Pension Meltdown
Illinois Court Ruling Rolls Chicago Back Down the Hill

An Illinois state court has dealt another blow to Chicago’s woeful finances. The city, whose pension system (on generous estimation) sits at around 36 percent funded, had proposed a plan to make minor changes to its defined benefit pension obligations, lessening the burden of its ever-worsening funding gap. But a court ruled against the changes, and the reasoning shows that Illinois’ constitution really is a suicide pact. From Bloomberg:

The state constitution “affords the participant protection against” cuts in benefits even if the general assembly changes the pension code, the judge wrote in her 35-page ruling.

The city will appeal to the state supreme court, Chicago’s lawyer said after the ruling.

“We continue to strongly believe that the city’s pension reform legislation, unlike the state legislation held unconstitutional this past spring, does not diminish or impair pension benefits, but rather preserves and protects them,” Stephen Patton, a lawyer for the city, said in an e-mailed statement.

While the politician and union leaders continue to toe their hard-lined positions, few seem concerned with experts’ dire evaluation of the city’s finances:

The rejection leaves Chicago with no viable plan to solve the pension deficit, said Sarah Wetmore, vice president and research director at the Civic Federation, a Chicago nonprofit that tracks municipal finance.

‘‘Without these reforms, the city reverts back to an inadequate funding formula that has resulted in such severe underfunding that actuaries expect the Municipal and Laborers Funds will run out of money within the next decade -– an unthinkable prospect,’’ she said.

In Illinois, a state that is no stranger to cronyism, reform remains a Sisyphean task.

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