Rep. Tom Cross

Filed: 5/29/2012

 

 


 

 


 
09700SB1673ham004LRB097 07605 JWD 70319 a

1
AMENDMENT TO SENATE BILL 1673

2    AMENDMENT NO. ______. Amend Senate Bill 1673, AS AMENDED,
3with reference to page and line numbers of House Amendment No.
4No. 3 as follows:
 
5on page 15, line 24, after "Section" insert "2-110.3,"; and
 
6on page 16, line 4, after "Section" insert "2-110.3,"; and
 
7on page 17, line 12, after "Section" insert "2-110.3,"; and
 
8on page 18, line 7, after "Section" insert "2-110.3,"; and
 
9on page 18, line 19, after "Section" insert "2-110.3,"; and
 
10on page 25, line 3, delete "16-163, 16-165,"; and
 
11on page 25, line 8, after "16-131.7," insert "and", and delete

 

 

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1", and 16-158.2"; and
 
2replace page 242, line 2, through page 268, line 5, with the
3following:
 
4    "(40 ILCS 5/16-158)   (from Ch. 108 1/2, par. 16-158)
5    Sec. 16-158. Contributions by State and other employing
6units.
7    (a) Except as otherwise provided in this Section, the The
8State shall make contributions to the System by means of
9appropriations from the Common School Fund and other State
10funds of amounts which, together with other employer
11contributions, employee contributions, investment income, and
12other income, will be sufficient to meet the cost of
13maintaining and administering the System on a 90% funded basis
14in accordance with actuarial recommendations.
15    The Board shall determine the amount of State contributions
16required for each fiscal year on the basis of the actuarial
17tables and other assumptions adopted by the Board and the
18recommendations of the actuary, using the formula in subsection
19(b-3).
20    (a-1) Annually, on or before November 15, the Board shall
21certify to the Governor the amount of the required State
22contribution for the coming fiscal year. The certification
23shall include a copy of the actuarial recommendations upon
24which it is based.

 

 

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1    On or before May 1, 2004, the Board shall recalculate and
2recertify to the Governor the amount of the required State
3contribution to the System for State fiscal year 2005, taking
4into account the amounts appropriated to and received by the
5System under subsection (d) of Section 7.2 of the General
6Obligation Bond Act.
7    On or before July 1, 2005 April 1, 2011, the Board shall
8recalculate and recertify to the Governor the amount of the
9required State contribution to the System for State fiscal year
102006, taking into account the changes in required State
11contributions made by this amendatory Act of the 94th General
12Assembly.
13    On or before April 1, 2011 June 15, 2010, the Board shall
14recalculate and recertify to the Governor the amount of the
15required State contribution to the System for State fiscal year
162011, applying the changes made by Public Act 96-889 to the
17System's assets and liabilities as of June 30, 2009 as though
18Public Act 96-889 was approved on that date.
19    (a-5) On or before November 1 of each year, beginning
20November 1, 2012, the Board shall submit to the State Actuary a
21proposed certification of the amount of the required State
22contribution to the System for the next fiscal year, along with
23all of the actuarial assumptions, calculations, and data upon
24which that proposed certification is based. On or before
25January 1 of each year beginning January 1, 2013, the State
26Actuary shall issue a preliminary report concerning the

 

 

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1proposed certification and identifying, if necessary,
2recommended changes in actuarial assumptions that the Board
3must consider before finalizing its certification of the
4required State contributions. On or before January 15, 2013 and
5each January 15 thereafter, the Board shall certify to the
6Governor and the General Assembly the amount of the required
7State contribution for the next fiscal year. The Board's
8certification must note any deviations from the State Actuary's
9recommended changes, the reason or reasons for not following
10the State Actuary's recommended changes, and the fiscal impact
11of not following the State Actuary's recommended changes on the
12required State contribution.
13    (b) Through State fiscal year 1995, the State contributions
14shall be paid to the System in accordance with Section 18-7 of
15the School Code.
16    (b-1) Beginning in State fiscal year 1996, on the 15th day
17of each month, or as soon thereafter as may be practicable, the
18Board shall submit vouchers for payment of State contributions
19to the System, in a total monthly amount of one-twelfth of the
20required annual State contribution certified under subsection
21(a-1). From the effective date of this amendatory Act of the
2293rd General Assembly through June 30, 2004, the Board shall
23not submit vouchers for the remainder of fiscal year 2004 in
24excess of the fiscal year 2004 certified contribution amount
25determined under this Section after taking into consideration
26the transfer to the System under subsection (a) of Section

