Public Pensions: LA, Illinois Both Try Cuts, End Up in Legal Tangles

When it comes to the thorny topic of funding public workers’ pensions, the city of Los Angeles and the state of Illinois provide a common theme: Hurt workers like Christine Bondi.

Bondi, of Ontarioville, Ill., has worked for the Illinois Secretary of State for 25 years.  She helps people get drivers licenses as a customer service rep.  She used to administer drivers license tests, too.  She’s got three years to go until she retires.

Assuming Bondi gets 3 percent yearly raises between now and 2017, the court papers in the Illinois mess say, she’d retire that year and her pension would be $31,454.  She’d still get increases for the rest of her life, but the new state pension law, now tied up in Illinois courts, would cut her future payouts by $64,898 over the next 25 years.

She’s not alone, in Illinois or nationwide.

The L.A. pension case affects 20,000 present municipal workers and the Illinois case affects 621,000 workers and retirees.  And the wider issue of what to do about public employee pensions affects 19.1 million state and local workers nationwide  – 57 percent of them women – and the nation’s politics.

That’s because both L.A. and Illinois faced deficits, and the politicians ruling both set out to close them by, among other things, cutting public workers’ present and future pensions.

Cutting those pensions is a favorite Right Wing cause, but supposedly pro-worker Democrats – not Right Wingers – control the governments of both the Land of Lincoln and the nation’s second-largest city.  And both Illinois and Los Angeles have gotten themselves legally tangled up in trying to unilaterally trash their present and future workers’ pensions.

Meanwhile, Right Wing politicians use state and local employees as whipping boys, telling voters that workers’ pay and pensions are the causes of red ink.  The Right Wingers’ solution: Cut the pay, trash the pensions and deprive workers of collective bargaining rights, which cripples their ability to fight back.  Nevertheless, workers and unions have fought back.

In Los Angeles, the city’s Employee Relations Board voted 3-2 in late May that the L.A. Federation of Labor met a procedural deadline for contesting the city’s cuts by filing an unfair labor practices/labor law-breaking complaint against the cuts, on time.  The city council voted for the cuts on Sept. 25, 2012.  The unions say the city misled them and failed to bargain over pension cuts.  The unions had offered their own counterproposal to close L.A.’s budget gap.

Ellen Greenstone, the attorney for the L.A. unions, predicted they would win on the merits, too.  That’s because the council also told city budget chief Miguel Santana to meet union reps to “find common ground and to avoid litigation” on the pension plan.

Citing that directive, the L.A. unions assumed there was still room for bargaining, so they held off challenging the cuts, Greenstone said.  “We shouldn’t be penalized for assuming that those discussions might bear fruit,” she told the employee relations panel.  With that board split 2-2, its newest member, Rhonda Hilyer, found that argument persuasive and sided with the union coalition.

Illinois is another matter.

There, the union coalition, including the state AFL-CIO, both state teachers unions, AFSCME Council 31, Service Employees Local 73, two police associations, the state Fire Fighters, the Illinois Nurses Association, Laborers Local 2002 and Teamsters Council 25 and Local 700, also banded together to try to work things out with state officials.

That We Are One Illinois coalition offered its own compromises to solve the pension gap, and help the state close a yawning budget deficit.  Gov. Pat Quinn, D-Ill., completely rejected the ideas and jammed the pension cuts through the Democratic-run legislature.

That forced the union coalition to court, filing a class action suit for their members, since the cuts violate the state constitution.  The constitution flat out bars such slashes.

“Although this litigation involves the unconstitutionality of Public Act 98-0599, its underpinnings involve much more than a legal question.  At base, this litigation concerns an ethical and moral promise to provide a certain level of retirement security for the women and men who chose to serve Illinois and its citizens,” the unions’ suit says.

“The majority of Illinois’ public employees in state retirement systems are not eligible to receive Social Security.  For many, their state pension is their life savings and is all that stands between them and poverty,” it adds.  Bondi’s pension “will be her primary source of income.”

Illinois has underfunded its share of workers’ pensions since at least 1970, when the state constitution was rewritten and the pension guarantee was inserted, the suit notes.  The workers should not be held responsible for the state’s inaction, the union coalition declares.  Coalitions of retirees filed their own suits against the state, too.

In the latest legal maneuver, Sangamon County Circuit Court Judge John Belz on May 14 granted a temporary restraining order and a preliminary injunction against the pension cut law, until he could hear all the suits, rolled into one, in his court.  Sangamon County includes the state capital, Springfield.  The law was scheduled to take effect on June 1.

“This is an important first step in our efforts to overturn this unfair, unconstitutional law and to protect retirement security for working and retired Illinois families,” said Illinois AFL-CIO President Michael Carrigan, speaking for the We Are One Illinois coalition.  “We are pleased the court prudently chose to halt implementation of these sweeping changes, which have caused so much fear and uncertainty and are likely to be overturned.”