99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
SB1291

 

Introduced 2/18/2015, by Sen. Melinda Bush

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/14-103.10  from Ch. 108 1/2, par. 14-103.10
40 ILCS 5/15-111  from Ch. 108 1/2, par. 15-111
110 ILCS 305/90 new
110 ILCS 520/75 new
110 ILCS 660/5-185 new
110 ILCS 665/10-185 new
110 ILCS 670/15-185 new
110 ILCS 675/20-190 new
110 ILCS 680/25-185 new
110 ILCS 685/30-195 new
110 ILCS 690/35-190 new
110 ILCS 805/3-29.11 new

    Amends the State Universities and State Employees Articles of the Illinois Pension Code to specify that severance payments are not included in "earnings" or "compensation" for pension purposes. Amends various Acts relating to the governance of public universities in Illinois and the Public Community College Act. Provides that, with respect to an executive administrator of a university or community college whose final rate of earnings exceeds $200,000, the governing board of the university or community college district may not award a severance payment to that employee that exceeds 30% of his or her final rate of earnings unless the severance payment is reviewed by the Board of Higher Education or the Illinois Community College Board and the respective Board approves the payment by a record vote of a majority of its members. Effective immediately.


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FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning severance payments.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Pension Code is amended by changing
5Sections 14-103.10 and 15-111 as follows:
 
6    (40 ILCS 5/14-103.10)  (from Ch. 108 1/2, par. 14-103.10)
7    Sec. 14-103.10. Compensation.
8    (a) For periods of service prior to January 1, 1978, the
9full rate of salary or wages payable to an employee for
10personal services performed if he worked the full normal
11working period for his position, subject to the following
12maximum amounts: (1) prior to July 1, 1951, $400 per month or
13$4,800 per year; (2) between July 1, 1951 and June 30, 1957
14inclusive, $625 per month or $7,500 per year; (3) beginning
15July 1, 1957, no limitation.
16    In the case of service of an employee in a position
17involving part-time employment, compensation shall be
18determined according to the employees' earnings record.
19    (b) For periods of service on and after January 1, 1978,
20all remuneration for personal services performed defined as
21"wages" under the Social Security Enabling Act, including that
22part of such remuneration which is in excess of any maximum
23limitation provided in such Act, and including any benefits

 

 

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

 

 

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1        (1) for vacation;
2        (2) for accumulated unused sick leave;
3        (3) upon discharge or dismissal; and
4        (4) for approved holidays.
5    (f) Notwithstanding the other provisions of this Section,
6for service on or after July 1, 2013, "compensation" does not
7include any stipend payable to an employee for service on a
8board or commission.
9    Severance payments that are made to facilitate termination
10of employment, or to induce someone to retire or not to retire,
11and are not for service actually performed do not constitute
12"compensation" for the purposes of this Article and shall not
13be included in determining final average compensation under
14Section 14-103.12.
15    (g) Notwithstanding any other provision of this Section,
16for an employee who first becomes a participant on or after the
17effective date of this amendatory Act of the 98th General
18Assembly, "compensation" does not include any payments or
19reimbursements for travel vouchers submitted more than 30 days
20after the last day of travel for which the voucher is
21submitted.
22    (h) Notwithstanding any other provision of this Code, the
23annual compensation of a Tier 1 member for the purposes of this
24Code shall not exceed, for periods of service on or after the
25effective date of this amendatory Act of the 98th General
26Assembly, the greater of (i) the annual limitation determined

 

 

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1from time to time under subsection (b-5) of Section 1-160 of
2this Code, (ii) the annualized compensation of the Tier 1
3member as of that effective date, or (iii) the annualized
4compensation of the Tier 1 member immediately preceding the
5expiration, renewal, or amendment of an employment contract or
6collective bargaining agreement in effect on that effective
7date.
8(Source: P.A. 98-449, eff. 8-16-13; 98-599, eff. 6-1-14.)
 
9    (40 ILCS 5/15-111)  (from Ch. 108 1/2, par. 15-111)
10    Sec. 15-111. Earnings.
11    (a) "Earnings": An amount paid for personal services equal
12to the sum of the basic compensation plus extra compensation
13for summer teaching, overtime or other extra service. For
14periods for which an employee receives service credit under
15subsection (c) of Section 15-113.1 or Section 15-113.2,
16earnings are equal to the basic compensation on which
17contributions are paid by the employee during such periods.
18Compensation for employment which is irregular, intermittent
19and temporary shall not be considered earnings, unless the
20participant is also receiving earnings from the employer as an
21employee under Section 15-107.
22    With respect to transition pay paid by the University of
23Illinois to a person who was a participating employee employed
24in the fire department of the University of Illinois's
25Champaign-Urbana campus immediately prior to the elimination

