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Full Text of HB3865  97th General Assembly

HB3865sam005 97TH GENERAL ASSEMBLY

Sen. Christine Radogno

Filed: 5/30/2012

 

 


 

 


 
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1
AMENDMENT TO HOUSE BILL 3865

2    AMENDMENT NO. ______. Amend House Bill 3865, AS AMENDED,
3with reference to page and line numbers of Senate Amendment No.
4No. 3 as follows:
 
5on page 13, line 24, after "16-131.7," by inserting "and", and
6delete ", and 16-158.2"; and
 
7by replacing page 127, line 23, through page 150, line 1, with
8the following:
 
9    "(40 ILCS 5/16-158)   (from Ch. 108 1/2, par. 16-158)
10    Sec. 16-158. Contributions by State and other employing
11units.
12    (a) Except as otherwise provided in this Section, the The
13State shall make contributions to the System by means of
14appropriations from the Common School Fund and other State
15funds of amounts which, together with other employer

 

 

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1contributions, employee contributions, investment income, and
2other income, will be sufficient to meet the cost of
3maintaining and administering the System on a 90% funded basis
4in accordance with actuarial recommendations.
5    The Board shall determine the amount of State contributions
6required for each fiscal year on the basis of the actuarial
7tables and other assumptions adopted by the Board and the
8recommendations of the actuary, using the formula in subsection
9(b-3).
10    (a-1) Annually, on or before November 15, the Board shall
11certify to the Governor the amount of the required State
12contribution for the coming fiscal year. The certification
13shall include a copy of the actuarial recommendations upon
14which it is based.
15    On or before May 1, 2004, the Board shall recalculate and
16recertify to the Governor the amount of the required State
17contribution to the System for State fiscal year 2005, taking
18into account the amounts appropriated to and received by the
19System under subsection (d) of Section 7.2 of the General
20Obligation Bond Act.
21    On or before July 1, 2005 April 1, 2011, the Board shall
22recalculate and recertify to the Governor the amount of the
23required State contribution to the System for State fiscal year
242006, taking into account the changes in required State
25contributions made by this amendatory Act of the 94th General
26Assembly.

 

 

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1    On or before April 1, 2011 June 15, 2010, the Board shall
2recalculate and recertify to the Governor the amount of the
3required State contribution to the System for State fiscal year
42011, applying the changes made by Public Act 96-889 to the
5System's assets and liabilities as of June 30, 2009 as though
6Public Act 96-889 was approved on that date.
7    (a-5) On or before November 1 of each year, beginning
8November 1, 2012, the Board shall submit to the State Actuary a
9proposed certification of the amount of the required State
10contribution to the System for the next fiscal year, along with
11all of the actuarial assumptions, calculations, and data upon
12which that proposed certification is based. On or before
13January 1 of each year beginning January 1, 2013, the State
14Actuary shall issue a preliminary report concerning the
15proposed certification and identifying, if necessary,
16recommended changes in actuarial assumptions that the Board
17must consider before finalizing its certification of the
18required State contributions. On or before January 15, 2013 and
19each January 15 thereafter, the Board shall certify to the
20Governor and the General Assembly the amount of the required
21State contribution for the next fiscal year. The Board's
22certification must note any deviations from the State Actuary's
23recommended changes, the reason or reasons for not following
24the State Actuary's recommended changes, and the fiscal impact
25of not following the State Actuary's recommended changes on the
26required State contribution.

 

 

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1    (b) Through State fiscal year 1995, the State contributions
2shall be paid to the System in accordance with Section 18-7 of
3the School Code.
4    (b-1) Beginning in State fiscal year 1996, on the 15th day
5of each month, or as soon thereafter as may be practicable, the
6Board shall submit vouchers for payment of State contributions
7to the System, in a total monthly amount of one-twelfth of the
8required annual State contribution certified under subsection
9(a-1). From the effective date of this amendatory Act of the
1093rd General Assembly through June 30, 2004, the Board shall
11not submit vouchers for the remainder of fiscal year 2004 in
12excess of the fiscal year 2004 certified contribution amount
13determined under this Section after taking into consideration
14the transfer to the System under subsection (a) of Section
156z-61 of the State Finance Act. These vouchers shall be paid by
16the State Comptroller and Treasurer by warrants drawn on the
17funds appropriated to the System for that fiscal year.
18    If in any month the amount remaining unexpended from all
19other appropriations to the System for the applicable fiscal
20year (including the appropriations to the System under Section
218.12 of the State Finance Act and Section 1 of the State
22Pension Funds Continuing Appropriation Act) is less than the
23amount lawfully vouchered under this subsection, the
24difference shall be paid from the Common School Fund under the
25continuing appropriation authority provided in Section 1.1 of
26the State Pension Funds Continuing Appropriation Act.

