99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
SB3454

 

Introduced 11/29/2016, by Sen. Michael E. Hastings

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/3-125  from Ch. 108 1/2, par. 3-125
40 ILCS 5/4-118  from Ch. 108 1/2, par. 4-118

    Amends the Downstate Police and Downstate Firefighter Articles of the Illinois Pension Code. Beginning in fiscal year 2021, sets a separate Comptroller intercept schedule for payments of State funds to pension funds that have assets in trust that exceed 5 years of current liabilities. Effective immediately.


LRB099 23973 RPS 51536 b

FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB3454LRB099 23973 RPS 51536 b

1    AN ACT concerning public employee benefits.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Pension Code is amended by changing
5Sections 3-125 and 4-118 as follows:
 
6    (40 ILCS 5/3-125)  (from Ch. 108 1/2, par. 3-125)
7    Sec. 3-125. Financing.
8    (a) The city council or the board of trustees of the
9municipality shall annually levy a tax upon all the taxable
10property of the municipality at the rate on the dollar which
11will produce an amount which, when added to the deductions from
12the salaries or wages of police officers, and revenues
13available from other sources, will equal a sum sufficient to
14meet the annual requirements of the police pension fund. The
15annual requirements to be provided by such tax levy are equal
16to (1) the normal cost of the pension fund for the year
17involved, plus (2) an amount sufficient to bring the total
18assets of the pension fund up to 90% of the total actuarial
19liabilities of the pension fund by the end of municipal fiscal
20year 2040, as annually updated and determined by an enrolled
21actuary employed by the Illinois Department of Insurance or by
22an enrolled actuary retained by the pension fund or the
23municipality. In making these determinations, the required

 

 

SB3454- 2 -LRB099 23973 RPS 51536 b

1minimum employer contribution shall be calculated each year as
2a level percentage of payroll over the years remaining up to
3and including fiscal year 2040 and shall be determined under
4the projected unit credit actuarial cost method. The tax shall
5be levied and collected in the same manner as the general taxes
6of the municipality, and in addition to all other taxes now or
7hereafter authorized to be levied upon all property within the
8municipality, and shall be in addition to the amount authorized
9to be levied for general purposes as provided by Section 8-3-1
10of the Illinois Municipal Code, approved May 29, 1961, as
11amended. The tax shall be forwarded directly to the treasurer
12of the board within 30 business days after receipt by the
13county.
14    (b) For purposes of determining the required employer
15contribution to a pension fund, the value of the pension fund's
16assets shall be equal to the actuarial value of the pension
17fund's assets, which shall be calculated as follows:
18        (1) On March 30, 2011, the actuarial value of a pension
19    fund's assets shall be equal to the market value of the
20    assets as of that date.
21        (2) In determining the actuarial value of the System's
22    assets for fiscal years after March 30, 2011, any actuarial
23    gains or losses from investment return incurred in a fiscal
24    year shall be recognized in equal annual amounts over the
25    5-year period following that fiscal year.
26    (c) Except as provided in subsection (c-5), if If a

 

 

SB3454- 3 -LRB099 23973 RPS 51536 b

1participating municipality fails to transmit to the fund
2contributions required of it under this Article for more than
390 days after the payment of those contributions is due, the
4fund may, after giving notice to the municipality, certify to
5the State Comptroller the amounts of the delinquent payments in
6accordance with any applicable rules of the Comptroller, and
7the Comptroller must, beginning in fiscal year 2016, deduct and
8remit to the fund the certified amounts or a portion of those
9amounts from the following proportions of payments of State
10funds to the municipality:
11        (1) in fiscal year 2016, one-third of the total amount
12    of any payments of State funds to the municipality;
13        (2) in fiscal year 2017, two-thirds of the total amount
14    of any payments of State funds to the municipality; and
15        (3) in fiscal year 2018 and each fiscal year
16    thereafter, the total amount of any payments of State funds
17    to the municipality.
18    The State Comptroller may not deduct from any payments of
19State funds to the municipality more than the amount of
20delinquent payments certified to the State Comptroller by the
21fund.
22    (c-5) Notwithstanding subsection (c), if a participating
23municipality fails to transmit to the fund contributions
24required of it under this Article for more than 90 days after
25the payment of those contributions is due and if the fund's
26assets in trust exceed 5 years of current liabilities of the

 

 

SB3454- 4 -LRB099 23973 RPS 51536 b

1pension fund, the fund may, after giving notice to the
2municipality, certify to the State Comptroller the amounts of
3the delinquent payments in accordance with any applicable rules
4of the Comptroller, and the Comptroller must, beginning in
5fiscal year 2021, deduct and remit to the fund the certified
6amounts or a portion of those amounts from the following
7proportions of payments of State funds to the municipality:
8        (1) in fiscal year 2021, one-tenth of the total amount
9    of any payments of State funds to the municipality;
10        (2) in fiscal year 2022, one-fifth of the total amount
11    of any payments of State funds to the municipality; and
12        (3) in fiscal year 2023, three-tenths of the total
13    amount of any payments of State funds to the municipality;
14    and
15        (4) in fiscal year 2024, two-fifths of the total amount
16    of any payments of State funds to the municipality; and
17        (5) in fiscal year 2025 and each fiscal year
18    thereafter, one-half the total amount of any payments of
19    State funds to the municipality.
20    The State Comptroller may not deduct from any payments of
21State funds to the municipality more than the amount of
22delinquent payments certified to the State Comptroller by the
23fund.
24    (d) The police pension fund shall consist of the following
25moneys which shall be set apart by the treasurer of the
26municipality:

