97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB3400

 

Introduced 2/24/2011, by Rep. Robert Rita

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/1-160
40 ILCS 5/17-129  from Ch. 108 1/2, par. 17-129
30 ILCS 805/8.35 new

    Amends the Illinois Pension Code. Provides that a provision that reduced benefits for new hires does not apply to members of a fund created under the Chicago Teachers Article of the Code. In the Chicago Teachers Article, changes the Board of Education's required minimum contribution to the fund. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.


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

 

 

A BILL FOR

 

HB3400LRB097 05119 JDS 45164 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 1-160 and 17-129 as follows:
 
6    (40 ILCS 5/1-160)
7    Sec. 1-160. Provisions applicable to new hires.
8    (a) The provisions of this Section apply to a person who,
9on or after January 1, 2011, first becomes a member or a
10participant under any reciprocal retirement system or pension
11fund established under this Code, other than a retirement
12system or pension fund established under Article 2, 3, 4, 5, 6,
1317, or 18 of this Code, notwithstanding any other provision of
14this Code to the contrary, but do not apply to any self-managed
15plan established under this Code, to any person with respect to
16service as a sheriff's law enforcement employee under Article
177, or to any participant of the retirement plan established
18under Section 22-101.
19    (b) "Final average salary" means the average monthly (or
20annual) salary obtained by dividing the total salary or
21earnings calculated under the Article applicable to the member
22or participant during the 96 consecutive months (or 8
23consecutive years) of service within the last 120 months (or 10

 

 

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1years) of service in which the total salary or earnings
2calculated under the applicable Article was the highest by the
3number of months (or years) of service in that period. For the
4purposes of a person who first becomes a member or participant
5of any retirement system or pension fund to which this Section
6applies on or after January 1, 2011, in this Code, "final
7average salary" shall be substituted for the following:
8        (1) In Articles 7 (except for service as sheriff's law
9    enforcement employees) and 15, "final rate of earnings".
10        (2) In Articles 8, 9, 10, 11, and 12, "highest average
11    annual salary for any 4 consecutive years within the last
12    10 years of service immediately preceding the date of
13    withdrawal".
14        (3) In Article 13, "average final salary".
15        (4) In Article 14, "final average compensation".
16        (5) (Blank) In Article 17, "average salary".
17        (6) In Section 22-207, "wages or salary received by him
18    at the date of retirement or discharge".
19    (b-5) Beginning on January 1, 2011, for all purposes under
20this Code (including without limitation the calculation of
21benefits and employee contributions), the annual earnings,
22salary, or wages (based on the plan year) of a member or
23participant to whom this Section applies shall not exceed
24$106,800; however, that amount shall annually thereafter be
25increased by the lesser of (i) 3% of that amount, including all
26previous adjustments, or (ii) one-half the annual unadjusted

 

 

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1percentage increase (but not less than zero) in the consumer
2price index-u for the 12 months ending with the September
3preceding each November 1, including all previous adjustments.
4    For the purposes of this Section, "consumer price index-u"
5means the index published by the Bureau of Labor Statistics of
6the United States Department of Labor that measures the average
7change in prices of goods and services purchased by all urban
8consumers, United States city average, all items, 1982-84 =
9100. The new amount resulting from each annual adjustment shall
10be determined by the Public Pension Division of the Department
11of Insurance and made available to the boards of the retirement
12systems and pension funds by November 1 of each year.
13    (c) A member or participant is entitled to a retirement
14annuity upon written application if he or she has attained age
1567 and has at least 10 years of service credit and is otherwise
16eligible under the requirements of the applicable Article.
17    A member or participant who has attained age 62 and has at
18least 10 years of service credit and is otherwise eligible
19under the requirements of the applicable Article may elect to
20receive the lower retirement annuity provided in subsection (d)
21of this Section.
22    (d) The retirement annuity of a member or participant who
23is retiring after attaining age 62 with at least 10 years of
24service credit shall be reduced by one-half of 1% for each full
25month that the member's age is under age 67.
26    (e) Any retirement annuity or supplemental annuity shall be

 

 