 

 

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16z-61 of the State Finance Act. These vouchers shall be paid by
2the State Comptroller and Treasurer by warrants drawn on the
3funds appropriated to the System for that fiscal year.
4    If in any month the amount remaining unexpended from all
5other appropriations to the System for the applicable fiscal
6year (including the appropriations to the System under Section
78.12 of the State Finance Act and Section 1 of the State
8Pension Funds Continuing Appropriation Act) is less than the
9amount lawfully vouchered under this subsection, the
10difference shall be paid from the Common School Fund under the
11continuing appropriation authority provided in Section 1.1 of
12the State Pension Funds Continuing Appropriation Act.
13    (b-2) Allocations from the Common School Fund apportioned
14to school districts not coming under this System shall not be
15diminished or affected by the provisions of this Article.
16    (b-3) For State fiscal years 2012 and 2013 through 2045,
17the minimum contribution to the System to be made by the State
18for each fiscal year shall be an amount determined by the
19System to be sufficient to bring the total assets of the System
20up to 90% of the total actuarial liabilities of the System by
21the end of State fiscal year 2045. In making these
22determinations, the required State contribution shall be
23calculated each year as a level percentage of payroll over the
24years remaining to and including fiscal year 2045 and shall be
25determined under the projected unit credit actuarial cost
26method.

 

 

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1    For State fiscal years 1996 through 2005, the State
2contribution to the System, as a percentage of the applicable
3employee payroll, shall be increased in equal annual increments
4so that by State fiscal year 2011, the State is contributing at
5the rate required under this Section; except that in the
6following specified State fiscal years, the State contribution
7to the System shall not be less than the following indicated
8percentages of the applicable employee payroll, even if the
9indicated percentage will produce a State contribution in
10excess of the amount otherwise required under this subsection
11and subsection (a), and notwithstanding any contrary
12certification made under subsection (a-1) before the effective
13date of this amendatory Act of 1998: 10.02% in FY 1999; 10.77%
14in FY 2000; 11.47% in FY 2001; 12.16% in FY 2002; 12.86% in FY
152003; and 13.56% in FY 2004.
16    Notwithstanding any other provision of this Article, the
17total required State contribution for State fiscal year 2006 is
18$534,627,700.
19    Notwithstanding any other provision of this Article, the
20total required State contribution for State fiscal year 2007 is
21$738,014,500.
22    For each of State fiscal years 2008 through 2009, the State
23contribution to the System, as a percentage of the applicable
24employee payroll, shall be increased in equal annual increments
25from the required State contribution for State fiscal year
262007, so that by State fiscal year 2011, the State is

 

 

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1contributing at the rate otherwise required under this Section.
2    Notwithstanding any other provision of this Article, the
3total required State contribution for State fiscal year 2010 is
4$2,089,268,000 and shall be made from the proceeds of bonds
5sold in fiscal year 2010 pursuant to Section 7.2 of the General
6Obligation Bond Act, less (i) the pro rata share of bond sale
7expenses determined by the System's share of total bond
8proceeds, (ii) any amounts received from the Common School Fund
9in fiscal year 2010, and (iii) any reduction in bond proceeds
10due to the issuance of discounted bonds, if applicable.
11    Notwithstanding any other provision of this Article, the
12total required State contribution for State fiscal year 2011 is
13the amount recertified by the System on or before April 1, 2011
14pursuant to subsection (a-1) of this Section and shall be made
15from the proceeds of bonds sold in fiscal year 2011 pursuant to
16Section 7.2 of the General Obligation Bond Act, less (i) the
17pro rata share of bond sale expenses determined by the System's
18share of total bond proceeds, (ii) any amounts received from
19the Common School Fund in fiscal year 2011, and (iii) any
20reduction in bond proceeds due to the issuance of discounted
21bonds, if applicable. This amount shall include, in addition to
22the amount certified by the System, an amount necessary to meet
23employer contributions required by the State as an employer
24under paragraph (e) of this Section, which may also be used by
25the System for contributions required by paragraph (a) of
26Section 16-127.

