97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB4622

 

Introduced 2/1/2012, by Rep. Elaine Nekritz

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/7-170  from Ch. 108 1/2, par. 7-170
40 ILCS 5/7-171  from Ch. 108 1/2, par. 7-171
40 ILCS 5/7-172  from Ch. 108 1/2, par. 7-172
40 ILCS 5/7-172.2  from Ch. 108 1/2, par. 7-172.2
40 ILCS 5/7-173  from Ch. 108 1/2, par. 7-173
40 ILCS 5/7-220  from Ch. 108 1/2, par. 7-220
30 ILCS 805/8.36 new

    Amends the Illinois Municipal Retirement Fund (IMRF) Article of the Illinois Pension Code. Provides that revenue generated by specified tax levies may not be used to finance employees' contributions for Federal Social Security taxes. Removes provisions requiring participating municipalities and participating instrumentalities to pay into the Fund employee contributions for Federal Social Security taxes. Makes other technical changes. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.


LRB097 16031 JDS 61183 b

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

 

 

A BILL FOR

 

HB4622LRB097 16031 JDS 61183 b

1    AN ACT concerning public employee benefits.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Pension Code is amended by changing
5Sections 7-170, 7-171, 7-172, 7-172.2, 7-173, and 7-220 as
6follows:
 
7    (40 ILCS 5/7-170)  (from Ch. 108 1/2, par. 7-170)
8    Sec. 7-170. Federal Social Security coverage.
9    (a) It is declared to be the policy and purpose to extend
10to covered employees as defined in Section 7-138, the benefits
11of the Federal Old Age and Survivors Insurance System as
12authorized by the Federal Social Security Act and amendments
13thereto. To effect this, the board shall take such action as
14may be required by applicable State and Federal laws or
15regulations.
16    (b) The board shall execute an agreement with the State
17Agency to secure coverage of covered employees as provided in
18paragraph (a) of this section.
19    (c) Each participating municipality and each participating
20instrumentality shall remit payment of contributions for
21Social Security purposes on behalf of covered employees and
22covered municipalities and participating instrumentalities as
23required by applicable State and federal laws and regulations.

 

 

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1    (d) Contributions of covered employees to this fund for
2Federal Social Security purposes shall be paid in such amounts
3and at such time as required by applicable State and federal
4laws and regulations.
5    (e) (Blank).
6    (f) The board shall maintain such records and submit such
7reports as may be required by applicable State and Federal laws
8or regulations.
9(Source: P.A. 96-1084, eff. 7-16-10.)
 
10    (40 ILCS 5/7-171)  (from Ch. 108 1/2, par. 7-171)
11    Sec. 7-171. Finance; taxes.
12    (a) Each municipality other than a school district shall
13appropriate an amount sufficient to provide for the current
14municipality contributions required by Section 7-172 of this
15Article, for the fiscal year for which the appropriation is
16made and all amounts due for municipal contributions for
17previous years. Those municipalities which have been assessed
18an annual amount to amortize its unfunded obligation, as
19provided in subparagraph 4 of paragraph (a) of Section 7-172 of
20this Article, shall include in the appropriation an amount
21sufficient to pay the amount assessed. The appropriation shall
22be based upon an estimate of assets available for municipality
23contributions and liabilities therefor for the fiscal year for
24which appropriations are to be made, including funds available
25from levies for this purpose in prior years.

 

 

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1    (b) For the purpose of providing monies for municipality
2contributions, beginning for the year in which a municipality
3is included in this fund:
4        (1) A municipality other than a school district may
5    levy a tax which shall not exceed the amount appropriated
6    for municipality contributions.
7        (2) A school district may levy a tax in an amount
8    reasonably calculated at the time of the levy to provide
9    for the municipality contributions required under Section
10    7-172 of this Article for the fiscal years for which
11    revenues from the levy will be received and all amounts due
12    for municipal contributions for previous years. Any levy
13    adopted before the effective date of this amendatory Act of
14    1995 by a school district shall be considered valid and
15    authorized to the extent that the amount was reasonably
16    calculated at the time of the levy to provide for the
17    municipality contributions required under Section 7-172
18    for the fiscal years for which revenues from the levy will
19    be received and all amounts due for municipal contributions
20    for previous years. In no event shall a budget adopted by a
21    school district limit a levy of that school district
22    adopted under this Section.
23    (c) Any county which is served by a regional office of
24education that serves 2 or more counties may include in its
25appropriation an amount sufficient to provide its
26proportionate share of the municipality contributions for that