 

 

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1of that fire department:
2        (1) "Earnings" includes transition pay paid to the
3    employee on or after the effective date of this amendatory
4    Act of the 91st General Assembly.
5        (2) "Earnings" includes transition pay paid to the
6    employee before the effective date of this amendatory Act
7    of the 91st General Assembly only if (i) employee
8    contributions under Section 15-157 have been withheld from
9    that transition pay or (ii) the employee pays to the System
10    before January 1, 2001 an amount representing employee
11    contributions under Section 15-157 on that transition pay.
12    Employee contributions under item (ii) may be paid in a
13    lump sum, by withholding from additional transition pay
14    accruing before January 1, 2001, or in any other manner
15    approved by the System. Upon payment of the employee
16    contributions on transition pay, the corresponding
17    employer contributions become an obligation of the State.
18    (a-5) Payments made to facilitate termination of
19employment or to induce someone to retire, or not to retire,
20are not for services rendered but are made in conjunction with
21an employee's termination of employment or retirement and are
22not "earnings". These payments are also not includable in the
23final rate of earnings under Section 15-112.
24    (b) For a Tier 2 member, the annual earnings shall not
25exceed $106,800; however, that amount shall annually
26thereafter be increased by the lesser of (i) 3% of that amount,

 

 

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1including all previous adjustments, or (ii) one half the annual
2unadjusted percentage increase (but not less than zero) in the
3consumer price index-u for the 12 months ending with the
4September preceding each November 1, including all previous
5adjustments.
6    For the purposes of this Section, "consumer price index u"
7means the index published by the Bureau of Labor Statistics of
8the United States Department of Labor that measures the average
9change in prices of goods and services purchased by all urban
10consumers, United States city average, all items, 1982-84 =
11100. The new amount resulting from each annual adjustment shall
12be determined by the Public Pension Division of the Department
13of Insurance and made available to the boards of the retirement
14systems and pension funds by November 1 of each year.
15    (c) Notwithstanding any other provision of this Code, the
16annual earnings of a Tier 1 member for the purposes of this
17Code shall not exceed, for periods of service on or after the
18effective date of this amendatory Act of the 98th General
19Assembly, the greater of (i) the annual limitation determined
20from time to time under subsection (b-5) of Section 1-160 of
21this Code, (ii) the annualized rate of earnings of the Tier 1
22member as of that effective date, or (iii) the annualized rate
23of earnings of the Tier 1 member immediately preceding the
24expiration, renewal, or amendment of an employment contract or
25collective bargaining agreement in effect on that effective
26date.

 

 

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1(Source: P.A. 98-92, eff. 7-16-13; 98-599, eff. 6-1-14.)
 
2    Section 10. The University of Illinois Act is amended by
3adding Section 90 as follows:
 
4    (110 ILCS 305/90 new)
5    Sec. 90. Severance payment limitation.
6    (a) In this Section:
7    "Final rate of earnings" has the meaning ascribed to that
8term under subsection (a) of Section 15-112 of the Illinois
9Pension Code.
10    "Severance payment" means a payment that is made to
11facilitate termination of employment or to induce someone to
12retire or not to retire, is not for services rendered, is made
13in conjunction with an employee's termination of employment or
14retirement, and is not earnings.
15    (b) With respect to any executive administrator of the
16University whose final rate of earnings exceeds $200,000, the
17Board of Trustees may not award a severance payment to that
18employee that exceeds 30% of his or her final rate of earnings,
19except as provided in subsection (c) of this Section.
20    (c) Any severance payment that exceeds the limitation
21provided in subsection (b) of this Section must be reviewed by
22the Board of Higher Education. The severance payment may not be
23awarded unless the Board of Higher Education approves the
24payment by a record vote of a majority of the members of the

 

 

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1Board of Higher Education.
 
2    Section 15. The Southern Illinois University Management
3Act is amended by adding Section 75 as follows:
 
4    (110 ILCS 520/75 new)
5    Sec. 75. Severance payment limitation.
6    (a) In this Section:
7    "Final rate of earnings" has the meaning ascribed to that
8term under subsection (a) of Section 15-112 of the Illinois
9Pension Code.
10    "Severance payment" means a payment that is made to
11facilitate termination of employment or to induce someone to
12retire or not to retire, is not for services rendered, is made
13in conjunction with an employee's termination of employment or
14retirement, and is not earnings.
15    (b) With respect to any executive administrator of the
16University whose final rate of earnings exceeds $200,000, the
17Board may not award a severance payment to that employee that
18exceeds 30% of his or her final rate of earnings, except as
19provided in subsection (c) of this Section.
20    (c) Any severance payment that exceeds the limitation
21provided in subsection (b) of this Section must be reviewed by
22the Board of Higher Education. The severance payment may not be
23awarded unless the Board of Higher Education approves the
24payment by a record vote of a majority of the members of the

 

 

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1Board of Higher Education.
 
