94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
HB3682

 

Introduced 2/24/2005, by Rep. Renee Kosel

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/16-133   from Ch. 108 1/2, par. 16-133
40 ILCS 5/16-158  from Ch. 108 1/2, par. 16-158
30 ILCS 805/8.29 new

    Amends the Downstate Teachers Article of the Illinois Pension Code. Provides that if a superintendent's salary for a school year is more than 7% greater than his or her salary with the same employer for the previous school year, the superintendent's employer shall pay to the System the actuarial value of the increase in benefits resulting from the portion of the increase in salary that is in excess of 7%. Provides that if a superintendent's salary exceeds the salary of the Governor, the superintendent's employer shall pay to the System the actuarial value of the benefits resulting from the portion of the salary that is in excess of the salary of the Governor. Applies to contracts entered into, amended, or extended after January 1, 2005. Provides that a superintendent may elect to have all or a portion of a salary increase not included as salary for the purpose of determining final average salary. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.


LRB094 04210 AMC 34234 b

FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

 

 

A BILL FOR

 

HB3682 LRB094 04210 AMC 34234 b

1     AN ACT in relation to public employee benefits.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Illinois Pension Code is amended by changing
5 Sections 16-133 and 16-158 as follows:
 
6     (40 ILCS 5/16-133)  (from Ch. 108 1/2, par. 16-133)
7     Sec. 16-133. Retirement annuity; amount.
8     (a) The amount of the retirement annuity shall be the
9 larger of the amounts determined under paragraphs (A) and (B)
10 below:
11         (A) An amount consisting of the sum of the following:
12             (1) An amount that can be provided on an
13         actuarially equivalent basis by the member's
14         accumulated contributions at the time of retirement;
15         and
16             (2) The sum of (i) the amount that can be provided
17         on an actuarially equivalent basis by the member's
18         accumulated contributions representing service prior
19         to July 1, 1947, and (ii) the amount that can be
20         provided on an actuarially equivalent basis by the
21         amount obtained by multiplying 1.4 times the member's
22         accumulated contributions covering service subsequent
23         to June 30, 1947; and
24             (3) If there is prior service, 2 times the amount
25         that would have been determined under subparagraph (2)
26         of paragraph (A) above on account of contributions
27         which would have been made during the period of prior
28         service creditable to the member had the System been in
29         operation and had the member made contributions at the
30         contribution rate in effect prior to July 1, 1947.
31         (B) An amount consisting of the greater of the
32     following:

 

 

HB3682 - 2 - LRB094 04210 AMC 34234 b

1             (1) For creditable service earned before July 1,
2         1998 that has not been augmented under Section
3         16-129.1: 1.67% of final average salary for each of the
4         first 10 years of creditable service, 1.90% of final
5         average salary for each year in excess of 10 but not
6         exceeding 20, 2.10% of final average salary for each
7         year in excess of 20 but not exceeding 30, and 2.30% of
8         final average salary for each year in excess of 30; and
9             For creditable service earned on or after July 1,
10         1998 by a member who has at least 24 years of
11         creditable service on July 1, 1998 and who does not
12         elect to augment service under Section 16-129.1: 2.2%
13         of final average salary for each year of creditable
14         service earned on or after July 1, 1998 but before the
15         member reaches a total of 30 years of creditable
16         service and 2.3% of final average salary for each year
17         of creditable service earned on or after July 1, 1998
18         and after the member reaches a total of 30 years of
19         creditable service; and
20             For all other creditable service: 2.2% of final
21         average salary for each year of creditable service; or
22             (2) 1.5% of final average salary for each year of
23         creditable service plus the sum $7.50 for each of the
24         first 20 years of creditable service.
25     The amount of the retirement annuity determined under this
26     paragraph (B) shall be reduced by 1/2 of 1% for each month
27     that the member is less than age 60 at the time the
28     retirement annuity begins. However, this reduction shall
29     not apply (i) if the member has at least 35 years of
30     creditable service, or (ii) if the member retires on
31     account of disability under Section 16-149.2 of this
32     Article with at least 20 years of creditable service, or
33     (iii) if the member (1) has earned during the period
34     immediately preceding the last day of service at least one
35     year of contributing creditable service as an employee of a
36     department as defined in Section 14-103.04, (2) has earned

 

 

