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LAWSUIT REGARDING PUBLIC ACT 98-0599
Press Release Issued January 2, 2014
January 2013

For Immediate Release

January 2, 2014
RETIRED STATE EMPLOYEES ASSOCIATION FILES LAWSUIT CHALLENGING LAW REDUCING PENSION BENEFITS

The Retired State Employees Association (RSEA), an association of over 9,000 dues- paying retired State of Illinois workers, today filed suit in Sangamon County challenging the recently-enacted law, Public Act 98-599, that reduces future pension benefits for retired members of the State Employees Retirement System (SERS).

The lawsuit, Retired State Employees Association et al. vs. Patrick Quinn et al., No. 2014 MR 1, names Governor Quinn, Comptroller Judy Baar Topinka, Treasurer Dan Rutherford, and the Board of Trustees of the State Employees Retirement System as Defendants. In addition to the RSEA, the complaint names four retirees as class plaintiffs representing over 60,000 retirees in a class action against these same defendants. There is also a subclass named of the more than 10,000 State workers who purchased extra service credits and took early retirement in 2002 and other years.

The Complaint alleges that that PA 98-599, which was fast-tracked through the General Assembly as Senate Bill 1 and signed by Governor Quinn in December, 2013, violates the Pension Protection and Impairment of Contracts Clauses of the Illinois Constitution of 1970. The lawsuit also contends that PA 98-599 violates the Equal Protection Clause of the Constitution because while impairing pension rights in all the other major State pension systems, the law exempted the Judges' Retirement System from its coverage without any rational basis. The Complaint seeks a declaration that the PA 98-599 is invalid as well as the creation of an escrow fund into which the State will, while the case is pending, pay the difference between what the SERS retirees would have received in benefits under the prior law, and what they will receive under the new law, which takes effect on June 1, 2014.

The main focus of the Complaint is the new law's gutting of the automatic annual increase in benefits that have been a feature of the pension laws since 1970. For 43 years, State workers have paid for this benefit with payroll deductions which the law required the State to match. The lawsuit contends that the State has abused SERS by underfunding it, including such gimmicks as "pension holidays," resulting in SERS declining from being over 80% funded in the year 2000 to being only 43% funded in 2012.

"The RSEA is proud to have taken this important first step on what promises to be a long journey through the courts. For too long, our members have had to endure being scapegoated for the State's financial problems," said RSEA President Bruce Strom. "The complaint demonstrates not only that the General Assembly has violated the Constitution, but has ignored its own statutes in using money owed to SERS and other pension systems to fund daily operations of State government," he added.

A copy of the complaint is available on request. The defendants will have 30 days to respond after they are served with legal process.

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