Back at square one
Imagine Illinois passed a law impairing its obligations to state pension plan participants. That law would doubtless be challenged in state court, and even assuming the Illinois Supreme Court upheld it, things could get interesting.
Long ago the Illinois Supreme Court ruled that state pension obligations are contractual and furthermore, despite actuarial underfunding already developing, that plan participants have no legal recourse until and unless Illinois actually fails to deliver a required payment to some individual participant. This has permitted Illinois to kick the can down the road for 40 years.
The U. S. Constitution contains two pertinent items. The Supremacy Clause (Article 6, Clause 2) states: “This Constitution shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby.” The Contracts Clause (Article 1, Section 10, Clause 1) states: “No State shall pass any Law impairing the Obligation of Contracts” A federal court could, under the Supremacy Clause, hear an appeal to the law and then evaluate its conformity to the Contracts Clause.
Since the state is one party to the contracts at issue, a past U.S. Supreme Court ruling requires a higher level of scrutiny to any modifications of those contracts. Denial of petitioners at any step in this scenario would appear subject to appeal, with potential temporary stays blocking implementation, all the way up to the U. S. Supreme Court.
Thus, Springfield could end up back at square one, with significant time lost, by their embarrassing, increasingly desperate scramble for a cheap, barely legitimate pension “fix.”