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Unions sue to stop Chicago pension overhaul

Mary Jones spent 30 years as a data entry operator at Chicago’s Harold Washington Library hoping to someday retire on a modest city pension “in the low-30’s.”

If Mayor Rahm Emanuel is allowed to raise employee contributions by 29 percent and reduce cost-of-living benefits to save the Municipal Employees pension fund, Jones said her monthly annuity will shrink and her lifestyle will change dramatically.

“I would probably have to move out of my home in Chatham because I wouldn’t be able to afford it. I would probably have to move into an apartment and put off knee replacement surgery,” said Jones, 62.

“I have my mother living with me. I support my grandchildren. I have health issues of my own. If they go ahead with these cuts,that would truly squeeze me beyond what I can afford. They’re being unfair trying to put all the pressure on retirees. We worked long and hard and we were promised we would be taken care of.”

On Tuesday, Jones was one of a dozen current and former city employees named as plaintiffs in a lawsuit against the city, along with four unions that represent them: AFSCME Council 31, the Chicago Teachers Union, the Illinois Nurses Association and Teamsters Local 700.

They’re asking a Circuit Court judge to overturn the bill that saved the Municipal Employees and Laborers pension funds, citing the same clause in the Illinois Constitution at the core of the state pension reform case: that pension benefits promised to government employees “shall not be diminished or impaired.”

The state pension reform bill was recently overturned by a lower court and is now before the Illinois Supreme Court.

With costly pension changes scheduled to take effect on Jan. 1, the four city unions were not about to wait for that ruling.

City employees who belong to roughly 30 white collar and building trade unions would see their annual pension contributions rise by one-half of 1 percent over a five-year period beginning Jan. 1.

Those employees currently contribute 8.5 percent of their annual paychecks to their pensions and are not eligible for Social Security. By 2019, they would contribute 11 percent.

Based on an average salary of $60,000, the increased contribution is expected to cost employees $300 more-a-year.

But that’s not the only sacrifice city employees will be required to make. They also will be asked to forfeit compounded cost-of-living adjustments that have been a driving force behind the city’s pension crisis.

Instead of getting annual, 3 percent cost-of-living increases compounded every year, they will get a simple, 3 percent increase or 50 percent of the consumer price index, whichever is less.

And they will get no increase in retirement benefits at all in 2017, 2019 and 2025. In addition, employees will be required to wait two years after retirement before becoming eligible for cost-of-living increases. That’s twice as long as they are required to wait today.

Anders Lindall, a spokesman for AFSCME Council 31, said the cost-of-living adjustment alone would reduce retiree benefits by 30 percent over the next 20 years.

Emanuel has argued that the Chicago pension reform bill is different from the state legislation because the city changes were agreed to by city unions.

On Tuesday, the mayor promised to stay the course, in spite of the legal challenge.

“I pledged as Mayor to address our pension funding shortfalls to protect the retirements of our workers and respect the hard work of our taxpayers. We believe [the legislation] — which does nothing short of ensuring the future of 61,000 city workers and retirees — is also compliant with the Illinois Constitution,” the mayor was quoted as saying in an emailed statement.

“Without this reform, these two funds will run out of money in just a matter of years, which is why we must defend this law to protect the future of our workers, retirees, and taxpayers.”

Plaintiffs attorney John Shapiro countered, “Our clients did not agree to any changes… People’s lives will be irreparably [harmed] if this takes effect. The law is unconstitutional. Therefore, we will seek to enjoin it… Employee and retiree benefits are protected absolutely under the pension protection clause of the Illinois. Constitution from any diminishment or impairment.”

Emanuel initially proposed raising property taxes by $250 million over five years to bankroll the city’s increased contribution to save the two funds.

He agreed to substitute a 56 percent increase in Chicago’s telephone tax for the city’s first-year contribution, only after Gov. Pat Quinn balked at a pre-election property tax hike.

City retirees have filed a separate lawsuit seeking to overturn Emanuel’s three-year phase-out of the city’s 55 percent subsidy for retiree health care. A final ruling in that case is expected in roughly six months.