Pension Conflict Causes Illinois Governor to Battle State Constitution | Financial Buzz

Pension Conflict Causes Illinois Governor to Battle State Constitution

The Governor of Illinois, Bruce Rauner, is faced with a difficult challenge as he tries to make changes to the pensions of public workers by altering the constitution of the state. Even if Rauner is successful in his move, it might solve the pension funding issues of the state for several years ahead.

A 2013 legislation which cuts pensions was voided by the Supreme Court in Illinois on Friday. This put the burden on the Republican governor, who was recently elected, to come up with a solution for the pension and budgetary problems of the state by putting forth his Plan B, which has little chances of success.

New pension reform by Rauner

Rauner had not backed the dumped law. Instead he presented a new pension reform that depends on a change in the constitution for its success-a huge undertaking. In the event that constitutional change is not possible, even higher spending cuts would have to be made by Rauner in comparison to those proposed. Otherwise, he would have to agree to the demands of the Democrats for a tax hike, unless there is another plan which is supported by the unions or which the constitution permits. At present, Illinois is the state in the United States with the poorest credit ratings, worst financed pensions and the maximum borrowing costs.

Greater retention of earned benefits

The aim of Rauner is to introduce a law which would permit retention of already earned retirement benefits among public workers and allot them less extravagant future benefits. He has been stressing that lawmakers take on this reform scheme before he considers alternative measures like tax hikes. To avoid the law from being tossed around by courts, he wants to make changes in the constitution of the state.

It would be quite challenging to alter the constitution of Illinois, especially since it is primarily a Democratic state and has activist public congregations. Placing an amendment on the state-wide poll of Illinois would also need a 3/5th vote from lawmakers in the Senate and House, largely controlled by Democrats.


Questions have been raised by a few legal experts and state lawmakers with regards to whether a new reform could nullify the benefits for existing workers in the public sector operating under the current pension clause. There also exists a unique contracts clause which allows unions and pension members to sue.