99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB3661

 

Introduced , by Rep. Mike Fortner

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Amends the Budget Stabilization Act. Makes changes concerning transfers from the General Revenue Fund to the Pension Stabilization Fund. Amends the State Universities, Downstate Teacher, and Chicago Teacher Articles of the Illinois Pension Code. Consolidates those systems into a single retirement system under Article 15 of the Code, to be known as the Illinois Teachers' Retirement Fund. Creates a new Board for the Fund. Imposes limits on pensionable salary, and requires participation in the self-managed plan to the extent that a participant's salary exceeds the salary cap. Changes participant contributions. Makes changes relating to State and employer funding. Shifts responsibility for a portion of the required State contribution to the actual employer and provides for the State to make certain payments to the actual employer. Authorizes actions to enforce payments by employers. Changes the formula for calculating the minimum required State contribution to these systems. Provides that the State is contractually obligated to pay the annual required State contribution to these retirement systems. Contains provisions requiring the retirement system to bring a mandamus action to compel payment of a required State contribution. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.


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FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

 

 

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 Budget Stabilization Act is amended by
5changing Sections 20 and 25 as follows:
 
6    (30 ILCS 122/20)
7    Sec. 20. Pension Stabilization Fund.
8    (a) The Pension Stabilization Fund is hereby created as a
9special fund in the State treasury. Moneys in the fund shall be
10used for the sole purpose of making payments to the designated
11retirement systems as provided in Section 25.
12    (b) For each fiscal year through State fiscal year 2014,
13when the General Assembly's appropriations and transfers or
14diversions as required by law from general funds do not exceed
1599% of the estimated general funds revenues pursuant to
16subsection (a) of Section 10, the Comptroller shall transfer
17from the General Revenue Fund as provided by this Section a
18total amount equal to 0.5% of the estimated general funds
19revenues to the Pension Stabilization Fund.
20    (c) For each fiscal year through State fiscal year 2015
212014, when the General Assembly's appropriations and transfers
22or diversions as required by law from general funds do not
23exceed 98% of the estimated general funds revenues pursuant to

 

 

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1subsection (b) of Section 10, the Comptroller shall transfer
2from the General Revenue Fund as provided by this Section a
3total amount equal to 1.0% of the estimated general funds
4revenues to the Pension Stabilization Fund.
5    (c-5) In Fiscal Year 2016, the State Comptroller shall
6order transferred and the State Treasurer shall transfer
7$4,100,000,000 from the General Revenue Fund to the Pension
8Stabilization Fund. In each fiscal year thereafter, the State
9Comptroller shall order transferred and the State Treasurer
10shall transfer from the General Revenue Fund to the Pension
11Stabilization Fund the amount transferred under this
12subsection (c-5) in the previous fiscal year increased by
132.25%.
14    (c-10) In addition, in Fiscal Year 2018 and each fiscal
15year thereafter, the State Comptroller shall order transferred
16and the State Treasurer shall transfer $693,500,000 from the
17General Revenue Fund to the Pension Stabilization Fund.
18    (c-15) In addition, in Fiscal Year 2022 and each fiscal
19year thereafter, the State Comptroller shall order transferred
20and the State Treasurer shall transfer $900,000,000 from the
21General Revenue Fund to the Pension Stabilization Fund.
22    (c-20) In addition, in Fiscal Year 2036 and each fiscal
23year thereafter, the State Comptroller shall order transferred
24and the State Treasurer shall transfer $1,100,000,000 from the
25General Revenue Fund to the Pension Stabilization Fund.
26    (c-25) The transfers made pursuant to subsections (c-5)

 

 

