Rep. Mike Fortner

Filed: 2/28/2013

 

 


 

 


 
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1
AMENDMENT TO HOUSE BILL 1165

2    AMENDMENT NO. ______. Amend House Bill 1165 by replacing
3everything after the enacting clause with the following:
 
4    "Section 3. The Budget Stabilization Act is amended by
5changing Sections 20 and 25 as follows:
 
6    (30 ILCS 122/20)
7    Sec. 20. Pension Stabilization Fund.
8    (a) The Pension Stabilization Fund is hereby created as a
9special fund in the State treasury. Moneys in the fund shall be
10used for the sole purpose of making payments to the designated
11retirement systems as provided in Section 25.
12    (b) For each fiscal year when the General Assembly's
13appropriations and transfers or diversions as required by law
14from general funds do not exceed 99% of the estimated general
15funds revenues pursuant to subsection (a) of Section 10, the
16Comptroller shall transfer from the General Revenue Fund as

 

 

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1provided by this Section a total amount equal to 0.5% of the
2estimated general funds revenues to the Pension Stabilization
3Fund.
4    (c) For each fiscal year through Fiscal Year 2013, when the
5General Assembly's appropriations and transfers or diversions
6as required by law from general funds do not exceed 98% of the
7estimated general funds revenues pursuant to subsection (b) of
8Section 10, the Comptroller shall transfer from the General
9Revenue Fund as provided by this Section a total amount equal
10to 1.0% of the estimated general funds revenues to the Pension
11Stabilization Fund.
12    (c-5) In Fiscal Year 2014, the State Comptroller shall
13order transferred and the State Treasurer shall transfer
14$4,600,000,000 from the General Revenue Fund to the Pension
15Stabilization Fund. In each fiscal year thereafter, the State
16Comptroller shall order transferred and the State Treasurer
17shall transfer from the General Revenue Fund to the Pension
18Stabilization Fund the amount transferred under this
19subsection (c-5) in the previous fiscal year increased by 2.5%.
20    (c-10) In addition, in Fiscal Year 2016 and each fiscal
21year thereafter, the State Comptroller shall order transferred
22and the State Treasurer shall transfer $693,500,000 from the
23General Revenue Fund to the Pension Stabilization Fund.
24    (c-15) In addition, in Fiscal Year 2020 and each fiscal
25year thereafter, the State Comptroller shall order transferred
26and the State Treasurer shall transfer $900,000,000 from the

 

 

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1General Revenue Fund to the Pension Stabilization Fund.
2    (c-20) In addition, in Fiscal Year 2034 and each fiscal
3year thereafter, the State Comptroller shall order transferred
4and the State Treasurer shall transfer $1,100,000,000 from the
5General Revenue Fund to the Pension Stabilization Fund.
6    (c-25) The transfers made pursuant to subsections (c-5)
7through (c-20) of this Section shall continue until Fiscal Year
82045 or until each of the designated retirement systems, as
9defined in Section 25, has achieved a funding ratio of at least
10100%, whichever occurs first.
11    (d) The Comptroller shall transfer 1/12 of the total amount
12to be transferred each fiscal year under this Section into the
13Pension Stabilization Fund on the first day of each month of
14that fiscal year or as soon thereafter as possible; except that
15the final transfer of the fiscal year shall be made as soon as
16practical after the August 31 following the end of the fiscal
17year.
18    Until Fiscal Year 2014, before Before the final transfer
19for a fiscal year is made, the Comptroller shall reconcile the
20estimated general funds revenues used in calculating the other
21transfers under this Section for that fiscal year with the
22actual general funds revenues for that fiscal year. The final
23transfer for the fiscal year shall be adjusted so that the
24total amount transferred under this Section for that fiscal
25year is equal to the percentage specified in subsection (b) or
26(c) of this Section, whichever is applicable, of the actual

 

 

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1general funds revenues for that fiscal year. The actual general
2funds revenues for the fiscal year shall be calculated in a
3manner consistent with subsection (c) of Section 10 of this
4Act.
5(Source: P.A. 94-839, eff. 6-6-06.)
 
6    (30 ILCS 122/25)
7    Sec. 25. Transfers from the Pension Stabilization Fund.
8    (a) As used in this Section, "designated retirement
9systems" means:
10        (1) the State Employees' Retirement System of
11    Illinois;
12        (2) the Teachers' Retirement System of the State of
13    Illinois;
14        (3) the State Universities Retirement System;
15        (4) the Judges Retirement System of Illinois; and
16        (5) the General Assembly Retirement System.
17    (b) As soon as may be practical after any money is
18deposited into the Pension Stabilization Fund, the State
19Comptroller shall apportion the deposited amount among the
20designated retirement systems and the State Comptroller and
21State Treasurer shall pay the apportioned amounts to the
22designated retirement systems. The amount deposited shall be
23apportioned among the designated retirement systems in
24proportion to their respective certified State contributions
25for the State fiscal year in which the payment is made to those

 

 

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1systems in the same proportion as their respective portions of
2the total actuarial reserve deficiency of the designated
3retirement systems, as most recently determined by the
4Governor's Office of Management and Budget. Amounts received by
5a designated retirement system under this Section shall be used
6for funding the unfunded liabilities of the retirement system.
7Payments under this Section are authorized by the continuing
8appropriation under Section 1.7 of the State Pension Funds
9Continuing Appropriation Act. The total amount transferred to
10the designated retirement systems in Fiscal Year 2014 shall not
11be less than $4,600,000,000. In each Fiscal Year thereafter,
12the total amount transferred to the designated retirement
13systems shall not be less than the total amount transferred in
14the previous fiscal year.
15    (c) At the request of the State Comptroller, the Governor's
16Office of Management and Budget shall determine the individual
17and total actuarial reserve deficiencies of the designated
18retirement systems. For this purpose, the Governor's Office of
19Management and Budget shall consider the latest available audit
20and actuarial reports of each of the retirement systems and the
21relevant reports and statistics of the Public Pension Division
22of the Department of Financial and Professional Regulation.
23    (d) Payments to the designated retirement systems under
24this Section shall be in addition to, and not in lieu of, any
25State contributions required under Section 2-124, 14-131,
2615-155, 16-158, or 18-131 of the Illinois Pension Code.

 

 

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1(Source: P.A. 94-839, eff. 6-6-06.)
 
2    Section 5. The Illinois Pension Code is amended by adding
3Sections 2-103.1, 2-103.2, 2-108.2, 2-126.2, 2-134.1,
414-103.12a, 14-103.40, 14-103.41, 14-133.2, 14-135.08a,
515-112.1, 15-165.1, 16-121.1, 16-122.2, 16-122.3, 16-158.2,
616-181.4, 18-111.1, 18-118.1, 18-118.2, 18-133.2, and 18-140.1
7and by changing Sections 2-124, 2-126, 14-103.10, 14-131,
814-133, 15-111, 15-155, 15-157, 15-158.2, 16-121, 16-152,
916-158, 18-131, and 18-133 as follows:
 
10    (40 ILCS 5/2-103.1 new)
11    Sec. 2-103.1. Traditional benefit package. "Traditional
12benefit package" means the defined benefit retirement program
13maintained by the System, which includes retirement annuities
14payable directly from the System, as provided in Sections
152-119, 2-119.01, 2-119.1, and 2-120; survivor's annuities
16payable directly from the System, as provided in Sections
172-121, 2-121.1, 2-121.2, and 2-121.3; and contribution
18refunds, as provided in Section 2-123.
 
19    (40 ILCS 5/2-103.2 new)
20    Sec. 2-103.2. Self-managed plan. "Self-managed plan" means
21the defined contribution retirement program maintained by the
22System, as described in Section 2-126.2. The self-managed plan
23does not include retirement annuities or survivor's benefits

 

 

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1payable directly from the System, as provided in Sections
22-119, 2-119.01, 2-119.1, 2-120, 2-121, 2-121.1, 2-121.2, and
32-121.3 or refunds determined under Section 2-123.
 
4    (40 ILCS 5/2-108.2 new)
5    Sec. 2-108.2. Limitation on salary. For the purpose of
6calculating traditional benefit package benefits and
7contributions, the annual earnings, salary, or wages of a
8participant shall not exceed the greater of (i) the amount
9specified under subsection (b-5) of Section 1-160 or (ii) the
10annual salary of the participant during the 365 days
11immediately before the effective date of this Section.
 
12    (40 ILCS 5/2-124)  (from Ch. 108 1/2, par. 2-124)
13    Sec. 2-124. Contributions by State.
14    (a) The State shall make contributions to the System by
15appropriations of amounts which, together with the
16contributions of participants, interest earned on investments,
17and other income will meet the cost of maintaining and
18administering the System on a 100% 90% funded basis in
19accordance with actuarial recommendations.
20    (b) The Board shall determine the amount of State
21contributions required for each fiscal year on the basis of the
22actuarial tables and other assumptions adopted by the Board and
23the prescribed rate of interest, using the formula in
24subsection (c).

 

 

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1    (c) For State fiscal years 2012 through 2045, the minimum
2contribution to the System to be made by the State for each
3fiscal year shall be an amount determined by the System to be
4sufficient to bring the total assets of the System up to 100%
590% of the total actuarial liabilities of the System by the end
6of State fiscal year 2045.
7    Pursuant to Article XIII of the 1970 Constitution of the
8State of Illinois, beginning on July 1, 2013, the State shall,
9as a retirement benefit to each participant and annuitant of
10the System be contractually obligated to the System (as a
11fiduciary and trustee of the participants and annuitants) to
12pay the Annual Required State Contribution, as determined by
13the Board of the System using generally accepted actuarial
14principles, as is necessary to bring the total assets of the
15System up to 100% of the total actuarial liabilities of the
16System by fiscal year 2045. As a further retirement benefit and
17contractual obligation, each fiscal year, the State shall pay
18to each designated retirement system the Annual Required State
19Contribution certified by the Board for that fiscal year.
20Payments of the Annual Required State Contribution for each
21fiscal year shall be made in equal monthly installments. This
22Section, and the security it provides to participants and
23annuitants is intended to be, and is, a contractual right that
24is part of the pension benefits provided to the participants
25and annuitants. Notwithstanding anything to the contrary in the
26Court of Claims Act or any other law, a designated retirement

 

 

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1system has the exclusive right to and shall bring a Mandamus
2action in the Circuit Court of Champaign County against the
3State to compel the State to make any installment of the Annual
4Required State Contribution required by this Section,
5irrespective of other remedies that may be available to the
6System. Each member or annuitant of the System has the right to
7bring a Mandamus action against the System in the Circuit Court
8in any judicial district in which the System maintains an
9office if the System fails to bring an action specified in this
10Section, irrespective of other remedies that may be available
11to the member or annuitant. In making these determinations, the
12required State contribution shall be calculated each year as a
13level percentage of payroll over the years remaining to and
14including fiscal year 2045 and shall be determined under the
15projected unit credit actuarial cost method.
16    For State fiscal years 1996 through 2005, the State
17contribution to the System, as a percentage of the applicable
18employee payroll, shall be increased in equal annual increments
19so that by State fiscal year 2011, the State is contributing at
20the rate required under this Section.
21    Notwithstanding any other provision of this Article, the
22total required State contribution for State fiscal year 2006 is
23$4,157,000.
24    Notwithstanding any other provision of this Article, the
25total required State contribution for State fiscal year 2007 is
26$5,220,300.

 

 

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1    For each of State fiscal years 2008 through 2009, the State
2contribution to the System, as a percentage of the applicable
3employee payroll, shall be increased in equal annual increments
4from the required State contribution for State fiscal year
52007, so that by State fiscal year 2011, the State is
6contributing at the rate otherwise required under this Section.
7    Notwithstanding any other provision of this Article, the
8total required State contribution for State fiscal year 2010 is
9$10,454,000 and shall be made from the proceeds of bonds sold
10in fiscal year 2010 pursuant to Section 7.2 of the General
11Obligation Bond Act, less (i) the pro rata share of bond sale
12expenses determined by the System's share of total bond
13proceeds, (ii) any amounts received from the General Revenue
14Fund in fiscal year 2010, and (iii) any reduction in bond
15proceeds due to the issuance of discounted bonds, if
16applicable.
17    Notwithstanding any other provision of this Article, the
18total required State contribution for State fiscal year 2011 is
19the amount recertified by the System on or before April 1, 2011
20pursuant to Section 2-134 and shall be made from the proceeds
21of bonds sold in fiscal year 2011 pursuant to Section 7.2 of
22the General Obligation Bond Act, less (i) the pro rata share of
23bond sale expenses determined by the System's share of total
24bond proceeds, (ii) any amounts received from the General
25Revenue Fund in fiscal year 2011, and (iii) any reduction in
26bond proceeds due to the issuance of discounted bonds, if

 

 

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1applicable.
2    Beginning in State fiscal year 2046, the minimum State
3contribution for each fiscal year shall be the amount needed to
4maintain the total assets of the System at 100% 90% of the
5total actuarial liabilities of the System.
6    Amounts received by the System pursuant to Section 25 of
7the Budget Stabilization Act or Section 8.12 of the State
8Finance Act in any fiscal year do not reduce and do not
9constitute payment of any portion of the minimum State
10contribution required under this Article in that fiscal year.
11Such amounts shall not reduce, and shall not be included in the
12calculation of, the required State contributions under this
13Article in any future year until the System has reached a
14funding ratio of at least 90%. A reference in this Article to
15the "required State contribution" or any substantially similar
16term does not include or apply to any amounts payable to the
17System under Section 25 of the Budget Stabilization Act.
18    Notwithstanding any other provision of this Section, the
19required State contribution for State fiscal year 2005 and for
20fiscal year 2008 and each fiscal year thereafter, as calculated
21under this Section and certified under Section 2-134, shall not
22exceed an amount equal to (i) the amount of the required State
23contribution that would have been calculated under this Section
24for that fiscal year if the System had not received any
25payments under subsection (d) of Section 7.2 of the General
26Obligation Bond Act, minus (ii) the portion of the State's

 

 

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1total debt service payments for that fiscal year on the bonds
2issued in fiscal year 2003 for the purposes of that Section
37.2, as determined and certified by the Comptroller, that is
4the same as the System's portion of the total moneys
5distributed under subsection (d) of Section 7.2 of the General
6Obligation Bond Act. In determining this maximum for State
7fiscal years 2008 through 2010, however, the amount referred to
8in item (i) shall be increased, as a percentage of the
9applicable employee payroll, in equal increments calculated
10from the sum of the required State contribution for State
11fiscal year 2007 plus the applicable portion of the State's
12total debt service payments for fiscal year 2007 on the bonds
13issued in fiscal year 2003 for the purposes of Section 7.2 of
14the General Obligation Bond Act, so that, by State fiscal year
152011, the State is contributing at the rate otherwise required
16under this Section.
17    (d) For purposes of determining the required State
18contribution to the System, the value of the System's assets
19shall be equal to the actuarial value of the System's assets,
20which shall be calculated as follows:
21    As of June 30, 2008, the actuarial value of the System's
22assets shall be equal to the market value of the assets as of
23that date. In determining the actuarial value of the System's
24assets for fiscal years after June 30, 2008, any actuarial
25gains or losses from investment return incurred in a fiscal
26year shall be recognized in equal annual amounts over the

 

 

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15-year period following that fiscal year.
2    (e) For purposes of determining the required State
3contribution to the system for a particular year, the actuarial
4value of assets shall be assumed to earn a rate of return equal
5to the system's actuarially assumed rate of return.
6(Source: P.A. 96-43, eff. 7-15-09; 96-1497, eff. 1-14-11;
796-1511, eff. 1-27-11; 96-1554, eff. 3-18-11; 97-813, eff.
87-13-12.)
 
9    (40 ILCS 5/2-126)  (from Ch. 108 1/2, par. 2-126)
10    Sec. 2-126. Contributions by participants.
11    (a) Each participant shall contribute toward the cost of
12his or her retirement annuity a percentage of each payment of
13salary received by him or her for service as a member as
14follows: for service between October 31, 1947 and January 1,
151959, 5%; for service between January 1, 1959 and June 30,
161969, 6%; for service between July 1, 1969 and January 10,
171973, 6 1/2%; for service after January 10, 1973, 7%; for
18service after December 31, 1981, 8 1/2%.
19    (b) Beginning August 2, 1949, each male participant, and
20from July 1, 1971, each female participant shall contribute
21towards the cost of the survivor's annuity 2% of salary.
22    A participant who has no eligible survivor's annuity
23beneficiary may elect to cease making contributions for
24survivor's annuity under this subsection. A survivor's annuity
25shall not be payable upon the death of a person who has made

 

 

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1this election, unless prior to that death the election has been
2revoked and the amount of the contributions that would have
3been paid under this subsection in the absence of the election
4is paid to the System, together with interest at the rate of 4%
5per year from the date the contributions would have been made
6to the date of payment.
7    (c) Beginning July 1, 1967, each participant shall
8contribute 1% of salary towards the cost of automatic increase
9in annuity provided in Section 2-119.1. These contributions
10shall be made concurrently with contributions for retirement
11annuity purposes.
12    (d) In addition, each participant serving as an officer of
13the General Assembly shall contribute, for the same purposes
14and at the same rates as are required of a regular participant,
15on each additional payment received as an officer. If the
16participant serves as an officer for at least 2 but less than 4
17years, he or she shall contribute an amount equal to the amount
18that would have been contributed had the participant served as
19an officer for 4 years. Persons who serve as officers in the
2087th General Assembly but cannot receive the additional payment
21to officers because of the ban on increases in salary during
22their terms may nonetheless make contributions based on those
23additional payments for the purpose of having the additional
24payments included in their highest salary for annuity purposes;
25however, persons electing to make these additional
26contributions must also pay an amount representing the

 

 

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1corresponding employer contributions, as calculated by the
2System.
3    (e) Notwithstanding any other provision of this Article,
4the required contribution of a participant who first becomes a
5participant on or after January 1, 2011 shall not exceed the
6contribution that would be due under this Article if that
7participant's highest salary for annuity purposes were
8$106,800, plus any increases in that amount under Section
92-108.1.
10    (e-1) Notwithstanding any provision of this Code to the
11contrary, (i) for a participant who does not file an election
12under subsection (a-5) of Section 2-126.2, any contributions on
13amounts of salary in excess of the amount specified under
14Section 2-108.2 for that year shall instead be used to finance
15self-managed plan benefits and (ii) for a participant who files
16an election under subsection (a-5) of Section 2-126.2, any
17contributions made after the date of the election, including
18the contributions for a survivor's annuity, shall be used to
19finance the benefits under Section 2-126.2. Notwithstanding
20any provision of this Code to the contrary, a participant who
21does not file an election under subsection (a-5) of Section
222-126.2 shall contribute toward the traditional benefit
23package a percentage of salary equal to the greater of (i)
24one-half of the normal cost of the traditional benefit package
25or (ii) 6% of salary.
26(Source: P.A. 96-1490, eff. 1-1-11.)
 