 

 

SB3454- 5 -LRB099 23973 RPS 51536 b

1        (1) All moneys derived from the taxes levied hereunder;
2        (2) Contributions by police officers under Section
3    3-125.1;
4        (3) All moneys accumulated by the municipality under
5    any previous legislation establishing a fund for the
6    benefit of disabled or retired police officers;
7        (4) Donations, gifts or other transfers authorized by
8    this Article.
9    (e) The Commission on Government Forecasting and
10Accountability shall conduct a study of all funds established
11under this Article and shall report its findings to the General
12Assembly on or before January 1, 2013. To the fullest extent
13possible, the study shall include, but not be limited to, the
14following:
15        (1) fund balances;
16        (2) historical employer contribution rates for each
17    fund;
18        (3) the actuarial formulas used as a basis for employer
19    contributions, including the actual assumed rate of return
20    for each year, for each fund;
21        (4) available contribution funding sources;
22        (5) the impact of any revenue limitations caused by
23    PTELL and employer home rule or non-home rule status; and
24        (6) existing statutory funding compliance procedures
25    and funding enforcement mechanisms for all municipal
26    pension funds.

 

 

SB3454- 6 -LRB099 23973 RPS 51536 b

1(Source: P.A. 99-8, eff. 7-9-15.)
 
2    (40 ILCS 5/4-118)  (from Ch. 108 1/2, par. 4-118)
3    Sec. 4-118. Financing.
4    (a) The city council or the board of trustees of the
5municipality shall annually levy a tax upon all the taxable
6property of the municipality at the rate on the dollar which
7will produce an amount which, when added to the deductions from
8the salaries or wages of firefighters and revenues available
9from other sources, will equal a sum sufficient to meet the
10annual actuarial requirements of the pension fund, as
11determined by an enrolled actuary employed by the Illinois
12Department of Insurance or by an enrolled actuary retained by
13the pension fund or municipality. For the purposes of this
14Section, the annual actuarial requirements of the pension fund
15are equal to (1) the normal cost of the pension fund, or 17.5%
16of the salaries and wages to be paid to firefighters for the
17year involved, whichever is greater, plus (2) an annual amount
18sufficient to bring the total assets of the pension fund up to
1990% of the total actuarial liabilities of the pension fund by
20the end of municipal fiscal year 2040, as annually updated and
21determined by an enrolled actuary employed by the Illinois
22Department of Insurance or by an enrolled actuary retained by
23the pension fund or the municipality. In making these
24determinations, the required minimum employer contribution
25shall be calculated each year as a level percentage of payroll

 

 

SB3454- 7 -LRB099 23973 RPS 51536 b

1over the years remaining up to and including fiscal year 2040
2and shall be determined under the projected unit credit
3actuarial cost method. The amount to be applied towards the
4amortization of the unfunded accrued liability in any year
5shall not be less than the annual amount required to amortize
6the unfunded accrued liability, including interest, as a level
7percentage of payroll over the number of years remaining in the
840 year amortization period.
9    (a-5) For purposes of determining the required employer
10contribution to a pension fund, the value of the pension fund's
11assets shall be equal to the actuarial value of the pension
12fund's assets, which shall be calculated as follows:
13        (1) On March 30, 2011, the actuarial value of a pension
14    fund's assets shall be equal to the market value of the
15    assets as of that date.
16        (2) In determining the actuarial value of the pension
17    fund's assets for fiscal years after March 30, 2011, any
18    actuarial gains or losses from investment return incurred
19    in a fiscal year shall be recognized in equal annual
20    amounts over the 5-year period following that fiscal year.
21    (b) The tax shall be levied and collected in the same
22manner as the general taxes of the municipality, and shall be
23in addition to all other taxes now or hereafter authorized to
24be levied upon all property within the municipality, and in
25addition to the amount authorized to be levied for general
26purposes, under Section 8-3-1 of the Illinois Municipal Code or

 

 