2    Section 20. The Chicago State University Law is amended by
3adding Section 5-185 as follows:
 
4    (110 ILCS 660/5-185 new)
5    Sec. 5-185. Severance payment limitation.
6    (a) In this Section:
7    "Final rate of earnings" has the meaning ascribed to that
8term under subsection (a) of Section 15-112 of the Illinois
9Pension Code.
10    "Severance payment" means a payment that is made to
11facilitate termination of employment or to induce someone to
12retire or not to retire, is not for services rendered, is made
13in conjunction with an employee's termination of employment or
14retirement, and is not earnings.
15    (b) With respect to any executive administrator of the
16University whose final rate of earnings exceeds $200,000, the
17Board may not award a severance payment to that employee that
18exceeds 30% of his or her final rate of earnings, except as
19provided in subsection (c) of this Section.
20    (c) Any severance payment that exceeds the limitation
21provided in subsection (b) of this Section must be reviewed by
22the Board of Higher Education. The severance payment may not be
23awarded unless the Board of Higher Education approves the
24payment by a record vote of a majority of the members of the

 

 

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1Board of Higher Education.
 
2    Section 25. The Eastern Illinois University Law is amended
3by adding Section 10-185 as follows:
 
4    (110 ILCS 665/10-185 new)
5    Sec. 10-185. Severance payment limitation.
6    (a) In this Section:
7    "Final rate of earnings" has the meaning ascribed to that
8term under subsection (a) of Section 15-112 of the Illinois
9Pension Code.
10    "Severance payment" means a payment that is made to
11facilitate termination of employment or to induce someone to
12retire or not to retire, is not for services rendered, is made
13in conjunction with an employee's termination of employment or
14retirement, and is not earnings.
15    (b) With respect to any executive administrator of the
16University whose final rate of earnings exceeds $200,000, the
17Board may not award a severance payment to that employee that
18exceeds 30% of his or her final rate of earnings, except as
19provided in subsection (c) of this Section.
20    (c) Any severance payment that exceeds the limitation
21provided in subsection (b) of this Section must be reviewed by
22the Board of Higher Education. The severance payment may not be
23awarded unless the Board of Higher Education approves the
24payment by a record vote of a majority of the members of the

 

 

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1Board of Higher Education.
 
2    Section 30. The Governors State University Law is amended
3by adding Section 15-185 as follows:
 
4    (110 ILCS 670/15-185 new)
5    Sec. 15-185. Severance payment limitation.
6    (a) In this Section:
7    "Final rate of earnings" has the meaning ascribed to that
8term under subsection (a) of Section 15-112 of the Illinois
9Pension Code.
10    "Severance payment" means a payment that is made to
11facilitate termination of employment or to induce someone to
12retire or not to retire, is not for services rendered, is made
13in conjunction with an employee's termination of employment or
14retirement, and is not earnings.
15    (b) With respect to any executive administrator of the
16University whose final rate of earnings exceeds $200,000, the
17Board may not award a severance payment to that employee that
18exceeds 30% of his or her final rate of earnings, except as
19provided in subsection (c) of this Section.
20    (c) Any severance payment that exceeds the limitation
21provided in subsection (b) of this Section must be reviewed by
22the Board of Higher Education. The severance payment may not be
23awarded unless the Board of Higher Education approves the
24payment by a record vote of a majority of the members of the

 

 

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1Board of Higher Education.
 
2    Section 35. The Illinois State University Law is amended by
3adding Section 20-190 as follows:
 
4    (110 ILCS 675/20-190 new)
5    Sec. 20-190. Severance payment limitation.
6    (a) In this Section:
7    "Final rate of earnings" has the meaning ascribed to that
8term under subsection (a) of Section 15-112 of the Illinois
9Pension Code.
10    "Severance payment" means a payment that is made to
11facilitate termination of employment or to induce someone to
12retire or not to retire, is not for services rendered, is made
13in conjunction with an employee's termination of employment or
14retirement, and is not earnings.
15    (b) With respect to any executive administrator of the
16University whose final rate of earnings exceeds $200,000, the
17Board may not award a severance payment to that employee that
18exceeds 30% of his or her final rate of earnings, except as
19provided in subsection (c) of this Section.
20    (c) Any severance payment that exceeds the limitation
21provided in subsection (b) of this Section must be reviewed by
22the Board of Higher Education. The severance payment may not be
23awarded unless the Board of Higher Education approves the
24payment by a record vote of a majority of the members of the

 

 

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1Board of Higher Education.
 