 

 

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1    (40 ILCS 5/2-126.2 new)
2    Sec. 2-126.2. Self-managed plan.
3    (a) The General Assembly Retirement System must establish
4and administer a self-managed plan that shall offer
5participants the opportunity to accumulate assets for
6retirement through a combination of participant and State
7contributions that may be invested in mutual funds, collective
8investment funds, or other investment products and used to
9purchase annuity contracts, that are fixed, variable, or a
10combination of fixed and variable. The plan must be qualified
11under the Internal Revenue Code of 1986.
12    The General Assembly Retirement System shall be the plan
13sponsor for the self-managed plan and shall prepare a plan
14document and adopt any rules and procedures that are considered
15necessary or desirable for the administration of the
16self-managed plan. Consistent with its fiduciary duty to the
17participants and beneficiaries of the self-managed plan, the
18Board of Trustees of the System may delegate aspects of plan
19administration as it sees fit to companies authorized to do
20business in this State.
21    (a-5) A participant may file an irrevocable election to
22transfer to the self-managed plan an amount equal to the
23participant's total contributions under the traditional
24benefit package, with interest. By filing the election, a
25participant forfeits all accrued rights and benefits under the

 

 

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1traditional benefit package.
2    (b) Notwithstanding any other provision of this Code, (i)
3for a participant who does not file an election under
4subsection (a-5) of this Section, any portion of his or her
5salary that exceeds the amount specified in Section 2-108.2 for
6that year shall be subject to the self-managed plan and (ii)
7for a participant who files an election under subsection (a-5)
8of this Section, the entirety of the participant's salary
9shall, after the date of the election, be subject to the
10self-managed plan created under this Section.
11    (c) The System shall solicit proposals to provide
12administrative services and funding vehicles for the
13self-managed plan from insurance and annuity companies and
14mutual fund companies, banks, trust companies, or other
15financial institutions authorized to do business in this State.
16In reviewing the proposals received and approving and
17contracting with no fewer than 2 and no more than 7 companies,
18the Board of Trustees of the System shall consider, among other
19things, the following criteria:
20        (1) the nature and extent of the benefits that would be
21    provided to the participants;
22        (2) the reasonableness of the benefits in relation to
23    the premium charged;
24        (3) the suitability of the benefits to the needs and
25    interests of the participants and the State; and
26        (4) the ability of the company to provide benefits

 

 

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1    under the contract and the financial stability of the
2    company.
3    The System shall periodically review each approved
4company. A company may continue to provide administrative
5services and funding vehicles for the self-managed plan only so
6long as it continues to be an approved company under contract
7with the Board.
8    In addition to the companies approved by the System under
9this subsection (c), the System may offer its participants an
10investment fund managed by the Illinois State Board of
11Investment.
12    (d) Participants in the program must be allowed to direct
13the transfer of their account balances among the various
14investment options offered, subject to applicable contractual
15provisions. The participant shall not be deemed a fiduciary by
16reason of providing such investment direction. A person who is
17a fiduciary shall not be liable for any loss resulting from
18that investment direction and shall not be deemed to have
19breached any fiduciary duty by acting in accordance with that
20direction. Neither the System nor the State shall guarantee any
21of the investments in the participant's account balances.
22    (e) Participation in the self-managed plan under this
23Section shall constitute participation in the General Assembly
24Retirement System.
25    (f) The self-managed plan shall be funded by contributions
26from participants in the self-managed plan and State

 

 

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1contributions as provided in this Section.
2    The contribution rate for participants in the self-managed
3plan shall be, (i) for a participant who does not file an
4election under subsection (a-5) of this Section, 6% of the
5amount of salary in excess of the limit specified in Section
62-108.2 in that year, in addition to the amount specified under
7subsection (e-1) of Section 2-126 for that year and (ii) for a
8participant who files an election under subsection (a-5) of
9Section 2-126.2, 8% of any amount of salary up to and including
10the limit specified in Section 2-108.2 for that year and 6% of
11any amount of salary in excess of that limit for that year.
12This required contribution shall be made as an employer pick-up
13under Section 414(h) of the Internal Revenue Code of 1986 or
14any successor Section thereof. Any participant in the System's
15traditional benefit package prior to his or her election to
16participate in the self-managed plan shall continue to have the
17employer pick up the contributions required under Section
182-126. However, the amounts picked up after the election of the
19self-managed plan shall be remitted to and treated as assets of
20the self-managed plan. In no event shall a participant have the
21option of receiving these amounts in cash. Participants may
22make additional contributions to the self-managed plan in
23accordance with procedures prescribed by the System, to the
24extent permitted under rules adopted by the System.
25    The program shall provide for State contributions to the
26self-managed plan in the following amounts: (i) for a

 

 

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1participant who does not file an election under subsection
2(a-5) of this Section, 3% of the amount of salary in excess of
3the limit specified in Section 2-108.2 for that year and (ii)
4for a participant who does not file an election under
5subsection (a-5) of this Section, 7.1% of any amount of salary
6up to and including the limit specified in Section 2-108.2 for
7that year and 3% of any amount of salary in excess of that
8limit for that year.
9    The State of Illinois shall make contributions by
10appropriations to the System for participants in the
11self-managed plan under this Section. The amount required shall
12be certified by the Board of Trustees of the System and paid by
13the State in accordance with Section 2-134. The System shall
14not be obligated to remit the required State contributions to
15any of the insurance and annuity companies, mutual fund
16companies, banks, trust companies, financial institutions, or
17other sponsors of any of the funding vehicles offered under the
18self-managed plan until it has received the required State
19contributions from the State.
20    (g) If a participant in the self-managed plan who is
21otherwise vested under this Article terminates employment, the
22participant shall be entitled to a benefit that is based on the
23account values attributable to both State and member
24contributions and any investment return thereon.
25    If a participant in the self-managed plan who is not
26otherwise vested under this Article terminates employment, the

 

 

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1participant shall be entitled to a benefit based solely on the
2account values attributable to the participant's contributions
3and any investment return thereon, and the State contributions
4and any investment return thereon shall be forfeited. Any State
5contributions that are forfeited shall be held in escrow by the
6company investing those contributions and shall be used, as
7directed by the System, for future allocations of State
8contributions.
 
9    (40 ILCS 5/2-134.1 new)
10    Sec. 2-134.1. To calculate the normal cost of benefits. To
11calculate the normal cost of each plan offered by the system as
12a percentage of salary and to update those amounts at least
13every 3 years.
 
14    (40 ILCS 5/14-103.10)  (from Ch. 108 1/2, par. 14-103.10)
15    Sec. 14-103.10. Compensation.
16    (a) For periods of service prior to January 1, 1978, the
17full rate of salary or wages payable to an employee for
18personal services performed if he worked the full normal
19working period for his position, subject to the following
20maximum amounts: (1) prior to July 1, 1951, $400 per month or
21$4,800 per year; (2) between July 1, 1951 and June 30, 1957
22inclusive, $625 per month or $7,500 per year; (3) beginning
23July 1, 1957, no limitation.
24    In the case of service of an employee in a position

 

 

09800HB1165ham002- 22 -LRB098 08854 EFG 41948 a

1involving part-time employment, compensation shall be
2determined according to the employees' earnings record.
3    (b) For periods of service on and after January 1, 1978,
4all remuneration for personal services performed defined as
5"wages" under the Social Security Enabling Act, including that
6part of such remuneration which is in excess of any maximum
7limitation provided in such Act, and including any benefits
8received by an employee under a sick pay plan in effect before
9January 1, 1981, but excluding lump sum salary payments:
10        (1) for vacation,
11        (2) for accumulated unused sick leave,
12        (3) upon discharge or dismissal,
13        (4) for approved holidays.
14    (c) For periods of service on or after December 16, 1978,
15compensation also includes any benefits, other than lump sum
16salary payments made at termination of employment, which an
17employee receives or is eligible to receive under a sick pay
18plan authorized by law.
19    (d) For periods of service after September 30, 1985,
20compensation also includes any remuneration for personal
21services not included as "wages" under the Social Security
22Enabling Act, which is deducted for purposes of participation
23in a program established pursuant to Section 125 of the
24Internal Revenue Code or its successor laws.
25    (e) For members for which Section 1-160 applies for periods
26of service on and after January 1, 2011, all remuneration for

 

 

09800HB1165ham002- 23 -LRB098 08854 EFG 41948 a

1personal services performed defined as "wages" under the Social
2Security Enabling Act, excluding remuneration that is in excess
3of the annual earnings, salary, or wages of a member or
4participant, as provided in subsection (b-5) of Section 1-160,
5but including any benefits received by an employee under a sick
6pay plan in effect before January 1, 1981. Compensation shall
7exclude lump sum salary payments:
8        (1) for vacation;
9        (2) for accumulated unused sick leave;
10        (3) upon discharge or dismissal; and
11        (4) for approved holidays.
12    (f) Notwithstanding any other provision of this Section,
13"compensation", except as used in Section 14-133.2, does not
14include any future increase in income due to a provision in a
15collectively bargained contract that grants an increase in
16salary based on an employee's expected date of retirement. The
17changes made to this Section by this amendatory Act of the 98th
18General Assembly do not apply to an employee who is covered by
19a collective bargaining agreement or employment contract that
20is in effect on the effective date of this amendatory Act of
21the 98th General Assembly and that provides for such increases,
22until that agreement or contract expires or is amended or
23renewed.
24(Source: P.A. 96-1490, eff. 1-1-11.)
 
25    (40 ILCS 5/14-103.12a new)

 

 

09800HB1165ham002- 24 -LRB098 08854 EFG 41948 a

1    Sec. 14-103.12a. Limitation on compensation. For the
2purpose of calculating traditional benefit package benefits
3and contributions, the annual earnings, salary, or wages of a
4participant shall not exceed the greater of (i) the amount
5specified under subsection (b-5) of Section 1-160 or (ii) the
6annual salary of the participant during the 365 days
7immediately before the effective date of this Section. If,
8however, an employment contract that is in place on or before
9the effective date of this Section authorizes an increase in
10earnings, salary, or wages on or after the effective date of
11this Section, then the annual earnings, salary, or wages of the
12participant during the 365 days that immediately precede the
13date that the contract expires may be used in lieu of the
14amount specified in item (ii) of this Section.
 
15    (40 ILCS 5/14-103.40 new)
16    Sec. 14-103.40. Traditional benefit package. "Traditional
17benefit package" means the defined benefit retirement program
18maintained by the System, which includes retirement annuities
19payable directly from the System, as provided in Sections
2014-107, 14-108, 14-113, and 14-114; survivor's annuities
21payable directly from the System, as provided in Sections
2214-120, 14-121, and 14-121.1; and contribution refunds, as
23provided in Section 14-130.
 
24    (40 ILCS 5/14-103.41 new)

 

 

09800HB1165ham002- 25 -LRB098 08854 EFG 41948 a

1    Sec. 14-103.41. Self-managed plan. "Self-managed plan"
2means the defined contribution retirement program maintained
3by the System, as described in Section 14-133.2. The
4self-managed plan does not include retirement annuities or
5survivor's benefits payable directly from the System, as
6provided in Sections 14-107, 14-108, 14-113, 14-114, 14-120,
714-121, and 14-121.1 or refunds determined under Section
814-130.
 
9    (40 ILCS 5/14-131)
10    Sec. 14-131. Contributions by State.
11    (a) The State shall make contributions to the System by
12appropriations of amounts which, together with other employer
13contributions from trust, federal, and other funds, employee
14contributions, investment income, and other income, will be
15sufficient to meet the cost of maintaining and administering
16the System on a 100% 90% funded basis in accordance with
17actuarial recommendations.
18    For the purposes of this Section and Section 14-135.08,
19references to State contributions refer only to employer
20contributions and do not include employee contributions that
21are picked up or otherwise paid by the State or a department on
22behalf of the employee.
23    (b) The Board shall determine the total amount of State
24contributions required for each fiscal year on the basis of the
25actuarial tables and other assumptions adopted by the Board,

 

 

09800HB1165ham002- 26 -LRB098 08854 EFG 41948 a

1using the formula in subsection (e).
2    The Board shall also determine a State contribution rate
3for each fiscal year, expressed as a percentage of payroll,
4based on the total required State contribution for that fiscal
5year (less the amount received by the System from
6appropriations under Section 8.12 of the State Finance Act and
7Section 1 of the State Pension Funds Continuing Appropriation
8Act, if any, for the fiscal year ending on the June 30
9immediately preceding the applicable November 15 certification
10deadline), the estimated payroll (including all forms of
11compensation) for personal services rendered by eligible
12employees, and the recommendations of the actuary.
13    For the purposes of this Section and Section 14.1 of the
14State Finance Act, the term "eligible employees" includes
15employees who participate in the System, persons who may elect
16to participate in the System but have not so elected, persons
17who are serving a qualifying period that is required for
18participation, and annuitants employed by a department as
19described in subdivision (a)(1) or (a)(2) of Section 14-111.
20    (c) Contributions shall be made by the several departments
21for each pay period by warrants drawn by the State Comptroller
22against their respective funds or appropriations based upon
23vouchers stating the amount to be so contributed. These amounts
24shall be based on the full rate certified by the Board under
25Section 14-135.08 for that fiscal year. From the effective date
26of this amendatory Act of the 93rd General Assembly through the

 

 

09800HB1165ham002- 27 -LRB098 08854 EFG 41948 a

1payment of the final payroll from fiscal year 2004
2appropriations, the several departments shall not make
3contributions for the remainder of fiscal year 2004 but shall
4instead make payments as required under subsection (a-1) of
5Section 14.1 of the State Finance Act. The several departments
6shall resume those contributions at the commencement of fiscal
7year 2005.
8    (c-1) Notwithstanding subsection (c) of this Section, for
9fiscal years 2010, 2012, and 2013 only, contributions by the
10several departments are not required to be made for General
11Revenue Funds payrolls processed by the Comptroller. Payrolls
12paid by the several departments from all other State funds must
13continue to be processed pursuant to subsection (c) of this
14Section.
15    (c-2) For State fiscal years 2010, 2012, and 2013 only, on
16or as soon as possible after the 15th day of each month, the
17Board shall submit vouchers for payment of State contributions
18to the System, in a total monthly amount of one-twelfth of the
19fiscal year General Revenue Fund contribution as certified by
20the System pursuant to Section 14-135.08 of the Illinois
21Pension Code.
22    (d) If an employee is paid from trust funds or federal
23funds, the department or other employer shall pay employer
24contributions from those funds to the System at the certified
25rate, unless the terms of the trust or the federal-State
26agreement preclude the use of the funds for that purpose, in

 

 

09800HB1165ham002- 28 -LRB098 08854 EFG 41948 a

1which case the required employer contributions shall be paid by
2the State. From the effective date of this amendatory Act of
3the 93rd General Assembly through the payment of the final
4payroll from fiscal year 2004 appropriations, the department or
5other employer shall not pay contributions for the remainder of
6fiscal year 2004 but shall instead make payments as required
7under subsection (a-1) of Section 14.1 of the State Finance
8Act. The department or other employer shall resume payment of
9contributions at the commencement of fiscal year 2005.
10    (e) For State fiscal years 2012 through 2045, the minimum
11contribution to the System to be made by the State for each
12fiscal year shall be an amount determined by the System to be
13sufficient to bring the total assets of the System up to 100%
1490% of the total actuarial liabilities of the System by the end
15of State fiscal year 2045. In making these determinations, the
16required State contribution shall be calculated each year as a
17level percentage of payroll over the years remaining to and
18including fiscal year 2045 and shall be determined under the
19projected unit credit actuarial cost method.
20    Pursuant to Article XIII of the 1970 Constitution of the
21State of Illinois, beginning on July 1, 2013, the State shall,
22as a retirement benefit to each participant and annuitant of
23the System be contractually obligated to the System (as a
24fiduciary and trustee of the participants and annuitants) to
25pay the Annual Required State Contribution, as determined by
26the Board of the System using generally accepted actuarial

 

 

09800HB1165ham002- 29 -LRB098 08854 EFG 41948 a

1principles, as is necessary to bring the total assets of the
2System up to 100% of the total actuarial liabilities of the
3System by the end of State fiscal year 2045. As a further
4retirement benefit and contractual obligation, each fiscal
5year, the State shall pay to each designated retirement system
6the Annual Required State Contribution certified by the Board
7for that fiscal year. Payments of the Annual Required State
8Contribution for each fiscal year shall be made in equal
9monthly installments. This Section, and the security it
10provides to participants and annuitants is intended to be, and
11is, a contractual right that is part of the pension benefits
12provided to the participants and annuitants. Notwithstanding
13anything to the contrary in the Court of Claims Act or any
14other law, a designated retirement system has the exclusive
15right to and shall bring a Mandamus action in the Circuit Court
16of Champaign County against the State to compel the State to
17make any installment of the Annual Required State Contribution
18required by this Section, irrespective of other remedies that
19may be available to the System. Each member or annuitant of the
20System has the right to bring a Mandamus action against the
21System in the Circuit Court in any judicial district in which
22the System maintains an office if the System fails to bring an
23action specified in this Section, irrespective of other
24remedies that may be available to the member or annuitant.
25    For State fiscal years 1996 through 2005, the State
26contribution to the System, as a percentage of the applicable

 

 

