Following years of gridlock in the state capitol, lawmakers passed a pension reform bill that has union leaders and some Democrats questioning its constitutionality.

A narrow Senate vote of 32-24 and House vote of 62-53 brought an end to one of Illinois’ most egregious financial quandaries. The pension reform package, co-sponsored by Democratic and Republican legislators, including Senate Republican Leader, Christine Rodogno, was passed by both Houses in Springfield on December 3 and signed into law on December 5 by Illinois Governor Pat Quinn. The bill required 30 votes for passage in the Senate and 60 in the House.

SB 1 is set to take effect in June 2014.

The New Legislation

An eclectic mix of proposals included in various bills brought to the forefront over the past several months, SB 1 gives workers the opportunity to join a retirement plan similar to a 401 K and to have a larger say when it comes to managing their retirement options. While the retirement age will remain the same for those 46 and above, younger members of Illinois’ workforce will see between four and sixty months added to the retirement age, pushing the age to 65 for individuals wishing to retire with full pension benefits. Additionally, SB 1 reduces the size of annual cost of living adjustments (COLAs). Rather than a 3 percent raise compounded on a yearly basis, the legislation’s proposal counts toward no more than the first $30,000 of a pension.

Scaling Back Pensions

Workers’ benefits are also scaled back. Unions, particularly We Are One, a labor coalition encompassing the AFL-CIO, Illinois Education Association and Illinois Federation of Teachers, are threatening to take legal action on account that the bill violates the state constitutional ban on diminishing or impairing public pension benefits. By and large, Illinois unions claim pension cuts are unfair to employees and retirees. Unions also plan to file a complaint alleging that the legislation violates the Illinois Constitution.

Some Democrats join unions in their opposition. Senate President John Cullerton says he believes the bill contains “serious problems” in light of the state constitution. Democratic State Representative Brandon Phelps also voted against the measure. The final verdict on SB1 ultimately rests in the hand of the Illinois Supreme Court, although unions are at liberty to challenge the court’s ruling. Unions are currently weighing their options.

Finding Support

Despite some downstate Democrats’ opposition, a few Senate Republicans are throwing their support behind the legislation, including Illinois gubernatorial candidate and State Senator Bill Brady, one of only two members of his party from the southern area of the state to vote in favor of the bill’s passage in the Senate. Brady claims the amount of money the state is using to fund pension obligations rather than fund state programs mandates a cut in workers’ benefits.

Supporters from both parties say the bill promotes security for retirees and current state workers, public school teachers, university employees and state public officials.

Still, some Republicans argue that the bill does not sufficiently decrease the state’s costs.

Republicans are concerned that Illinois’ massive pension debt will lead to the continuation of the 2011 state income tax increase that was signed into law originally as a temporary tax.

Both parties can agree that the need for a long-term, viable pension reform solution has cast a shadow over other items on legislators’ agendas. The state’s unfunded liabilities have topped $100.5 billion at the end of fiscal year 2013. SB1 proposes placing $1 billion per year into the state’s pension systems by 2020. Illinois currently has the worst-funded state pension system in the nation.