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1through (c-20) of this Section shall continue until Fiscal Year
22047 or until each of the designated retirement systems, as
3defined in Section 25, has achieved a funding ratio of at least
4100%, whichever occurs first.
5    (c-5) In addition to any other amounts required to be
6transferred under this Section, in State fiscal year 2016 and
7each fiscal year thereafter through State fiscal year 2045, or
8when each of the designated retirement systems, as defined in
9Section 25, has achieved 100% funding, whichever occurs first,
10the State Comptroller shall order transferred and the State
11Treasurer shall transfer from the General Revenue Fund to the
12Pension Stabilization Fund an amount equal to 10% of (1) the
13sum of the amounts certified by the designated retirement
14systems under subsection (a-5) of Section 2-134, subsection
15(a-10) of Section 14-135.08, subsection (a-10) of Section
1615-165, and subsection (a-10) of Section 16-158 of this Code
17for that fiscal year minus (2) the sum of (i) the transfer
18required under subsection (c-10) of this Section for that
19fiscal year and (ii) the sum of the required State
20contributions certified by the retirement systems under
21subsection (a) of Section 2-134, subsection (a-5) of Section
2214-135.08, subsection (a-5) of Section 15-165, and subsection
23(a-5) of Section 16-158 of this Code for that fiscal year. The
24transferred amount is intended to represent one-tenth of the
25annual savings to the State resulting from the enactment of
26this amendatory Act of the 98th General Assembly.

 

 

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1    (c-10) In State fiscal year 2019, the State Comptroller
2shall order transferred and the State Treasurer shall transfer
3$364,000,000 from the General Revenue Fund to the Pension
4Stabilization Fund. In State fiscal year 2020 and each fiscal
5year thereafter until terminated under subsection (c-15), the
6State Comptroller shall order transferred and the State
7Treasurer shall transfer $1,000,000,000 from the General
8Revenue Fund to the Pension Stabilization Fund.
9    (c-15) The transfers made beginning in State fiscal year
102020 pursuant to subsection (c-10) of this Section shall
11terminate at the end of State fiscal year 2045 or when each of
12the designated retirement systems, as defined in Section 25,
13has achieved 100% funding, whichever occurs first.
14    (d) The Comptroller shall transfer 1/12 of the total amount
15to be transferred each fiscal year under this Section into the
16Pension Stabilization Fund on the first day of each month of
17that fiscal year or as soon thereafter as possible; except that
18the final transfer of the fiscal year shall be made as soon as
19practical after the August 31 following the end of the fiscal
20year.
21    Until State fiscal year 2016 2015, before the final
22transfer for a fiscal year is made, the Comptroller shall
23reconcile the estimated general funds revenues used in
24calculating the other transfers under this Section for that
25fiscal year with the actual general funds revenues for that
26fiscal year. The final transfer for the fiscal year shall be

 

 

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1adjusted so that the total amount transferred under this
2Section for that fiscal year is equal to the percentage
3specified in subsection (b) or (c) of this Section, whichever
4is applicable, of the actual general funds revenues for that
5fiscal year. The actual general funds revenues for the fiscal
6year shall be calculated in a manner consistent with subsection
7(c) of Section 10 of this Act.
8(Source: P.A. 98-599, eff. 6-1-14.)
 
9    (30 ILCS 122/25)
10    Sec. 25. Transfers from the Pension Stabilization Fund.
11    (a) As used in this Section, "designated retirement
12systems" means:
13        (1) the State Employees' Retirement System of
14    Illinois;
15        (2) (blank) the Teachers' Retirement System of the
16    State of Illinois;
17        (3) the Illinois Teachers' Retirement Fund State
18    Universities Retirement System;
19        (4) the Judges Retirement System of Illinois; and
20        (5) the General Assembly Retirement System.
21    (b) As soon as may be practical after any money is
22deposited into the Pension Stabilization Fund, the State
23Comptroller shall apportion the deposited amount among the
24designated retirement systems and the State Comptroller and
25State Treasurer shall pay the apportioned amounts to the

 

 

