SR0317enr 99TH GENERAL ASSEMBLY

09900SR0317 Enrolled LRB099 11807 MST 33736 r

SENATE RESOLUTION NO. 317

WHEREAS, Public Act 96-0889 was passed in 2010 and established, among other provisions, a "Tier 2" pension plan; and

WHEREAS, Public employees who began service on or after January 1, 2011 are now enrolled in what is commonly referred to as the "Tier 2" pension plan; and

WHEREAS, The Tier 2 pension plan dramatically reduced benefits for these members of the Teachers' Retirement System (TRS) and the State Universities Retirement System (SURS); and

WHEREAS, At the time of passage of this plan, it was estimated that this change would result in $64 billion in savings to State taxpayers; and

WHEREAS, Members of the Tier 2 pension plan in TRS and SURS do not participate in Social Security, and many experts believe that the Tier 2 pension plan does not provide benefits that are at least comparable to those provided by the Old-Age portion of the Social Security program; and

WHEREAS, Failure to provide benefits at least comparable to Social Security for Tier 2 members who do not participate in Social Security could result in severe unforeseen consequences for taxpayers in the State of Illinois; and

WHEREAS, Illinois taxpayers need to be advised of all the implications regarding this change, especially the possible impact on property taxes, higher education budgets, and school funding; and

WHEREAS, The Governor has called for the mandatory participation of current Tier 1 members in the Tier 2 plan after an undetermined date; and

WHEREAS, It would be irresponsible to pursue such a drastic change without a federal determination as to whether or not Tier 2 participants in TRS and SURS receive benefits that are in compliance with protections provided under the Internal Revenue Code of 1986; and

WHEREAS, Such a change would harm thousands of working families throughout Illinois and significantly impact our universities' and schools' workforces; and

WHEREAS, It would be irresponsible for the State of Illinois to enact such a drastic proposal without studying the financial impact it would have on taxpayers and working families; therefore, be it

RESOLVED, BY THE SENATE OF THE NINETY-NINTH GENERAL ASSEMBLY OF THE STATE OF ILLINOIS, that we urge TRS and SURS to pursue an Internal Revenue Service ruling on the compliance of Tier 2 with safe harbor provisions under Section 3121(b)(7)(F) of the Internal Revenue Code of 1986; and be it further

RESOLVED, That TRS and SURS provide a detailed analysis on the financial impact that the Governor's proposal would have on the members of working families who are currently in the Tier 1 pension plan; and be it further

RESOLVED, That this report be completed prior to any consideration of the Governor's proposal to move Tier 1 participants in TRS and SURS into Tier 2.