SB3454- 8 -LRB099 23973 RPS 51536 b

1under Section 14 of the Fire Protection District Act. The tax
2shall be forwarded directly to the treasurer of the board
3within 30 business days of receipt by the county (or, in the
4case of amounts added to the tax levy under subsection (f),
5used by the municipality to pay the employer contributions
6required under subsection (b-1) of Section 15-155 of this
7Code).
8    (b-5) Except as provided in subsection (b-10), if If a
9participating municipality fails to transmit to the fund
10contributions required of it under this Article for more than
1190 days after the payment of those contributions is due, the
12fund may, after giving notice to the municipality, certify to
13the State Comptroller the amounts of the delinquent payments in
14accordance with any applicable rules of the Comptroller, and
15the Comptroller must, beginning in fiscal year 2016, deduct and
16remit to the fund the certified amounts or a portion of those
17amounts from the following proportions of payments of State
18funds to the municipality:
19        (1) in fiscal year 2016, one-third of the total amount
20    of any payments of State funds to the municipality;
21        (2) in fiscal year 2017, two-thirds of the total amount
22    of any payments of State funds to the municipality; and
23        (3) in fiscal year 2018 and each fiscal year
24    thereafter, the total amount of any payments of State funds
25    to the municipality.
26    The State Comptroller may not deduct from any payments of

 

 

SB3454- 9 -LRB099 23973 RPS 51536 b

1State funds to the municipality more than the amount of
2delinquent payments certified to the State Comptroller by the
3fund.
4    (b-10) Notwithstanding subsection (b-5), if a
5participating municipality fails to transmit to the fund
6contributions required of it under this Article for more than
790 days after the payment of those contributions is due and if
8the fund's assets in trust exceed 5 years of current
9liabilities of the pension fund, the fund may, after giving
10notice to the municipality, certify to the State Comptroller
11the amounts of the delinquent payments in accordance with any
12applicable rules of the Comptroller, and the Comptroller must,
13beginning in fiscal year 2021, deduct and remit to the fund the
14certified amounts or a portion of those amounts from the
15following proportions of payments of State funds to the
16municipality:
17        (1) in fiscal year 2021, one-tenth of the total amount
18    of any payments of State funds to the municipality;
19        (2) in fiscal year 2022, one-fifth of the total amount
20    of any payments of State funds to the municipality; and
21        (3) in fiscal year 2023, three-tenths of the total
22    amount of any payments of State funds to the municipality;
23    and
24        (4) in fiscal year 2024, two-fifths of the total amount
25    of any payments of State funds to the municipality; and
26        (5) in fiscal year 2025 and each fiscal year

 

 

SB3454- 10 -LRB099 23973 RPS 51536 b

1    thereafter, one-half the total amount of any payments of
2    State funds to the municipality.
3    The State Comptroller may not deduct from any payments of
4State funds to the municipality more than the amount of
5delinquent payments certified to the State Comptroller by the
6fund.
7    (c) The board shall make available to the membership and
8the general public for inspection and copying at reasonable
9times the most recent Actuarial Valuation Balance Sheet and Tax
10Levy Requirement issued to the fund by the Department of
11Insurance.
12    (d) The firefighters' pension fund shall consist of the
13following moneys which shall be set apart by the treasurer of
14the municipality: (1) all moneys derived from the taxes levied
15hereunder; (2) contributions by firefighters as provided under
16Section 4-118.1; (3) all rewards in money, fees, gifts, and
17emoluments that may be paid or given for or on account of
18extraordinary service by the fire department or any member
19thereof, except when allowed to be retained by competitive
20awards; and (4) any money, real estate or personal property
21received by the board.
22    (e) For the purposes of this Section, "enrolled actuary"
23means an actuary: (1) who is a member of the Society of
24Actuaries or the American Academy of Actuaries; and (2) who is
25enrolled under Subtitle C of Title III of the Employee
26Retirement Income Security Act of 1974, or who has been engaged

 

 

SB3454- 11 -LRB099 23973 RPS 51536 b

1in providing actuarial services to one or more public
2retirement systems for a period of at least 3 years as of July
31, 1983.
4    (f) The corporate authorities of a municipality that
5employs a person who is described in subdivision (d) of Section
64-106 may add to the tax levy otherwise provided for in this
7Section an amount equal to the projected cost of the employer
8contributions required to be paid by the municipality to the
9State Universities Retirement System under subsection (b-1) of
10Section 15-155 of this Code.
11    (g) The Commission on Government Forecasting and
12Accountability shall conduct a study of all funds established
13under this Article and shall report its findings to the General
14Assembly on or before January 1, 2013. To the fullest extent
15possible, the study shall include, but not be limited to, the
16following:
17        (1) fund balances;
18        (2) historical employer contribution rates for each
19    fund;
20        (3) the actuarial formulas used as a basis for employer
21    contributions, including the actual assumed rate of return
22    for each year, for each fund;
23        (4) available contribution funding sources;
24        (5) the impact of any revenue limitations caused by
25    PTELL and employer home rule or non-home rule status; and
26        (6) existing statutory funding compliance procedures

 

 

SB3454- 12 -LRB099 23973 RPS 51536 b

1    and funding enforcement mechanisms for all municipal
2    pension funds.
3(Source: P.A. 99-8, eff. 7-9-15.)
 
4    Section 99. Effective date. This Act takes effect upon
5becoming law.