HB3682 - 3 - LRB094 04210 AMC 34234 b

1     at least 5 years of contributing creditable service as an
2     employee of a department as defined in Section 14-103.04,
3     (3) retires on or after January 1, 2001, and (4) retires
4     having attained an age which, when added to the number of
5     years of his or her total creditable service, equals at
6     least 85. Portions of years shall be counted as decimal
7     equivalents.
8     (b) For purposes of this Section, final average salary
9 shall be the average salary for the highest 4 consecutive years
10 within the last 10 years of creditable service as determined
11 under rules of the board. The minimum final average salary
12 shall be considered to be $2,400 per year.
13     In the determination of final average salary for members
14 other than elected officials and their appointees when such
15 appointees are allowed by statute, that part of a member's
16 salary for any year beginning after June 30, 1979 which exceeds
17 the member's annual full-time salary rate with the same
18 employer for the preceding year by more than 20% shall be
19 excluded. The exclusion shall not apply in any year in which
20 the member's creditable earnings are less than 50% of the
21 preceding year's mean salary for downstate teachers as
22 determined by the survey of school district salaries provided
23 in Section 2-3.103 of the School Code.
24     If a superintendent receives a salary increase on or after
25 the effective date of this amendatory Act of the 94th General
26 Assembly, the superintendent may choose to have some or all of
27 that increase in salary not included as a part of his or her
28 salary for the purpose of determining final average salary by
29 filing a written election with the System within 30 days after
30 receiving the salary increase.
31     (c) In determining the amount of the retirement annuity
32 under paragraph (B) of this Section, a fractional year shall be
33 granted proportional credit.
34     (d) The retirement annuity determined under paragraph (B)
35 of this Section shall be available only to members who render
36 teaching service after July 1, 1947 for which member

 

 

HB3682 - 4 - LRB094 04210 AMC 34234 b

1 contributions are required, and to annuitants who re-enter
2 under the provisions of Section 16-150.
3     (e) The maximum retirement annuity provided under
4 paragraph (B) of this Section shall be 75% of final average
5 salary.
6     (f) A member retiring after the effective date of this
7 amendatory Act of 1998 shall receive a pension equal to 75% of
8 final average salary if the member is qualified to receive a
9 retirement annuity equal to at least 74.6% of final average
10 salary under this Article or as proportional annuities under
11 Article 20 of this Code.
12 (Source: P.A. 90-582, eff. 5-27-98; 91-17, eff. 6-4-99; 91-887,
13 eff. 7-6-00; 91-927, eff. 12-14-00.)
 
14     (40 ILCS 5/16-158)   (from Ch. 108 1/2, par. 16-158)
15     Sec. 16-158. Contributions by State and other employing
16 units.
17     (a) The State shall make contributions to the System by
18 means of appropriations from the Common School Fund and other
19 State funds of amounts which, together with other employer
20 contributions, employee contributions, investment income, and
21 other income, will be sufficient to meet the cost of
22 maintaining and administering the System on a 90% funded basis
23 in accordance with actuarial recommendations.
24     The Board shall determine the amount of State contributions
25 required for each fiscal year on the basis of the actuarial
26 tables and other assumptions adopted by the Board and the
27 recommendations of the actuary, using the formula in subsection
28 (b-3).
29     (a-1) Annually, on or before November 15, the Board shall
30 certify to the Governor the amount of the required State
31 contribution for the coming fiscal year. The certification
32 shall include a copy of the actuarial recommendations upon
33 which it is based.
34     On or before May 1, 2004, the Board shall recalculate and
35 recertify to the Governor the amount of the required State

 

 

HB3682 - 5 - LRB094 04210 AMC 34234 b

1 contribution to the System for State fiscal year 2005, taking
2 into account the amounts appropriated to and received by the
3 System under subsection (d) of Section 7.2 of the General
4 Obligation Bond Act.
5     (b) Through State fiscal year 1995, the State contributions
6 shall be paid to the System in accordance with Section 18-7 of
7 the School Code.
8     (b-1) Beginning in State fiscal year 1996, on the 15th day
9 of each month, or as soon thereafter as may be practicable, the
10 Board shall submit vouchers for payment of State contributions
11 to the System, in a total monthly amount of one-twelfth of the
12 required annual State contribution certified under subsection
13 (a-1). From the effective date of this amendatory Act of the
14 93rd General Assembly through June 30, 2004, the Board shall
15 not submit vouchers for the remainder of fiscal year 2004 in
16 excess of the fiscal year 2004 certified contribution amount
17 determined under this Section after taking into consideration
18 the transfer to the System under subsection (a) of Section
19 6z-61 of the State Finance Act. These vouchers shall be paid by
20 the State Comptroller and Treasurer by warrants drawn on the
21 funds appropriated to the System for that fiscal year.
22     If in any month the amount remaining unexpended from all
23 other appropriations to the System for the applicable fiscal
24 year (including the appropriations to the System under Section
25 8.12 of the State Finance Act and Section 1 of the State
26 Pension Funds Continuing Appropriation Act) is less than the
27 amount lawfully vouchered under this subsection, the
28 difference shall be paid from the Common School Fund under the
29 continuing appropriation authority provided in Section 1.1 of
30 the State Pension Funds Continuing Appropriation Act.
31     (b-2) Allocations from the Common School Fund apportioned
32 to school districts not coming under this System shall not be
33 diminished or affected by the provisions of this Article.
34     (b-3) For State fiscal years 2011 through 2045, the minimum
35 contribution to the System to be made by the State for each
36 fiscal year shall be an amount determined by the System to be

