SB0436sam002 99TH GENERAL ASSEMBLY

Sen. Steve Stadelman

Filed: 3/3/2016

 

 


 

 


 
09900SB0436sam002LRB099 03096 RPS 44581 a

1
AMENDMENT TO SENATE BILL 436

2    AMENDMENT NO. ______. Amend Senate Bill 436 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Illinois Pension Code is amended by
5changing Section 16-158 as follows:
 
6    (40 ILCS 5/16-158)   (from Ch. 108 1/2, par. 16-158)
7    (Text of Section WITHOUT the changes made by P.A. 98-599,
8which has been held unconstitutional)
9    Sec. 16-158. Contributions by State and other employing
10units.
11    (a) The State shall make contributions to the System by
12means of appropriations from the Common School Fund and other
13State funds of amounts which, together with other employer
14contributions, employee contributions, investment income, and
15other income, will be sufficient to meet the cost of
16maintaining and administering the System on a 90% funded basis

 

 

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1in accordance with actuarial recommendations.
2    The Board shall determine the amount of State contributions
3required for each fiscal year on the basis of the actuarial
4tables and other assumptions adopted by the Board and the
5recommendations of the actuary, using the formula in subsection
6(b-3).
7    (a-1) Annually, on or before November 15 until November 15,
82011, the Board shall certify to the Governor the amount of the
9required State contribution for the coming fiscal year. The
10certification under this subsection (a-1) shall include a copy
11of the actuarial recommendations upon which it is based and
12shall specifically identify the System's projected State
13normal cost for that fiscal year.
14    On or before May 1, 2004, the Board shall recalculate and
15recertify to the Governor the amount of the required State
16contribution to the System for State fiscal year 2005, taking
17into account the amounts appropriated to and received by the
18System under subsection (d) of Section 7.2 of the General
19Obligation Bond Act.
20    On or before July 1, 2005, the Board shall recalculate and
21recertify to the Governor the amount of the required State
22contribution to the System for State fiscal year 2006, taking
23into account the changes in required State contributions made
24by this amendatory Act of the 94th General Assembly.
25    On or before April 1, 2011, the Board shall recalculate and
26recertify to the Governor the amount of the required State

 

 

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1contribution to the System for State fiscal year 2011, applying
2the changes made by Public Act 96-889 to the System's assets
3and liabilities as of June 30, 2009 as though Public Act 96-889
4was approved on that date.
5    (a-5) On or before November 1 of each year, beginning
6November 1, 2012, the Board shall submit to the State Actuary,
7the Governor, and the General Assembly a proposed certification
8of the amount of the required State contribution to the System
9for the next fiscal year, along with all of the actuarial
10assumptions, calculations, and data upon which that proposed
11certification is based. On or before January 1 of each year,
12beginning January 1, 2013, the State Actuary shall issue a
13preliminary report concerning the proposed certification and
14identifying, if necessary, recommended changes in actuarial
15assumptions that the Board must consider before finalizing its
16certification of the required State contributions. On or before
17January 15, 2013 and each January 15 thereafter, the Board
18shall certify to the Governor and the General Assembly the
19amount of the required State contribution for the next fiscal
20year. The Board's certification must note any deviations from
21the State Actuary's recommended changes, the reason or reasons
22for not following the State Actuary's recommended changes, and
23the fiscal impact of not following the State Actuary's
24recommended changes on the required State contribution.
25    (b) Through State fiscal year 1995, the State contributions
26shall be paid to the System in accordance with Section 18-7 of

 

 