09800HB1165ham002- 30 -LRB098 08854 EFG 41948 a

1employee payroll, shall be increased in equal annual increments
2so that by State fiscal year 2011, the State is contributing at
3the rate required under this Section; except that (i) for State
4fiscal year 1998, for all purposes of this Code and any other
5law of this State, the certified percentage of the applicable
6employee payroll shall be 5.052% for employees earning eligible
7creditable service under Section 14-110 and 6.500% for all
8other employees, notwithstanding any contrary certification
9made under Section 14-135.08 before the effective date of this
10amendatory Act of 1997, and (ii) in the following specified
11State fiscal years, the State contribution to the System shall
12not be less than the following indicated percentages of the
13applicable employee payroll, even if the indicated percentage
14will produce a State contribution in excess of the amount
15otherwise required under this subsection and subsection (a):
169.8% in FY 1999; 10.0% in FY 2000; 10.2% in FY 2001; 10.4% in FY
172002; 10.6% in FY 2003; and 10.8% in FY 2004.
18    Notwithstanding any other provision of this Article, the
19total required State contribution to the System for State
20fiscal year 2006 is $203,783,900.
21    Notwithstanding any other provision of this Article, the
22total required State contribution to the System for State
23fiscal year 2007 is $344,164,400.
24    For each of State fiscal years 2008 through 2009, the State
25contribution to the System, as a percentage of the applicable
26employee payroll, shall be increased in equal annual increments

 

 

09800HB1165ham002- 31 -LRB098 08854 EFG 41948 a

1from the required State contribution for State fiscal year
22007, so that by State fiscal year 2011, the State is
3contributing at the rate otherwise required under this Section.
4    Notwithstanding any other provision of this Article, the
5total required State General Revenue Fund contribution for
6State fiscal year 2010 is $723,703,100 and shall be made from
7the proceeds of bonds sold in fiscal year 2010 pursuant to
8Section 7.2 of the General Obligation Bond Act, less (i) the
9pro rata share of bond sale expenses determined by the System's
10share of total bond proceeds, (ii) any amounts received from
11the General Revenue Fund in fiscal year 2010, and (iii) any
12reduction in bond proceeds due to the issuance of discounted
13bonds, if applicable.
14    Notwithstanding any other provision of this Article, the
15total required State General Revenue Fund contribution for
16State fiscal year 2011 is the amount recertified by the System
17on or before April 1, 2011 pursuant to Section 14-135.08 and
18shall be made from the proceeds of bonds sold in fiscal year
192011 pursuant to Section 7.2 of the General Obligation Bond
20Act, less (i) the pro rata share of bond sale expenses
21determined by the System's share of total bond proceeds, (ii)
22any amounts received from the General Revenue Fund in fiscal
23year 2011, and (iii) any reduction in bond proceeds due to the
24issuance of discounted bonds, if applicable.
25    Beginning in State fiscal year 2046, the minimum State
26contribution for each fiscal year shall be the amount needed to

 

 

09800HB1165ham002- 32 -LRB098 08854 EFG 41948 a

1maintain the total assets of the System at 100% 90% of the
2total actuarial liabilities of the System.
3    Amounts received by the System pursuant to Section 25 of
4the Budget Stabilization Act or Section 8.12 of the State
5Finance Act in any fiscal year do not reduce and do not
6constitute payment of any portion of the minimum State
7contribution required under this Article in that fiscal year.
8Such amounts shall not reduce, and shall not be included in the
9calculation of, the required State contributions under this
10Article in any future year until the System has reached a
11funding ratio of at least 90%. A reference in this Article to
12the "required State contribution" or any substantially similar
13term does not include or apply to any amounts payable to the
14System under Section 25 of the Budget Stabilization Act.
15    Notwithstanding any other provision of this Section, the
16required State contribution for State fiscal year 2005 and for
17fiscal year 2008 and each fiscal year thereafter, as calculated
18under this Section and certified under Section 14-135.08, shall
19not exceed an amount equal to (i) the amount of the required
20State contribution that would have been calculated under this
21Section for that fiscal year if the System had not received any
22payments under subsection (d) of Section 7.2 of the General
23Obligation Bond Act, minus (ii) the portion of the State's
24total debt service payments for that fiscal year on the bonds
25issued in fiscal year 2003 for the purposes of that Section
267.2, as determined and certified by the Comptroller, that is

 

 

09800HB1165ham002- 33 -LRB098 08854 EFG 41948 a

1the same as the System's portion of the total moneys
2distributed under subsection (d) of Section 7.2 of the General
3Obligation Bond Act. In determining this maximum for State
4fiscal years 2008 through 2010, however, the amount referred to
5in item (i) shall be increased, as a percentage of the
6applicable employee payroll, in equal increments calculated
7from the sum of the required State contribution for State
8fiscal year 2007 plus the applicable portion of the State's
9total debt service payments for fiscal year 2007 on the bonds
10issued in fiscal year 2003 for the purposes of Section 7.2 of
11the General Obligation Bond Act, so that, by State fiscal year
122011, the State is contributing at the rate otherwise required
13under this Section.
14    (f) After the submission of all payments for eligible
15employees from personal services line items in fiscal year 2004
16have been made, the Comptroller shall provide to the System a
17certification of the sum of all fiscal year 2004 expenditures
18for personal services that would have been covered by payments
19to the System under this Section if the provisions of this
20amendatory Act of the 93rd General Assembly had not been
21enacted. Upon receipt of the certification, the System shall
22determine the amount due to the System based on the full rate
23certified by the Board under Section 14-135.08 for fiscal year
242004 in order to meet the State's obligation under this
25Section. The System shall compare this amount due to the amount
26received by the System in fiscal year 2004 through payments

 

 

09800HB1165ham002- 34 -LRB098 08854 EFG 41948 a

1under this Section and under Section 6z-61 of the State Finance
2Act. If the amount due is more than the amount received, the
3difference shall be termed the "Fiscal Year 2004 Shortfall" for
4purposes of this Section, and the Fiscal Year 2004 Shortfall
5shall be satisfied under Section 1.2 of the State Pension Funds
6Continuing Appropriation Act. If the amount due is less than
7the amount received, the difference shall be termed the "Fiscal
8Year 2004 Overpayment" for purposes of this Section, and the
9Fiscal Year 2004 Overpayment shall be repaid by the System to
10the Pension Contribution Fund as soon as practicable after the
11certification.
12    (g) For purposes of determining the required State
13contribution to the System, the value of the System's assets
14shall be equal to the actuarial value of the System's assets,
15which shall be calculated as follows:
16    As of June 30, 2008, the actuarial value of the System's
17assets shall be equal to the market value of the assets as of
18that date. In determining the actuarial value of the System's
19assets for fiscal years after June 30, 2008, any actuarial
20gains or losses from investment return incurred in a fiscal
21year shall be recognized in equal annual amounts over the
225-year period following that fiscal year.
23    (h) For purposes of determining the required State
24contribution to the System for a particular year, the actuarial
25value of assets shall be assumed to earn a rate of return equal
26to the System's actuarially assumed rate of return.

 

 

09800HB1165ham002- 35 -LRB098 08854 EFG 41948 a

1    (i) After the submission of all payments for eligible
2employees from personal services line items paid from the
3General Revenue Fund in fiscal year 2010 have been made, the
4Comptroller shall provide to the System a certification of the
5sum of all fiscal year 2010 expenditures for personal services
6that would have been covered by payments to the System under
7this Section if the provisions of this amendatory Act of the
896th General Assembly had not been enacted. Upon receipt of the
9certification, the System shall determine the amount due to the
10System based on the full rate certified by the Board under
11Section 14-135.08 for fiscal year 2010 in order to meet the
12State's obligation under this Section. The System shall compare
13this amount due to the amount received by the System in fiscal
14year 2010 through payments under this Section. If the amount
15due is more than the amount received, the difference shall be
16termed the "Fiscal Year 2010 Shortfall" for purposes of this
17Section, and the Fiscal Year 2010 Shortfall shall be satisfied
18under Section 1.2 of the State Pension Funds Continuing
19Appropriation Act. If the amount due is less than the amount
20received, the difference shall be termed the "Fiscal Year 2010
21Overpayment" for purposes of this Section, and the Fiscal Year
222010 Overpayment shall be repaid by the System to the General
23Revenue Fund as soon as practicable after the certification.
24    (j) After the submission of all payments for eligible
25employees from personal services line items paid from the
26General Revenue Fund in fiscal year 2011 have been made, the

 

 

09800HB1165ham002- 36 -LRB098 08854 EFG 41948 a

1Comptroller shall provide to the System a certification of the
2sum of all fiscal year 2011 expenditures for personal services
3that would have been covered by payments to the System under
4this Section if the provisions of this amendatory Act of the
596th General Assembly had not been enacted. Upon receipt of the
6certification, the System shall determine the amount due to the
7System based on the full rate certified by the Board under
8Section 14-135.08 for fiscal year 2011 in order to meet the
9State's obligation under this Section. The System shall compare
10this amount due to the amount received by the System in fiscal
11year 2011 through payments under this Section. If the amount
12due is more than the amount received, the difference shall be
13termed the "Fiscal Year 2011 Shortfall" for purposes of this
14Section, and the Fiscal Year 2011 Shortfall shall be satisfied
15under Section 1.2 of the State Pension Funds Continuing
16Appropriation Act. If the amount due is less than the amount
17received, the difference shall be termed the "Fiscal Year 2011
18Overpayment" for purposes of this Section, and the Fiscal Year
192011 Overpayment shall be repaid by the System to the General
20Revenue Fund as soon as practicable after the certification.
21    (k) For fiscal years 2012 and 2013 only, after the
22submission of all payments for eligible employees from personal
23services line items paid from the General Revenue Fund in the
24fiscal year have been made, the Comptroller shall provide to
25the System a certification of the sum of all expenditures in
26the fiscal year for personal services. Upon receipt of the

 

 

09800HB1165ham002- 37 -LRB098 08854 EFG 41948 a

1certification, the System shall determine the amount due to the
2System based on the full rate certified by the Board under
3Section 14-135.08 for the fiscal year in order to meet the
4State's obligation under this Section. The System shall compare
5this amount due to the amount received by the System for the
6fiscal year. If the amount due is more than the amount
7received, the difference shall be termed the "Prior Fiscal Year
8Shortfall" for purposes of this Section, and the Prior Fiscal
9Year Shortfall shall be satisfied under Section 1.2 of the
10State Pension Funds Continuing Appropriation Act. If the amount
11due is less than the amount received, the difference shall be
12termed the "Prior Fiscal Year Overpayment" for purposes of this
13Section, and the Prior Fiscal Year Overpayment shall be repaid
14by the System to the General Revenue Fund as soon as
15practicable after the certification.
16(Source: P.A. 96-43, eff. 7-15-09; 96-45, eff. 7-15-09;
1796-1000, eff. 7-2-10; 96-1497, eff. 1-14-11; 96-1511, eff.
181-27-11; 96-1554, eff. 3-18-11; 97-72, eff. 7-1-11; 97-732,
19eff. 6-30-12.)
 
20    (40 ILCS 5/14-133)  (from Ch. 108 1/2, par. 14-133)
21    Sec. 14-133. Contributions on behalf of members.
22    (a) Each participating employee shall make contributions
23to the System, based on the employee's compensation, as
24follows:
25        (1) Covered employees, except as indicated below, 3.5%

 

 

09800HB1165ham002- 38 -LRB098 08854 EFG 41948 a

1    for retirement annuity, and 0.5% for a widow or survivors
2    annuity;
3        (2) Noncovered employees, except as indicated below,
4    7% for retirement annuity and 1% for a widow or survivors
5    annuity;
6        (3) Noncovered employees serving in a position in which
7    "eligible creditable service" as defined in Section 14-110
8    may be earned, 1% for a widow or survivors annuity plus the
9    following amount for retirement annuity: 8.5% through
10    December 31, 2001; 9.5% in 2002; 10.5% in 2003; and 11.5%
11    in 2004 and thereafter;
12        (4) Covered employees serving in a position in which
13    "eligible creditable service" as defined in Section 14-110
14    may be earned, 0.5% for a widow or survivors annuity plus
15    the following amount for retirement annuity: 5% through
16    December 31, 2001; 6% in 2002; 7% in 2003; and 8% in 2004
17    and thereafter;
18        (5) Each security employee of the Department of
19    Corrections or of the Department of Human Services who is a
20    covered employee, 0.5% for a widow or survivors annuity
21    plus the following amount for retirement annuity: 5%
22    through December 31, 2001; 6% in 2002; 7% in 2003; and 8%
23    in 2004 and thereafter;
24        (6) Each security employee of the Department of
25    Corrections or of the Department of Human Services who is
26    not a covered employee, 1% for a widow or survivors annuity

 

 

09800HB1165ham002- 39 -LRB098 08854 EFG 41948 a

1    plus the following amount for retirement annuity: 8.5%
2    through December 31, 2001; 9.5% in 2002; 10.5% in 2003; and
3    11.5% in 2004 and thereafter.
4    (b) Contributions shall be in the form of a deduction from
5compensation and shall be made notwithstanding that the
6compensation paid in cash to the employee shall be reduced
7thereby below the minimum prescribed by law or regulation. Each
8member is deemed to consent and agree to the deductions from
9compensation provided for in this Article, and shall receipt in
10full for salary or compensation.
11    (c) Notwithstanding any provision of this Code to the
12contrary, (i) for a participant who does not file an election
13under subsection (a-5) of Section 14-133.2, any contributions
14on amounts of salary in excess of the limit specified in
15Section 14-103.12a for that year shall instead be used to
16finance self-managed plan benefits and (ii) for a participant
17who files an election under subsection (a-5) of Section
1814-133.2, any contributions made after the date of the
19election, including contributions for a survivor's annuity,
20shall instead be used to finance the benefits under Section
2114-133.2. Notwithstanding any provision of this Code to the
22contrary, a participant who does not file an election under
23subsection (a-5) of Section 14-133.2 shall contribute towards
24the traditional benefit package a percentage of salary equal to
25the greater of (i) one-half of the normal cost of the
26traditional benefit package or (ii) 6% of salary.

 

 

09800HB1165ham002- 40 -LRB098 08854 EFG 41948 a

1(Source: P.A. 92-14, eff. 6-28-01.)
 
2    (40 ILCS 5/14-133.2 new)
3    Sec. 14-133.2. Self-managed plan.
4    (a) The State Employees' Retirement System of Illinois must
5establish and administer a self-managed plan that shall offer
6participants the opportunity to accumulate assets for
7retirement through a combination of participant and State
8contributions that may be invested in mutual funds, collective
9investment funds, or other investment products and used to
10purchase annuity contracts, that are fixed, variable, or a
11combination of fixed and variable. The plan must be qualified
12under the Internal Revenue Code of 1986.
13    The State Employees' Retirement System of Illinois shall be
14the plan sponsor for the self-managed plan and shall prepare a
15plan document and adopt any rules and procedures that are
16considered necessary or desirable for the administration of the
17self-managed plan. Consistent with its fiduciary duty to the
18participants and beneficiaries of the self-managed plan, the
19Board of Trustees of the System may delegate aspects of plan
20administration as it sees fit to companies authorized to do
21business in this State.
22    (a-5) A participant may file an irrevocable election to
23transfer amounts equal to the participant's total
24contributions under the traditional benefit package, with
25interest, to the self-managed plan under this Section. By

 

 

09800HB1165ham002- 41 -LRB098 08854 EFG 41948 a

1filing the election, a participant forfeits all accrued rights
2and benefits under the traditional benefit package.
3    (b) Notwithstanding any other provision of this Code, (i)
4for a participant who does not file an election under
5subsection (a-5) of this Section, any portion of his or her
6compensation that exceeds the limit specified in Section
714-103.12a for that year shall be subject to the self-managed
8plan and (ii) for a participant who files an election under
9subsection (a-5) of this Section, the entirety of the
10participant's compensation shall, after the date of the
11election, be subject to the self-managed plan created under
12this Section.
13    (c) The System shall solicit proposals to provide
14administrative services and funding vehicles for the
15self-managed plan from insurance and annuity companies and
16mutual fund companies, banks, trust companies, or other
17financial institutions authorized to do business in this State.
18In reviewing the proposals received and approving and
19contracting with no fewer than 2 and no more than 7 companies,
20the Board of Trustees of the System shall consider, among other
21things, the following criteria:
22        (1) the nature and extent of the benefits that would be
23    provided to the participants;
24        (2) the reasonableness of the benefits in relation to
25    the premium charged;
26        (3) the suitability of the benefits to the needs and

 

 

09800HB1165ham002- 42 -LRB098 08854 EFG 41948 a

1    interests of the participants and the State; and
2        (4) the ability of the company to provide benefits
3    under the contract and the financial stability of the
4    company.
5    The System shall periodically review each approved
6company. A company may continue to provide administrative
7services and funding vehicles for the self-managed plan only so
8long as it continues to be an approved company under contract
9with the Board.
10    In addition to the companies approved by the System under
11this subsection (c), the System may offer its participants an
12investment fund managed by the Illinois State Board of
13Investment.
14    (d) Participants in the program must be allowed to direct
15the transfer of their account balances among the various
16investment options offered, subject to applicable contractual
17provisions. The participant shall not be deemed a fiduciary by
18reason of providing such investment direction. A person who is
19a fiduciary shall not be liable for any loss resulting from
20that investment direction and shall not be deemed to have
21breached any fiduciary duty by acting in accordance with that
22direction. Neither the System nor the State shall guarantee any
23of the investments in the participant's account balances.
24    (e) Participation in the self-managed plan under this
25Section shall constitute participation in the State Employees'
26Retirement System of Illinois.

