Illinois General Assembly - Full Text of HB0529
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Full Text of HB0529  97th General Assembly



State of Illinois
2011 and 2012


Introduced 01/31/11, by Rep. Michael J. Madigan


40 ILCS 5/16-158  from Ch. 108 1/2, par. 16-158

    Amends the Downstate Teacher Article of the Illinois Pension Code. Makes a technical change in a Section concerning contributions by the State and other employing units.

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HB0529LRB097 03356 JDS 43393 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
5Section 16-158 as follows:
6    (40 ILCS 5/16-158)   (from Ch. 108 1/2, par. 16-158)
7    Sec. 16-158. Contributions by State and other employing
9    (a) The The State shall make contributions to the System by
10means of appropriations from the Common School Fund and other
11State funds of amounts which, together with other employer
12contributions, employee contributions, investment income, and
13other income, will be sufficient to meet the cost of
14maintaining and administering the System on a 90% funded basis
15in accordance with actuarial recommendations.
16    The Board shall determine the amount of State contributions
17required for each fiscal year on the basis of the actuarial
18tables and other assumptions adopted by the Board and the
19recommendations of the actuary, using the formula in subsection
21    (a-1) Annually, on or before November 15, the Board shall
22certify to the Governor the amount of the required State
23contribution for the coming fiscal year. The certification



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1shall include a copy of the actuarial recommendations upon
2which it is based.
3    On or before May 1, 2004, the Board shall recalculate and
4recertify to the Governor the amount of the required State
5contribution to the System for State fiscal year 2005, taking
6into account the amounts appropriated to and received by the
7System under subsection (d) of Section 7.2 of the General
8Obligation Bond Act.
9    On or before July 1, 2005, the Board shall recalculate and
10recertify to the Governor the amount of the required State
11contribution to the System for State fiscal year 2006, taking
12into account the changes in required State contributions made
13by this amendatory Act of the 94th General Assembly.
14    (b) Through State fiscal year 1995, the State contributions
15shall be paid to the System in accordance with Section 18-7 of
16the School Code.
17    (b-1) Beginning in State fiscal year 1996, on the 15th day
18of each month, or as soon thereafter as may be practicable, the
19Board shall submit vouchers for payment of State contributions
20to the System, in a total monthly amount of one-twelfth of the
21required annual State contribution certified under subsection
22(a-1). From the effective date of this amendatory Act of the
2393rd General Assembly through June 30, 2004, the Board shall
24not submit vouchers for the remainder of fiscal year 2004 in
25excess of the fiscal year 2004 certified contribution amount
26determined under this Section after taking into consideration



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1the transfer to the System under subsection (a) of Section
26z-61 of the State Finance Act. These vouchers shall be paid by
3the State Comptroller and Treasurer by warrants drawn on the
4funds appropriated to the System for that fiscal year.
5    If in any month the amount remaining unexpended from all
6other appropriations to the System for the applicable fiscal
7year (including the appropriations to the System under Section
88.12 of the State Finance Act and Section 1 of the State
9Pension Funds Continuing Appropriation Act) is less than the
10amount lawfully vouchered under this subsection, the
11difference shall be paid from the Common School Fund under the
12continuing appropriation authority provided in Section 1.1 of
13the State Pension Funds Continuing Appropriation Act.
14    (b-2) Allocations from the Common School Fund apportioned
15to school districts not coming under this System shall not be
16diminished or affected by the provisions of this Article.
17    (b-3) For State fiscal years 2011 through 2045, the minimum
18contribution to the System to be made by the State for each
19fiscal year shall be an amount determined by the System to be
20sufficient to bring the total assets of the System up to 90% of
21the total actuarial liabilities of the System by the end of
22State fiscal year 2045. In making these determinations, the
23required State contribution shall be calculated each year as a
24level percentage of payroll over the years remaining to and
25including fiscal year 2045 and shall be determined under the
26projected unit credit actuarial cost method.



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1    For State fiscal years 1996 through 2005, the State
2contribution to the System, as a percentage of the applicable
3employee payroll, shall be increased in equal annual increments
4so that by State fiscal year 2011, the State is contributing at
5the rate required under this Section; except that in the
6following specified State fiscal years, the State contribution
7to the System shall not be less than the following indicated
8percentages of the applicable employee payroll, even if the
9indicated percentage will produce a State contribution in
10excess of the amount otherwise required under this subsection
11and subsection (a), and notwithstanding any contrary
12certification made under subsection (a-1) before the effective
13date of this amendatory Act of 1998: 10.02% in FY 1999; 10.77%
14in FY 2000; 11.47% in FY 2001; 12.16% in FY 2002; 12.86% in FY
152003; and 13.56% in FY 2004.
16    Notwithstanding any other provision of this Article, the
17total required State contribution for State fiscal year 2006 is
19    Notwithstanding any other provision of this Article, the
20total required State contribution for State fiscal year 2007 is
22    For each of State fiscal years 2008 through 2009, the State
23contribution to the System, as a percentage of the applicable
24employee payroll, shall be increased in equal annual increments
25from the required State contribution for State fiscal year
262007, so that by State fiscal year 2011, the State is