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1the School Code.
2    (b-1) Beginning in State fiscal year 1996, on the 15th day
3of each month, or as soon thereafter as may be practicable, the
4Board shall submit vouchers for payment of State contributions
5to the System, in a total monthly amount of one-twelfth of the
6required annual State contribution certified under subsection
7(a-1). From the effective date of this amendatory Act of the
893rd General Assembly through June 30, 2004, the Board shall
9not submit vouchers for the remainder of fiscal year 2004 in
10excess of the fiscal year 2004 certified contribution amount
11determined under this Section after taking into consideration
12the transfer to the System under subsection (a) of Section
136z-61 of the State Finance Act. These vouchers shall be paid by
14the State Comptroller and Treasurer by warrants drawn on the
15funds appropriated to the System for that fiscal year.
16    If in any month the amount remaining unexpended from all
17other appropriations to the System for the applicable fiscal
18year (including the appropriations to the System under Section
198.12 of the State Finance Act and Section 1 of the State
20Pension Funds Continuing Appropriation Act) is less than the
21amount lawfully vouchered under this subsection, the
22difference shall be paid from the Common School Fund under the
23continuing appropriation authority provided in Section 1.1 of
24the State Pension Funds Continuing Appropriation Act.
25    (b-2) Allocations from the Common School Fund apportioned
26to school districts not coming under this System shall not be

 

 

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1diminished or affected by the provisions of this Article.
2    (b-3) 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 90% of
6the total actuarial liabilities of the System by the end of
7State fiscal year 2045. In making these determinations, the
8required State contribution shall be calculated each year as a
9level percentage of payroll over the years remaining to and
10including fiscal year 2045 and shall be determined under the
11projected unit credit actuarial cost method.
12    For State fiscal years 1996 through 2005, the State
13contribution to the System, as a percentage of the applicable
14employee payroll, shall be increased in equal annual increments
15so that by State fiscal year 2011, the State is contributing at
16the rate required under this Section; except that in the
17following specified State fiscal years, the State contribution
18to the System shall not be less than the following indicated
19percentages of the applicable employee payroll, even if the
20indicated percentage will produce a State contribution in
21excess of the amount otherwise required under this subsection
22and subsection (a), and notwithstanding any contrary
23certification made under subsection (a-1) before the effective
24date of this amendatory Act of 1998: 10.02% in FY 1999; 10.77%
25in FY 2000; 11.47% in FY 2001; 12.16% in FY 2002; 12.86% in FY
262003; and 13.56% in FY 2004.

 

 

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1    Notwithstanding any other provision of this Article, the
2total required State contribution for State fiscal year 2006 is
3$534,627,700.
4    Notwithstanding any other provision of this Article, the
5total required State contribution for State fiscal year 2007 is
6$738,014,500.
7    For each of State fiscal years 2008 through 2009, the State
8contribution to the System, as a percentage of the applicable
9employee payroll, shall be increased in equal annual increments
10from the required State contribution for State fiscal year
112007, so that by State fiscal year 2011, the State is
12contributing at the rate otherwise required under this Section.
13    Notwithstanding any other provision of this Article, the
14total required State contribution for State fiscal year 2010 is
15$2,089,268,000 and shall be made from the proceeds of bonds
16sold in fiscal year 2010 pursuant to Section 7.2 of the General
17Obligation Bond Act, less (i) the pro rata share of bond sale
18expenses determined by the System's share of total bond
19proceeds, (ii) any amounts received from the Common School Fund
20in fiscal year 2010, and (iii) any reduction in bond proceeds
21due to the issuance of discounted bonds, if applicable.
22    Notwithstanding any other provision of this Article, the
23total required State contribution for State fiscal year 2011 is
24the amount recertified by the System on or before April 1, 2011
25pursuant to subsection (a-1) of this Section and shall be made
26from the proceeds of bonds sold in fiscal year 2011 pursuant to

 

 

