A Cook County judge is scheduled to rule on the constitutionality of Chicago's pension-reform law on July 24. No matter what the outcome is, the pension overhaul will eventually end up in the Illinois Supreme Court. But the ruling may give a clue as to whether or not the city’s reforms will ultimately be upheld.
Chicago’s contributions to its government-worker pension funds will jump to $1 billion in 2016 from $500 million in 2015, according to a new report by Moody’s Investors Service.
Although the Illinois Supreme Court has ruled that altering pension benefits of current government workers violates the Illinois Constitution, there are still actions – from politicians voluntarily reforming their own pension system, to allowing municipal bankruptcy – that Illinois can take to set government-worker pensions on a more fiscally sound path.
Without real reforms, low investment yearly returns of 4 to 6 percent over the next 28 years could cost Illinois taxpayers anywhere from $100 billion to $200 billion above what they’re already expected to pay in contributions.
Illinois Comptroller Leslie Munger announced the state will delay a $560 million pension payment as the state’s government-pension-driven fiscal crisis worsens.
The Illinois Supreme Court’s precedent has made it impossible for Chicago to stave off bankruptcy by making even the most meager reforms to government-worker pensions.
The Education Freedom Tax Credit, also known as the Federal Scholarship Tax Credit, will give Illinois students access to donor money if the state opts into the program.