 

 

09800HB1165ham002- 43 -LRB098 08854 EFG 41948 a

1    (f) The self-managed plan shall be funded by contributions
2from participants in the self-managed plan and State
3contributions as provided in this Section.
4    The contribution rate for participants in the self-managed
5plan shall be, (i) for a participant who does not file an
6election under subsection (a-5) of this Section, 6% of the
7amount of compensation in excess of the limit specified in
814-103.12a for that year, in addition to the amount specified
9under subsection (c) of Section 14-133 for that year and (ii)
10for a participant who files an election under subsection (a-5)
11of Section 14-133.2, 8% of any amount of compensation up to and
12including the limit specified in Section 14-103.12a for that
13year and 6% of any amount of compensation in excess of that
14limit for that year. This required contribution shall be made
15as an employer pick-up under Section 414(h) of the Internal
16Revenue Code of 1986 or any successor Section thereof. Any
17participant in the System's traditional benefit package prior
18to his or her election to participate in the self-managed plan
19shall continue to have the employer pick up the contributions
20required under Section 14-133. However, the amounts picked up
21after the election of the self-managed plan shall be remitted
22to and treated as assets of the self-managed plan. In no event
23shall a participant have the option of receiving these amounts
24in cash. Participants may make additional contributions to the
25self-managed plan in accordance with procedures prescribed by
26the System, to the extent permitted under rules adopted by the

 

 

09800HB1165ham002- 44 -LRB098 08854 EFG 41948 a

1System.
2    The program shall provide for State contributions to the
3self-managed plan in the following amounts: (i) for a
4participant who does not file an election under subsection
5(a-5) of this Section, 3% of the amount of compensation in
6excess of the limit specified in 14-103.12a for that year and
7(ii) for a participant who does not file an election under
8subsection (a-5) of this Section, 7.1% of any amount of
9compensation up to and including the limit specified in Section
1014-103.12a for that year and 3% of any amount of compensation
11in excess of that limit for that year.
12    The State of Illinois shall make contributions by
13appropriations to the System for participants in the
14self-managed plan under this Section. The amount required shall
15be certified by the Board of Trustees of the System and paid by
16the State in accordance with Sections 14-132 and 14-135.08. The
17System shall not be obligated to remit the required State
18contributions to any of the insurance and annuity companies,
19mutual fund companies, banks, trust companies, financial
20institutions, or other sponsors of any of the funding vehicles
21offered under the self-managed plan until it has received the
22required State contributions from the State.
23    (g) If a participant in the self-managed plan who is
24otherwise vested under this Article terminates employment, the
25participant shall be entitled to a benefit that is based on the
26account values attributable to both State and member

 

 

09800HB1165ham002- 45 -LRB098 08854 EFG 41948 a

1contributions and any investment return thereon.
2    If a participant in the self-managed plan who is not
3otherwise vested under this Article terminates employment, the
4participant shall be entitled to a benefit based solely on the
5account values attributable to the participant's contributions
6and any investment return thereon, and the State contributions
7and any investment return thereon shall be forfeited. Any State
8contributions that are forfeited shall be held in escrow by the
9company investing those contributions and shall be used, as
10directed by the System, for future allocations of State
11contributions.
 
12    (40 ILCS 5/14-135.08a new)
13    Sec. 14-135.08a. To calculate the normal cost of benefits.
14To calculate the normal cost of each plan offered by the system
15as a percentage of compensation and to update those amounts at
16least every 3 years.
 
17    (40 ILCS 5/15-111)  (from Ch. 108 1/2, par. 15-111)
18    Sec. 15-111. Earnings. "Earnings": An amount paid for
19personal services equal to the sum of the basic compensation
20plus extra compensation for summer teaching, overtime or other
21extra service. For periods for which an employee receives
22service credit under subsection (c) of Section 15-113.1 or
23Section 15-113.2, earnings are equal to the basic compensation
24on which contributions are paid by the employee during such

 

 

09800HB1165ham002- 46 -LRB098 08854 EFG 41948 a

1periods. Compensation for employment which is irregular,
2intermittent and temporary shall not be considered earnings,
3unless the participant is also receiving earnings from the
4employer as an employee under Section 15-107.
5    With respect to transition pay paid by the University of
6Illinois to a person who was a participating employee employed
7in the fire department of the University of Illinois's
8Champaign-Urbana campus immediately prior to the elimination
9of that fire department:
10        (1) "Earnings" includes transition pay paid to the
11    employee on or after the effective date of this amendatory
12    Act of the 91st General Assembly.
13        (2) "Earnings" includes transition pay paid to the
14    employee before the effective date of this amendatory Act
15    of the 91st General Assembly only if (i) employee
16    contributions under Section 15-157 have been withheld from
17    that transition pay or (ii) the employee pays to the System
18    before January 1, 2001 an amount representing employee
19    contributions under Section 15-157 on that transition pay.
20    Employee contributions under item (ii) may be paid in a
21    lump sum, by withholding from additional transition pay
22    accruing before January 1, 2001, or in any other manner
23    approved by the System. Upon payment of the employee
24    contributions on transition pay, the corresponding
25    employer contributions become an obligation of the State.
26    Notwithstanding any other provision of this Section,

 

 

09800HB1165ham002- 47 -LRB098 08854 EFG 41948 a

1"earnings", except as used in Section 15-158.2, does not
2include any future increase in income due to a provision in a
3collectively bargained contract that grants an increase in
4earnings based on an employee's expected date of retirement.
5The changes made to this Section by this amendatory Act of the
698th General Assembly do not apply to an employee who is
7covered by a collective bargaining agreement or employment
8contract that is in effect on the effective date of this
9amendatory Act of the 98th General Assembly and that provides
10for such increases, until that agreement or contract expires or
11is amended or renewed.
12(Source: P.A. 91-887, eff. 7-6-00.)
 
13    (40 ILCS 5/15-112.1 new)
14    Sec. 15-112.1. Limitation on earnings and required
15participation in the self-managed plan.
16    (a) For the purpose of calculating traditional benefit
17package benefits and contributions, the annual earnings,
18salary, or wages of a participant shall not exceed the greater
19of (i) the amount specified under subsection (b-5) of Section
201-160 or (ii) the annual earnings of the participant during the
21365 days immediately before the effective date of this Section.
22If, however, an employment contract that is in place on or
23before the effective date of this Section authorizes an
24increase in earnings, salary, or wages on or after the
25effective date of this Section, then the annual earnings,

 

 

09800HB1165ham002- 48 -LRB098 08854 EFG 41948 a

1salary, or wages of the participant during the 365 days that
2immediately precede the date that the contract expires may be
3used in lieu of the amount specified in item (ii) of this
4Section.
5    (b) Notwithstanding any other provision of this Code, (i)
6for a participant who does not make an election under Section
715-134.5, any portion of his or her earnings that exceeds the
8limit specified in subsection (a) of this Section for that year
9shall be subject to the self-managed plan and (ii) for a
10participant who makes an election under Section 15-134.5, the
11entirety of the participant's earnings shall, after the date of
12the election, be subject to the self-managed plan created under
13this Section, as is provided in Section 15-158.2.
 
14    (40 ILCS 5/15-155)  (from Ch. 108 1/2, par. 15-155)
15    Sec. 15-155. Employer contributions.
16    (a) The State of Illinois shall make contributions by
17appropriations of amounts which, together with the other
18employer contributions from trust, federal, and other funds,
19employee contributions, income from investments, and other
20income of this System, will be sufficient to meet the cost of
21maintaining and administering the System on a 100% 90% funded
22basis in accordance with actuarial recommendations.
23    The Board shall determine the amount of State contributions
24required for each fiscal year on the basis of the actuarial
25tables and other assumptions adopted by the Board and the

 

 

09800HB1165ham002- 49 -LRB098 08854 EFG 41948 a

1recommendations of the actuary, using the formula in subsection
2(a-1).
3    (a-1) For State fiscal years 2012 through 2045, the minimum
4contribution to the System to be made by the State for each
5fiscal year shall be an amount determined by the System to be
6sufficient to bring the total assets of the System up to 100%
790% of the total actuarial liabilities of the System by the end
8of State fiscal year 2045.
9    Pursuant to Article XIII of the 1970 Constitution of the
10State of Illinois, beginning on July 1, 2013, the State shall,
11as a retirement benefit to each participant and annuitant of
12the System be contractually obligated to the System (as a
13fiduciary and trustee of the participants and annuitants) to
14pay the Annual Required State Contribution, as determined by
15the Board of the System using generally accepted actuarial
16principles, as is necessary to bring the total assets of the
17System up to 100% of the total actuarial liabilities of the
18System by the end of State fiscal year 2045. As a further
19retirement benefit and contractual obligation, each fiscal
20year, the State shall pay to each designated retirement system
21the Annual Required State Contribution certified by the Board
22for that fiscal year. Payments of the Annual Required State
23Contribution for each fiscal year shall be made in equal
24monthly installments. This Section, and the security it
25provides to participants and annuitants is intended to be, and
26is, a contractual right that is part of the pension benefits

 

 

09800HB1165ham002- 50 -LRB098 08854 EFG 41948 a

1provided to the participants and annuitants. Notwithstanding
2anything to the contrary in the Court of Claims Act or any
3other law, a designated retirement system has the exclusive
4right to and shall bring a Mandamus action in the Circuit Court
5of Champaign County against the State to compel the State to
6make any installment of the Annual Required State Contribution
7required by this Section, irrespective of other remedies that
8may be available to the System. Each member or annuitant of the
9System has the right to bring a Mandamus action against the
10System in the Circuit Court in any judicial district in which
11the System maintains an office if the System fails to bring an
12action specified in this Section, irrespective of other
13remedies that may be available to the member or annuitant. In
14making these determinations, the required State contribution
15shall be calculated each year as a level percentage of payroll
16over the years remaining to and including fiscal year 2045 and
17shall be determined under the projected unit credit actuarial
18cost method.
19    For State fiscal years 1996 through 2005, the State
20contribution to the System, as a percentage of the applicable
21employee payroll, shall be increased in equal annual increments
22so that by State fiscal year 2011, the State is contributing at
23the rate required under this Section.
24    Notwithstanding any other provision of this Article, the
25total required State contribution for State fiscal year 2006 is
26$166,641,900.

 

 

09800HB1165ham002- 51 -LRB098 08854 EFG 41948 a

1    Notwithstanding any other provision of this Article, the
2total required State contribution for State fiscal year 2007 is
3$252,064,100.
4    For each of State fiscal years 2008 through 2009, the State
5contribution to the System, as a percentage of the applicable
6employee payroll, shall be increased in equal annual increments
7from the required State contribution for State fiscal year
82007, so that by State fiscal year 2011, the State is
9contributing at the rate otherwise required under this Section.
10    Notwithstanding any other provision of this Article, the
11total required State contribution for State fiscal year 2010 is
12$702,514,000 and shall be made from the State Pensions Fund and
13proceeds of bonds sold in fiscal year 2010 pursuant to Section
147.2 of the General Obligation Bond Act, less (i) the pro rata
15share of bond sale expenses determined by the System's share of
16total bond proceeds, (ii) any amounts received from the General
17Revenue Fund in fiscal year 2010, (iii) any reduction in bond
18proceeds due to the issuance of discounted bonds, if
19applicable.
20    Notwithstanding any other provision of this Article, the
21total required State contribution for State fiscal year 2011 is
22the amount recertified by the System on or before April 1, 2011
23pursuant to Section 15-165 and shall be made from the State
24Pensions Fund and proceeds of bonds sold in fiscal year 2011
25pursuant to Section 7.2 of the General Obligation Bond Act,
26less (i) the pro rata share of bond sale expenses determined by

 

 

09800HB1165ham002- 52 -LRB098 08854 EFG 41948 a

1the System's share of total bond proceeds, (ii) any amounts
2received from the General Revenue Fund in fiscal year 2011, and
3(iii) any reduction in bond proceeds due to the issuance of
4discounted bonds, if applicable.
5    Beginning in State fiscal year 2046, the minimum State
6contribution for each fiscal year shall be the amount needed to
7maintain the total assets of the System at 100% 90% of the
8total actuarial liabilities of the System.
9    Amounts received by the System pursuant to Section 25 of
10the Budget Stabilization Act or Section 8.12 of the State
11Finance Act in any fiscal year do not reduce and do not
12constitute payment of any portion of the minimum State
13contribution required under this Article in that fiscal year.
14Such amounts shall not reduce, and shall not be included in the
15calculation of, the required State contributions under this
16Article in any future year until the System has reached a
17funding ratio of at least 90%. A reference in this Article to
18the "required State contribution" or any substantially similar
19term does not include or apply to any amounts payable to the
20System under Section 25 of the Budget Stabilization Act.
21    Notwithstanding any other provision of this Section, the
22required State contribution for State fiscal year 2005 and for
23fiscal year 2008 and each fiscal year thereafter, as calculated
24under this Section and certified under Section 15-165, shall
25not exceed an amount equal to (i) the amount of the required
26State contribution that would have been calculated under this

 

 

09800HB1165ham002- 53 -LRB098 08854 EFG 41948 a

1Section for that fiscal year if the System had not received any
2payments under subsection (d) of Section 7.2 of the General
3Obligation Bond Act, minus (ii) the portion of the State's
4total debt service payments for that fiscal year on the bonds
5issued in fiscal year 2003 for the purposes of that Section
67.2, as determined and certified by the Comptroller, that is
7the same as the System's portion of the total moneys
8distributed under subsection (d) of Section 7.2 of the General
9Obligation Bond Act. In determining this maximum for State
10fiscal years 2008 through 2010, however, the amount referred to
11in item (i) shall be increased, as a percentage of the
12applicable employee payroll, in equal increments calculated
13from the sum of the required State contribution for State
14fiscal year 2007 plus the applicable portion of the State's
15total debt service payments for fiscal year 2007 on the bonds
16issued in fiscal year 2003 for the purposes of Section 7.2 of
17the General Obligation Bond Act, so that, by State fiscal year
182011, the State is contributing at the rate otherwise required
19under this Section.
20    (b) If an employee is paid from trust or federal funds, the
21employer shall pay to the Board contributions from those funds
22which are sufficient to cover the accruing normal costs on
23behalf of the employee. However, universities having employees
24who are compensated out of local auxiliary funds, income funds,
25or service enterprise funds are not required to pay such
26contributions on behalf of those employees. The local auxiliary

 

 

09800HB1165ham002- 54 -LRB098 08854 EFG 41948 a

1funds, income funds, and service enterprise funds of
2universities shall not be considered trust funds for the
3purpose of this Article, but funds of alumni associations,
4foundations, and athletic associations which are affiliated
5with the universities included as employers under this Article
6and other employers which do not receive State appropriations
7are considered to be trust funds for the purpose of this
8Article.
9    (b-1) The City of Urbana and the City of Champaign shall
10each make employer contributions to this System for their
11respective firefighter employees who participate in this
12System pursuant to subsection (h) of Section 15-107. The rate
13of contributions to be made by those municipalities shall be
14determined annually by the Board on the basis of the actuarial
15assumptions adopted by the Board and the recommendations of the
16actuary, and shall be expressed as a percentage of salary for
17each such employee. The Board shall certify the rate to the
18affected municipalities as soon as may be practical. The
19employer contributions required under this subsection shall be
20remitted by the municipality to the System at the same time and
21in the same manner as employee contributions.
22    (c) Through State fiscal year 1995: The total employer
23contribution shall be apportioned among the various funds of
24the State and other employers, whether trust, federal, or other
25funds, in accordance with actuarial procedures approved by the
26Board. State of Illinois contributions for employers receiving

 

 

09800HB1165ham002- 55 -LRB098 08854 EFG 41948 a

1State appropriations for personal services shall be payable
2from appropriations made to the employers or to the System. The
3contributions for Class I community colleges covering earnings
4other than those paid from trust and federal funds, shall be
5payable solely from appropriations to the Illinois Community
6College Board or the System for employer contributions.
7    (d) Beginning in State fiscal year 1996, the required State
8contributions to the System shall be appropriated directly to
9the System and shall be payable through vouchers issued in
10accordance with subsection (c) of Section 15-165, except as
11provided in subsection (g).
12    (e) The State Comptroller shall draw warrants payable to
13the System upon proper certification by the System or by the
14employer in accordance with the appropriation laws and this
15Code.
16    (f) Normal costs under this Section means liability for
17pensions and other benefits which accrues to the System because
18of the credits earned for service rendered by the participants
19during the fiscal year and expenses of administering the
20System, but shall not include the principal of or any
21redemption premium or interest on any bonds issued by the Board
22or any expenses incurred or deposits required in connection
23therewith.
24    (g) If the amount of a participant's earnings for any
25academic year used to determine the final rate of earnings,
26determined on a full-time equivalent basis, exceeds the amount

 

 

09800HB1165ham002- 56 -LRB098 08854 EFG 41948 a

1of his or her earnings with the same employer for the previous
2academic year, determined on a full-time equivalent basis, by
3more than 6%, the participant's employer shall pay to the
4System, in addition to all other payments required under this
5Section and in accordance with guidelines established by the
6System, the present value of the increase in benefits resulting
7from the portion of the increase in earnings that is in excess
8of 6%. This present value shall be computed by the System on
9the basis of the actuarial assumptions and tables used in the
10most recent actuarial valuation of the System that is available
11at the time of the computation. The System may require the
12employer to provide any pertinent information or
13documentation.
14    Whenever it determines that a payment is or may be required
15under this subsection (g), the System shall calculate the
16amount of the payment and bill the employer for that amount.
17The bill shall specify the calculations used to determine the
18amount due. If the employer disputes the amount of the bill, it
19may, within 30 days after receipt of the bill, apply to the
20System in writing for a recalculation. The application must
21specify in detail the grounds of the dispute and, if the
22employer asserts that the calculation is subject to subsection
23(h) or (i) of this Section, must include an affidavit setting
24forth and attesting to all facts within the employer's
25knowledge that are pertinent to the applicability of subsection
26(h) or (i). Upon receiving a timely application for

 

 

09800HB1165ham002- 57 -LRB098 08854 EFG 41948 a

1recalculation, the System shall review the application and, if
2appropriate, recalculate the amount due.
3    The employer contributions required under this subsection
4(g) (f) may be paid in the form of a lump sum within 90 days
5after receipt of the bill. If the employer contributions are
6not paid within 90 days after receipt of the bill, then
7interest will be charged at a rate equal to the System's annual
8actuarially assumed rate of return on investment compounded
9annually from the 91st day after receipt of the bill. Payments
10must be concluded within 3 years after the employer's receipt
11of the bill.
12    (h) This subsection (h) applies only to payments made or
13salary increases given on or after June 1, 2005 but before July
141, 2011. The changes made by Public Act 94-1057 shall not
15require the System to refund any payments received before July
1631, 2006 (the effective date of Public Act 94-1057).
17    When assessing payment for any amount due under subsection
18(g), the System shall exclude earnings increases paid to
19participants under contracts or collective bargaining
20agreements entered into, amended, or renewed before June 1,
212005.
22    When assessing payment for any amount due under subsection
23(g), the System shall exclude earnings increases paid to a
24participant at a time when the participant is 10 or more years
25from retirement eligibility under Section 15-135.
26    When assessing payment for any amount due under subsection

 

 

09800HB1165ham002- 58 -LRB098 08854 EFG 41948 a

1(g), the System shall exclude earnings increases resulting from
2overload work, including a contract for summer teaching, or
3overtime when the employer has certified to the System, and the
4System has approved the certification, that: (i) in the case of
5overloads (A) the overload work is for the sole purpose of
6academic instruction in excess of the standard number of
7instruction hours for a full-time employee occurring during the
8academic year that the overload is paid and (B) the earnings
9increases are equal to or less than the rate of pay for
10academic instruction computed using the participant's current
11salary rate and work schedule; and (ii) in the case of
12overtime, the overtime was necessary for the educational
13mission.
14    When assessing payment for any amount due under subsection
15(g), the System shall exclude any earnings increase resulting
16from (i) a promotion for which the employee moves from one
17classification to a higher classification under the State
18Universities Civil Service System, (ii) a promotion in academic
19rank for a tenured or tenure-track faculty position, or (iii) a
20promotion that the Illinois Community College Board has
21recommended in accordance with subsection (k) of this Section.
22These earnings increases shall be excluded only if the
23promotion is to a position that has existed and been filled by
24a member for no less than one complete academic year and the
25earnings increase as a result of the promotion is an increase
26that results in an amount no greater than the average salary

 

 

09800HB1165ham002- 59 -LRB098 08854 EFG 41948 a

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

 

 

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1    (k) The Illinois Community College Board shall adopt rules
2for recommending lists of promotional positions submitted to
3the Board by community colleges and for reviewing the
4promotional lists on an annual basis. When recommending
5promotional lists, the Board shall consider the similarity of
6the positions submitted to those positions recognized for State
7universities by the State Universities Civil Service System.
8The Illinois Community College Board shall file a copy of its
9findings with the System. The System shall consider the
10findings of the Illinois Community College Board when making
11determinations under this Section. The System shall not exclude
12any earnings increases resulting from a promotion when the
13promotion was not submitted by a community college. Nothing in
14this subsection (k) shall require any community college to
15submit any information to the Community College Board.
16    (l) For purposes of determining the required State
17contribution to the System, the value of the System's assets
18shall be equal to the actuarial value of the System's assets,
19which shall be calculated as follows:
20    As of June 30, 2008, the actuarial value of the System's
21assets shall be equal to the market value of the assets as of
22that date. In determining the actuarial value of the System's
23assets for fiscal years after June 30, 2008, any actuarial
24gains or losses from investment return incurred in a fiscal
25year shall be recognized in equal annual amounts over the
265-year period following that fiscal year.