 

 

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1regional office of education. The tax levy authorized by this
2Section may include an amount necessary to provide monies for
3this contribution.
4    (d) Any county that is a part of a multiple-county health
5department or consolidated health department which is formed
6under "An Act in relation to the establishment and maintenance
7of county and multiple-county public health departments",
8approved July 9, 1943, as amended, and which is a participating
9instrumentality may include in the county's appropriation an
10amount sufficient to provide its proportionate share of
11municipality contributions of the department. The tax levy
12authorized by this Section may include the amount necessary to
13provide monies for this contribution.
14    (d-5) A school district participating in a special
15education joint agreement created under Section 10-22.31 of the
16School Code that is a participating instrumentality may include
17in the school district's tax levy under this Section an amount
18sufficient to provide its proportionate share of the
19municipality contributions for current and prior service by
20employees of the participating instrumentality created under
21the joint agreement.
22    (e) Such tax shall be levied and collected in like manner,
23with the general taxes of the municipality and shall be in
24addition to all other taxes which the municipality is now or
25may hereafter be authorized to levy upon all taxable property
26therein, and shall be exclusive of and in addition to the

 

 

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1amount of tax levied for general purposes under Section 8-3-1
2of the "Illinois Municipal Code", approved May 29, 1961, as
3amended, or under any other law or laws which may limit the
4amount of tax which the municipality may levy for general
5purposes. The tax may be levied by the governing body of the
6municipality without being authorized as being additional to
7all other taxes by a vote of the people of the municipality.
8    (f) The county clerk of the county in which any such
9municipality is located, in reducing tax levies shall not
10consider any such tax as a part of the general tax levy for
11municipality purposes, and shall not include the same in the
12limitation of any other tax rate which may be extended.
13    (g) The amount of the tax to be levied in any year shall,
14within the limits herein prescribed, be determined by the
15governing body of the respective municipality.
16    (h) The revenue derived from any such tax levy shall be
17used only for the contributions required under Section 7-172
18purposes specified in this Article and, as collected, shall be
19paid to the treasurer of the municipality levying the tax.
20Monies received by a county treasurer for use in making
21contributions to a regional office of education for its
22municipality contributions shall be held by him for that
23purpose and paid to the regional office of education in the
24same manner as other monies appropriated for the expense of the
25regional office.
26(Source: P.A. 96-1084, eff. 7-16-10.)
 

 

 

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1    (40 ILCS 5/7-172)  (from Ch. 108 1/2, par. 7-172)
2    Sec. 7-172. Contributions by participating municipalities
3and participating instrumentalities.
4    (a) Each participating municipality and each participating
5instrumentality shall make payment to the fund as follows:
6        1. municipality contributions in an amount determined
7    by applying the municipality contribution rate to each
8    payment of earnings paid to each of its participating
9    employees;
10        2. an amount equal to the employee contributions
11    provided by paragraph paragraphs (a) and (b) of Section
12    7-173, whether or not the employee contributions are
13    withheld as permitted by that Section;
14        3. all accounts receivable, together with interest
15    charged thereon, as provided in Section 7-209;
16        4. if it has no participating employees with current
17    earnings, an amount payable which, over a closed period of
18    20 years for participating municipalities and 10 years for
19    participating instrumentalities, will amortize, at the
20    effective rate for that year, any unfunded obligation. The
21    unfunded obligation shall be computed as provided in
22    paragraph 2 of subsection (b);
23        5. if it has fewer than 7 participating employees or a
24    negative balance in its municipality reserve, the greater
25    of (A) an amount payable that, over a period of 20 years,