 

 

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1    (b-2) Allocations from the Common School Fund apportioned
2to school districts not coming under this System shall not be
3diminished or affected by the provisions of this Article.
4    (b-3) Except as provided in subsection (b-5), for For State
5fiscal years 2012 through 2045, the minimum contribution to the
6System to be made by the State for each fiscal year shall be an
7amount determined by the System to be sufficient to bring the
8total assets of the System up to 90% of the total actuarial
9liabilities of the System by the end of State fiscal year 2045.
10In making these determinations, the required State
11contribution shall be calculated each year as a level
12percentage of payroll over the years remaining to and including
13fiscal year 2045 and shall be determined under the projected
14unit credit actuarial cost method.
15    For State fiscal years 1996 through 2005, the State
16contribution to the System, as a percentage of the applicable
17employee payroll, shall be increased in equal annual increments
18so that by State fiscal year 2011, the State is contributing at
19the rate required under this Section; except that in the
20following specified State fiscal years, the State contribution
21to the System shall not be less than the following indicated
22percentages of the applicable employee payroll, even if the
23indicated percentage will produce a State contribution in
24excess of the amount otherwise required under this subsection
25and subsection (a), and notwithstanding any contrary
26certification made under subsection (a-1) before the effective

 

 

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1date of this amendatory Act of 1998: 10.02% in FY 1999; 10.77%
2in FY 2000; 11.47% in FY 2001; 12.16% in FY 2002; 12.86% in FY
32003; and 13.56% in FY 2004.
4    Notwithstanding any other provision of this Article, the
5total required State contribution for State fiscal year 2006 is
6$534,627,700.
7    Notwithstanding any other provision of this Article, the
8total required State contribution for State fiscal year 2007 is
9$738,014,500.
10    For each of State fiscal years 2008 through 2009, the State
11contribution to the System, as a percentage of the applicable
12employee payroll, shall be increased in equal annual increments
13from the required State contribution for State fiscal year
142007, so that by State fiscal year 2011, the State is
15contributing at the rate otherwise required under this Section.
16    Notwithstanding any other provision of this Article, the
17total required State contribution for State fiscal year 2010 is
18$2,089,268,000 and shall be made from the proceeds of bonds
19sold in fiscal year 2010 pursuant to Section 7.2 of the General
20Obligation Bond Act, less (i) the pro rata share of bond sale
21expenses determined by the System's share of total bond
22proceeds, (ii) any amounts received from the Common School Fund
23in fiscal year 2010, and (iii) any reduction in bond proceeds
24due to the issuance of discounted bonds, if applicable.
25    Notwithstanding any other provision of this Article, the
26total required State contribution for State fiscal year 2011 is

 

 

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1the amount recertified by the System on or before April 1, 2011
2pursuant to subsection (a-1) of this Section and shall be made
3from the proceeds of bonds sold in fiscal year 2011 pursuant to
4Section 7.2 of the General Obligation Bond Act, less (i) the
5pro rata share of bond sale expenses determined by the System's
6share of total bond proceeds, (ii) any amounts received from
7the Common School Fund in fiscal year 2011, and (iii) any
8reduction in bond proceeds due to the issuance of discounted
9bonds, if applicable. This amount shall include, in addition to
10the amount certified by the System, an amount necessary to meet
11employer contributions required by the State as an employer
12under paragraph (e) of this Section, which may also be used by
13the System for contributions required by paragraph (a) of
14Section 16-127.
15    Except as provided in subsection (b-5), beginning
16Beginning in State fiscal year 2046, the minimum State
17contribution for each fiscal year shall be the amount needed to
18maintain the total assets of the System at 90% of the total
19actuarial liabilities of the System.
20    Amounts received by the System pursuant to Section 25 of
21the Budget Stabilization Act or Section 8.12 of the State
22Finance Act in any fiscal year do not reduce and do not
23constitute payment of any portion of the minimum State
24contribution required under this Article in that fiscal year.
25Such amounts shall not reduce, and shall not be included in the
26calculation of, the required State contributions under this

