Full Text of SB2775 99th General Assembly
SB2775 99TH GENERAL ASSEMBLY |
| | 99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016 SB2775 Introduced 2/17/2016, by Sen. Pamela J. Althoff 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 Fire Articles of the Illinois Pension Code in relation to employer contributions. Changes the funding formula by: (1) reducing the target funding ratio from 90% to 85%; (2) extending the amortization period to 2055; (3) changing the actuarial method from projected unit credit to entry age normal; and (4) deleting the "level percentage of payroll" calculation from the funding requirement. Also delays by 4 years the enforcement of late payments by intercepting State funds. Effective immediately.
|
| |
| | FISCAL NOTE ACT MAY APPLY | | PENSION IMPACT NOTE ACT MAY APPLY |
| | A BILL FOR |
|
| | | SB2775 | | LRB099 18749 EFG 43133 b |
|
| 1 | | AN ACT concerning public employee benefits.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Pension Code is amended by changing | 5 | | Sections 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 | 9 | | municipality shall annually levy a tax upon all
the taxable | 10 | | property of the municipality at the rate on the dollar which
| 11 | | will produce an amount which, when added to the deductions from | 12 | | the salaries
or wages of police officers, and revenues
| 13 | | available from other
sources, will equal a sum sufficient to | 14 | | meet
the annual requirements of the police pension fund. | 15 | | Through 2016, the The annual
requirements to be provided by | 16 | | such tax levy are equal
to (1) the normal cost of the pension | 17 | | fund for the year involved, plus
(2) an amount sufficient to | 18 | | bring the total assets of the pension fund up to 90% of the | 19 | | total actuarial liabilities of the pension fund by the end of | 20 | | municipal fiscal year 2040, as annually updated and determined | 21 | | by an enrolled actuary employed by the Illinois Department of | 22 | | Insurance or by an enrolled actuary retained by the pension | 23 | | fund or the municipality. In making these determinations, the |
| | | SB2775 | - 2 - | LRB099 18749 EFG 43133 b |
|
| 1 | | required minimum employer contribution shall be calculated | 2 | | each year as a level percentage of payroll over the years | 3 | | remaining up to and including fiscal year 2040 and shall be | 4 | | determined under the projected unit credit actuarial cost | 5 | | method. | 6 | | Beginning in 2017, the annual requirements to be provided | 7 | | by the tax levy under this subsection shall be an amount equal | 8 | | to (1) the normal cost of the pension fund for the year | 9 | | involved, plus (2) an amount sufficient to amortize 85% of the | 10 | | unfunded accrued liability of the pension fund by 2055, as | 11 | | annually updated and determined by an enrolled actuary employed | 12 | | by the Illinois Department of Insurance or by an enrolled | 13 | | actuary retained by the pension fund or the municipality. In | 14 | | making these determinations, the required minimum employer | 15 | | contribution shall be determined under the entry age normal | 16 | | actuarial cost method. | 17 | | The tax shall be levied and
collected in the same manner as | 18 | | the general taxes
of the municipality, and in addition to all | 19 | | other taxes now or hereafter authorized to
be levied upon all | 20 | | property within the municipality, and shall be in
addition to | 21 | | the amount authorized to be levied for general purposes as
| 22 | | provided by Section 8-3-1 of the Illinois Municipal Code, | 23 | | approved May
29, 1961, as amended. The tax shall be forwarded | 24 | | directly to the treasurer of the board within 30 business days | 25 | | after receipt by the county.