 

 

HB4622- 7 -LRB097 16031 JDS 61183 b

1    will amortize at the effective rate for that year any
2    unfunded obligation, computed as provided in paragraph 2 of
3    subsection (b) or (B) the amount required by paragraph 1 of
4    this subsection (a).
5    (b) A separate municipality contribution rate shall be
6determined for each calendar year for all participating
7municipalities together with all instrumentalities thereof.
8The municipality contribution rate shall be determined for
9participating instrumentalities as if they were participating
10municipalities. The municipality contribution rate shall be
11the sum of the following percentages:
12        1. The percentage of earnings of all the participating
13    employees of all participating municipalities and
14    participating instrumentalities which, if paid over the
15    entire period of their service, will be sufficient when
16    combined with all employee contributions available for the
17    payment of benefits, to provide all annuities for
18    participating employees, and the $3,000 death benefit
19    payable under Sections 7-158 and 7-164, such percentage to
20    be known as the normal cost rate.
21        2. The percentage of earnings of the participating
22    employees of each participating municipality and
23    participating instrumentalities necessary to adjust for
24    the difference between the present value of all benefits,
25    excluding temporary and total and permanent disability and
26    death benefits, to be provided for its participating

 

 

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1    employees and the sum of its accumulated municipality
2    contributions and the accumulated employee contributions
3    and the present value of expected future employee and
4    municipality contributions pursuant to subparagraph 1 of
5    this paragraph (b). This adjustment shall be spread over
6    the remainder of the period that is allowable under
7    generally accepted accounting principles.
8        3. The percentage of earnings of the participating
9    employees of all municipalities and participating
10    instrumentalities necessary to provide the present value
11    of all temporary and total and permanent disability
12    benefits granted during the most recent year for which
13    information is available.
14        4. The percentage of earnings of the participating
15    employees of all participating municipalities and
16    participating instrumentalities necessary to provide the
17    present value of the net single sum death benefits expected
18    to become payable from the reserve established under
19    Section 7-206 during the year for which this rate is fixed.
20        5. The percentage of earnings necessary to meet any
21    deficiency arising in the Terminated Municipality Reserve.
22    (c) A separate municipality contribution rate shall be
23computed for each participating municipality or participating
24instrumentality for its sheriff's law enforcement employees.
25    A separate municipality contribution rate shall be
26computed for the sheriff's law enforcement employees of each

 

 

HB4622- 9 -LRB097 16031 JDS 61183 b

1forest preserve district that elects to have such employees.
2For the period from January 1, 1986 to December 31, 1986, such
3rate shall be the forest preserve district's regular rate plus
42%.
5    In the event that the Board determines that there is an
6actuarial deficiency in the account of any municipality with
7respect to a person who has elected to participate in the Fund
8under Section 3-109.1 of this Code, the Board may adjust the
9municipality's contribution rate so as to make up that
10deficiency over such reasonable period of time as the Board may
11determine.
12    (d) The Board may establish a separate municipality
13contribution rate for all employees who are program
14participants employed under the federal Comprehensive
15Employment Training Act by all of the participating
16municipalities and instrumentalities. The Board may also
17provide that, in lieu of a separate municipality rate for these
18employees, a portion of the municipality contributions for such
19program participants shall be refunded or an extra charge
20assessed so that the amount of municipality contributions
21retained or received by the fund for all CETA program
22participants shall be an amount equal to that which would be
23provided by the separate municipality contribution rate for all
24such program participants. Refunds shall be made to prime
25sponsors of programs upon submission of a claim therefor and
26extra charges shall be assessed to participating

 

 