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1contributing at the rate otherwise required under this Section.
2    Notwithstanding any other provision of this Article, the
3total required State contribution for State fiscal year 2010 is
4$2,089,268,000 and shall be made from the proceeds of bonds
5sold in fiscal year 2010 pursuant to Section 7.2 of the General
6Obligation Bond Act, less (i) the pro rata share of bond sale
7expenses determined by the System's share of total bond
8proceeds, (ii) any amounts received from the Common School Fund
9in fiscal year 2010, and (iii) any reduction in bond proceeds
10due to the issuance of discounted bonds, if applicable.
11    Beginning in State fiscal year 2046, the minimum State
12contribution for each fiscal year shall be the amount needed to
13maintain the total assets of the System at 90% of the total
14actuarial liabilities of the System.
15    Amounts received by the System pursuant to Section 25 of
16the Budget Stabilization Act or Section 8.12 of the State
17Finance Act in any fiscal year do not reduce and do not
18constitute payment of any portion of the minimum State
19contribution required under this Article in that fiscal year.
20Such amounts shall not reduce, and shall not be included in the
21calculation of, the required State contributions under this
22Article in any future year until the System has reached a
23funding ratio of at least 90%. A reference in this Article to
24the "required State contribution" or any substantially similar
25term does not include or apply to any amounts payable to the
26System under Section 25 of the Budget Stabilization Act.



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1    Notwithstanding any other provision of this Section, the
2required State contribution for State fiscal year 2005 and for
3fiscal year 2008 and each fiscal year thereafter, as calculated
4under this Section and certified under subsection (a-1), shall
5not exceed an amount equal to (i) the amount of the required
6State contribution that would have been calculated under this
7Section for that fiscal year if the System had not received any
8payments under subsection (d) of Section 7.2 of the General
9Obligation Bond Act, minus (ii) the portion of the State's
10total debt service payments for that fiscal year on the bonds
11issued for the purposes of that Section 7.2, as determined and
12certified by the Comptroller, that is the same as the System's
13portion of the total moneys distributed under subsection (d) of
14Section 7.2 of the General Obligation Bond Act. In determining
15this maximum for State fiscal years 2008 through 2010, however,
16the amount referred to in item (i) shall be increased, as a
17percentage of the applicable employee payroll, in equal
18increments calculated from the sum of the required State
19contribution for State fiscal year 2007 plus the applicable
20portion of the State's total debt service payments for fiscal
21year 2007 on the bonds issued for the purposes of Section 7.2
22of the General Obligation Bond Act, so that, by State fiscal
23year 2011, the State is contributing at the rate otherwise
24required under this Section.
25    (c) Payment of the required State contributions and of all
26pensions, retirement annuities, death benefits, refunds, and



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1other benefits granted under or assumed by this System, and all
2expenses in connection with the administration and operation
3thereof, are obligations of the State.
4    If members are paid from special trust or federal funds
5which are administered by the employing unit, whether school
6district or other unit, the employing unit shall pay to the
7System from such funds the full accruing retirement costs based
8upon that service, as determined by the System. Employer
9contributions, based on salary paid to members from federal
10funds, may be forwarded by the distributing agency of the State
11of Illinois to the System prior to allocation, in an amount
12determined in accordance with guidelines established by such
13agency and the System.
14    (d) Effective July 1, 1986, any employer of a teacher as
15defined in paragraph (8) of Section 16-106 shall pay the
16employer's normal cost of benefits based upon the teacher's
17service, in addition to employee contributions, as determined
18by the System. Such employer contributions shall be forwarded
19monthly in accordance with guidelines established by the
21    However, with respect to benefits granted under Section
2216-133.4 or 16-133.5 to a teacher as defined in paragraph (8)
23of Section 16-106, the employer's contribution shall be 12%
24(rather than 20%) of the member's highest annual salary rate
25for each year of creditable service granted, and the employer
26shall also pay the required employee contribution on behalf of



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1the teacher. For the purposes of Sections 16-133.4 and
216-133.5, a teacher as defined in paragraph (8) of Section
316-106 who is serving in that capacity while on leave of
4absence from another employer under this Article shall not be
5considered an employee of the employer from which the teacher
6is on leave.
7    (e) Beginning July 1, 1998, every employer of a teacher
8shall pay to the System an employer contribution computed as
10        (1) Beginning July 1, 1998 through June 30, 1999, the
11    employer contribution shall be equal to 0.3% of each
12    teacher's salary.
13        (2) Beginning July 1, 1999 and thereafter, the employer
14    contribution shall be equal to 0.58% of each teacher's
15    salary.
16The school district or other employing unit may pay these
17employer contributions out of any source of funding available
18for that purpose and shall forward the contributions to the
19System on the schedule established for the payment of member
21    These employer contributions are intended to offset a
22portion of the cost to the System of the increases in
23retirement benefits resulting from this amendatory Act of 1998.
24    Each employer of teachers is entitled to a credit against
25the contributions required under this subsection (e) with
26respect to salaries paid to teachers for the period January 1,