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1subject to annual increases on the January 1 occurring either
2on or after the attainment of age 67 or the first anniversary
3of the annuity start date, whichever is later. Each annual
4increase shall be calculated at 3% or one-half the annual
5unadjusted percentage increase (but not less than zero) in the
6consumer price index-u for the 12 months ending with the
7September preceding each November 1, whichever is less, of the
8originally granted retirement annuity. If the annual
9unadjusted percentage change in the consumer price index-u for
10the 12 months ending with the September preceding each November
111 is zero or there is a decrease, then the annuity shall not be
12increased.
13    (f) The initial survivor's or widow's annuity of an
14otherwise eligible survivor or widow of a retired member or
15participant who first became a member or participant on or
16after January 1, 2011 shall be in the amount of 66 2/3% of the
17retired member's or participant's retirement annuity at the
18date of death. In the case of the death of a member or
19participant who has not retired and who first became a member
20or participant on or after January 1, 2011, eligibility for a
21survivor's or widow's annuity shall be determined by the
22applicable Article of this Code. The initial benefit shall be
2366 2/3% of the earned annuity without a reduction due to age. A
24child's annuity of an otherwise eligible child shall be in the
25amount prescribed under each Article if applicable. Any
26survivor's or widow's annuity shall be increased (1) on each

 

 

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1January 1 occurring on or after the commencement of the annuity
2if the deceased member died while receiving a retirement
3annuity or (2) in other cases, on each January 1 occurring
4after the first anniversary of the commencement of the annuity.
5Each annual increase shall be calculated at 3% or one-half the
6annual unadjusted percentage increase (but not less than zero)
7in the consumer price index-u for the 12 months ending with the
8September preceding each November 1, whichever is less, of the
9originally granted survivor's annuity. If the annual
10unadjusted percentage change in the consumer price index-u for
11the 12 months ending with the September preceding each November
121 is zero or there is a decrease, then the annuity shall not be
13increased.
14    (g) The benefits in Section 14-110 apply only if the person
15is a State policeman, a fire fighter in the fire protection
16service of a department, or a security employee of the
17Department of Corrections or the Department of Juvenile
18Justice, as those terms are defined in subsection (b) of
19Section 14-110. A person who meets the requirements of this
20Section is entitled to an annuity calculated under the
21provisions of Section 14-110, in lieu of the regular or minimum
22retirement annuity, only if the person has withdrawn from
23service with not less than 20 years of eligible creditable
24service and has attained age 60, regardless of whether the
25attainment of age 60 occurs while the person is still in
26service.

 

 

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1    (h) If a person who first becomes a member or a participant
2of a retirement system or pension fund subject to this Section
3on or after January 1, 2011 is receiving a retirement annuity
4or retirement pension under that system or fund and becomes a
5member or participant under any other system or fund created by
6this Code and is employed on a full-time basis, except for
7those members or participants exempted from the provisions of
8this Section under subsection (a) of this Section, then the
9person's retirement annuity or retirement pension under that
10system or fund shall be suspended during that employment. Upon
11termination of that employment, the person's retirement
12annuity or retirement pension payments shall resume and be
13recalculated if recalculation is provided for under the
14applicable Article of this Code.
15    (i) Notwithstanding any other provision of this Section, a
16person who first becomes a participant of the retirement system
17established under Article 15 on or after January 1, 2011 shall
18have the option to enroll in the self-managed plan created
19under Section 15-158.2 of this Code.
20    (j) In the case of a conflict between the provisions of
21this Section and any other provision of this Code, the
22provisions of this Section shall control.
23(Source: P.A. 96-889, eff. 1-1-11; 96-1490, eff. 1-1-11.)
 
24    (40 ILCS 5/17-129)  (from Ch. 108 1/2, par. 17-129)
25    Sec. 17-129. Employer contributions; deficiency in Fund.

 

 

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1    (a) If in any fiscal year of the Board of Education ending
2prior to 1997 the total amounts paid to the Fund from the Board
3of Education (other than under this subsection, and other than
4amounts used for making or "picking up" contributions on behalf
5of teachers) and from the State do not equal the total
6contributions made by or on behalf of the teachers for such
7year, or if the total income of the Fund in any such fiscal
8year of the Board of Education from all sources is less than
9the total such expenditures by the Fund for such year, the
10Board of Education shall, in the next succeeding year, in
11addition to any other payment to the Fund set apart and
12appropriate from moneys from its tax levy for educational
13purposes, a sum sufficient to remove such deficiency or
14deficiencies, and promptly pay such sum into the Fund in order
15to restore any of the reserves of the Fund that may have been
16so temporarily applied. Any amounts received by the Fund after
17December 4, 1997 from State appropriations, including under
18Section 17-127, shall be a credit against and shall fully
19satisfy any obligation that may have arisen, or be claimed to
20have arisen, under this subsection (a) as a result of any
21deficiency or deficiencies in the fiscal year of the Board of
22Education ending in calendar year 1997.
23    (b) (Blank). (i) Notwithstanding any other provision of
24this Section, and notwithstanding any prior certification by
25the Board under subsection (c) for fiscal year 2011, the Board
26of Education's total required contribution to the Fund for