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1municipalities and instrumentalities. In establishing the
2municipality contribution rate as provided in paragraph (b) of
3this Section, the use of a separate municipality contribution
4rate for program participants or the refund of a portion of the
5municipality contributions, as the case may be, may be
6considered.
7    (e) Computations of municipality contribution rates for
8the following calendar year shall be made prior to the
9beginning of each year, from the information available at the
10time the computations are made, and on the assumption that the
11employees in each participating municipality or participating
12instrumentality at such time will continue in service until the
13end of such calendar year at their respective rates of earnings
14at such time.
15    (f) Any municipality which is the recipient of State
16allocations representing that municipality's contributions for
17retirement annuity purposes on behalf of its employees as
18provided in Section 12-21.16 of the Illinois Public Aid Code
19shall pay the allocations so received to the Board for such
20purpose. Estimates of State allocations to be received during
21any taxable year shall be considered in the determination of
22the municipality's tax rate for that year under Section 7-171.
23If a special tax is levied under Section 7-171, none of the
24proceeds may be used to reimburse the municipality for the
25amount of State allocations received and paid to the Board. Any
26multiple-county or consolidated health department which

 

 

HB4622- 11 -LRB097 16031 JDS 61183 b

1receives contributions from a county under Section 11.2 of "An
2Act in relation to establishment and maintenance of county and
3multiple-county health departments", approved July 9, 1943, as
4amended, or distributions under Section 3 of the Department of
5Public Health Act, shall use these only for municipality
6contributions by the health department.
7    (g) Municipality contributions for the several purposes
8specified shall, for township treasurers and employees in the
9offices of the township treasurers who meet the qualifying
10conditions for coverage hereunder, be allocated among the
11several school districts and parts of school districts serviced
12by such treasurers and employees in the proportion which the
13amount of school funds of each district or part of a district
14handled by the treasurer bears to the total amount of all
15school funds handled by the treasurer.
16    From the funds subject to allocation among districts and
17parts of districts pursuant to the School Code, the trustees
18shall withhold the proportionate share of the liability for
19municipality contributions imposed upon such districts by this
20Section, in respect to such township treasurers and employees
21and remit the same to the Board.
22    The municipality contribution rate for an educational
23service center shall initially be the same rate for each year
24as the regional office of education or school district which
25serves as its administrative agent. When actuarial data become
26available, a separate rate shall be established as provided in

 

 

HB4622- 12 -LRB097 16031 JDS 61183 b

1subparagraph (i) of this Section.
2    The municipality contribution rate for a public agency,
3other than a vocational education cooperative, formed under the
4Intergovernmental Cooperation Act shall initially be the
5average rate for the municipalities which are parties to the
6intergovernmental agreement. When actuarial data become
7available, a separate rate shall be established as provided in
8subparagraph (i) of this Section.
9    (h) Each participating municipality and participating
10instrumentality shall make the contributions in the amounts
11provided in this Section in the manner prescribed from time to
12time by the Board and all such contributions shall be
13obligations of the respective participating municipalities and
14participating instrumentalities to this fund. The failure to
15deduct any employee contributions shall not relieve the
16participating municipality or participating instrumentality of
17its obligation to this fund. Delinquent payments of
18contributions due under this Section may, with interest, be
19recovered by civil action against the participating
20municipalities or participating instrumentalities.
21Municipality contributions, other than the amount necessary
22for employee contributions and Social Security contributions,
23for periods of service by employees from whose earnings no
24deductions were made for employee contributions to the fund,
25may be charged to the municipality reserve for the municipality
26or participating instrumentality.

 

 

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1    (i) Contributions by participating instrumentalities shall
2be determined as provided herein except that the percentage
3derived under subparagraph 2 of paragraph (b) of this Section,
4and the amount payable under subparagraph 4 of paragraph (a) of
5this Section, shall be based on an amortization period of 10
6years.
7    (j) Notwithstanding the other provisions of this Section,
8the additional unfunded liability accruing as a result of this
9amendatory Act of the 94th General Assembly shall be amortized
10over a period of 30 years beginning on January 1 of the second
11calendar year following the calendar year in which this
12amendatory Act takes effect, except that the employer may
13provide for a longer amortization period by adopting a
14resolution or ordinance specifying a 35-year or 40-year period
15and submitting a certified copy of the ordinance or resolution
16to the fund no later than June 1 of the calendar year following
17the calendar year in which this amendatory Act takes effect.
18    (k) If the amount of a participating employee's reported
19earnings for any of the 12-month periods used to determine the
20final rate of earnings exceeds the employee's 12 month reported
21earnings with the same employer for the previous year by the
22greater of 6% or 1.5 times the annual increase in the Consumer
23Price Index-U, as established by the United States Department
24of Labor for the preceding September, the participating
25municipality or participating instrumentality that paid those
26earnings shall pay to the Fund, in addition to any other