 

 

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1    (m) For purposes of determining the required State
2contribution to the system for a particular year, the actuarial
3value of assets shall be assumed to earn a rate of return equal
4to the system's actuarially assumed rate of return.
5(Source: P.A. 96-43, eff. 7-15-09; 96-1497, eff. 1-14-11;
696-1511, eff. 1-27-11; 96-1554, eff. 3-18-11; 97-813, eff.
77-13-12; revised 10-17-12.)
 
8    (40 ILCS 5/15-157)  (from Ch. 108 1/2, par. 15-157)
9    Sec. 15-157. Employee Contributions.
10    (a) Each participating employee shall make contributions
11towards the retirement benefits payable under the retirement
12program applicable to the employee from each payment of
13earnings applicable to employment under this system on and
14after the date of becoming a participant as follows: Prior to
15September 1, 1949, 3 1/2% of earnings; from September 1, 1949
16to August 31, 1955, 5%; from September 1, 1955 to August 31,
171969, 6%; from September 1, 1969, 6 1/2%. These contributions
18are to be considered as normal contributions for purposes of
19this Article.
20    Each participant who is a police officer or firefighter
21shall make normal contributions of 8% of each payment of
22earnings applicable to employment as a police officer or
23firefighter under this system on or after September 1, 1981,
24unless he or she files with the board within 60 days after the
25effective date of this amendatory Act of 1991 or 60 days after

 

 

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1the board receives notice that he or she is employed as a
2police officer or firefighter, whichever is later, a written
3notice waiving the retirement formula provided by Rule 4 of
4Section 15-136. This waiver shall be irrevocable. If a
5participant had met the conditions set forth in Section
615-132.1 prior to the effective date of this amendatory Act of
71991 but failed to make the additional normal contributions
8required by this paragraph, he or she may elect to pay the
9additional contributions plus compound interest at the
10effective rate. If such payment is received by the board, the
11service shall be considered as police officer service in
12calculating the retirement annuity under Rule 4 of Section
1315-136. While performing service described in clause (i) or
14(ii) of Rule 4 of Section 15-136, a participating employee
15shall be deemed to be employed as a firefighter for the purpose
16of determining the rate of employee contributions under this
17Section.
18    (b) Starting September 1, 1969, each participating
19employee shall make additional contributions of 1/2 of 1% of
20earnings to finance a portion of the cost of the annual
21increases in retirement annuity provided under Section 15-136,
22except that with respect to participants in the self-managed
23plan this additional contribution shall be used to finance the
24benefits obtained under that retirement program.
25    (c) In addition to the amounts described in subsections (a)
26and (b) of this Section, each participating employee shall make

 

 

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1contributions of 1% of earnings applicable under this system on
2and after August 1, 1959. The contributions made under this
3subsection (c) shall be considered as survivor's insurance
4contributions for purposes of this Article if the employee is
5covered under the traditional benefit package, and such
6contributions shall be considered as additional contributions
7for purposes of this Article if the employee is participating
8in the self-managed plan or has elected to participate in the
9portable benefit package and has completed the applicable
10one-year waiting period. Contributions in excess of $80 during
11any fiscal year beginning before August 31, 1969 and in excess
12of $120 during any fiscal year thereafter until September 1,
131971 shall be considered as additional contributions for
14purposes of this Article.
15    (d) If the board by board rule so permits and subject to
16such conditions and limitations as may be specified in its
17rules, a participant may make other additional contributions of
18such percentage of earnings or amounts as the participant shall
19elect in a written notice thereof received by the board.
20    (e) That fraction of a participant's total accumulated
21normal contributions, the numerator of which is equal to the
22number of years of service in excess of that which is required
23to qualify for the maximum retirement annuity, and the
24denominator of which is equal to the total service of the
25participant, shall be considered as accumulated additional
26contributions. The determination of the applicable maximum

 

 

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1annuity and the adjustment in contributions required by this
2provision shall be made as of the date of the participant's
3retirement.
4    (f) Notwithstanding the foregoing, a participating
5employee shall not be required to make contributions under this
6Section after the date upon which continuance of such
7contributions would otherwise cause his or her retirement
8annuity to exceed the maximum retirement annuity as specified
9in clause (1) of subsection (c) of Section 15-136.
10    (g) A participating employee may make contributions for the
11purchase of service credit under this Article.
12    (h) Notwithstanding any provision of this Code to the
13contrary, (i) for a member who does not file an election under
14subsection (e) of Section 15-158.2, any contributions on
15amounts of earnings in excess of the limit specified in Section
1615-112.1 for that year shall instead be used to finance
17self-managed plan benefits and (ii) for a member who files an
18election under subsection (e) of Section 15-158.2, any
19contributions made after the date of the election, including
20the contributions for a survivor's annuity, shall be used to
21finance the benefits under Section 15-158.2. Notwithstanding
22any provision of this Code to the contrary, a member who does
23not file an election under subsection (a-5) of Section 15-158.2
24shall contribute towards the traditional benefit package a
25percentage of earnings equal to the greater of (i) one-half of
26the normal cost of the traditional benefit package or (ii) 6%

 

 

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1of earnings.
2(Source: P.A. 90-32, eff. 6-27-97; 90-65, eff. 7-7-97; 90-448,
3eff. 8-16-97; 90-511, eff. 8-22-97; 90-576, eff. 3-31-98;
490-655, eff. 7-30-98; 90-766, eff. 8-14-98.)
 
5    (40 ILCS 5/15-158.2)
6    Sec. 15-158.2. Self-managed plan.
7    (a) Purpose. The General Assembly finds that it is
8important for colleges and universities to be able to attract
9and retain the most qualified employees and that in order to
10attract and retain these employees, colleges and universities
11should have the flexibility to provide a defined contribution
12plan as an alternative for eligible employees who elect not to
13participate in a defined benefit retirement program provided
14under this Article. Accordingly, the State Universities
15Retirement System is hereby authorized to establish and
16administer a self-managed plan, which shall offer
17participating employees the opportunity to accumulate assets
18for retirement through a combination of employee and employer
19contributions that may be invested in mutual funds, collective
20investment funds, or other investment products and used to
21purchase annuity contracts, either fixed or variable or a
22combination thereof. The plan must be qualified under the
23Internal Revenue Code of 1986.
24    (b) Adoption by employers. Each employer subject to this
25Article may elect to adopt the self-managed plan established

 

 

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1under this Section; this election is irrevocable. An employer's
2election to adopt the self-managed plan makes available to the
3eligible employees of that employer the elections described in
4Section 15-134.5.
5    The State Universities Retirement System shall be the plan
6sponsor for the self-managed plan and shall prepare a plan
7document and prescribe such rules and procedures as are
8considered necessary or desirable for the administration of the
9self-managed plan. Consistent with its fiduciary duty to the
10participants and beneficiaries of the self-managed plan, the
11Board of Trustees of the System may delegate aspects of plan
12administration as it sees fit to companies authorized to do
13business in this State, to the employers, or to a combination
14of both.
15    (c) Selection of service providers and funding vehicles.
16The System, in consultation with the employers, shall solicit
17proposals to provide administrative services and funding
18vehicles for the self-managed plan from insurance and annuity
19companies and mutual fund companies, banks, trust companies, or
20other financial institutions authorized to do business in this
21State. In reviewing the proposals received and approving and
22contracting with no fewer than 2 and no more than 7 companies,
23the Board of Trustees of the System shall consider, among other
24things, the following criteria:
25        (1) the nature and extent of the benefits that would be
26    provided to the participants;

 

 

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1        (2) the reasonableness of the benefits in relation to
2    the premium charged;
3        (3) the suitability of the benefits to the needs and
4    interests of the participating employees and the employer;
5        (4) the ability of the company to provide benefits
6    under the contract and the financial stability of the
7    company; and
8        (5) the efficacy of the contract in the recruitment and
9    retention of employees.
10    The System, in consultation with the employers, shall
11periodically review each approved company. A company may
12continue to provide administrative services and funding
13vehicles for the self-managed plan only so long as it continues
14to be an approved company under contract with the Board.
15    (d) Employee Direction. Employees who are participating in
16the program must be allowed to direct the transfer of their
17account balances among the various investment options offered,
18subject to applicable contractual provisions. The participant
19shall not be deemed a fiduciary by reason of providing such
20investment direction. A person who is a fiduciary shall not be
21liable for any loss resulting from such investment direction
22and shall not be deemed to have breached any fiduciary duty by
23acting in accordance with that direction. Neither the System
24nor the employer guarantees any of the investments in the
25employee's account balances.
26    (e) Participation. An employee eligible to participate in

 

 

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1the self-managed plan must make a written election in
2accordance with the provisions of Section 15-134.5 and the
3procedures established by the System or become subject to the
4limitation specified in Section 15-112.1. Participation in the
5self-managed plan by an electing employee shall begin on the
6first day of the first pay period following the later of the
7date the employee's election is filed with the System, or the
8effective date as of which the employee's employer begins to
9offer participation in the self-managed plan, or the date the
10participant's annual earnings exceeds the limitation specified
11in Section 15-112.1. Employers may not make the self-managed
12plan available earlier than January 1, 1998. An employee's
13participation in any other retirement program administered by
14the System under this Article shall terminate on the date that
15participation in the self-managed plan begins.
16    An employee who participates has elected to participate in
17the self-managed plan under this Section must continue
18participation while employed in an eligible position, and may
19not participate in any other retirement program administered by
20the System under this Article while employed by that employer
21or any other employer that has adopted the self-managed plan,
22unless the self-managed plan is terminated in accordance with
23subsection (i).
24    Participation in the self-managed plan under this Section
25shall constitute membership in the State Universities
26Retirement System.

 

 

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1    A participant under this Section shall be entitled to the
2benefits of Article 20 of this Code.
3    (f) Establishment of Initial Account Balance. If at the
4time an employee elects to participate in the self-managed plan
5he or she has rights and credits in the System due to previous
6participation in the traditional benefit package, the System
7shall establish for the employee an opening account balance in
8the self-managed plan, equal to the amount of contribution
9refund that the employee would be eligible to receive under
10Section 15-154 if the employee terminated employment on that
11date and elected a refund of contributions, except that this
12hypothetical refund shall include interest at the effective
13rate for the respective years. The System shall transfer assets
14from the defined benefit retirement program to the self-managed
15plan, as a tax free transfer in accordance with Internal
16Revenue Service guidelines, for purposes of funding the
17employee's opening account balance.
18    (g) No Duplication of Service Credit. Notwithstanding any
19other provision of this Article, an employee may not purchase
20or receive service or service credit applicable to any other
21retirement program administered by the System under this
22Article for any period during which the employee was a
23participant in the self-managed plan established under this
24Section.
25    (h) Contributions.
26        (1) The self-managed plan shall be funded by

 

 

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1    contributions from employees participating in the
2    self-managed plan and employer contributions as provided
3    in this Section.
4            (A) Before the effective date of this amendatory
5        Act of the 98th General Assembly, the The contribution
6        rate for employees participating in the self-managed
7        plan under this Section shall be equal to the employee
8        contribution rate for other participants in the
9        System, as provided in Section 15-157. This required
10        contribution shall be made as an "employer pick-up"
11        under Section 414(h) of the Internal Revenue Code of
12        1986 or any successor Section thereof. Any employee
13        participating in the System's traditional benefit
14        package prior to his or her election to participate in
15        the self-managed plan shall continue to have the
16        employer pick up the contributions required under
17        Section 15-157. However, the amounts picked up after
18        the election of the self-managed plan shall be remitted
19        to and treated as assets of the self-managed plan. In
20        no event shall an employee have an option of receiving
21        these amounts in cash. Employees may make additional
22        contributions to the self-managed plan in accordance
23        with procedures prescribed by the System, to the extent
24        permitted under rules prescribed by the System.
25            (B) On and after the effective date of this
26        amendatory Act of the 98th General Assembly, the

 

 

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1        contribution rate for participants in the self-managed
2        plan shall be, (i) for a participant who does not file
3        an election under subsection (e) of this Section, 6% of
4        the amount of earnings in excess of the limit specified
5        in 15-112.1 for that year, in addition to the amount
6        specified under subsection (h) of Section 15-157 for
7        that year and (ii) for a participant who files an
8        election under subsection (e) of this Section, 8% of
9        any amount of earnings up to and including the limit
10        specified in Section 15-112.1 for that year and 6% of
11        any amount of earnings in excess of that limit for that
12        year. This required contribution shall be made as an
13        employer pick-up under Section 414(h) of the Internal
14        Revenue Code of 1986 or any successor Section thereof.
15        Any participant in the System's traditional benefit
16        package prior to his or her election to participate in
17        the self-managed plan shall continue to have the
18        employer pick up the contributions required under
19        Section 15-157. However, the amounts picked up after
20        the election of the self-managed plan shall be remitted
21        to and treated as assets of the self-managed plan. In
22        no event shall a participant have the option of
23        receiving these amounts in cash. Participants may make
24        additional contributions to the self-managed plan in
25        accordance with procedures prescribed by the System,
26        to the extent permitted under rules adopted by the

 

 

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1        System.
2        (2) The program shall provide for employer and State
3    contributions to the self-managed plan in the following
4    amounts: (i) for a member who does not file an election
5    under subsection (e) of this Section, 3% of the amount of
6    earnings in excess of the limit specified in Section
7    15-112.1 for that year, to be paid by the actual employer,
8    and (ii) for a member who files an election under
9    subsection (e) of this Section, 7.1% of any amount of
10    earnings up to and including the limit specified in Section
11    15-112.1 for that year, to be paid by the State, and 3% of
12    any amount of earnings in excess of that limit for that
13    year, to be paid by the actual employer.
14        The program shall provide for these employer and State
15    contributions to be credited to each self-managed plan
16    participant at a rate of 7.6% of the participating
17    employee's salary, less the amount used by the System to
18    provide disability benefits for the employee. The amounts
19    so credited shall be paid into the participant's
20    self-managed plan accounts in a manner to be prescribed by
21    the System.
22        (3) An amount of employer contribution, not exceeding
23    1% of the participating employee's salary, shall be used
24    for the purpose of providing the disability benefits of the
25    System to the employee. Prior to the beginning of each plan
26    year under the self-managed plan, the Board of Trustees

 

 

09800HB1165ham002- 73 -LRB098 08854 EFG 41948 a

1    shall determine, as a percentage of salary, the amount of
2    employer contributions to be allocated during that plan
3    year for providing disability benefits for employees in the
4    self-managed plan.
5        (4) The State of Illinois shall make contributions by
6    appropriations to the System of the employer contributions
7    required for employees who participate in the self-managed
8    plan under this Section. The amount required shall be
9    certified by the Board of Trustees of the System and paid
10    by the State in accordance with Section 15-165. The System
11    shall not be obligated to remit the required employer
12    contributions to any of the insurance and annuity
13    companies, mutual fund companies, banks, trust companies,
14    financial institutions, or other sponsors of any of the
15    funding vehicles offered under the self-managed plan until
16    it has received the required employer contributions from
17    the State. In the event of a deficiency in the amount of
18    State contributions, the System shall implement those
19    procedures described in subsection (c) of Section 15-165 to
20    obtain the required funding from the General Revenue Fund.
21    (i) Termination. The self-managed plan authorized under
22this Section may be terminated by the System, subject to the
23terms of any relevant contracts, and the System shall have no
24obligation to reestablish the self-managed plan under this
25Section. This Section does not create a right to continued
26participation in any self-managed plan set up by the System

 

 

09800HB1165ham002- 74 -LRB098 08854 EFG 41948 a

1under this Section. If the self-managed plan is terminated, the
2participants shall have the right to participate in one of the
3other retirement programs offered by the System and receive
4service credit in such other retirement program for any years
5of employment following the termination.
6    (j) Vesting; Withdrawal; Return to Service. A participant
7in the self-managed plan becomes vested in the employer
8contributions credited to his or her accounts in the
9self-managed plan on the earliest to occur of the following:
10(1) completion of 5 years of service with an employer described
11in Section 15-106; (2) the death of the participating employee
12while employed by an employer described in Section 15-106, if
13the participant has completed at least 1 1/2 years of service;
14or (3) the participant's election to retire and apply the
15reciprocal provisions of Article 20 of this Code.
16    A participant in the self-managed plan who receives a
17distribution of his or her vested amounts from the self-managed
18plan while not yet eligible for retirement under this Article
19(and Article 20, if applicable) shall forfeit all service
20credit and accrued rights in the System; if subsequently
21re-employed, the participant shall be considered a new
22employee. If a former participant again becomes a participating
23employee (or becomes employed by a participating system under
24Article 20 of this Code) and continues as such for at least 2
25years, all such rights, service credits, and previous status as
26a participant shall be restored upon repayment of the amount of

 

 

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1the distribution, without interest.
2    (k) Benefit amounts. If an employee who is vested in
3employer contributions terminates employment, the employee
4shall be entitled to a benefit which is based on the account
5values attributable to both employer and employee
6contributions and any investment return thereon.
7    If an employee who is not vested in employer contributions
8terminates employment, the employee shall be entitled to a
9benefit based solely on the account values attributable to the
10employee's contributions and any investment return thereon,
11and the employer contributions and any investment return
12thereon shall be forfeited. Any employer contributions which
13are forfeited shall be held in escrow by the company investing
14those contributions and shall be used as directed by the System
15for future allocations of employer contributions or for the
16restoration of amounts previously forfeited by former
17participants who again become participating employees.
18(Source: P.A. 93-347, eff. 7-24-03.)
 