 

 

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1fiscal year 2011 under this Section is $187,000,000.
2    (ii) Notwithstanding any other provision of this Section,
3the Board of Education's total required contribution to the
4Fund for fiscal year 2012 under this Section is $192,000,000.
5    (iii) Notwithstanding any other provision of this Section,
6the Board of Education's total required contribution to the
7Fund for fiscal year 2013 under this Section is $196,000,000.
8    (iv) For fiscal years 2014 through 2059, the minimum
9contribution to the Fund to be made by the Board of Education
10in each fiscal year shall be an amount determined by the Fund
11to be sufficient to bring the total assets of the Fund up to
1290% of the total actuarial liabilities of the Fund by the end
13of fiscal year 2059. In making these determinations, the
14required Board of Education contribution shall be calculated
15each year as a level percentage of the applicable employee
16payrolls over the years remaining to and including fiscal year
172059 and shall be determined under the projected unit credit
18actuarial cost method.
19    (v) Beginning in fiscal year 2060, the minimum Board of
20Education contribution for each fiscal year shall be the amount
21needed to maintain the total assets of the Fund at 90% of the
22total actuarial liabilities of the Fund.
23    (vi) Notwithstanding any other provision of this
24subsection (b), for any fiscal year, the contribution to the
25Fund from the Board of Education shall not be required to be in
26excess of the amount calculated as needed to maintain the

 

 

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1assets (or cause the assets to be) at the 90% level by the end
2of the fiscal year.
3    (vii) Any contribution by the State to or for the benefit
4of the Fund, including, without limitation, as referred to
5under Section 17-127, shall be a credit against any
6contribution required to be made by the Board of Education
7under this subsection (b).
8    (b-5)(i) For fiscal years 2011 through 2045, the minimum
9contribution to the Fund to be made by the Board of Education
10in each fiscal year shall be an amount determined by the Fund
11to be sufficient to bring the total assets of the Fund up to
1290% of the to all actuarial liabilities of the Fund by the end
13of fiscal year 2045. In making these determinations, the
14required Board of Education contribution shall be calculated
15each year as a level percentage of the applicable employee
16payrolls over the years remaining up to and including fiscal
17year 2045 and shall be determined under the projected unit
18credit actuarial cost method.
19    (ii) Beginning in fiscal year 2046, the minimum Board of
20Education contribution for each fiscal year shall be the amount
21needed to maintain the total assets of the Fund at 90% of the
22total actuarial liabilities of the Fund.
23    (iii) Notwithstanding the provisions of paragraphs (i) and
24(ii) of this subsection (b-5), for any fiscal year the
25contribution to the Fund from the Board of Education shall not
26be required to be in excess of the amount calculated as needed

 

 

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1to maintain the assets (or cause the assets to be) at the 90%
2level by the end of the fiscal year.
3    (iv) Any contribution by the State to or for the benefit of
4the Fund, including, without limitation, as referred to under
5Section 17-127, shall be a credit against any contribution
6required to be made by the Board of Education under this
7subsection (b-5).
8    (c) The Board shall determine the amount of Board of
9Education contributions required for each fiscal year on the
10basis of the actuarial tables and other assumptions adopted by
11the Board and the recommendations of the actuary, in order to
12meet the minimum contribution requirements of subsections (a)
13and (b-5) (b). Annually, on or before February 28, the Board
14shall certify to the Board of Education the amount of the
15required Board of Education contribution for the coming fiscal
16year. The certification shall include a copy of the actuarial
17recommendations upon which it is based.
18(Source: P.A. 96-889, eff. 4-14-10.)
 
19    Section 90. The State Mandates Act is amended by adding
20Section 8.35 as follows:
 
21    (30 ILCS 805/8.35 new)
22    Sec. 8.35. Exempt mandate. Notwithstanding Sections 6 and 8
23of this Act, no reimbursement by the State is required for the
24implementation of any mandate created by this amendatory Act of

 

 

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1the 97th General Assembly.
 
2    Section 99. Effective date. This Act takes effect upon
3becoming law.