 

 

HB3682 - 6 - LRB094 04210 AMC 34234 b

1 sufficient to bring the total assets of the System up to 90% of
2 the total actuarial liabilities of the System by the end of
3 State fiscal year 2045. In making these determinations, the
4 required State contribution shall be calculated each year as a
5 level percentage of payroll over the years remaining to and
6 including fiscal year 2045 and shall be determined under the
7 projected unit credit actuarial cost method.
8     For State fiscal years 1996 through 2010, the State
9 contribution to the System, as a percentage of the applicable
10 employee payroll, shall be increased in equal annual increments
11 so that by State fiscal year 2011, the State is contributing at
12 the rate required under this Section; except that in the
13 following specified State fiscal years, the State contribution
14 to the System shall not be less than the following indicated
15 percentages of the applicable employee payroll, even if the
16 indicated percentage will produce a State contribution in
17 excess of the amount otherwise required under this subsection
18 and subsection (a), and notwithstanding any contrary
19 certification made under subsection (a-1) before the effective
20 date of this amendatory Act of 1998: 10.02% in FY 1999; 10.77%
21 in FY 2000; 11.47% in FY 2001; 12.16% in FY 2002; 12.86% in FY
22 2003; and 13.56% in FY 2004.
23     Beginning in State fiscal year 2046, the minimum State
24 contribution for each fiscal year shall be the amount needed to
25 maintain the total assets of the System at 90% of the total
26 actuarial liabilities of the System.
27     Notwithstanding any other provision of this Section, the
28 required State contribution for State fiscal year 2005 and each
29 fiscal year thereafter, as calculated under this Section and
30 certified under subsection (a-1), shall not exceed an amount
31 equal to (i) the amount of the required State contribution that
32 would have been calculated under this Section for that fiscal
33 year if the System had not received any payments under
34 subsection (d) of Section 7.2 of the General Obligation Bond
35 Act, minus (ii) the portion of the State's total debt service
36 payments for that fiscal year on the bonds issued for the

 

 

HB3682 - 7 - LRB094 04210 AMC 34234 b

1 purposes of that Section 7.2, as determined and certified by
2 the Comptroller, that is the same as the System's portion of
3 the total moneys distributed under subsection (d) of Section
4 7.2 of the General Obligation Bond Act.
5     (b-4) If a superintendent's salary for a school year is
6 more than 7% greater than his or her salary with the same
7 employer for the previous school year, the superintendent's
8 employer shall pay to the System, in addition to all other
9 payments required under this Section and in accordance with
10 guidelines established by the System, the actuarial value of
11 the increase in benefits resulting from the portion of the
12 increase in salary that is in excess of 7%.
13     If, during any calendar year, a superintendent's salary
14 exceeds the salary of the Governor during that calendar year,
15 the superintendent's employer shall pay to the System, in
16 addition to all other payments required under this Section and
17 in accordance with guidelines established by the System, the
18 actuarial value of the benefits resulting from the portion of
19 the salary that is in excess of the Governor's salary.
20     For the purposes of this subsection (b-4) the term
21 "superintendent" means a superintendent who is employed
22 pursuant to Section 10-21.4 of the School Code.
23     The provisions of this subsection (b-4) apply to salaries
24 paid to general superintendents under employment contracts
25 entered into, amended, or extended after January 1, 2005 (other
26 than any portion of a salary that a superintendent elects to
27 have not included as a part of his or her salary for the
28 purpose of determining final average salary under subsection
29 (b) of Section 16-133).
30     (c) Payment of the required State contributions and of all
31 pensions, retirement annuities, death benefits, refunds, and
32 other benefits granted under or assumed by this System, and all
33 expenses in connection with the administration and operation
34 thereof, are obligations of the State.
35     If members are paid from special trust or federal funds
36 which are administered by the employing unit, whether school