19    (40 ILCS 5/15-165.1 new)
20    Sec. 15-165.1. To calculate the normal cost of benefits. To
21calculate the normal cost of each plan offered by the system as
22a percentage of earnings and to update those amounts at least
23every 3 years.
 
24    (40 ILCS 5/16-121)  (from Ch. 108 1/2, par. 16-121)

 

 

09800HB1165ham002- 76 -LRB098 08854 EFG 41948 a

1    Sec. 16-121. Salary. "Salary": The actual compensation
2received by a teacher during any school year and recognized by
3the system in accordance with rules of the board. For purposes
4of this Section, "school year" includes the regular school term
5plus any additional period for which a teacher is compensated
6and such compensation is recognized by the rules of the board.
7Notwithstanding any other provision of this Section, "salary",
8except as used in Section 16-158.2, does not include any future
9increase in income due to a provision in a collectively
10bargained contract that grants an increase in salary based on a
11teacher's expected date of retirement. The changes made to this
12Section by this amendatory Act of the 98th General Assembly do
13not apply to a teacher who is covered by a collective
14bargaining agreement or employment contract that is in effect
15on the effective date of this amendatory Act of the 98th
16General Assembly and that provides for such increases, until
17that agreement or contract expires or is amended or renewed.
18(Source: P.A. 84-1028.)
 
19    (40 ILCS 5/16-121.1 new)
20    Sec. 16-121.1. Limitation on salary. For the purpose of
21calculating traditional benefit package benefits and
22contributions, the annual earnings, salary, or wages of a
23member shall not exceed the greater of (i) the amount specified
24under subsection (b-5) of Section 1-160 or (ii) the annual
25salary of the member during the 365 days immediately before the

 

 

09800HB1165ham002- 77 -LRB098 08854 EFG 41948 a

1effective date of this Section. If, however, an employment
2contract that is in place on or before the effective date of
3this Section authorizes an increase in earnings, salary, or
4wages on or after the effective date of this Section, then the
5annual earnings, salary, or wages of the member during the 365
6days that immediately precede the date that the contract
7expires may be used in lieu of the amount specified in item
8(ii) of this Section.
 
9    (40 ILCS 5/16-122.2 new)
10    Sec. 16-122.2. Traditional benefit package. "Traditional
11benefit package" means the defined benefit retirement program
12maintained by the System, which includes retirement annuities
13payable directly from the System, as provided in Sections
1416-132, 16-133, 16-133.1, and 16-136; survivor's annuities
15payable directly from the System, as provided in Sections
1616-140, 16-141, 16-142, 16-142.1, 16-142.2, 16-142.3, 16-143,
17and 16-143.1; and contribution refunds, as provided in Section
1816-151.
 
19    (40 ILCS 5/16-122.3 new)
20    Sec. 16-122.3. Self-managed plan. "Self-managed plan"
21means the defined contribution retirement program maintained
22by the System, as described in Section 16-158.2. The
23self-managed plan does not include retirement annuities or
24survivor's benefits payable directly from the System, as

 

 

09800HB1165ham002- 78 -LRB098 08854 EFG 41948 a

1provided in Sections 16-132, 16-133, 16-133.1, 16-136, 16-140,
216-141, 16-142, 16-142.1, 16-142.2, 16-142.3, 16-143, and
316-143.1 or refunds determined under Section 16-151.
 
4    (40 ILCS 5/16-152)  (from Ch. 108 1/2, par. 16-152)
5    Sec. 16-152. Contributions by members.
6    (a) Each member shall make contributions for membership
7service to this System as follows:
8        (1) Effective July 1, 1998, contributions of 7.50% of
9    salary towards the cost of the retirement annuity. Such
10    contributions shall be deemed "normal contributions".
11        (2) Effective July 1, 1969, contributions of 1/2 of 1%
12    of salary toward the cost of the automatic annual increase
13    in retirement annuity provided under Section 16-133.1.
14        (3) Effective July 24, 1959, contributions of 1% of
15    salary towards the cost of survivor benefits. Such
16    contributions shall not be credited to the individual
17    account of the member and shall not be subject to refund
18    except as provided under Section 16-143.2.
19        (4) Effective July 1, 2005, contributions of 0.40% of
20    salary toward the cost of the early retirement without
21    discount option provided under Section 16-133.2. This
22    contribution shall cease upon termination of the early
23    retirement without discount option as provided in Section
24    16-176.
25    (b) The minimum required contribution for any year of

 

 

09800HB1165ham002- 79 -LRB098 08854 EFG 41948 a

1full-time teaching service shall be $192.
2    (c) Contributions shall not be required of any annuitant
3receiving a retirement annuity who is given employment as
4permitted under Section 16-118 or 16-150.1.
5    (d) A person who (i) was a member before July 1, 1998, (ii)
6retires with more than 34 years of creditable service, and
7(iii) does not elect to qualify for the augmented rate under
8Section 16-129.1 shall be entitled, at the time of retirement,
9to receive a partial refund of contributions made under this
10Section for service occurring after the later of June 30, 1998
11or attainment of 34 years of creditable service, in an amount
12equal to 1.00% of the salary upon which those contributions
13were based.
14    (e) A member's contributions toward the cost of early
15retirement without discount made under item (a)(4) of this
16Section shall not be refunded if the member has elected early
17retirement without discount under Section 16-133.2 and has
18begun to receive a retirement annuity under this Article
19calculated in accordance with that election. Otherwise, a
20member's contributions toward the cost of early retirement
21without discount made under item (a)(4) of this Section shall
22be refunded according to whichever one of the following
23circumstances occurs first:
24        (1) The contributions shall be refunded to the member,
25    without interest, within 120 days after the member's
26    retirement annuity commences, if the member does not elect

 

 

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1    early retirement without discount under Section 16-133.2.
2        (2) The contributions shall be included, without
3    interest, in any refund claimed by the member under Section
4    16-151.
5        (3) The contributions shall be refunded to the member's
6    designated beneficiary (or if there is no beneficiary, to
7    the member's estate), without interest, if the member dies
8    without having begun to receive a retirement annuity under
9    this Article.
10        (4) The contributions shall be refunded to the member,
11    without interest, within 120 days after the early
12    retirement without discount option provided under Section
13    16-133.2 is terminated under Section 16-176.
14    (f) Notwithstanding any provision of this Code to the
15contrary, (i) for a member who does not file an election under
16subsection (a-5) of Section 16-158.2, any contributions on
17amounts of salary in excess of the limit specified in Section
1816-121.1 for that year shall instead be used to finance
19self-managed plan benefits and (ii) for a member who files an
20election under subsection (a-5) of Section 16-158.2, any
21contributions made after the date of the election, including
22the contributions for a survivor's annuity, shall be used to
23finance the benefits under Section 16-158.2. Notwithstanding
24any provision of this Code to the contrary, a member who does
25not file an election under subsection (a-5) of Section 16-158.2
26shall contribute towards the traditional benefit package a

 

 

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1percentage of salary equal to the greater of (i) one-half of
2the normal cost of the traditional benefit package or (ii) 6%
3of salary.
4(Source: P.A. 93-320, eff. 7-23-03; 94-4, eff. 6-1-05.)
 
5    (40 ILCS 5/16-158)   (from Ch. 108 1/2, par. 16-158)
6    Sec. 16-158. Contributions by State and other employing
7units.
8    (a) The State shall make contributions to the System by
9means of appropriations from the Common School Fund and other
10State funds 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 100% 90% funded
14basis in 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 until November 15,
212011, the Board shall certify to the Governor the amount of the
22required State contribution for the coming fiscal year. The
23certification under this subsection (a-1) shall include a copy
24of the actuarial recommendations upon which it is based and
25shall specifically identify the System's projected State

 

 

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1normal cost for that fiscal year.
2    On or before May 1, 2004, the Board shall recalculate and
3recertify to the Governor the amount of the required State
4contribution to the System for State fiscal year 2005, taking
5into account the amounts appropriated to and received by the
6System under subsection (d) of Section 7.2 of the General
7Obligation Bond Act.
8    On or before July 1, 2005, the Board shall recalculate and
9recertify to the Governor the amount of the required State
10contribution to the System for State fiscal year 2006, taking
11into account the changes in required State contributions made
12by this amendatory Act of the 94th General Assembly.
13    On or before April 1, 2011, the Board shall recalculate and
14recertify to the Governor the amount of the required State
15contribution to the System for State fiscal year 2011, applying
16the changes made by Public Act 96-889 to the System's assets
17and liabilities as of June 30, 2009 as though Public Act 96-889
18was 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,
21the Governor, and the General Assembly a proposed certification
22of the amount of the required State contribution to the System
23for the next fiscal year, along with all of the actuarial
24assumptions, calculations, and data upon which that proposed
25certification is based. On or before January 1 of each year,
26beginning January 1, 2013, the State Actuary shall issue a

 

 

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1preliminary report concerning the proposed certification and
2identifying, if necessary, recommended changes in actuarial
3assumptions that the Board must consider before finalizing its
4certification of the required State contributions. On or before
5January 15, 2013 and each January 15 thereafter, the Board
6shall certify to the Governor and the General Assembly the
7amount of the required State contribution for the next fiscal
8year. The Board's certification must note any deviations from
9the State Actuary's recommended changes, the reason or reasons
10for not following the State Actuary's recommended changes, and
11the fiscal impact of not following the State Actuary's
12recommended changes on the required 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

 

 

09800HB1165ham002- 84 -LRB098 08854 EFG 41948 a

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 through 2045, the minimum
17contribution to the System to be made by the State for each
18fiscal year shall be an amount determined by the System to be
19sufficient to bring the total assets of the System up to 100%
2090% of the total actuarial liabilities of the System by the end
21of State fiscal year 2045.
22    Pursuant to Article XIII of the 1970 Constitution of the
23State of Illinois, beginning on July 1, 2013, the State shall,
24as a retirement benefit to each participant and annuitant of
25the System be contractually obligated to the System (as a
26fiduciary and trustee of the participants and annuitants) to

 

 

09800HB1165ham002- 85 -LRB098 08854 EFG 41948 a

1pay the Annual Required State Contribution, as determined by
2the Board of the System using generally accepted actuarial
3principles, as is necessary to bring the total assets of the
4System up to 100% of the total actuarial liabilities of the
5System by the end of State fiscal year 2045. As a further
6retirement benefit and contractual obligation, each fiscal
7year, the State shall pay to each designated retirement system
8the Annual Required State Contribution certified by the Board
9for that fiscal year. Payments of the Annual Required State
10Contribution for each fiscal year shall be made in equal
11monthly installments. This Section, and the security it
12provides to participants and annuitants is intended to be, and
13is, a contractual right that is part of the pension benefits
14provided to the participants and annuitants. Notwithstanding
15anything to the contrary in the Court of Claims Act or any
16other law, a designated retirement system has the exclusive
17right to and shall bring a Mandamus action in the Circuit Court
18of Champaign County against the State to compel the State to
19make any installment of the Annual Required State Contribution
20required by this Section, irrespective of other remedies that
21may be available to the System. Each member or annuitant of the
22System has the right to bring a Mandamus action against the
23System in the Circuit Court in any judicial district in which
24the System maintains an office if the System fails to bring an
25action specified in this Section, irrespective of other
26remedies that may be available to the member or annuitant. In

 

 

09800HB1165ham002- 86 -LRB098 08854 EFG 41948 a

1making these determinations, the required State contribution
2shall be calculated each year as a level percentage of payroll
3over the years remaining to and including fiscal year 2045 and
4shall be determined under the projected unit credit actuarial
5cost method.
6    For State fiscal years 1996 through 2005, the State
7contribution to the System, as a percentage of the applicable
8employee payroll, shall be increased in equal annual increments
9so that by State fiscal year 2011, the State is contributing at
10the rate required under this Section; except that in the
11following specified State fiscal years, the State contribution
12to the System shall not be less than the following indicated
13percentages of the applicable employee payroll, even if the
14indicated percentage will produce a State contribution in
15excess of the amount otherwise required under this subsection
16and subsection (a), and notwithstanding any contrary
17certification made under subsection (a-1) before the effective
18date of this amendatory Act of 1998: 10.02% in FY 1999; 10.77%
19in FY 2000; 11.47% in FY 2001; 12.16% in FY 2002; 12.86% in FY
202003; and 13.56% in FY 2004.
21    Notwithstanding any other provision of this Article, the
22total required State contribution for State fiscal year 2006 is
23$534,627,700.
24    Notwithstanding any other provision of this Article, the
25total required State contribution for State fiscal year 2007 is
26$738,014,500.

 

 

09800HB1165ham002- 87 -LRB098 08854 EFG 41948 a

1    For each of State fiscal years 2008 through 2009, the State
2contribution to the System, as a percentage of the applicable
3employee payroll, shall be increased in equal annual increments
4from the required State contribution for State fiscal year
52007, so that by State fiscal year 2011, the State is
6contributing at the rate otherwise required under this Section.
7    Notwithstanding any other provision of this Article, the
8total required State contribution for State fiscal year 2010 is
9$2,089,268,000 and shall be made from the proceeds of bonds
10sold in fiscal year 2010 pursuant to Section 7.2 of the General
11Obligation Bond Act, less (i) the pro rata share of bond sale
12expenses determined by the System's share of total bond
13proceeds, (ii) any amounts received from the Common School Fund
14in fiscal year 2010, and (iii) any reduction in bond proceeds
15due to the issuance of discounted bonds, if applicable.
16    Notwithstanding any other provision of this Article, the
17total required State contribution for State fiscal year 2011 is
18the amount recertified by the System on or before April 1, 2011
19pursuant to subsection (a-1) of this Section and shall be made
20from the proceeds of bonds sold in fiscal year 2011 pursuant to
21Section 7.2 of the General Obligation Bond Act, less (i) the
22pro rata share of bond sale expenses determined by the System's
23share of total bond proceeds, (ii) any amounts received from
24the Common School Fund in fiscal year 2011, and (iii) any
25reduction in bond proceeds due to the issuance of discounted
26bonds, if applicable. This amount shall include, in addition to

 

 

09800HB1165ham002- 88 -LRB098 08854 EFG 41948 a

1the amount certified by the System, an amount necessary to meet
2employer contributions required by the State as an employer
3under paragraph (e) of this Section, which may also be used by
4the System for contributions required by paragraph (a) of
5Section 16-127.
6    Beginning in State fiscal year 2046, the minimum State
7contribution for each fiscal year shall be the amount needed to
8maintain the total assets of the System at 100% 90% of the
9total actuarial liabilities of the System.
10    Amounts received by the System pursuant to Section 25 of
11the Budget Stabilization Act or Section 8.12 of the State
12Finance Act in any fiscal year do not reduce and do not
13constitute payment of any portion of the minimum State
14contribution required under this Article in that fiscal year.
15Such amounts shall not reduce, and shall not be included in the
16calculation of, the required State contributions under this
17Article in any future year until the System has reached a
18funding ratio of at least 90%. A reference in this Article to
19the "required State contribution" or any substantially similar
20term does not include or apply to any amounts payable to the
21System under Section 25 of the Budget Stabilization Act.
22    Notwithstanding any other provision of this Section, the
23required State contribution for State fiscal year 2005 and for
24fiscal year 2008 and each fiscal year thereafter, as calculated
25under this Section and certified under subsection (a-1), shall
26not exceed an amount equal to (i) the amount of the required

 

 

09800HB1165ham002- 89 -LRB098 08854 EFG 41948 a

1State contribution that would have been calculated under this
2Section for that fiscal year if the System had not received any
3payments under subsection (d) of Section 7.2 of the General
4Obligation Bond Act, minus (ii) the portion of the State's
5total debt service payments for that fiscal year on the bonds
6issued in fiscal year 2003 for the purposes of that Section
77.2, as determined and certified by the Comptroller, that is
8the same as the System's portion of the total moneys
9distributed under subsection (d) of Section 7.2 of the General
10Obligation Bond Act. In determining this maximum for State
11fiscal years 2008 through 2010, however, the amount referred to
12in item (i) shall be increased, as a percentage of the
13applicable employee payroll, in equal increments calculated
14from the sum of the required State contribution for State
15fiscal year 2007 plus the applicable portion of the State's
16total debt service payments for fiscal year 2007 on the bonds
17issued in fiscal year 2003 for the purposes of Section 7.2 of
18the General Obligation Bond Act, so that, by State fiscal year
192011, the State is contributing at the rate otherwise required
20under this Section.
21    (c) Payment of the required State contributions and of all
22pensions, retirement annuities, death benefits, refunds, and
23other benefits granted under or assumed by this System, and all
24expenses in connection with the administration and operation
25thereof, are obligations of the State.
26    If members are paid from special trust or federal funds

 

 

09800HB1165ham002- 90 -LRB098 08854 EFG 41948 a

1which are administered by the employing unit, whether school
2district or other unit, the employing unit shall pay to the
3System from such funds the full accruing retirement costs based
4upon that service, as determined by the System. Employer
5contributions, based on salary paid to members from federal
6funds, may be forwarded by the distributing agency of the State
7of Illinois to the System prior to allocation, in an amount
8determined in accordance with guidelines established by such
9agency and the System.
10    (d) Effective July 1, 1986, any employer of a teacher as
11defined in paragraph (8) of Section 16-106 shall pay the
12employer's normal cost of benefits based upon the teacher's
13service, in addition to employee contributions, as determined
14by the System. Such employer contributions shall be forwarded
15monthly in accordance with guidelines established by the
16System.
17    However, with respect to benefits granted under Section
1816-133.4 or 16-133.5 to a teacher as defined in paragraph (8)
19of Section 16-106, the employer's contribution shall be 12%
20(rather than 20%) of the member's highest annual salary rate
21for each year of creditable service granted, and the employer
22shall also pay the required employee contribution on behalf of
23the teacher. For the purposes of Sections 16-133.4 and
2416-133.5, a teacher as defined in paragraph (8) of Section
2516-106 who is serving in that capacity while on leave of
26absence from another employer under this Article shall not be

 

 

09800HB1165ham002- 91 -LRB098 08854 EFG 41948 a

1considered an employee of the employer from which the teacher
2is on leave.
3    (e) Beginning July 1, 1998, every employer of a teacher
4shall pay to the System an employer contribution computed as
5follows:
6        (1) Beginning July 1, 1998 through June 30, 1999, the
7    employer contribution shall be equal to 0.3% of each
8    teacher's salary.
9        (2) Beginning July 1, 1999 and thereafter, the employer
10    contribution shall be equal to 0.58% of each teacher's
11    salary.
12The school district or other employing unit may pay these
13employer contributions out of any source of funding available
14for that purpose and shall forward the contributions to the
15System on the schedule established for the payment of member
16contributions.
17    These employer contributions are intended to offset a
18portion of the cost to the System of the increases in
19retirement benefits resulting from this amendatory Act of 1998.
20    Each employer of teachers is entitled to a credit against
21the contributions required under this subsection (e) with
22respect to salaries paid to teachers for the period January 1,
232002 through June 30, 2003, equal to the amount paid by that
24employer under subsection (a-5) of Section 6.6 of the State
25Employees Group Insurance Act of 1971 with respect to salaries
26paid to teachers for that period.