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1Section 7.2 of the General Obligation Bond Act, less (i) the
2pro rata share of bond sale expenses determined by the System's
3share of total bond proceeds, (ii) any amounts received from
4the Common School Fund in fiscal year 2011, and (iii) any
5reduction in bond proceeds due to the issuance of discounted
6bonds, if applicable. This amount shall include, in addition to
7the amount certified by the System, an amount necessary to meet
8employer contributions required by the State as an employer
9under paragraph (e) of this Section, which may also be used by
10the System for contributions required by paragraph (a) of
11Section 16-127.
12    Beginning in State fiscal year 2046, the minimum State
13contribution for each fiscal year shall be the amount needed to
14maintain the total assets of the System at 90% of the total
15actuarial liabilities of the System.
16    Amounts received by the System pursuant to Section 25 of
17the Budget Stabilization Act or Section 8.12 of the State
18Finance Act in any fiscal year do not reduce and do not
19constitute payment of any portion of the minimum State
20contribution required under this Article in that fiscal year.
21Such amounts shall not reduce, and shall not be included in the
22calculation of, the required State contributions under this
23Article in any future year until the System has reached a
24funding ratio of at least 90%. A reference in this Article to
25the "required State contribution" or any substantially similar
26term does not include or apply to any amounts payable to the

 

 

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1System under Section 25 of the Budget Stabilization Act.
2    Notwithstanding any other provision of this Section, the
3required State contribution for State fiscal year 2005 and for
4fiscal year 2008 and each fiscal year thereafter, as calculated
5under this Section and certified under subsection (a-1), shall
6not exceed an amount equal to (i) the amount of the required
7State contribution that would have been calculated under this
8Section for that fiscal year if the System had not received any
9payments under subsection (d) of Section 7.2 of the General
10Obligation Bond Act, minus (ii) the portion of the State's
11total debt service payments for that fiscal year on the bonds
12issued in fiscal year 2003 for the purposes of that Section
137.2, as determined and certified by the Comptroller, that is
14the same as the System's portion of the total moneys
15distributed under subsection (d) of Section 7.2 of the General
16Obligation Bond Act. In determining this maximum for State
17fiscal years 2008 through 2010, however, the amount referred to
18in item (i) shall be increased, as a percentage of the
19applicable employee payroll, in equal increments calculated
20from the sum of the required State contribution for State
21fiscal year 2007 plus the applicable portion of the State's
22total debt service payments for fiscal year 2007 on the bonds
23issued in fiscal year 2003 for the purposes of Section 7.2 of
24the General Obligation Bond Act, so that, by State fiscal year
252011, the State is contributing at the rate otherwise required
26under this Section.

 

 

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1    (c) Payment of the required State contributions and of all
2pensions, retirement annuities, death benefits, refunds, and
3other benefits granted under or assumed by this System, and all
4expenses in connection with the administration and operation
5thereof, are obligations of the State.
6    If members are paid from special trust or federal funds
7which are administered by the employing unit, whether school
8district or other unit, the employing unit shall pay to the
9System from such funds the full accruing retirement costs based
10upon that service, which, beginning July 1, 2016 2014, shall be
11at a rate, expressed as a percentage of salary, equal to the
12total employer's minimum contribution to the System to be made
13by the State for that fiscal year, including both normal cost
14and unfunded liability components, expressed as a percentage of
15payroll, as determined by the System under subsection (b-3) of
16this Section. Employer contributions, based on salary paid to
17members from federal funds, may be forwarded by the
18distributing agency of the State of Illinois to the System
19prior to allocation, in an amount determined in accordance with
20guidelines established by such agency and the System. Any
21contribution for fiscal year 2015 collected as a result of the
22change made by this amendatory Act of the 98th General Assembly
23shall be considered a State contribution under subsection (b-3)
24of this Section.
25    (d) Effective July 1, 1986, any employer of a teacher as
26defined in paragraph (8) of Section 16-106 shall pay the

 

 