 

 

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1Article in any future year until the System has reached a
2funding ratio of at least 90%. A reference in this Article to
3the "required State contribution" or any substantially similar
4term does not include or apply to any amounts payable to the
5System under Section 25 of the Budget Stabilization Act.
6    Notwithstanding any other provision of this Section, the
7required State contribution for State fiscal year 2005 and for
8fiscal year 2008 and each fiscal year thereafter, as calculated
9under this Section and certified under subsection (a-1), shall
10not exceed an amount equal to (i) the amount of the required
11State contribution that would have been calculated under this
12Section for that fiscal year if the System had not received any
13payments under subsection (d) of Section 7.2 of the General
14Obligation Bond Act, minus (ii) the portion of the State's
15total debt service payments for that fiscal year on the bonds
16issued in fiscal year 2003 for the purposes of that Section
177.2, as determined and certified by the Comptroller, that is
18the same as the System's portion of the total moneys
19distributed under subsection (d) of Section 7.2 of the General
20Obligation Bond Act. In determining this maximum for State
21fiscal years 2008 through 2010, however, the amount referred to
22in item (i) shall be increased, as a percentage of the
23applicable employee payroll, in equal increments calculated
24from the sum of the required State contribution for State
25fiscal year 2007 plus the applicable portion of the State's
26total debt service payments for fiscal year 2007 on the bonds

 

 

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1issued in fiscal year 2003 for the purposes of Section 7.2 of
2the General Obligation Bond Act, so that, by State fiscal year
32011, the State is contributing at the rate otherwise required
4under this Section.
5    (b-5) If at least 50% of Tier I employees making an
6election under Section 16-131.7 before June 1, 2013 choose the
7option under paragraph (1) of subsection (a) of that Section,
8then:
9        (1) In lieu of the State contributions required under
10    subsection (b-3), for State fiscal years 2014 through 2043
11    the minimum contribution to the System to be made by the
12    State for each fiscal year shall be an amount determined by
13    the System to be equal to the sum of (1) the State's
14    portion of the projected normal cost for that fiscal year,
15    plus (2) an amount sufficient to bring the total assets of
16    the System up to 100% of the total actuarial liabilities of
17    the System by the end of State fiscal year 2043. In making
18    these determinations, the required State contribution
19    shall be calculated each year as a level percentage of
20    payroll over the years remaining to and including fiscal
21    year 2043 and shall be determined under the projected unit
22    credit actuarial cost method.
23        (2) Beginning in State fiscal year 2044, the minimum
24    State contribution for each fiscal year shall be the amount
25    needed to maintain the total assets of the System at 100%
26    of the total actuarial liabilities of the System.

 

 

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1    (b-6) If less than 50% of Tier I employees making an
2election under Section 16-131.7 before June 1, 2013 choose the
3option under paragraph (1) of subsection (a) of that Section,
4then:
5        (1) Instead of the annual required contribution
6    otherwise specified in subsection (b-5) of this Section,
7    the annual required contribution to the System to be made
8    by the State shall be determined under subsection (b-3) of
9    this Section.
10        (2) As soon as possible after June 1, 2014, the Board
11    shall recertify the annual required contribution by the
12    State for State fiscal year 2015.
13    (c) Payment of the required State contributions and of all
14pensions, retirement annuities, death benefits, refunds, and
15other benefits granted under or assumed by this System, and all
16expenses in connection with the administration and operation
17thereof, are obligations of the State.
18    If members are paid from special trust or federal funds
19which are administered by the employing unit, whether school
20district or other unit, the employing unit shall pay to the
21System from such funds the full accruing retirement costs based
22upon that service, as determined by the System. Employer
23contributions, based on salary paid to members from federal
24funds, may be forwarded by the distributing agency of the State
25of Illinois to the System prior to allocation, in an amount
26determined in accordance with guidelines established by such

 

 