 

 

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1    Beginning in State fiscal year 2046, the minimum State
2contribution for each fiscal year shall be the amount needed to
3maintain the total assets of the System at 90% of the total
4actuarial liabilities of the System.
5    Amounts received by the System pursuant to Section 25 of
6the Budget Stabilization Act or Section 8.12 of the State
7Finance Act in any fiscal year do not reduce and do not
8constitute payment of any portion of the minimum State
9contribution required under this Article in that fiscal year.
10Such amounts shall not reduce, and shall not be included in the
11calculation of, the required State contributions under this
12Article in any future year until the System has reached a
13funding ratio of at least 90%. A reference in this Article to
14the "required State contribution" or any substantially similar
15term does not include or apply to any amounts payable to the
16System under Section 25 of the Budget Stabilization Act.
17    Notwithstanding any other provision of this Section, the
18required State contribution for State fiscal year 2005 and for
19fiscal year 2008 and each fiscal year thereafter, as calculated
20under this Section and certified under subsection (a-1), shall
21not exceed an amount equal to (i) the amount of the required
22State contribution that would have been calculated under this
23Section for that fiscal year if the System had not received any
24payments under subsection (d) of Section 7.2 of the General
25Obligation Bond Act, minus (ii) the portion of the State's
26total debt service payments for that fiscal year on the bonds

 

 

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1issued in fiscal year 2003 for the purposes of that Section
27.2, as determined and certified by the Comptroller, that is
3the same as the System's portion of the total moneys
4distributed under subsection (d) of Section 7.2 of the General
5Obligation Bond Act. In determining this maximum for State
6fiscal years 2008 through 2010, however, the amount referred to
7in item (i) shall be increased, as a percentage of the
8applicable employee payroll, in equal increments calculated
9from the sum of the required State contribution for State
10fiscal year 2007 plus the applicable portion of the State's
11total debt service payments for fiscal year 2007 on the bonds
12issued in fiscal year 2003 for the purposes of Section 7.2 of
13the General Obligation Bond Act, so that, by State fiscal year
142011, the State is contributing at the rate otherwise required
15under this Section.
16    (b-5) If at least 50% of Tier I employees making an
17election under Section 16-131.7 before June 1, 2013 choose the
18option under paragraph (1) of subsection (a) of that Section,
19then:
20        (1) In lieu of the State contributions required under
21    subsection (e), for State fiscal years 2014 through 2043
22    the minimum contribution to the System to be made by the
23    State for each fiscal year shall be an amount determined by
24    the System to be equal to the sum of (1) the State's
25    portion of the projected normal cost for that fiscal year,
26    plus (2) an amount sufficient to bring the total assets of

 

 

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1    the System up to 100% of the total actuarial liabilities of
2    the System by the end of State fiscal year 2043. In making
3    these determinations, the required State contribution
4    shall be calculated each year as a level percentage of
5    payroll over the years remaining to and including fiscal
6    year 2043 and shall be determined under the projected unit
7    credit actuarial cost method.
8        (2) Beginning in State fiscal year 2044, the minimum
9    State contribution for each fiscal year shall be the amount
10    needed to maintain the total assets of the System at 100%
11    of the total actuarial liabilities of the System.
12    (b-6) If less than 50% of Tier I employees making an
13election under Section 17-131.7 before June 1, 2013 choose the
14option under paragraph (1) of subsection (a) of that Section,
15then:
16        (1) Instead of the annual required contribution
17    otherwise specified in subsection (b-5) of this Section,
18    the annual required contribution to the System to be made
19    by the State shall be determined under subsection (e) of
20    this Section.
21        (2) As soon as possible after June 1, 2014, the Board
22    shall recertify the annual required contribution by the
23    State for State fiscal year 2015.
24    (c) Payment of the required State contributions and of all
25pensions, retirement annuities, death benefits, refunds, and
26other benefits granted under or assumed by this System, and all

 

 

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1expenses in connection with the administration and operation
2thereof, are obligations of the State.
3    If members are paid from special trust or federal funds
4which are administered by the employing unit, whether school
5district or other unit, the employing unit shall pay to the
6System from such funds the full accruing retirement costs based
7upon that service, as determined by the System. Employer
8contributions, based on salary paid to members from federal
9funds, may be forwarded by the distributing agency of the State
10of Illinois to the System prior to allocation, in an amount
11determined in accordance with guidelines established by such
12agency and the System.
13    (d) Effective July 1, 1986, any employer of a teacher as
14defined in paragraph (8) of Section 16-106 shall pay the
15employer's normal cost of benefits based upon the teacher's
16service, in addition to employee contributions, as determined
17by the System. Such employer contributions shall be forwarded
18monthly in accordance with guidelines established by the
19System.
20    However, with respect to benefits granted under Section
2116-133.4 or 16-133.5 to a teacher as defined in paragraph (8)
22of Section 16-106, the employer's contribution shall be 12%
23(rather than 20%) of the member's highest annual salary rate
24for each year of creditable service granted, and the employer
25shall also pay the required employee contribution on behalf of
26the teacher. For the purposes of Sections 16-133.4 and