 

 

HB3682 - 8 - LRB094 04210 AMC 34234 b

1 district or other unit, the employing unit shall pay to the
2 System from such funds the full accruing retirement costs based
3 upon that service, as determined by the System. Employer
4 contributions, based on salary paid to members from federal
5 funds, may be forwarded by the distributing agency of the State
6 of Illinois to the System prior to allocation, in an amount
7 determined in accordance with guidelines established by such
8 agency and the System.
9     (d) Effective July 1, 1986, any employer of a teacher as
10 defined in paragraph (8) of Section 16-106 shall pay the
11 employer's normal cost of benefits based upon the teacher's
12 service, in addition to employee contributions, as determined
13 by the System. Such employer contributions shall be forwarded
14 monthly in accordance with guidelines established by the
15 System.
16     However, with respect to benefits granted under Section
17 16-133.4 or 16-133.5 to a teacher as defined in paragraph (8)
18 of Section 16-106, the employer's contribution shall be 12%
19 (rather than 20%) of the member's highest annual salary rate
20 for each year of creditable service granted, and the employer
21 shall also pay the required employee contribution on behalf of
22 the teacher. For the purposes of Sections 16-133.4 and
23 16-133.5, a teacher as defined in paragraph (8) of Section
24 16-106 who is serving in that capacity while on leave of
25 absence from another employer under this Article shall not be
26 considered an employee of the employer from which the teacher
27 is on leave.
28     (e) Beginning July 1, 1998, every employer of a teacher
29 shall pay to the System an employer contribution computed as
30 follows:
31         (1) Beginning July 1, 1998 through June 30, 1999, the
32     employer contribution shall be equal to 0.3% of each
33     teacher's salary.
34         (2) Beginning July 1, 1999 and thereafter, the employer
35     contribution shall be equal to 0.58% of each teacher's
36     salary.

 

 

HB3682 - 9 - LRB094 04210 AMC 34234 b

1 The school district or other employing unit may pay these
2 employer contributions out of any source of funding available
3 for that purpose and shall forward the contributions to the
4 System on the schedule established for the payment of member
5 contributions.
6     These employer contributions are intended to offset a
7 portion of the cost to the System of the increases in
8 retirement benefits resulting from this amendatory Act of 1998.
9     Each employer of teachers is entitled to a credit against
10 the contributions required under this subsection (e) with
11 respect to salaries paid to teachers for the period January 1,
12 2002 through June 30, 2003, equal to the amount paid by that
13 employer under subsection (a-5) of Section 6.6 of the State
14 Employees Group Insurance Act of 1971 with respect to salaries
15 paid to teachers for that period.
16     The additional 1% employee contribution required under
17 Section 16-152 by this amendatory Act of 1998 is the
18 responsibility of the teacher and not the teacher's employer,
19 unless the employer agrees, through collective bargaining or
20 otherwise, to make the contribution on behalf of the teacher.
21     If an employer is required by a contract in effect on May
22 1, 1998 between the employer and an employee organization to
23 pay, on behalf of all its full-time employees covered by this
24 Article, all mandatory employee contributions required under
25 this Article, then the employer shall be excused from paying
26 the employer contribution required under this subsection (e)
27 for the balance of the term of that contract. The employer and
28 the employee organization shall jointly certify to the System
29 the existence of the contractual requirement, in such form as
30 the System may prescribe. This exclusion shall cease upon the
31 termination, extension, or renewal of the contract at any time
32 after May 1, 1998.
33 (Source: P.A. 92-505, eff. 12-20-01; 93-2, eff. 4-7-03; 93-665,
34 eff. 3-5-04.)
 
35     Section 90. The State Mandates Act is amended by adding

 

 

HB3682 - 10 - LRB094 04210 AMC 34234 b

1 Section 8.29 as follows:
 
2     (30 ILCS 805/8.29 new)
3     Sec. 8.29. Exempt mandate. Notwithstanding Sections 6 and 8
4 of this Act, no reimbursement by the State is required for the
5 implementation of any mandate created by this amendatory Act of
6 the 94th General Assembly.
 
7     Section 99. Effective date. This Act takes effect upon
8 becoming law.