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1agency and the System.
2    (d) Effective July 1, 1986, any employer of a teacher as
3defined in paragraph (8) of Section 16-106 shall pay the
4employer's normal cost of benefits based upon the teacher's
5service, in addition to employee contributions, as determined
6by the System. Such employer contributions shall be forwarded
7monthly in accordance with guidelines established by the
8System.
9    However, with respect to benefits granted under Section
1016-133.4 or 16-133.5 to a teacher as defined in paragraph (8)
11of Section 16-106, the employer's contribution shall be 12%
12(rather than 20%) of the member's highest annual salary rate
13for each year of creditable service granted, and the employer
14shall also pay the required employee contribution on behalf of
15the teacher. For the purposes of Sections 16-133.4 and
1616-133.5, a teacher as defined in paragraph (8) of Section
1716-106 who is serving in that capacity while on leave of
18absence from another employer under this Article shall not be
19considered an employee of the employer from which the teacher
20is on leave.
21    (e) Beginning July 1, 1998, every employer of a teacher
22shall pay to the System an employer contribution computed as
23follows:
24        (1) Beginning July 1, 1998 through June 30, 1999, the
25    employer contribution shall be equal to 0.3% of each
26    teacher's salary.

 

 

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1        (2) Beginning July 1, 1999 and thereafter, the employer
2    contribution shall be equal to 0.58% of each teacher's
3    salary.
4The school district or other employing unit may pay these
5employer contributions out of any source of funding available
6for that purpose and shall forward the contributions to the
7System on the schedule established for the payment of member
8contributions.
9    These employer contributions are intended to offset a
10portion of the cost to the System of the increases in
11retirement benefits resulting from this amendatory Act of 1998.
12    Each employer of teachers is entitled to a credit against
13the contributions required under this subsection (e) with
14respect to salaries paid to teachers for the period January 1,
152002 through June 30, 2003, equal to the amount paid by that
16employer under subsection (a-5) of Section 6.6 of the State
17Employees Group Insurance Act of 1971 with respect to salaries
18paid to teachers for that period.
19    The additional 1% employee contribution required under
20Section 16-152 by this amendatory Act of 1998 is the
21responsibility of the teacher and not the teacher's employer,
22unless the employer agrees, through collective bargaining or
23otherwise, to make the contribution on behalf of the teacher.
24    If an employer is required by a contract in effect on May
251, 1998 between the employer and an employee organization to
26pay, on behalf of all its full-time employees covered by this

 

 

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1Article, all mandatory employee contributions required under
2this Article, then the employer shall be excused from paying
3the employer contribution required under this subsection (e)
4for the balance of the term of that contract. The employer and
5the employee organization shall jointly certify to the System
6the existence of the contractual requirement, in such form as
7the System may prescribe. This exclusion shall cease upon the
8termination, extension, or renewal of the contract at any time
9after May 1, 1998.
10    (f) If the amount of a teacher's salary for any school year
11used to determine final average salary exceeds the member's
12annual full-time salary rate with the same employer for the
13previous school year by more than 6%, the teacher's employer
14shall pay to the System, in addition to all other payments
15required under this Section and in accordance with guidelines
16established by the System, the present value of the increase in
17benefits resulting from the portion of the increase in salary
18that is in excess of 6%. This present value shall be computed
19by the System on the basis of the actuarial assumptions and
20tables used in the most recent actuarial valuation of the
21System that is available at the time of the computation. If a
22teacher's salary for the 2005-2006 school year is used to
23determine final average salary under this subsection (f), then
24the changes made to this subsection (f) by Public Act 94-1057
25shall apply in calculating whether the increase in his or her
26salary is in excess of 6%. For the purposes of this Section,

 

 

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1change in employment under Section 10-21.12 of the School Code
2on or after June 1, 2005 shall constitute a change in employer.
3The System may require the employer to provide any pertinent
4information or documentation. The changes made to this
5subsection (f) by this amendatory Act of the 94th General
6Assembly apply without regard to whether the teacher was in
7service on or after its effective date.
8    Whenever it determines that a payment is or may be required
9under this subsection, the System shall calculate the amount of
10the payment and bill the employer for that amount. The bill
11shall specify the calculations used to determine the amount
12due. If the employer disputes the amount of the bill, it may,
13within 30 days after receipt of the bill, apply to the System
14in writing for a recalculation. The application must specify in
15detail the grounds of the dispute and, if the employer asserts
16that the calculation is subject to subsection (g) or (h) of
17this Section, must include an affidavit setting forth and
18attesting to all facts within the employer's knowledge that are
19pertinent to the applicability of that subsection. Upon
20receiving a timely application for recalculation, the System
21shall review the application and, if appropriate, recalculate
22the amount due.
23    The employer contributions required under this subsection
24(f) may be paid in the form of a lump sum within 90 days after
25receipt of the bill. If the employer contributions are not paid
26within 90 days after receipt of the bill, then interest will be