| 26 | | (b) For purposes of determining the required employer |
| | | SB2775 | - 3 - | LRB099 18749 EFG 43133 b |
|
| 1 | | contribution to a pension fund, the value of the pension fund's | 2 | | assets shall be equal to the actuarial value of the pension | 3 | | fund's assets, which shall be calculated as follows: | 4 | | (1) On March 30, 2011, the actuarial value of a pension | 5 | | fund's assets shall be equal to the market value of the | 6 | | assets as of that date. | 7 | | (2) In determining the actuarial value of the System's | 8 | | assets for fiscal years after March 30, 2011, any actuarial | 9 | | gains or losses from investment return incurred in a fiscal | 10 | | year shall be recognized in equal annual amounts over the | 11 | | 5-year period following that fiscal year. | 12 | | (c) If a participating municipality fails to transmit to | 13 | | the fund contributions required of it under this Article for | 14 | | more than 90 days after the payment of those contributions is | 15 | | due, the fund may, after giving notice to the municipality, | 16 | | certify to the State Comptroller the amounts of the delinquent | 17 | | payments in accordance with any applicable rules of the | 18 | | Comptroller, and the Comptroller must, beginning in fiscal year | 19 | | 2020 2016 , deduct and remit to the fund the certified amounts | 20 | | or a portion of those amounts from the following proportions of | 21 | | payments of State funds to the municipality: | 22 | | (1) in fiscal year 2020 2016 , one-third of the total | 23 | | amount of any payments of State funds to the municipality; | 24 | | (2) in fiscal year 2021 2017 , two-thirds of the total | 25 | | amount of any payments of State funds to the municipality; | 26 | | and |
| | | SB2775 | - 4 - | LRB099 18749 EFG 43133 b |
|
| 1 | | (3) in fiscal year 2022 2018 and each fiscal year | 2 | | thereafter, the total amount of any payments of State funds | 3 | | to the municipality. | 4 | | The State Comptroller may not deduct from any payments of | 5 | | State funds to the municipality more than the amount of | 6 | | delinquent payments certified to the State Comptroller by the | 7 | | fund. | 8 | | (d) The police pension fund shall consist of the following | 9 | | moneys which
shall be set apart by the treasurer of the | 10 | | municipality:
| 11 | | (1) All moneys derived from the taxes levied hereunder;
| 12 | | (2) Contributions by police officers under Section | 13 | | 3-125.1;
| 14 | | (3) All moneys accumulated by the municipality under | 15 | | any previous
legislation establishing a fund for the | 16 | | benefit of disabled or retired
police officers;
| 17 | | (4) Donations, gifts or other transfers authorized by | 18 | | this
Article.
| 19 | | (e) The Commission on Government Forecasting and
| 20 | | Accountability shall conduct a study of all funds established
| 21 | | under this Article and shall report its findings to the General
| 22 | | Assembly on or before January 1, 2013. To the fullest extent | 23 | | possible, the study shall include, but not be limited to, the | 24 | | following: | 25 | | (1) fund balances; | 26 | | (2) historical employer contribution rates for each
|
| | | SB2775 | - 5 - | LRB099 18749 EFG 43133 b |
|
| 1 | | fund; | 2 | | (3) the actuarial formulas used as a basis for employer
| 3 | | contributions, including the actual assumed rate of return
| 4 | | for each year, for each fund; | 5 | | (4) available contribution funding sources; | 6 | | (5) the impact of any revenue limitations caused by
| 7 | | PTELL and employer home rule or non-home rule status; and | 8 | | (6) existing statutory funding compliance procedures
| 9 | | and funding enforcement mechanisms for all municipal
| 10 | | pension funds. | 11 | | (Source: P.A. 99-8, eff. 7-9-15.)
| 12 | | (40 ILCS 5/4-118) (from Ch. 108 1/2, par. 4-118)
| 13 | | Sec. 4-118. Financing.