 

 

HB4622- 14 -LRB097 16031 JDS 61183 b

1contributions required under this Article, the present value of
2the increase in the pension resulting from the portion of the
3increase in salary that is in excess of the greater of 6% or
41.5 times the annual increase in the Consumer Price Index-U, as
5determined by the Fund. This present value shall be computed on
6the basis of the actuarial assumptions and tables used in the
7most recent actuarial valuation of the Fund that is available
8at the time of the computation.
9    Whenever it determines that a payment is or may be required
10under this subsection (k), the fund shall calculate the amount
11of the payment and bill the participating municipality or
12participating instrumentality for that amount. The bill shall
13specify the calculations used to determine the amount due. If
14the participating municipality or participating
15instrumentality disputes the amount of the bill, it may, within
1630 days after receipt of the bill, apply to the fund in writing
17for a recalculation. The application must specify in detail the
18grounds of the dispute. Upon receiving a timely application for
19recalculation, the fund shall review the application and, if
20appropriate, recalculate the amount due. The participating
21municipality and participating instrumentality contributions
22required under this subsection (k) may be paid in the form of a
23lump sum within 90 days after receipt of the bill. If the
24participating municipality and participating instrumentality
25contributions are not paid within 90 days after receipt of the
26bill, then interest will be charged at a rate equal to the

 

 

HB4622- 15 -LRB097 16031 JDS 61183 b

1fund's annual actuarially assumed rate of return on investment
2compounded annually from the 91st day after receipt of the
3bill. Payments must be concluded within 3 years after receipt
4of the bill by the participating municipality or participating
5instrumentality.
6    When assessing payment for any amount due under this
7subsection (k), the fund shall exclude earnings increases
8resulting from overload or overtime earnings.
9    When assessing payment for any amount due under this
10subsection (k), the fund shall also exclude earnings increases
11attributable to standard employment promotions resulting in
12increased responsibility and workload.
13    This subsection (k) does not apply to earnings increases
14paid to individuals under contracts or collective bargaining
15agreements entered into, amended, or renewed before January 1,
162012 (the effective date of Public Act 97-609) this amendatory
17Act of the 97th General Assembly, earnings increases paid to
18members who are 10 years or more from retirement eligibility,
19or earnings increases resulting from an increase in the number
20of hours required to be worked.
21    When assessing payment for any amount due under this
22subsection (k), the fund shall also exclude earnings
23attributable to personnel policies adopted before January 1,
242012 (the effective date of Public Act 97-609) this amendatory
25Act of the 97th General Assembly as long as those policies are
26not applicable to employees who begin service on or after

 

 

HB4622- 16 -LRB097 16031 JDS 61183 b

1January 1, 2012 (the effective date of Public Act 97-609) this
2amendatory Act of the 97th General Assembly.
3(Source: P.A. 96-1084, eff. 7-16-10; 96-1140, eff. 7-21-10;
497-333, eff. 8-12-11; 97-609, eff. 1-1-12.)
 
5    (40 ILCS 5/7-172.2)  (from Ch. 108 1/2, par. 7-172.2)
6    Sec. 7-172.2. In addition to the payments otherwise
7required by this Article, each participating municipality and
8each participating instrumentality shall make payment of
9Social Security contributions and medicare taxes in the amounts
10and in the manner provided by law. Each employee shall make
11contributions for Federal Social Security and medicare taxes,
12for periods during which he or she is a covered employee, as
13required by the Social Security Enabling Act and State and
14federal law.
15(Source: P.A. 84-1472.)
 