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1employer's normal cost of benefits based upon the teacher's
2service, in addition to employee contributions, as determined
3by the System. Such employer contributions shall be forwarded
4monthly in accordance with guidelines established by the
5System.
6    However, with respect to benefits granted under Section
716-133.4 or 16-133.5 to a teacher as defined in paragraph (8)
8of Section 16-106, the employer's contribution shall be 12%
9(rather than 20%) of the member's highest annual salary rate
10for each year of creditable service granted, and the employer
11shall also pay the required employee contribution on behalf of
12the teacher. For the purposes of Sections 16-133.4 and
1316-133.5, a teacher as defined in paragraph (8) of Section
1416-106 who is serving in that capacity while on leave of
15absence from another employer under this Article shall not be
16considered an employee of the employer from which the teacher
17is on leave.
18    (e) Beginning July 1, 1998, every employer of a teacher
19shall pay to the System an employer contribution computed as
20follows:
21        (1) Beginning July 1, 1998 through June 30, 1999, the
22    employer contribution shall be equal to 0.3% of each
23    teacher's salary.
24        (2) Beginning July 1, 1999 and thereafter, the employer
25    contribution shall be equal to 0.58% of each teacher's
26    salary.

 

 

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1The school district or other employing unit may pay these
2employer contributions out of any source of funding available
3for that purpose and shall forward the contributions to the
4System on the schedule established for the payment of member
5contributions.
6    These employer contributions are intended to offset a
7portion of the cost to the System of the increases in
8retirement benefits resulting from this amendatory Act of 1998.
9    Each employer of teachers is entitled to a credit against
10the contributions required under this subsection (e) with
11respect to salaries paid to teachers for the period January 1,
122002 through June 30, 2003, equal to the amount paid by that
13employer under subsection (a-5) of Section 6.6 of the State
14Employees Group Insurance Act of 1971 with respect to salaries
15paid to teachers for that period.
16    The additional 1% employee contribution required under
17Section 16-152 by this amendatory Act of 1998 is the
18responsibility of the teacher and not the teacher's employer,
19unless the employer agrees, through collective bargaining or
20otherwise, to make the contribution on behalf of the teacher.
21    If an employer is required by a contract in effect on May
221, 1998 between the employer and an employee organization to
23pay, on behalf of all its full-time employees covered by this
24Article, all mandatory employee contributions required under
25this Article, then the employer shall be excused from paying
26the employer contribution required under this subsection (e)

 

 

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1for the balance of the term of that contract. The employer and
2the employee organization shall jointly certify to the System
3the existence of the contractual requirement, in such form as
4the System may prescribe. This exclusion shall cease upon the
5termination, extension, or renewal of the contract at any time
6after May 1, 1998.
7    (f) If the amount of a teacher's salary for any school year
8used to determine final average salary exceeds the member's
9annual full-time salary rate with the same employer for the
10previous school year by more than 6%, the teacher's employer
11shall pay to the System, in addition to all other payments
12required under this Section and in accordance with guidelines
13established by the System, the present value of the increase in
14benefits resulting from the portion of the increase in salary
15that is in excess of 6%. This present value shall be computed
16by the System on the basis of the actuarial assumptions and
17tables used in the most recent actuarial valuation of the
18System that is available at the time of the computation. If a
19teacher's salary for the 2005-2006 school year is used to
20determine final average salary under this subsection (f), then
21the changes made to this subsection (f) by Public Act 94-1057
22shall apply in calculating whether the increase in his or her
23salary is in excess of 6%. For the purposes of this Section,
24change in employment under Section 10-21.12 of the School Code
25on or after June 1, 2005 shall constitute a change in employer.
26The System may require the employer to provide any pertinent

 

 

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1information or documentation. The changes made to this
2subsection (f) by this amendatory Act of the 94th General
3Assembly apply without regard to whether the teacher was in
4service on or after its effective date.
5    Whenever it determines that a payment is or may be required
6under this subsection, the System shall calculate the amount of
7the payment and bill the employer for that amount. The bill
8shall specify the calculations used to determine the amount
9due. If the employer disputes the amount of the bill, it may,
10within 30 days after receipt of the bill, apply to the System
11in writing for a recalculation. The application must specify in
12detail the grounds of the dispute and, if the employer asserts
13that the calculation is subject to subsection (g) or (h) of
14this Section, must include an affidavit setting forth and
15attesting to all facts within the employer's knowledge that are
16pertinent to the applicability of that subsection. Upon
17receiving a timely application for recalculation, the System
18shall review the application and, if appropriate, recalculate
19the amount due.
20    The employer contributions required under this subsection
21(f) may be paid in the form of a lump sum within 90 days after
22receipt of the bill. If the employer contributions are not paid
23within 90 days after receipt of the bill, then interest will be
24charged at a rate equal to the System's annual actuarially
25assumed rate of return on investment compounded annually from
26the 91st day after receipt of the bill. Payments must be

