This section contains the nature of the case and procedural background.

D has established five State-funded retirement systems for public employees (Ps). Members earn specific benefits based on their years of service, income, and age. All are subject to the pension protection clause of our state constitution, which provides: 'Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.' Ill. Const. 1970, art. XIII, § 5. Members who first contributed prior to January 1, 2011, receive what are known as 'Tier 1' annuity benefits. Members first contributing on or after January 1, 2011, receive a lower level of benefits designated as 'Tier 2.' The Public Act is directed primarily at Tier 1 annuities. Members are eligible to retire at age 60 if they have at least eight years of credited service. They may retire with full benefits at any age if their age plus years of service credit equal 85. They are also eligible to retire if they are between the ages of 55 and 60 and have at least 25 years of credited service, but their benefit will be reduced by half of 1% for each month they are under the age of 60. Members may earn a retirement annuity of up to 75% of their final average compensation although for members covered by Social Security, it would take nearly 45 years of State service to do so. These annuity payments are subject to 3% automatic annual increases beginning after the member's first full year of retirement, except that some members who retire before 60 and do not meet the rule of 85 will not receive the increases until they turn 60 and have been retired at least one full year. The annual annuity adjustments are built-in to the pension benefit and are not tied to the cost of living. As a result, the real value of annuities may either increase or erode depending on economic conditions, notwithstanding the adjustments. Funding is from contributions by D through appropriation by the General Assembly; contributions by or on behalf of members based on their salaries; and income, interest, and dividends derived from retirement fund deposits and investments. Ps have paid their full share as required by law. D has failed miserably. The funds all suffer from actuarial insolvency on a sound basis. D has failed to meet its commitments to finance the pension obligations. According to the SEC, the amount of the increase in the State's unfunded liability over the period between 1996 and 2010 was $57 billion. By the end of June 2013, the five State-funded retirement systems contained a total of only 41.1% of the funding necessary to meet their accrued liabilities based on the market value of fund assets. The General Assembly ultimately enacted what became Public Act 98-599. It reduces annuity benefits for members of GRS, SERS, SURS, and TRS entitled to Tier 1 benefits, i.e., members who belonged to those systems prior to January 1, 2011. Five separate lawsuits challenging the law were filed almost immediately. Ps sued D. Ps' principal contention was that the reduction in retirement annuity benefits for Tier 1 employees was void and unenforceable as a violation of the constitution's pension protection clause (Ill. Const. 1970, art. XIII, § 5). D argued that Ps' claims under the Illinois Constitution should be rejected as a matter of law because (1) through D's police power, the General Assembly possesses inherent authority to override and modify obligations imposed on it by the Illinois Constitution when, in its judgment, such action is reasonable and necessary to advance an important public purpose; (2) because of the 'dramatic squeeze on Ds finances' caused by the Great Recession, the strain on the State's revenues which would result from having to meet current pension obligations, the poor condition of D's economy, and the continued deterioration of \D's credit rating, notwithstanding D's attempts to employ other remedial measures, action was needed in the interest of the public good; and (3) the reduction in retirement annuity benefits which would result from implementation of Public Act 98-599 to these fiscal challenges is fair and reasonable under the circumstances. The court ruled in favor of Ps claiming the new law was invalid and unconstitutional. D appealed.

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