 

 

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116-133.5, a teacher as defined in paragraph (8) of Section
216-106 who is serving in that capacity while on leave of
3absence from another employer under this Article shall not be
4considered an employee of the employer from which the teacher
5is on leave.
6    (e) Beginning July 1, 1998, every employer of a teacher
7shall pay to the System an employer contribution computed as
8follows:
9        (1) Beginning July 1, 1998 through June 30, 1999, the
10    employer contribution shall be equal to 0.3% of each
11    teacher's salary.
12        (2) Beginning July 1, 1999 and thereafter, the employer
13    contribution shall be equal to 0.58% of each teacher's
14    salary.
15The school district or other employing unit may pay these
16employer contributions out of any source of funding available
17for that purpose and shall forward the contributions to the
18System on the schedule established for the payment of member
19contributions.
20    These employer contributions are intended to offset a
21portion of the cost to the System of the increases in
22retirement benefits resulting from this amendatory Act of 1998.
23    Each employer of teachers is entitled to a credit against
24the contributions required under this subsection (e) with
25respect to salaries paid to teachers for the period January 1,
262002 through June 30, 2003, equal to the amount paid by that

 

 

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1employer under subsection (a-5) of Section 6.6 of the State
2Employees Group Insurance Act of 1971 with respect to salaries
3paid to teachers for that period.
4    The additional 1% employee contribution required under
5Section 16-152 by this amendatory Act of 1998 is the
6responsibility of the teacher and not the teacher's employer,
7unless the employer agrees, through collective bargaining or
8otherwise, to make the contribution on behalf of the teacher.
9    If an employer is required by a contract in effect on May
101, 1998 between the employer and an employee organization to
11pay, on behalf of all its full-time employees covered by this
12Article, all mandatory employee contributions required under
13this Article, then the employer shall be excused from paying
14the employer contribution required under this subsection (e)
15for the balance of the term of that contract. The employer and
16the employee organization shall jointly certify to the System
17the existence of the contractual requirement, in such form as
18the System may prescribe. This exclusion shall cease upon the
19termination, extension, or renewal of the contract at any time
20after May 1, 1998.
21    (f) If the amount of a teacher's salary for any school year
22used to determine final average salary exceeds the member's
23annual full-time salary rate with the same employer for the
24previous school year by more than 6%, the teacher's employer
25shall pay to the System, in addition to all other payments
26required under this Section and in accordance with guidelines

 

 

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1established by the System, the present value of the increase in
2benefits resulting from the portion of the increase in salary
3that is in excess of 6%. This present value shall be computed
4by the System on the basis of the actuarial assumptions and
5tables used in the most recent actuarial valuation of the
6System that is available at the time of the computation. If a
7teacher's salary for the 2005-2006 school year is used to
8determine final average salary under this subsection (f), then
9the changes made to this subsection (f) by Public Act 94-1057
10shall apply in calculating whether the increase in his or her
11salary is in excess of 6%. For the purposes of this Section,
12change in employment under Section 10-21.12 of the School Code
13on or after June 1, 2005 shall constitute a change in employer.
14The System may require the employer to provide any pertinent
15information or documentation. The changes made to this
16subsection (f) by this amendatory Act of the 94th General
17Assembly apply without regard to whether the teacher was in
18service on or after its effective date. The changes to this
19subsection (removing the 6% increase permitted without payment
20to the System by the employer) made by this amendatory Act of
21the 97th General Assembly do not apply to a teacher who is
22covered by a collective bargaining agreement or employment
23contract in effect on the effective date of this amendatory Act
24that provides for such increases, until such time as that
25agreement or contract expires or is amended or renewed.
26    Whenever it determines that a payment is or may be required

 

 

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1under this subsection, the System shall calculate the amount of
2the payment and bill the employer for that amount. The bill
3shall specify the calculations used to determine the amount
4due. If the employer disputes the amount of the bill, it may,
5within 30 days after receipt of the bill, apply to the System
6in writing for a recalculation. The application must specify in
7detail the grounds of the dispute and, if the employer asserts
8that the calculation is subject to subsection (g) or (h) of
9this Section, must include an affidavit setting forth and
10attesting to all facts within the employer's knowledge that are
11pertinent to the applicability of that subsection. Upon
12receiving a timely application for recalculation, the System
13shall review the application and, if appropriate, recalculate
14the amount due.
15    The employer contributions required under this subsection
16(f) may be paid in the form of a lump sum within 90 days after
17receipt of the bill. If the employer contributions are not paid
18within 90 days after receipt of the bill, then interest will be
19charged at a rate equal to the System's annual actuarially
20assumed rate of return on investment compounded annually from
21the 91st day after receipt of the bill. Payments must be
22concluded within 3 years after the employer's receipt of the
23bill.
24    (g) This subsection (g) applies only to payments made or
25salary increases given on or after June 1, 2005 but before July
261, 2011. The changes made by Public Act 94-1057 shall not