 

 

09800HB1165ham002- 92 -LRB098 08854 EFG 41948 a

1    The additional 1% employee contribution required under
2Section 16-152 by this amendatory Act of 1998 is the
3responsibility of the teacher and not the teacher's employer,
4unless the employer agrees, through collective bargaining or
5otherwise, to make the contribution on behalf of the teacher.
6    If an employer is required by a contract in effect on May
71, 1998 between the employer and an employee organization to
8pay, on behalf of all its full-time employees covered by this
9Article, all mandatory employee contributions required under
10this Article, then the employer shall be excused from paying
11the employer contribution required under this subsection (e)
12for the balance of the term of that contract. The employer and
13the employee organization shall jointly certify to the System
14the existence of the contractual requirement, in such form as
15the System may prescribe. This exclusion shall cease upon the
16termination, extension, or renewal of the contract at any time
17after May 1, 1998.
18    (f) If the amount of a teacher's salary for any school year
19used to determine final average salary exceeds the member's
20annual full-time salary rate with the same employer for the
21previous school year by more than 6%, the teacher's employer
22shall pay to the System, in addition to all other payments
23required under this Section and in accordance with guidelines
24established by the System, the present value of the increase in
25benefits resulting from the portion of the increase in salary
26that is in excess of 6%. This present value shall be computed

 

 

09800HB1165ham002- 93 -LRB098 08854 EFG 41948 a

1by the System on the basis of the actuarial assumptions and
2tables used in the most recent actuarial valuation of the
3System that is available at the time of the computation. If a
4teacher's salary for the 2005-2006 school year is used to
5determine final average salary under this subsection (f), then
6the changes made to this subsection (f) by Public Act 94-1057
7shall apply in calculating whether the increase in his or her
8salary is in excess of 6%. For the purposes of this Section,
9change in employment under Section 10-21.12 of the School Code
10on or after June 1, 2005 shall constitute a change in employer.
11The System may require the employer to provide any pertinent
12information or documentation. The changes made to this
13subsection (f) by this amendatory Act of the 94th General
14Assembly apply without regard to whether the teacher was in
15service on or after its effective date.
16    Whenever it determines that a payment is or may be required
17under this subsection, the System shall calculate the amount of
18the payment and bill the employer for that amount. The bill
19shall specify the calculations used to determine the amount
20due. If the employer disputes the amount of the bill, it may,
21within 30 days after receipt of the bill, apply to the System
22in writing for a recalculation. The application must specify in
23detail the grounds of the dispute and, if the employer asserts
24that the calculation is subject to subsection (g) or (h) of
25this Section, must include an affidavit setting forth and
26attesting to all facts within the employer's knowledge that are

 

 

09800HB1165ham002- 94 -LRB098 08854 EFG 41948 a

1pertinent to the applicability of that subsection. Upon
2receiving a timely application for recalculation, the System
3shall review the application and, if appropriate, recalculate
4the amount due.
5    The employer contributions required under this subsection
6(f) may be paid in the form of a lump sum within 90 days after
7receipt of the bill. If the employer contributions are not paid
8within 90 days after receipt of the bill, then interest will be
9charged at a rate equal to the System's annual actuarially
10assumed rate of return on investment compounded annually from
11the 91st day after receipt of the bill. Payments must be
12concluded within 3 years after the employer's receipt of the
13bill.
14    (g) This subsection (g) applies only to payments made or
15salary increases given on or after June 1, 2005 but before July
161, 2011. The changes made by Public Act 94-1057 shall not
17require the System to refund any payments received before July
1831, 2006 (the effective date of Public Act 94-1057).
19    When assessing payment for any amount due under subsection
20(f), the System shall exclude salary increases paid to teachers
21under contracts or collective bargaining agreements entered
22into, amended, or renewed before June 1, 2005.
23    When assessing payment for any amount due under subsection
24(f), the System shall exclude salary increases paid to a
25teacher at a time when the teacher is 10 or more years from
26retirement eligibility under Section 16-132 or 16-133.2.

 

 

09800HB1165ham002- 95 -LRB098 08854 EFG 41948 a

1    When assessing payment for any amount due under subsection
2(f), the System shall exclude salary increases resulting from
3overload work, including summer school, when the school
4district has certified to the System, and the System has
5approved the certification, that (i) the overload work is for
6the sole purpose of classroom instruction in excess of the
7standard number of classes for a full-time teacher in a school
8district during a school year and (ii) the salary increases are
9equal to or less than the rate of pay for classroom instruction
10computed on the teacher's current salary and work schedule.
11    When assessing payment for any amount due under subsection
12(f), the System shall exclude a salary increase resulting from
13a promotion (i) for which the employee is required to hold a
14certificate or supervisory endorsement issued by the State
15Teacher Certification Board that is a different certification
16or supervisory endorsement than is required for the teacher's
17previous position and (ii) to a position that has existed and
18been filled by a member for no less than one complete academic
19year and the salary increase from the promotion is an increase
20that results in an amount no greater than the lesser of the
21average salary paid for other similar positions in the district
22requiring the same certification or the amount stipulated in
23the collective bargaining agreement for a similar position
24requiring the same certification.
25    When assessing payment for any amount due under subsection
26(f), the System shall exclude any payment to the teacher from

 

 

09800HB1165ham002- 96 -LRB098 08854 EFG 41948 a

1the State of Illinois or the State Board of Education over
2which the employer does not have discretion, notwithstanding
3that the payment is included in the computation of final
4average salary.
5    (h) When assessing payment for any amount due under
6subsection (f), the System shall exclude any salary increase
7described in subsection (g) of this Section given on or after
8July 1, 2011 but before July 1, 2014 under a contract or
9collective bargaining agreement entered into, amended, or
10renewed on or after June 1, 2005 but before July 1, 2011.
11Notwithstanding any other provision of this Section, any
12payments made or salary increases given after June 30, 2014
13shall be used in assessing payment for any amount due under
14subsection (f) of this Section.
15    (i) The System shall prepare a report and file copies of
16the report with the Governor and the General Assembly by
17January 1, 2007 that contains all of the following information:
18        (1) The number of recalculations required by the
19    changes made to this Section by Public Act 94-1057 for each
20    employer.
21        (2) The dollar amount by which each employer's
22    contribution to the System was changed due to
23    recalculations required by Public Act 94-1057.
24        (3) The total amount the System received from each
25    employer as a result of the changes made to this Section by
26    Public Act 94-4.

 

 

09800HB1165ham002- 97 -LRB098 08854 EFG 41948 a

1        (4) The increase in the required State contribution
2    resulting from the changes made to this Section by Public
3    Act 94-1057.
4    (j) For purposes of determining the required State
5contribution to the System, the value of the System's assets
6shall be equal to the actuarial value of the System's assets,
7which shall be calculated as follows:
8    As of June 30, 2008, the actuarial value of the System's
9assets shall be equal to the market value of the assets as of
10that date. In determining the actuarial value of the System's
11assets for fiscal years after June 30, 2008, any actuarial
12gains or losses from investment return incurred in a fiscal
13year shall be recognized in equal annual amounts over the
145-year period following that fiscal year.
15    (k) For purposes of determining the required State
16contribution to the system for a particular year, the actuarial
17value of assets shall be assumed to earn a rate of return equal
18to the system's actuarially assumed rate of return.
19(Source: P.A. 96-43, eff. 7-15-09; 96-1497, eff. 1-14-11;
2096-1511, eff. 1-27-11; 96-1554, eff. 3-18-11; 97-694, eff.
216-18-12; 97-813, eff. 7-13-12.)
 
22    (40 ILCS 5/16-158.2 new)
23    Sec. 16-158.2. Self-managed plan.
24    (a) The Teachers' Retirement System of the State of
25Illinois must establish and administer a self-managed plan that

 

 

09800HB1165ham002- 98 -LRB098 08854 EFG 41948 a

1shall offer member the opportunity to accumulate assets for
2retirement through a combination of member and State
3contributions that may be invested in mutual funds, collective
4investment funds, or other investment products and used to
5purchase annuity contracts, that are fixed, variable, or a
6combination of fixed and variable. The plan must be qualified
7under the Internal Revenue Code of 1986.
8    The Teachers' Retirement System of the State of Illinois
9shall be the plan sponsor for the self-managed plan and shall
10prepare a plan document and adopt any rules and procedures that
11are considered necessary or desirable for the administration of
12the self-managed plan. Consistent with its fiduciary duty to
13the members and beneficiaries of the self-managed plan, the
14Board of Trustees of the System may delegate aspects of plan
15administration as it sees fit to companies authorized to do
16business in this State.
17    (a-5) A member may file an irrevocable election to transfer
18amounts equal to the member's total contributions under the
19traditional benefit package, with interest, to the
20self-managed plan under this Section. By filing the election, a
21member forfeits all accrued rights and benefits under the
22traditional benefit package.
23    (b) Notwithstanding any other provision of this Code, (i)
24for a member who does not file an election under subsection
25(a-5) of this Section, any portion of his or her salary that
26exceeds the limit specified in Section 16-121.1 for that year

 

 

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1shall be subject to the self-managed plan and (ii) for a member
2who files an election under subsection (a-5) of this Section,
3the entirety of the member's salary shall, after the date of
4the election, be subject to the self-managed plan created under
5this Section.
6    (c) The System shall solicit proposals to provide
7administrative services and funding vehicles for the
8self-managed plan from insurance and annuity companies and
9mutual fund companies, banks, trust companies, or other
10financial institutions authorized to do business in this State.
11In reviewing the proposals received and approving and
12contracting with no fewer than 2 and no more than 7 companies,
13the Board of Trustees of the System shall consider, among other
14things, the following criteria:
15        (1) the nature and extent of the benefits that would be
16    provided to the members;
17        (2) the reasonableness of the benefits in relation to
18    the premium charged;
19        (3) the suitability of the benefits to the needs and
20    interests of the members and the State; and
21        (4) the ability of the company to provide benefits
22    under the contract and the financial stability of the
23    company.
24    The System shall periodically review each approved
25company. A company may continue to provide administrative
26services and funding vehicles for the self-managed plan only so

 

 

09800HB1165ham002- 100 -LRB098 08854 EFG 41948 a

1long as it continues to be an approved company under contract
2with the Board.
3    In addition to the companies approved by the System under
4this subsection (c), the System may offer its members an
5investment fund managed by the Illinois State Board of
6Investment.
7    (d) Members in the program must be allowed to direct the
8transfer of their account balances among the various investment
9options offered, subject to applicable contractual provisions.
10The member shall not be deemed a fiduciary by reason of
11providing such investment direction. A person who is a
12fiduciary shall not be liable for any loss resulting from that
13investment direction and shall not be deemed to have breached
14any fiduciary duty by acting in accordance with that direction.
15Neither the System nor the State shall guarantee any of the
16investments in the member's account balances.
17    (e) Participation in the self-managed plan under this
18Section shall constitute participation in the Teachers'
19Retirement System of the State of Illinois.
20    (f) The self-managed plan shall be funded by contributions
21from members in the self-managed plan and State contributions
22as provided in this Section.
23    The contribution rate for members in the self-managed plan
24shall be, (i) for a member who does not file an election under
25subsection (a-5) of this Section, 6% of the amount of salary in
26excess of the limit specified in Section 16-121.1 for that

 

 

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1year, in addition to the amount specified under subsection (f)
2of Section 16-152 for that year and (ii) for a member who files
3an election under subsection (a-5) of this Section, 8% of any
4amount of salary up to and including the limit specified in
5Section 16-121.1 for that year and 6% of any amount of salary
6in excess of that limit for that year. This required
7contribution shall be made as an employer pick-up under Section
8414(h) of the Internal Revenue Code of 1986 or any successor
9Section thereof. Any member in the System's traditional benefit
10package prior to his or her election to participate in the
11self-managed plan shall continue to have the employer pick up
12the contributions required under Section 16-152. However, the
13amounts picked up after the election of the self-managed plan
14shall be remitted to and treated as assets of the self-managed
15plan. In no event shall a member have the option of receiving
16these amounts in cash. Members may make additional
17contributions to the self-managed plan in accordance with
18procedures prescribed by the System, to the extent permitted
19under rules adopted by the System.
20    The program shall provide for employer and State
21contributions to the self-managed plan in the following
22amounts: (i) for a member who does not file an election under
23subsection (a-5) of this Section, 3% of the amount of salary in
24excess of the limit specified in Section 16-121.1 for that
25year, to be paid by the actual employer, and (ii) for a member
26who files an election under subsection (a-5) of this Section,

 

 

09800HB1165ham002- 102 -LRB098 08854 EFG 41948 a

17.1% of any amount of salary up to and including the limit
2specified in Section 16-121.1 for that year, to be paid by the
3State, and 3% of any amount of salary in excess of that limit
4for that year, to be paid by the actual employer.
5    The State of Illinois shall make contributions by
6appropriations to the System for members in the self-managed
7plan under this Section. The amount required shall be certified
8by the Board of Trustees of the System and paid by the State in
9accordance with Section 16-158. The System shall not be
10obligated to remit the required State contributions to any of
11the insurance and annuity companies, mutual fund companies,
12banks, trust companies, financial institutions, or other
13sponsors of any of the funding vehicles offered under the
14self-managed plan until it has received the required State
15contributions from the State.
16    (g) If a member in the self-managed plan who is otherwise
17vested under this Article terminates employment, the member
18shall be entitled to a benefit that is based on the account
19values attributable to both State and member contributions and
20any investment return thereon.
21    If a member in the self-managed plan who is not otherwise
22vested under this Article terminates employment, the member
23shall be entitled to a benefit based solely on the account
24values attributable to the member's contributions and any
25investment return thereon, and the State contributions and any
26investment return thereon shall be forfeited. Any State

 

 

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1contributions that are forfeited shall be held in escrow by the
2company investing those contributions and shall be used, as
3directed by the System, for future allocations of State
4contributions.
 
5    (40 ILCS 5/16-181.4 new)
6    Sec. 16-181.4. To calculate the normal cost of benefits. To
7calculate the normal cost of each plan offered by the system as
8a percentage of salary and to update those amounts at least
9every 3 years.
 
10    (40 ILCS 5/18-111.1 new)
11    Sec. 18-111.1. Limitation on salary. For the purpose of
12calculating traditional benefit package benefits and
13contributions, the annual earnings, salary, or wages of a
14participant shall not exceed the greater of (i) the amount
15specified under subsection (b-5) of Section 1-160 or (ii) the
16annual salary of the participant during the 365 days
17immediately before the effective date of this Section.
 
18    (40 ILCS 5/18-118.1 new)
19    Sec. 18-118.1. Traditional benefit package. "Traditional
20benefit package" means the defined benefit retirement program
21maintained by the System, which includes retirement annuities
22payable directly from the System, as provided in Sections
2318-124, 18-125, and 18-125.1; survivor's annuities payable

 

 

09800HB1165ham002- 104 -LRB098 08854 EFG 41948 a

1directly from the System, as provided in Sections 18-128,
218-128.01, 18-128.1, 18-128.1, and 18-128.3; and contribution
3refunds, as provided in Section 18-129.
 
4    (40 ILCS 5/18-118.2 new)
5    Sec. 18-118.2. Self-managed plan. "Self-managed plan"
6means the defined contribution retirement program maintained
7by the System, as described in Section 18-133.2. The
8self-managed plan does not include retirement annuities or
9survivor's benefits payable directly from the System, as
10provided in Sections 18-124, 18-125, 18-125.1, 18-128,
1118-128.01, 18-128.1, 18-128.1, and 18-128.3 or refunds
12determined under Section 18-129.
 