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12002 through June 30, 2003, equal to the amount paid by that
2employer under subsection (a-5) of Section 6.6 of the State
3Employees Group Insurance Act of 1971 with respect to salaries
4paid to teachers for that period.
5    The additional 1% employee contribution required under
6Section 16-152 by this amendatory Act of 1998 is the
7responsibility of the teacher and not the teacher's employer,
8unless the employer agrees, through collective bargaining or
9otherwise, to make the contribution on behalf of the teacher.
10    If an employer is required by a contract in effect on May
111, 1998 between the employer and an employee organization to
12pay, on behalf of all its full-time employees covered by this
13Article, all mandatory employee contributions required under
14this Article, then the employer shall be excused from paying
15the employer contribution required under this subsection (e)
16for the balance of the term of that contract. The employer and
17the employee organization shall jointly certify to the System
18the existence of the contractual requirement, in such form as
19the System may prescribe. This exclusion shall cease upon the
20termination, extension, or renewal of the contract at any time
21after May 1, 1998.
22    (f) If the amount of a teacher's salary for any school year
23used to determine final average salary exceeds the member's
24annual full-time salary rate with the same employer for the
25previous school year by more than 6%, the teacher's employer
26shall pay to the System, in addition to all other payments



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



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1detail the grounds of the dispute and, if the employer asserts
2that the calculation is subject to subsection (g) or (h) of
3this Section, must include an affidavit setting forth and
4attesting to all facts within the employer's knowledge that are
5pertinent to the applicability of that subsection. Upon
6receiving a timely application for recalculation, the System
7shall review the application and, if appropriate, recalculate
8the amount due.
9    The employer contributions required under this subsection
10(f) may be paid in the form of a lump sum within 90 days after
11receipt of the bill. If the employer contributions are not paid
12within 90 days after receipt of the bill, then interest will be
13charged at a rate equal to the System's annual actuarially
14assumed rate of return on investment compounded annually from
15the 91st day after receipt of the bill. Payments must be
16concluded within 3 years after the employer's receipt of the
18    (g) This subsection (g) applies only to payments made or
19salary increases given on or after June 1, 2005 but before July
201, 2011. The changes made by Public Act 94-1057 shall not
21require the System to refund any payments received before July
2231, 2006 (the effective date of Public Act 94-1057).
23    When assessing payment for any amount due under subsection
24(f), the System shall exclude salary increases paid to teachers
25under contracts or collective bargaining agreements entered
26into, amended, or renewed before June 1, 2005.



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1    When assessing payment for any amount due under subsection
2(f), the System shall exclude salary increases paid to a
3teacher at a time when the teacher is 10 or more years from
4retirement eligibility under Section 16-132 or 16-133.2.
5    When assessing payment for any amount due under subsection
6(f), the System shall exclude salary increases resulting from
7overload work, including summer school, when the school
8district has certified to the System, and the System has
9approved the certification, that (i) the overload work is for
10the sole purpose of classroom instruction in excess of the
11standard number of classes for a full-time teacher in a school
12district during a school year and (ii) the salary increases are
13equal to or less than the rate of pay for classroom instruction
14computed on the teacher's current salary and work schedule.
15    When assessing payment for any amount due under subsection
16(f), the System shall exclude a salary increase resulting from
17a promotion (i) for which the employee is required to hold a
18certificate or supervisory endorsement issued by the State
19Teacher Certification Board that is a different certification
20or supervisory endorsement than is required for the teacher's
21previous position and (ii) to a position that has existed and
22been filled by a member for no less than one complete academic
23year and the salary increase from the promotion is an increase
24that results in an amount no greater than the lesser of the
25average salary paid for other similar positions in the district
26requiring the same certification or the amount stipulated in



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



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1    recalculations required by Public Act 94-1057.
2        (3) The total amount the System received from each
3    employer as a result of the changes made to this Section by
4    Public Act 94-4.
5        (4) The increase in the required State contribution
6    resulting from the changes made to this Section by Public
7    Act 94-1057.
8    (j) For purposes of determining the required State
9contribution to the System, the value of the System's assets
10shall be equal to the actuarial value of the System's assets,
11which shall be calculated as follows:
12    As of June 30, 2008, the actuarial value of the System's
13assets shall be equal to the market value of the assets as of
14that date. In determining the actuarial value of the System's
15assets for fiscal years after June 30, 2008, any actuarial
16gains or losses from investment return incurred in a fiscal
17year shall be recognized in equal annual amounts over the
185-year period following that fiscal year.
19    (k) For purposes of determining the required State
20contribution to the system for a particular year, the actuarial
21value of assets shall be assumed to earn a rate of return equal
22to the system's actuarially assumed rate of return.
23(Source: P.A. 95-331, eff. 8-21-07; 95-950, eff. 8-29-08;
2496-43, eff. 7-15-09.)