2    Section 40. The Northeastern Illinois University Law is
3amended by adding Section 25-185 as follows:
 
4    (110 ILCS 680/25-185 new)
5    Sec. 25-185. Severance payment limitation.
6    (a) In this Section:
7    "Final rate of earnings" has the meaning ascribed to that
8term under subsection (a) of Section 15-112 of the Illinois
9Pension Code.
10    "Severance payment" means a payment that is made to
11facilitate termination of employment or to induce someone to
12retire or not to retire, is not for services rendered, is made
13in conjunction with an employee's termination of employment or
14retirement, and is not earnings.
15    (b) With respect to any executive administrator of the
16University whose final rate of earnings exceeds $200,000, the
17Board may not award a severance payment to that employee that
18exceeds 30% of his or her final rate of earnings, except as
19provided in subsection (c) of this Section.
20    (c) Any severance payment that exceeds the limitation
21provided in subsection (b) of this Section must be reviewed by
22the Board of Higher Education. The severance payment may not be
23awarded unless the Board of Higher Education approves the
24payment by a record vote of a majority of the members of the

 

 

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1Board of Higher Education.
 
2    Section 45. The Northern Illinois University Law is amended
3by adding Section 30-195 as follows:
 
4    (110 ILCS 685/30-195 new)
5    Sec. 30-195. Severance payment limitation.
6    (a) In this Section:
7    "Final rate of earnings" has the meaning ascribed to that
8term under subsection (a) of Section 15-112 of the Illinois
9Pension Code.
10    "Severance payment" means a payment that is made to
11facilitate termination of employment or to induce someone to
12retire or not to retire, is not for services rendered, is made
13in conjunction with an employee's termination of employment or
14retirement, and is not earnings.
15    (b) With respect to any executive administrator of the
16University whose final rate of earnings exceeds $200,000, the
17Board may not award a severance payment to that employee that
18exceeds 30% of his or her final rate of earnings, except as
19provided in subsection (c) of this Section.
20    (c) Any severance payment that exceeds the limitation
21provided in subsection (b) of this Section must be reviewed by
22the Board of Higher Education. The severance payment may not be
23awarded unless the Board of Higher Education approves the
24payment by a record vote of a majority of the members of the

 

 

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1Board of Higher Education.
 
2    Section 50. The Western Illinois University Law is amended
3by adding Section 35-190 as follows:
 
4    (110 ILCS 690/35-190 new)
5    Sec. 35-190. Severance payment limitation.
6    (a) In this Section:
7    "Final rate of earnings" has the meaning ascribed to that
8term under subsection (a) of Section 15-112 of the Illinois
9Pension Code.
10    "Severance payment" means a payment that is made to
11facilitate termination of employment or to induce someone to
12retire or not to retire, is not for services rendered, is made
13in conjunction with an employee's termination of employment or
14retirement, and is not earnings.
15    (b) With respect to any executive administrator of the
16University whose final rate of earnings exceeds $200,000, the
17Board may not award a severance payment to that employee that
18exceeds 30% of his or her final rate of earnings, except as
19provided in subsection (c) of this Section.
20    (c) Any severance payment that exceeds the limitation
21provided in subsection (b) of this Section must be reviewed by
22the Board of Higher Education. The severance payment may not be
23awarded unless the Board of Higher Education approves the
24payment by a record vote of a majority of the members of the

 

 

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1Board of Higher Education.
 
2    Section 55. The Public Community College Act is amended by
3adding Section 3-29.11 as follows:
 
4    (110 ILCS 805/3-29.11 new)
5    Sec. 3-29.11. Severance payment limitation.
6    (a) In this Section:
7    "Final rate of earnings" has the meaning ascribed to that
8term under subsection (a) of Section 15-112 of the Illinois
9Pension Code.
10    "Severance payment" means a payment that is made to
11facilitate termination of employment or to induce someone to
12retire or not to retire, is not for services rendered, is made
13in conjunction with an employee's termination of employment or
14retirement, and is not earnings.
15    (b) With respect to an executive administrator of a
16community college whose final rate of earnings exceeds
17$200,000, the board may not award a severance payment to that
18employee that exceeds 30% of his or her final rate of earnings,
19except as provided in subsection (c) of this Section.
20    (c) Any severance payment that exceeds the limitation
21provided in subsection (b) of this Section must be reviewed by
22the State Board. The severance payment may not be awarded
23unless the State Board approves the payment by a record vote of
24a majority of the members of the State Board.
 

 

 

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1    Section 99. Effective date. This Act takes effect upon
2becoming law.