clause similar to Illinois’ and successfully passed reform. Though reductions were mostly agreed through negotiation, dissenting pensioners, to this day, could go to court if they thought they could win. None of them has.
The only two paths to override the state’s pension clause are state bankruptcy or a state constitutional amendment. State bankruptcy would require federal legislation, which leaves a state constitutional amendment as the only option at hand.
“Illinois can and must amend the pension protection clause,” says Mark. “Doing so will allow Illinois to address its overwhelming pension debt and put the state on a sustainable fiscal path.”
Read “Part 3: Why Pension Reform is Legal” at: https://wirepoints.org/part-3-why-pension-reform-is-legal