 

 

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1concluded within 3 years after the employer's receipt of the
2bill.
3    (g) This subsection (g) applies only to payments made or
4salary increases given on or after June 1, 2005 but before July
51, 2011. The changes made by Public Act 94-1057 shall not
6require the System to refund any payments received before July
731, 2006 (the effective date of Public Act 94-1057).
8    When assessing payment for any amount due under subsection
9(f), the System shall exclude salary increases paid to teachers
10under contracts or collective bargaining agreements entered
11into, amended, or renewed before June 1, 2005.
12    When assessing payment for any amount due under subsection
13(f), the System shall exclude salary increases paid to a
14teacher at a time when the teacher is 10 or more years from
15retirement eligibility under Section 16-132 or 16-133.2.
16    When assessing payment for any amount due under subsection
17(f), the System shall exclude salary increases resulting from
18overload work, including summer school, when the school
19district has certified to the System, and the System has
20approved the certification, that (i) the overload work is for
21the sole purpose of classroom instruction in excess of the
22standard number of classes for a full-time teacher in a school
23district during a school year and (ii) the salary increases are
24equal to or less than the rate of pay for classroom instruction
25computed on the teacher's current salary and work schedule.
26    When assessing payment for any amount due under subsection

 

 

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1(f), the System shall exclude a salary increase resulting from
2a promotion (i) for which the employee is required to hold a
3certificate or supervisory endorsement issued by the State
4Teacher Certification Board that is a different certification
5or supervisory endorsement than is required for the teacher's
6previous position and (ii) to a position that has existed and
7been filled by a member for no less than one complete academic
8year and the salary increase from the promotion is an increase
9that results in an amount no greater than the lesser of the
10average salary paid for other similar positions in the district
11requiring the same certification or the amount stipulated in
12the collective bargaining agreement for a similar position
13requiring the same certification.
14    When assessing payment for any amount due under subsection
15(f), the System shall exclude any payment to the teacher from
16the State of Illinois or the State Board of Education over
17which the employer does not have discretion, notwithstanding
18that the payment is included in the computation of final
19average salary.
20    (h) When assessing payment for any amount due under
21subsection (f), the System shall exclude any salary increase
22described in subsection (g) of this Section given on or after
23July 1, 2011 but before July 1, 2014 under a contract or
24collective bargaining agreement entered into, amended, or
25renewed on or after June 1, 2005 but before July 1, 2011.
26Notwithstanding any other provision of this Section, any

 

 

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1payments made or salary increases given after June 30, 2014
2shall be used in assessing payment for any amount due under
3subsection (f) of this Section.
4    (i) The System shall prepare a report and file copies of
5the report with the Governor and the General Assembly by
6January 1, 2007 that contains all of the following information:
7        (1) The number of recalculations required by the
8    changes made to this Section by Public Act 94-1057 for each
9    employer.
10        (2) The dollar amount by which each employer's
11    contribution to the System was changed due to
12    recalculations required by Public Act 94-1057.
13        (3) The total amount the System received from each
14    employer as a result of the changes made to this Section by
15    Public Act 94-4.
16        (4) The increase in the required State contribution
17    resulting from the changes made to this Section by Public
18    Act 94-1057.
19    (j) 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

 

 

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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    (k) 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; 97-694, eff.
106-18-12; 97-813, eff. 7-13-12; 98-674, eff. 6-30-14.)
 
11    Section 99. Effective date. This Act takes effect upon
12becoming law.".