16    (40 ILCS 5/7-173)  (from Ch. 108 1/2, par. 7-173)
17    Sec. 7-173. Contributions by employees.
18    (a) Each participating employee shall make contributions
19to the fund as follows:
20        1. For retirement annuity purposes, normal
21    contributions of 3 3/4% of earnings.
22        2. Additional contributions of such percentages of
23    each payment of earnings, as shall be elected by the
24    employee for retirement annuity purposes, but not in excess

 

 

HB4622- 17 -LRB097 16031 JDS 61183 b

1    of 10%. The selected rate shall be applicable to all
2    earnings paid following receipt by the Board of written
3    notice of election to make such contributions. Additional
4    contributions at the selected rate shall be made
5    concurrently with normal contributions.
6        3. Survivor contributions, by each participating
7    employee, of 3/4% of each payment of earnings.
8    (b) (Blank) Each employee shall make contributions for
9Federal Social Security taxes, for periods during which he is a
10covered employee, as required by the Social Security Enabling
11Act and State and federal law. For participating employees,
12such contributions shall be in addition to those required under
13paragraph (a) of this Section.
14    (c) Contributions shall be deducted from each
15corresponding payment of earnings paid to each employee and
16shall be remitted to the board by the participating
17municipality or participating instrumentality making such
18payment. The remittance, together with a report of the earnings
19and contributions shall be made as directed by the board. For
20township treasurers and employees of township treasurers
21qualifying as employees hereunder, the contributions herein
22required as deductions from salary shall be withheld by the
23school township trustees from funds available for the payment
24of the compensation of such treasurers and employees as
25provided in the School Code and remitted to the board.
26    (d) An employee who has made additional contributions under

 

 

HB4622- 18 -LRB097 16031 JDS 61183 b

1paragraph (a)2 of this Section may upon retirement or at any
2time prior thereto, elect to withdraw the total of such
3additional contributions including interest credited thereon
4to the end of the preceding calendar year.
5    (e) Failure to make the deductions for employee
6contributions provided in paragraph (c) of this Section shall
7not relieve the employee from liability for such contributions.
8The amount of such liability may be deducted, with interest
9charged under Section 7-209, from any annuities or benefits
10payable hereunder to the employee or any other person receiving
11an annuity or benefit by reason of such employee's
12participation.
13    (f) A participating employee who has at least 40 years of
14creditable service in the Fund may elect to cease making the
15contributions required under this Section. The status of the
16employee under this Article shall be unaffected by this
17election, except that the employee shall not receive any
18additional creditable service for the periods of employment
19following the election. An election under this subsection
20relieves the employer from making additional employer
21contributions in relation to that employee.
22(Source: P.A. 96-1084, eff. 7-16-10; 96-1258, eff. 7-23-10;
2397-333, eff. 8-12-11.)
 
24    (40 ILCS 5/7-220)  (from Ch. 108 1/2, par. 7-220)
25    Sec. 7-220. Administrative review. The provisions of the

 

 

HB4622- 19 -LRB097 16031 JDS 61183 b

1Administrative Review Law, and all amendments and
2modifications thereof and the rules adopted pursuant thereto
3shall apply to and govern all proceedings for the judicial
4review of final administrative decisions of the retirement
5board provided for under this Article. The term "administrative
6decision" is as defined in Section 3-101 of the Code of Civil
7Procedure. The venue for actions brought under the
8Administrative Review Law shall be any county in which the
9Board maintains an office or the county in which the member's
10plaintiff's employing participating municipality or
11participating instrumentality has its main office.
12(Source: P.A. 96-1140, eff. 7-21-10.)
 
13    Section 90. The State Mandates Act is amended by adding
14Section 8.36 as follows:
 
15    (30 ILCS 805/8.36 new)
16    Sec. 8.36. Exempt mandate. Notwithstanding Sections 6 and 8
17of this Act, no reimbursement by the State is required for the
18implementation of any mandate created by this amendatory Act of
19the 97th General Assembly.
 
20    Section 99. Effective date. This Act takes effect upon
21becoming law.