| 14 | | (a) The city council or the board of trustees
of the | 15 | | municipality shall annually levy a tax upon all the taxable | 16 | | property
of the municipality at the rate on the dollar which | 17 | | will produce an amount
which, when added to the deductions from | 18 | | the salaries or wages of
firefighters and revenues available | 19 | | from other sources, will equal a sum
sufficient to meet the | 20 | | annual actuarial requirements of the pension fund,
as | 21 | | determined by an enrolled actuary employed by the Illinois | 22 | | Department of
Insurance or by an enrolled actuary retained by | 23 | | the pension fund or
municipality. | 24 | | Through 2016, for For the purposes of this Section, the | 25 | | annual actuarial
requirements of the pension fund are equal to |
| | | SB2775 | - 6 - | LRB099 18749 EFG 43133 b |
|
| 1 | | (1) the normal cost of the
pension fund, or 17.5% of the | 2 | | salaries and wages to be paid to firefighters
for the year | 3 | | involved, whichever is greater, plus (2) an annual amount
| 4 | | sufficient to bring the total assets of the pension fund up to | 5 | | 90% of the total actuarial liabilities of the pension fund by | 6 | | the end of municipal fiscal year 2040, as annually updated and | 7 | | determined by an enrolled actuary employed by the Illinois | 8 | | Department of Insurance or by an enrolled actuary retained by | 9 | | the pension fund or the municipality. In making these | 10 | | determinations, the required minimum employer contribution | 11 | | shall be calculated each year as a level percentage of payroll | 12 | | over the years remaining up to and including fiscal year 2040 | 13 | | and shall be determined under the projected unit credit | 14 | | actuarial cost method. | 15 | | Beginning in 2017, for the purposes of this Section, the | 16 | | annual actuarial requirements of the pension fund are equal to | 17 | | (1) the normal cost of the pension fund, or 17.5% of the | 18 | | salaries and wages to be paid to firefighters for the year | 19 | | involved, whichever is greater, plus (2) an amount sufficient | 20 | | to amortize 85% of the unfunded accrued liability of the | 21 | | pension fund by 2055, as annually updated and determined by an | 22 | | enrolled actuary employed by the Illinois Department of | 23 | | Insurance or by an enrolled actuary retained by the pension | 24 | | fund or the municipality. In making these determinations, the | 25 | | required minimum employer contribution shall be determined | 26 | | under the entry age normal actuarial cost method. |
| | | SB2775 | - 7 - | LRB099 18749 EFG 43133 b |
|
| 1 | | The amount
to be applied towards the amortization of the | 2 | | unfunded accrued liability in any
year shall not be less than | 3 | | the annual amount required to amortize the unfunded
accrued | 4 | | liability, including interest, as a level percentage of payroll | 5 | | over
the number of years remaining in the 40 year amortization | 6 | | period.
| 7 | | (a-5) For purposes of determining the required employer | 8 | | contribution to a pension fund, the value of the pension fund's | 9 | | assets shall be equal to the actuarial value of the pension | 10 | | fund's assets, which shall be calculated as follows: | 11 | | (1) On March 30, 2011, the actuarial value of a pension | 12 | | fund's assets shall be equal to the market value of the | 13 | | assets as of that date. | 14 | | (2) In determining the actuarial value of the pension | 15 | | fund's assets for fiscal years after March 30, 2011, any | 16 | | actuarial gains or losses from investment return incurred | 17 | | in a fiscal year shall be recognized in equal annual | 18 | | amounts over the 5-year period following that fiscal year. | 19 | | (b) The tax shall be levied and collected in the same | 20 | | manner
as the general taxes of the municipality, and shall be | 21 | | in addition
to all other taxes now or hereafter authorized to | 22 | | be levied upon all
property within the municipality, and in | 23 | | addition to the amount authorized
to be levied for general | 24 | | purposes, under Section 8-3-1 of the Illinois
Municipal Code or | 25 | | under Section 14 of the Fire Protection District Act. The
tax | 26 | | shall be forwarded directly to the treasurer of the board |
| | | SB2775 | - 8 - | LRB099 18749 EFG 43133 b |
|
| 1 | | within 30
business days of receipt by the county
(or, in the | 2 | | case of amounts
added to the tax levy under subsection (f), | 3 | | used by the municipality to pay the
employer contributions | 4 | | required under subsection (b-1) of Section 15-155 of
this | 5 | | Code).
