97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB5644

 

Introduced 2/15/2012, by Rep. David R. Leitch

 

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. Authorizes the corporate authorities of a participating municipality to elect, by a duly authorized resolution or ordinance, to calculate actuarial liabilities using a 30-year rolling amortization period.


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FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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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) either (i) in the case of a participating
18municipality that has elected a 30-year rolling amortization
19period pursuant to subsection (f) of this Section, an amount
20sufficient to bring the total assets of the pension fund up to
2190% of the total actuarial liabilities of the pension fund
22within 30 years, as annually updated and determined by an
23enrolled actuary employed by the Illinois Department of

 

 

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1Insurance or by an enrolled actuary retained by the pension
2fund or the municipality, or (ii) in all other cases, an amount
3sufficient to bring the total assets of the pension fund up to
490% of the total actuarial liabilities of the pension fund by
5the end of municipal fiscal year 2040, as annually updated and
6determined by an enrolled actuary employed by the Illinois
7Department of Insurance or by an enrolled actuary retained by
8the pension fund or the municipality. In making these
9determinations, the required minimum employer contribution
10shall be calculated each year as a level percentage of payroll
11over the years remaining up to and including fiscal year 2040
12and shall be determined under the projected unit credit
13actuarial cost method. The tax shall be levied and collected in
14the same manner as the general taxes of the municipality, and
15in addition to all other taxes now or hereafter authorized to
16be levied upon all property within the municipality, and shall
17be in addition to the amount authorized to be levied for
18general purposes as provided by Section 8-3-1 of the Illinois
19Municipal Code, approved May 29, 1961, as amended. The tax
20shall be forwarded directly to the treasurer of the board
21within 30 business days after receipt by the county.
22    (b) For purposes of determining the required employer
23contribution to a pension fund, the value of the pension fund's
24assets shall be equal to the actuarial value of the pension
25fund's assets, which shall be calculated as follows:
26        (1) On March 30, 2011, the actuarial value of a pension

 

 

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1    fund's assets shall be equal to the market value of the
2    assets as of that date.
3        (2) In determining the actuarial value of the System's
4    assets for fiscal years after March 30, 2011, any actuarial
5    gains or losses from investment return incurred in a fiscal
6    year shall be recognized in equal annual amounts over the
7    5-year period following that fiscal year.
8    (c) If a participating municipality fails to transmit to
9the fund contributions required of it under this Article for
10more than 90 days after the payment of those contributions is
11due, the fund may, after giving notice to the municipality,
12certify to the State Comptroller the amounts of the delinquent
13payments, and the Comptroller must, beginning in fiscal year
142016, deduct and deposit into the fund the certified amounts or
15a portion of those amounts from the following proportions of
16grants of State funds to the municipality:
17        (1) in fiscal year 2016, one-third of the total amount
18    of any grants of State funds to the municipality;
19        (2) in fiscal year 2017, two-thirds of the total amount
20    of any grants of State funds to the municipality; and
21        (3) in fiscal year 2018 and each fiscal year
22    thereafter, the total amount of any grants of State funds
23    to the municipality.
24    The State Comptroller may not deduct from any grants of
25State funds to the municipality more than the amount of
26delinquent payments certified to the State Comptroller by the

 

 

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

 

 

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1    PTELL and employer home rule or non-home rule status; and
2        (6) existing statutory funding compliance procedures
3    and funding enforcement mechanisms for all municipal
4    pension funds.
5    (f) Beginning on the effective date of this amendatory Act
6of the 97th General Assembly, the corporate authorities of a
7participating municipality may, by a duly authorized
8resolution or ordinance, elect to use a 30-year rolling
9amortization period to calculate actuarial liabilities under
10subsection (a) of this Section.
11(Source: P.A. 95-530, eff. 8-28-07; 96-1495, eff. 1-1-11.)
 
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
15municipality shall annually levy a tax upon all the taxable
16property of the municipality at the rate on the dollar which
17will produce an amount which, when added to the deductions from
18the salaries or wages of firefighters and revenues available
19from other sources, will equal a sum sufficient to meet the
20annual actuarial requirements of the pension fund, as
21determined by an enrolled actuary employed by the Illinois
22Department of Insurance or by an enrolled actuary retained by
23the pension fund or municipality. For the purposes of this
24Section, the annual actuarial requirements of the pension fund
25are equal to (1) the normal cost of the pension fund, or 17.5%

 

 

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1of the salaries and wages to be paid to firefighters for the
2year involved, whichever is greater, plus (2) either (i) in the
3case of a participating municipality that has elected a 30-year
4rolling amortization period pursuant to subsection (h) of this
5Section, an amount sufficient to bring the total assets of the
6pension fund up to 90% of the total actuarial liabilities of
7the pension fund within 30 years, as annually updated and
8determined by an enrolled actuary employed by the Illinois
9Department of Insurance or by an enrolled actuary retained by
10the pension fund or the municipality, or (ii) in all other
11cases, an annual amount sufficient to bring the total assets of
12the pension fund up to 90% of the total actuarial liabilities
13of the pension fund by the end of municipal fiscal year 2040,
14as annually updated and determined by an enrolled actuary
15employed by the Illinois Department of Insurance or by an
16enrolled actuary retained by the pension fund or the
17municipality. In making these determinations, the required
18minimum employer contribution shall be calculated each year as
19a level percentage of payroll over the years remaining up to
20and including fiscal year 2040 and shall be determined under
21the projected unit credit actuarial cost method. The amount to
22be applied towards the amortization of the unfunded accrued
23liability in any year shall not be less than the annual amount
24required to amortize the unfunded accrued liability, including
25interest, as a level percentage of payroll over the number of
26years remaining in the 40 year amortization period.