13    (40 ILCS 5/18-131)  (from Ch. 108 1/2, par. 18-131)
14    Sec. 18-131. Financing; employer contributions.
15    (a) The State of Illinois shall make contributions to this
16System by appropriations of the amounts which, together with
17the contributions of participants, net earnings on
18investments, and other income, will meet the costs of
19maintaining and administering this System on a 100% 90% funded
20basis in accordance with actuarial recommendations.
21    (b) The Board shall determine the amount of State
22contributions required for each fiscal year on the basis of the
23actuarial tables and other assumptions adopted by the Board and
24the prescribed rate of interest, using the formula in

 

 

09800HB1165ham002- 105 -LRB098 08854 EFG 41948 a

1subsection (c).
2    (c) For State fiscal years 2012 through 2045, the minimum
3contribution to the System to be made by the State for each
4fiscal year shall be an amount determined by the System to be
5sufficient to bring the total assets of the System up to 100%
690% of the total actuarial liabilities of the System by the end
7of State fiscal year 2045.
8    Pursuant to Article XIII of the 1970 Constitution of the
9State of Illinois, beginning on July 1, 2013, the State shall,
10as a retirement benefit to each participant and annuitant of
11the System be contractually obligated to the System (as a
12fiduciary and trustee of the participants and annuitants) to
13pay the Annual Required State Contribution, as determined by
14the Board of the System using generally accepted actuarial
15principles, as is necessary to bring the total assets of the
16System up to 100% of the total actuarial liabilities of the
17System by the end of State fiscal year 2045. As a further
18retirement benefit and contractual obligation, each fiscal
19year, the State shall pay to each designated retirement system
20the Annual Required State Contribution certified by the Board
21for that fiscal year. Payments of the Annual Required State
22Contribution for each fiscal year shall be made in equal
23monthly installments. This Section, and the security it
24provides to participants and annuitants is intended to be, and
25is, a contractual right that is part of the pension benefits
26provided to the participants and annuitants. Notwithstanding

 

 

09800HB1165ham002- 106 -LRB098 08854 EFG 41948 a

1anything to the contrary in the Court of Claims Act or any
2other law, a designated retirement system has the exclusive
3right to and shall bring a Mandamus action in the Circuit Court
4of Champaign County against the State to compel the State to
5make any installment of the Annual Required State Contribution
6required by this Section, irrespective of other remedies that
7may be available to the System. Each member or annuitant of the
8System has the right to bring a Mandamus action against the
9System in the Circuit Court in any judicial district in which
10the System maintains an office if the System fails to bring an
11action specified in this Section, irrespective of other
12remedies that may be available to the member or annuitant. In
13making these determinations, the required State contribution
14shall be calculated each year as a level percentage of payroll
15over the years remaining to and including fiscal year 2045 and
16shall be determined under the projected unit credit actuarial
17cost method.
18    For State fiscal years 1996 through 2005, the State
19contribution to the System, as a percentage of the applicable
20employee payroll, shall be increased in equal annual increments
21so that by State fiscal year 2011, the State is contributing at
22the rate required under this Section.
23    Notwithstanding any other provision of this Article, the
24total required State contribution for State fiscal year 2006 is
25$29,189,400.
26    Notwithstanding any other provision of this Article, the

 

 

09800HB1165ham002- 107 -LRB098 08854 EFG 41948 a

1total required State contribution for State fiscal year 2007 is
2$35,236,800.
3    For each of State fiscal years 2008 through 2009, the State
4contribution to the System, as a percentage of the applicable
5employee payroll, shall be increased in equal annual increments
6from the required State contribution for State fiscal year
72007, so that by State fiscal year 2011, the State is
8contributing at the rate otherwise required under this Section.
9    Notwithstanding any other provision of this Article, the
10total required State contribution for State fiscal year 2010 is
11$78,832,000 and shall be made from the proceeds of bonds sold
12in fiscal year 2010 pursuant to Section 7.2 of the General
13Obligation Bond Act, less (i) the pro rata share of bond sale
14expenses determined by the System's share of total bond
15proceeds, (ii) any amounts received from the General Revenue
16Fund in fiscal year 2010, and (iii) any reduction in bond
17proceeds due to the issuance of discounted bonds, if
18applicable.
19    Notwithstanding any other provision of this Article, the
20total required State contribution for State fiscal year 2011 is
21the amount recertified by the System on or before April 1, 2011
22pursuant to Section 18-140 and shall be made from the proceeds
23of bonds sold in fiscal year 2011 pursuant to Section 7.2 of
24the General Obligation Bond Act, less (i) the pro rata share of
25bond sale expenses determined by the System's share of total
26bond proceeds, (ii) any amounts received from the General

 

 

09800HB1165ham002- 108 -LRB098 08854 EFG 41948 a

1Revenue Fund in fiscal year 2011, and (iii) any reduction in
2bond proceeds due to the issuance of discounted bonds, if
3applicable.
4    Beginning in State fiscal year 2046, the minimum State
5contribution for each fiscal year shall be the amount needed to
6maintain the total assets of the System at 100% 90% of the
7total actuarial liabilities of the System.
8    Amounts received by the System pursuant to Section 25 of
9the Budget Stabilization Act or Section 8.12 of the State
10Finance Act in any fiscal year do not reduce and do not
11constitute payment of any portion of the minimum State
12contribution required under this Article in that fiscal year.
13Such amounts shall not reduce, and shall not be included in the
14calculation of, the required State contributions under this
15Article in any future year until the System has reached a
16funding ratio of at least 90%. A reference in this Article to
17the "required State contribution" or any substantially similar
18term does not include or apply to any amounts payable to the
19System under Section 25 of the Budget Stabilization Act.
20    Notwithstanding any other provision of this Section, the
21required State contribution for State fiscal year 2005 and for
22fiscal year 2008 and each fiscal year thereafter, as calculated
23under this Section and certified under Section 18-140, shall
24not exceed an amount equal to (i) the amount of the required
25State contribution that would have been calculated under this
26Section for that fiscal year if the System had not received any

 

 

09800HB1165ham002- 109 -LRB098 08854 EFG 41948 a

1payments under subsection (d) of Section 7.2 of the General
2Obligation Bond Act, minus (ii) the portion of the State's
3total debt service payments for that fiscal year on the bonds
4issued in fiscal year 2003 for the purposes of that Section
57.2, as determined and certified by the Comptroller, that is
6the same as the System's portion of the total moneys
7distributed under subsection (d) of Section 7.2 of the General
8Obligation Bond Act. In determining this maximum for State
9fiscal years 2008 through 2010, however, the amount referred to
10in item (i) shall be increased, as a percentage of the
11applicable employee payroll, in equal increments calculated
12from the sum of the required State contribution for State
13fiscal year 2007 plus the applicable portion of the State's
14total debt service payments for fiscal year 2007 on the bonds
15issued in fiscal year 2003 for the purposes of Section 7.2 of
16the General Obligation Bond Act, so that, by State fiscal year
172011, the State is contributing at the rate otherwise required
18under this Section.
19    (d) For purposes of determining the required State
20contribution to the System, the value of the System's assets
21shall be equal to the actuarial value of the System's assets,
22which shall be calculated as follows:
23    As of June 30, 2008, the actuarial value of the System's
24assets shall be equal to the market value of the assets as of
25that date. In determining the actuarial value of the System's
26assets for fiscal years after June 30, 2008, any actuarial

 

 

09800HB1165ham002- 110 -LRB098 08854 EFG 41948 a

1gains or losses from investment return incurred in a fiscal
2year shall be recognized in equal annual amounts over the
35-year period following that fiscal year.
4    (e) For purposes of determining the required State
5contribution to the system for a particular year, the actuarial
6value of assets shall be assumed to earn a rate of return equal
7to the system's actuarially assumed rate of return.
8(Source: P.A. 96-43, eff. 7-15-09; 96-1497, eff. 1-14-11;
996-1511, eff. 1-27-11; 96-1554, eff. 3-18-11; 97-813, eff.
107-13-12.)
 
11    (40 ILCS 5/18-133)  (from Ch. 108 1/2, par. 18-133)
12    Sec. 18-133. Financing; employee contributions.
13    (a) Effective July 1, 1967, each participant is required to
14contribute 7 1/2% of each payment of salary toward the
15retirement annuity. Such contributions shall continue during
16the entire time the participant is in service, with the
17following exceptions:
18        (1) Contributions for the retirement annuity are not
19    required on salary received after 18 years of service by
20    persons who were participants before January 2, 1954.
21        (2) A participant who continues to serve as a judge
22    after becoming eligible to receive the maximum rate of
23    annuity may elect, through a written direction filed with
24    the Board, to discontinue contributing to the System. Any
25    such option elected by a judge shall be irrevocable unless

 

 

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1    prior to January 1, 2000, and while continuing to serve as
2    judge, the judge (A) files with the Board a letter
3    cancelling the direction to discontinue contributing to
4    the System and requesting that such contributing resume,
5    and (B) pays into the System an amount equal to the total
6    of the discontinued contributions plus interest thereon at
7    5% per annum. Service credits earned in any other
8    "participating system" as defined in Article 20 of this
9    Code shall be considered for purposes of determining a
10    judge's eligibility to discontinue contributions under
11    this subdivision (a)(2).
12        (3) A participant who (i) has attained age 60, (ii)
13    continues to serve as a judge after becoming eligible to
14    receive the maximum rate of annuity, and (iii) has not
15    elected to discontinue contributing to the System under
16    subdivision (a)(2) of this Section (or has revoked any such
17    election) may elect, through a written direction filed with
18    the Board, to make contributions to the System based only
19    on the amount of the increases in salary received by the
20    judge on or after the date of the election, rather than the
21    total salary received. If a judge who is making
22    contributions to the System on the effective date of this
23    amendatory Act of the 91st General Assembly makes an
24    election to limit contributions under this subdivision
25    (a)(3) within 90 days after that effective date, the
26    election shall be deemed to become effective on that

 

 

09800HB1165ham002- 112 -LRB098 08854 EFG 41948 a

1    effective date and the judge shall be entitled to receive a
2    refund of any excess contributions paid to the System
3    during that 90-day period; any other election under this
4    subdivision (a)(3) becomes effective on the first of the
5    month following the date of the election. An election to
6    limit contributions under this subdivision (a)(3) is
7    irrevocable. Service credits earned in any other
8    participating system as defined in Article 20 of this Code
9    shall be considered for purposes of determining a judge's
10    eligibility to make an election under this subdivision
11    (a)(3).
12    (b) Beginning July 1, 1969, each participant is required to
13contribute 1% of each payment of salary towards the automatic
14increase in annuity provided in Section 18-125.1. However, such
15contributions need not be made by any participant who has
16elected prior to September 15, 1969, not to be subject to the
17automatic increase in annuity provisions.
18    (c) Effective July 13, 1953, each married participant
19subject to the survivor's annuity provisions is required to
20contribute 2 1/2% of each payment of salary, whether or not he
21or she is required to make any other contributions under this
22Section. Such contributions shall be made concurrently with the
23contributions made for annuity purposes.
24    (d) Notwithstanding any other provision of this Article,
25the required contributions for a participant who first becomes
26a participant on or after January 1, 2011 shall not exceed the

 

 

09800HB1165ham002- 113 -LRB098 08854 EFG 41948 a

1contributions that would be due under this Article if that
2participant's highest salary for annuity purposes were
3$106,800, plus any increase in that amount under Section
418-125.
5    (e) Notwithstanding any provision of this Code to the
6contrary, (i) for a participant who does not file an election
7under subsection (a-5) of Section 18-133.2, any contributions
8on amounts of salary in excess of the limit specified in
9Section 18-118.1 for that year shall instead be used to finance
10self-managed plan benefits and (ii) for a member who files an
11election under subsection (a-5) of Section 18-133.2, any
12contributions made after the date of the election, including
13the contributions for a survivor's annuity, shall be used to
14finance the benefits under Section 18-133.2. Notwithstanding
15any provision of this Code to the contrary, a member who does
16not file an election under subsection (a-5) of Section 18-133.2
17shall contribute towards the traditional benefit package a
18percentage of salary equal to the greater of (i) one-half of
19the normal cost of the traditional benefit package or (ii) 6%
20of salary.
21(Source: P.A. 96-1490, eff. 1-1-11.)
 
22    (40 ILCS 5/18-133.2 new)
23    Sec. 18-133.2. Self-managed plan.
24    (a) The Judges Retirement System of Illinois must establish
25and administer a self-managed plan that shall offer

 

 

09800HB1165ham002- 114 -LRB098 08854 EFG 41948 a

1participants the opportunity to accumulate assets for
2retirement through a combination of participant and State
3contributions that may be invested in mutual funds, collective
4investment funds, or other investment products and used to
5purchase annuity contracts, that are fixed, variable, or a
6combination of fixed and variable. The plan must be qualified
7under the Internal Revenue Code of 1986.
8    The Judges Retirement System of Illinois shall be the plan
9sponsor for the self-managed plan and shall prepare a plan
10document and adopt any rules and procedures that are considered
11necessary or desirable for the administration of the
12self-managed plan. Consistent with its fiduciary duty to the
13participants and beneficiaries of the self-managed plan, the
14Board of Trustees of the System may delegate aspects of plan
15administration as it sees fit to companies authorized to do
16business in this State.
17    (a-5) A participant may file an irrevocable election to
18transfer amounts equal to the participant's total
19contributions under the traditional benefit package, with
20interest, to the self-managed plan under this Section. By
21filing the election, a participant forfeits all accrued rights
22and benefits under the traditional benefit package.
23    (b) Notwithstanding any other provision of this Code, (i)
24for a participant who does not file an election under
25subsection (a-5) of this Section, any portion of his or her
26salary that exceeds the limit specified in Section 18-111.1 for

 

 

09800HB1165ham002- 115 -LRB098 08854 EFG 41948 a

1that year shall be subject to the self-managed plan and (ii)
2for a participant who files an election under subsection (a-5)
3of this Section, the entirety of the participant's salary
4shall, after the date of the election, be subject to the
5self-managed plan created under this Section.
6    (c) The System shall solicit proposals to provide
7administrative services and funding vehicles for the
8self-managed plan from insurance and annuity companies and
9mutual fund companies, banks, trust companies, or other
10financial institutions authorized to do business in this State.
11In reviewing the proposals received and approving and
12contracting with no fewer than 2 and no more than 7 companies,
13the Board of Trustees of the System shall consider, among other
14things, the following criteria:
15        (1) the nature and extent of the benefits that would be
16    provided to the participants;
17        (2) the reasonableness of the benefits in relation to
18    the premium charged;
19        (3) the suitability of the benefits to the needs and
20    interests of the participants and the State; and
21        (4) the ability of the company to provide benefits
22    under the contract and the financial stability of the
23    company.
24    The System shall periodically review each approved
25company. A company may continue to provide administrative
26services and funding vehicles for the self-managed plan only so

 

 

09800HB1165ham002- 116 -LRB098 08854 EFG 41948 a

1long as it continues to be an approved company under contract
2with the Board.
3    In addition to the companies approved by the System under
4this subsection (c), the System may offer its participants an
5investment fund managed by the Illinois State Board of
6Investment.
7    (d) Participants in the program must be allowed to direct
8the transfer of their account balances among the various
9investment options offered, subject to applicable contractual
10provisions. The participant shall not be deemed a fiduciary by
11reason of providing such investment direction. A person who is
12a fiduciary shall not be liable for any loss resulting from
13that investment direction and shall not be deemed to have
14breached any fiduciary duty by acting in accordance with that
15direction. Neither the System nor the State shall guarantee any
16of the investments in the participant's account balances.
17    (e) Participation in the self-managed plan under this
18Section shall constitute participation in the Judges
19Retirement System of Illinois.
20    (f) The self-managed plan shall be funded by contributions
21from participants in the self-managed plan and State
22contributions as provided in this Section.
23    The contribution rate for participants in the self-managed
24plan shall be, (i) for a participant who does not file an
25election under subsection (a-5) of this Section, 6% of the
26amount of salary in excess of the limit specified in Section

 

 

09800HB1165ham002- 117 -LRB098 08854 EFG 41948 a

118-111.1 for that year, in addition to the amount specified
2under subsection (e) of Section 18-133 for that year and (ii)
3for a participant who files an election under subsection (a-5)
4of this Section, 8% of any amount of salary up to and including
5the limit specified in Section 18-111.1 for that year and 6% of
6any amount of salary in excess of that limit for that year.
7This required contribution shall be made as an employer pick-up
8under Section 414(h) of the Internal Revenue Code of 1986 or
9any successor Section thereof. Any participant in the System's
10traditional benefit package prior to his or her election to
11participate in the self-managed plan shall continue to have the
12employer pick up the contributions required under Section
1318-133. However, the amounts picked up after the election of
14the self-managed plan shall be remitted to and treated as
15assets of the self-managed plan. In no event shall a
16participant have the option of receiving these amounts in cash.
17participants may make additional contributions to the
18self-managed plan in accordance with procedures prescribed by
19the System, to the extent permitted under rules adopted by the
20System.
21    The program shall provide for State contributions to the
22self-managed plan in the following amounts: (i) for a
23participant who does not file an election under subsection
24(a-5) of this Section, 3% of the amount of salary in excess of
25the limit specified in Section 18-111.1 for that year and (ii)
26for a participant who does not file an election under

 

 

09800HB1165ham002- 118 -LRB098 08854 EFG 41948 a

1subsection (a-5) of this Section, 7.1% of any amount of salary
2up to and including the limit specified in Section 18-111.1 for
3that year and 3% of any amount of salary in excess of that
4limit for that year.
5    The State of Illinois shall make contributions by
6appropriations to the System for participants in the
7self-managed plan under this Section. The amount required shall
8be certified by the Board of Trustees of the System and paid by
9the State in accordance with Sections 18-132 and 18-140. The
10System shall not be obligated to remit the required State
11contributions to any of the insurance and annuity companies,
12mutual fund companies, banks, trust companies, financial
13institutions, or other sponsors of any of the funding vehicles
14offered under the self-managed plan until it has received the
15required State contributions from the State.
16    (g) If a participant in the self-managed plan who is
17otherwise vested under this Article terminates employment, the
18participant shall be entitled to a benefit that is based on the
19account values attributable to both State and participant
20contributions and any investment return thereon.
21    If a participant in the self-managed plan who is not
22otherwise vested under this Article terminates employment, the
23participant shall be entitled to a benefit based solely on the
24account values attributable to the participant's contributions
25and any investment return thereon, and the State contributions
26and any investment return thereon shall be forfeited. Any State

 

 

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1contributions that are forfeited shall be held in escrow by the
2company investing those contributions and shall be used, as
3directed by the System, for future allocations of State
4contributions.
 
5    (40 ILCS 5/18-140.1 new)
6    Sec. 18-140.1. To calculate the normal cost of benefits. To
7calculate the normal cost of each plan offered by the system as
8a percentage of salary and to update those amounts at least
9every 3 years.
 
10    Section 90. The State Mandates Act is amended by adding
11Section 8.37 as follows:
 
12    (30 ILCS 805/8.37 new)
13    Sec. 8.37. Exempt mandate. Notwithstanding Sections 6 and 8
14of this Act, no reimbursement by the State is required for the
15implementation of any mandate created by this amendatory Act of
16the 98th General Assembly.
 
17    Section 99. Effective date. This Act takes effect upon
18becoming law.".