| 6 | | (b-5) If a participating municipality fails to transmit to | 7 | | the fund contributions required of it under this Article for | 8 | | more than 90 days after the payment of those contributions is | 9 | | due, the fund may, after giving notice to the municipality, | 10 | | certify to the State Comptroller the amounts of the delinquent | 11 | | payments in accordance with any applicable rules of the | 12 | | Comptroller, and the Comptroller must, beginning in fiscal year | 13 | | 2020 2016 , deduct and remit to the fund the certified amounts | 14 | | or a portion of those amounts from the following proportions of | 15 | | payments of State funds to the municipality: | 16 | | (1) in fiscal year 2020 2016 , one-third of the total | 17 | | amount of any payments of State funds to the municipality; | 18 | | (2) in fiscal year 2021 2017 , two-thirds of the total | 19 | | amount of any payments of State funds to the municipality; | 20 | | and | 21 | | (3) in fiscal year 2022 2018 and each fiscal year | 22 | | thereafter, the total amount of any payments of State funds | 23 | | to the municipality. | 24 | | The State Comptroller may not deduct from any payments of | 25 | | State funds to the municipality more than the amount of | 26 | | delinquent payments certified to the State Comptroller by the |
| | | SB2775 | - 9 - | LRB099 18749 EFG 43133 b |
|
| 1 | | fund. | 2 | | (c) The board shall make available to the membership and | 3 | | the general public
for inspection and copying at reasonable | 4 | | times the most recent Actuarial
Valuation Balance Sheet and Tax | 5 | | Levy Requirement issued to the fund by the
Department of | 6 | | Insurance.
| 7 | | (d) The firefighters' pension fund shall consist of the | 8 | | following moneys
which shall be set apart by the treasurer of | 9 | | the municipality: (1) all
moneys derived from the taxes levied | 10 | | hereunder; (2) contributions
by firefighters as provided under | 11 | | Section 4-118.1; (3) all
rewards in money, fees, gifts, and | 12 | | emoluments that may be paid or given
for or on account of | 13 | | extraordinary service by the fire department or any
member | 14 | | thereof, except when allowed to be retained by competitive | 15 | | awards;
and (4) any money, real estate or personal property | 16 | | received by the board.
| 17 | | (e) For the purposes of this Section, "enrolled actuary" | 18 | | means an actuary:
(1) who is a member of the Society of | 19 | | Actuaries or the American
Academy of Actuaries; and (2) who is | 20 | | enrolled under Subtitle
C of Title III of the Employee | 21 | | Retirement Income Security Act of 1974, or
who has been engaged | 22 | | in providing actuarial services to one or more public
| 23 | | retirement systems for a period of at least 3 years as of July | 24 | | 1, 1983.
| 25 | | (f) The corporate authorities of a municipality that | 26 | | employs a person
who is described in subdivision (d) of Section |
| | | SB2775 | - 10 - | LRB099 18749 EFG 43133 b |
|
| 1 | | 4-106 may add to the tax levy
otherwise provided for in this | 2 | | Section an amount equal to the projected cost of
the employer | 3 | | contributions required to be paid by the municipality to the | 4 | | State
Universities Retirement System under subsection (b-1) of | 5 | | Section 15-155 of this
Code. | 6 | | (g) The Commission on Government Forecasting and
| 7 | | Accountability shall conduct a study of all funds established
| 8 | | under this Article and shall report its findings to the General
| 9 | | Assembly on or before January 1, 2013. To the fullest extent | 10 | | possible, the study shall include, but not be limited to, the | 11 | | following: | 12 | | (1) fund balances; | 13 | | (2) historical employer contribution rates for each
| 14 | | fund; | 15 | | (3) the actuarial formulas used as a basis for employer
| 16 | | contributions, including the actual assumed rate of return
| 17 | | for each year, for each fund; | 18 | | (4) available contribution funding sources; | 19 | | (5) the impact of any revenue limitations caused by
| 20 | | PTELL and employer home rule or non-home rule status; and | 21 | | (6) existing statutory funding compliance procedures
| 22 | | and funding enforcement mechanisms for all municipal
| 23 | | pension funds.
| 24 | | (Source: P.A. 99-8, eff. 7-9-15.)
| 25 | | Section 99. Effective date. This Act takes effect upon | 26 | | becoming law.
|
|