 

 

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1    (a-5) For purposes of determining the required employer
2contribution to a pension fund, the value of the pension fund's
3assets shall be equal to the actuarial value of the pension
4fund's assets, which shall be calculated as follows:
5        (1) On March 30, 2011, the actuarial value of a pension
6    fund's assets shall be equal to the market value of the
7    assets as of that date.
8        (2) In determining the actuarial value of the pension
9    fund's assets for fiscal years after March 30, 2011, any
10    actuarial gains or losses from investment return incurred
11    in a fiscal year shall be recognized in equal annual
12    amounts over the 5-year period following that fiscal year.
13    (b) The tax shall be levied and collected in the same
14manner as the general taxes of the municipality, and shall be
15in addition to all other taxes now or hereafter authorized to
16be levied upon all property within the municipality, and in
17addition to the amount authorized to be levied for general
18purposes, under Section 8-3-1 of the Illinois Municipal Code or
19under Section 14 of the Fire Protection District Act. The tax
20shall be forwarded directly to the treasurer of the board
21within 30 business days of receipt by the county (or, in the
22case of amounts added to the tax levy under subsection (f),
23used by the municipality to pay the employer contributions
24required under subsection (b-1) of Section 15-155 of this
25Code).
26    (b-5) If a participating municipality fails to transmit to

 

 

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1the fund contributions required of it under this Article for
2more than 90 days after the payment of those contributions is
3due, the fund may, after giving notice to the municipality,
4certify to the State Comptroller the amounts of the delinquent
5payments, and the Comptroller must, beginning in fiscal year
62016, deduct and deposit into the fund the certified amounts or
7a portion of those amounts from the following proportions of
8grants of State funds to the municipality:
9        (1) in fiscal year 2016, one-third of the total amount
10    of any grants of State funds to the municipality;
11        (2) in fiscal year 2017, two-thirds of the total amount
12    of any grants of State funds to the municipality; and
13        (3) in fiscal year 2018 and each fiscal year
14    thereafter, the total amount of any grants of State funds
15    to the municipality.
16    The State Comptroller may not deduct from any grants of
17State funds to the municipality more than the amount of
18delinquent payments certified to the State Comptroller by the
19fund.
20    (c) The board shall make available to the membership and
21the general public for inspection and copying at reasonable
22times the most recent Actuarial Valuation Balance Sheet and Tax
23Levy Requirement issued to the fund by the Department of
24Insurance.
25    (d) The firefighters' pension fund shall consist of the
26following moneys which shall be set apart by the treasurer of

 

 

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1the municipality: (1) all moneys derived from the taxes levied
2hereunder; (2) contributions by firefighters as provided under
3Section 4-118.1; (3) all rewards in money, fees, gifts, and
4emoluments that may be paid or given for or on account of
5extraordinary service by the fire department or any member
6thereof, except when allowed to be retained by competitive
7awards; and (4) any money, real estate or personal property
8received by the board.
9    (e) For the purposes of this Section, "enrolled actuary"
10means an actuary: (1) who is a member of the Society of
11Actuaries or the American Academy of Actuaries; and (2) who is
12enrolled under Subtitle C of Title III of the Employee
13Retirement Income Security Act of 1974, or who has been engaged
14in providing actuarial services to one or more public
15retirement systems for a period of at least 3 years as of July
161, 1983.
17    (f) The corporate authorities of a municipality that
18employs a person who is described in subdivision (d) of Section
194-106 may add to the tax levy otherwise provided for in this
20Section an amount equal to the projected cost of the employer
21contributions required to be paid by the municipality to the
22State Universities Retirement System under subsection (b-1) of
23Section 15-155 of this Code.
24    (g) The Commission on Government Forecasting and
25Accountability shall conduct a study of all funds established
26under this Article and shall report its findings to the General

 

 

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1Assembly on or before January 1, 2013. To the fullest extent
2possible, the study shall include, but not be limited to, the
3following:
4        (1) fund balances;
5        (2) historical employer contribution rates for each
6    fund;
7        (3) the actuarial formulas used as a basis for employer
8    contributions, including the actual assumed rate of return
9    for each year, for each fund;
10        (4) available contribution funding sources;
11        (5) the impact of any revenue limitations caused by
12    PTELL and employer home rule or non-home rule status; and
13        (6) existing statutory funding compliance procedures
14    and funding enforcement mechanisms for all municipal
15    pension funds.
16    (h) Beginning on the effective date of this amendatory Act
17of the 97th General Assembly, the corporate authorities of a
18participating municipality may, by a duly authorized
19resolution or ordinance, elect to use a 30-year rolling
20amortization period to calculate actuarial liabilities under
21subsection (a) of this Section.
22(Source: P.A. 96-1495, eff. 1-1-11.)