 

 

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1require the System to refund any payments received before July
231, 2006 (the effective date of Public Act 94-1057).
3    When assessing payment for any amount due under subsection
4(f), the System shall exclude salary increases paid to teachers
5under contracts or collective bargaining agreements entered
6into, amended, or renewed before June 1, 2005.
7    When assessing payment for any amount due under subsection
8(f), the System shall exclude salary increases paid to a
9teacher at a time when the teacher is 10 or more years from
10retirement eligibility under Section 16-132 or 16-133.2.
11    When assessing payment for any amount due under subsection
12(f), the System shall exclude salary increases resulting from
13overload work, including summer school, when the school
14district has certified to the System, and the System has
15approved the certification, that (i) the overload work is for
16the sole purpose of classroom instruction in excess of the
17standard number of classes for a full-time teacher in a school
18district during a school year and (ii) the salary increases are
19equal to or less than the rate of pay for classroom instruction
20computed on the teacher's current salary and work schedule.
21    When assessing payment for any amount due under subsection
22(f), the System shall exclude a salary increase resulting from
23a promotion (i) for which the employee is required to hold a
24certificate or supervisory endorsement issued by the State
25Teacher Certification Board that is a different certification
26or supervisory endorsement than is required for the teacher's

 

 

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1previous position and (ii) to a position that has existed and
2been filled by a member for no less than one complete academic
3year and the salary increase from the promotion is an increase
4that results in an amount no greater than the lesser of the
5average salary paid for other similar positions in the district
6requiring the same certification or the amount stipulated in
7the collective bargaining agreement for a similar position
8requiring the same certification.
9    When assessing payment for any amount due under subsection
10(f), the System shall exclude any payment to the teacher from
11the State of Illinois or the State Board of Education over
12which the employer does not have discretion, notwithstanding
13that the payment is included in the computation of final
14average salary.
15    (h) When assessing payment for any amount due under
16subsection (f), the System shall exclude any salary increase
17described in subsection (g) of this Section given on or after
18July 1, 2011 but before July 1, 2014 under a contract or
19collective bargaining agreement entered into, amended, or
20renewed on or after June 1, 2005 but before July 1, 2011.
21Notwithstanding any other provision of this Section, any
22payments made or salary increases given after June 30, 2014
23shall be used in assessing payment for any amount due under
24subsection (f) of this Section.
25    (i) The System shall prepare a report and file copies of
26the report with the Governor and the General Assembly by

 

 

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1January 1, 2007 that contains all of the following information:
2        (1) The number of recalculations required by the
3    changes made to this Section by Public Act 94-1057 for each
4    employer.
5        (2) The dollar amount by which each employer's
6    contribution to the System was changed due to
7    recalculations required by Public Act 94-1057.
8        (3) The total amount the System received from each
9    employer as a result of the changes made to this Section by
10    Public Act 94-4.
11        (4) The increase in the required State contribution
12    resulting from the changes made to this Section by Public
13    Act 94-1057.
14    (j) For purposes of determining the required State
15contribution to the System, the value of the System's assets
16shall be equal to the actuarial value of the System's assets,
17which shall be calculated as follows:
18    As of June 30, 2008, the actuarial value of the System's
19assets shall be equal to the market value of the assets as of
20that date. In determining the actuarial value of the System's
21assets for fiscal years after June 30, 2008, any actuarial
22gains or losses from investment return incurred in a fiscal
23year shall be recognized in equal annual amounts over the
245-year period following that fiscal year.
25    (k) For purposes of determining the required State
26contribution to the system for a particular year, the actuarial

 

 

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1value of assets shall be assumed to earn a rate of return equal
2to the system's actuarially assumed rate of return.
3(Source: P.A. 95-331, eff. 8-21-07; 95-950, eff. 8-29-08;
496-43, eff. 7-15-09; 96-1497, eff. 1-14-11; 96-1511, eff.
51-27-11; 96-1554, eff. 3-18-11; revised 4-6-11.)".