 

 

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1charged at a rate equal to the System's annual actuarially
2assumed rate of return on investment compounded annually from
3the 91st day after receipt of the bill. Payments must be
4concluded within 3 years after the employer's receipt of the
5bill.
6    (g) This subsection (g) applies only to payments made or
7salary increases given on or after June 1, 2005 but before July
81, 2011. The changes made by Public Act 94-1057 shall not
9require the System to refund any payments received before July
1031, 2006 (the effective date of Public Act 94-1057).
11    When assessing payment for any amount due under subsection
12(f), the System shall exclude salary increases paid to teachers
13under contracts or collective bargaining agreements entered
14into, amended, or renewed before June 1, 2005.
15    When assessing payment for any amount due under subsection
16(f), the System shall exclude salary increases paid to a
17teacher at a time when the teacher is 10 or more years from
18retirement eligibility under Section 16-132 or 16-133.2.
19    When assessing payment for any amount due under subsection
20(f), the System shall exclude salary increases resulting from
21overload work, including summer school, when the school
22district has certified to the System, and the System has
23approved the certification, that (i) the overload work is for
24the sole purpose of classroom instruction in excess of the
25standard number of classes for a full-time teacher in a school
26district during a school year and (ii) the salary increases are

 

 

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1equal to or less than the rate of pay for classroom instruction
2computed on the teacher's current salary and work schedule.
3    When assessing payment for any amount due under subsection
4(f), the System shall exclude a salary increase resulting from
5a promotion (i) for which the employee is required to hold a
6certificate or supervisory endorsement issued by the State
7Teacher Certification Board that is a different certification
8or supervisory endorsement than is required for the teacher's
9previous position and (ii) to a position that has existed and
10been filled by a member for no less than one complete academic
11year and the salary increase from the promotion is an increase
12that results in an amount no greater than the lesser of the
13average salary paid for other similar positions in the district
14requiring the same certification or the amount stipulated in
15the collective bargaining agreement for a similar position
16requiring the same certification.
17    When assessing payment for any amount due under subsection
18(f), the System shall exclude any payment to the teacher from
19the State of Illinois or the State Board of Education over
20which the employer does not have discretion, notwithstanding
21that the payment is included in the computation of final
22average salary.
23    (h) When assessing payment for any amount due under
24subsection (f), the System shall exclude any salary increase
25described in subsection (g) of this Section given on or after
26July 1, 2011 but before July 1, 2014 under a contract or

 

 

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1collective bargaining agreement entered into, amended, or
2renewed on or after June 1, 2005 but before July 1, 2011.
3Notwithstanding any other provision of this Section, any
4payments made or salary increases given after June 30, 2014
5shall be used in assessing payment for any amount due under
6subsection (f) of this Section.
7    (i) The System shall prepare a report and file copies of
8the report with the Governor and the General Assembly by
9January 1, 2007 that contains all of the following information:
10        (1) The number of recalculations required by the
11    changes made to this Section by Public Act 94-1057 for each
12    employer.
13        (2) The dollar amount by which each employer's
14    contribution to the System was changed due to
15    recalculations required by Public Act 94-1057.
16        (3) The total amount the System received from each
17    employer as a result of the changes made to this Section by
18    Public Act 94-4.
19        (4) The increase in the required State contribution
20    resulting from the changes made to this Section by Public
21    Act 94-1057.
22    (j) For purposes of determining the required State
23contribution to the System, the value of the System's assets
24shall be equal to the actuarial value of the System's assets,
25which shall be calculated as follows:
26    As of June 30, 2008, the actuarial value of the System's

 

 

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1assets shall be equal to the market value of the assets as of
2that date. In determining the actuarial value of the System's
3assets for fiscal years after June 30, 2008, any actuarial
4gains or losses from investment return incurred in a fiscal
5year shall be recognized in equal annual amounts over the
65-year period following that fiscal year.
7    (k) For purposes of determining the required State
8contribution to the system for a particular year, the actuarial
9value of assets shall be assumed to earn a rate of return equal
10to the system's actuarially assumed rate of return.
11(Source: P.A. 95-331, eff. 8-21-07; 95-950, eff. 8-29-08;
1296-43, eff. 7-15-09; 96-1497, eff. 1-14-11; 96-1511, eff.
131-27-11; 96-1554, eff. 3-18-11; revised 4-6-11.)".