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1designated retirement systems. The amount deposited shall be
2apportioned among the designated retirement systems in
3proportion to their respective certified State contributions
4for the State fiscal year in which the payment is made to those
5systems in the same proportion as their respective portions of
6the total actuarial reserve deficiency of the designated
7retirement systems, as most recently determined by the
8Governor's Office of Management and Budget. Amounts received by
9a designated retirement system under this Section shall be used
10for funding the unfunded liabilities of the retirement system.
11Payments under this Section are authorized by the continuing
12appropriation under Section 1.7 of the State Pension Funds
13Continuing Appropriation Act. The total amount transferred to
14the designated retirement systems in Fiscal Year 2016 shall not
15be less than $4,100,000,000. In each Fiscal Year thereafter,
16the total amount transferred to the designated retirement
17systems shall not be less than the total amount transferred in
18the previous fiscal year.
19    (c) At the request of the State Comptroller, the Governor's
20Office of Management and Budget shall determine the individual
21and total actuarial reserve deficiencies of the designated
22retirement systems. For this purpose, the Governor's Office of
23Management and Budget shall consider the latest available audit
24and actuarial reports of each of the retirement systems and the
25relevant reports and statistics of the Public Pension Division
26of the Department of Insurance.

 

 

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1    (d) Payments to the designated retirement systems under
2this Section shall be in addition to, and not in lieu of, any
3State contributions required under Section 2-124, 14-131,
415-155, 16-158, or 18-131 of the Illinois Pension Code.
5    Payments to the designated retirement systems under this
6Section received after the effective date of this amendatory
7Act of the 98th General Assembly, and any investment earnings
8attributable to such payments, do not reduce and do not
9constitute payment of any portion of the required State
10contribution under Article 2, 14, 15, 16, or 18 of the Illinois
11Pension Code in the current fiscal year. Such amounts shall not
12reduce, and shall not be included in the calculation of, the
13required State contribution under Article 2, 14, 15, 16, or 18
14of the Illinois Pension Code in any future fiscal year, until
15the designated retirement system has reached the targeted
16funding ratio as prescribed by law for that retirement system.
17Such payments may be invested in the same manner as other
18assets of the designated retirement system and shall be used in
19the calculation of the system's funding ratio for the purposes
20of this Section and Section 20 of this Act. Payments under this
21Section may be used for any associated administrative costs.
22(Source: P.A. 98-599, eff. 6-1-14.)
 
23    Section 10. The Illinois Pension Code is amended by
24changing Sections 15-101, 15-103, 15-111, 15-155, 15-157,
2515-158.2, 16-101, and 17-101 and adding Sections 15-112.1,

 

 

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115-155.1, 15-159.1, and 15-165.1 as follows:
 
2    (40 ILCS 5/15-101)  (from Ch. 108 1/2, par. 15-101)
3    Sec. 15-101. Creation of system.
4    (a) Until July 1, 2015, a A retirement system is created to
5provide retirement annuities and other benefits for employees,
6as defined in this Article, and their dependents.
7    The system shall be known and may be cited as State
8Universities Retirement System. All the business of the system
9shall be transacted in that name.
10    (b) On July 1, 2015, the retirement system established
11under this Article is merged and consolidated with the Article
1216 and 17 retirement systems into a single retirement fund, to
13be known as the Illinois Teachers' Retirement Fund, which shall
14be established and administered as prescribed in this Article.
15    (c) In preparation for that consolidation, the Board of
16this System shall cooperate with the boards of trustees of the
17Article 16 and 17 retirement systems.
18    (d) At the time of consolidation, or as otherwise directed
19by the Board of the Illinois Teachers' Retirement Fund, all
20assets and liabilities belonging to the System established
21under this Article shall become the assets and liabilities of
22the Illinois Teachers' Retirement Fund, and all current or
23former members and beneficiaries of the System established
24under this Article shall be deemed current or former
25participants and beneficiaries of the Illinois Teachers'

 

 

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1Retirement Fund.
2    (e) The Illinois Teachers' Retirement Fund shall be the
3legal successor to the System established under this Article
4and it may exercise any of the rights and powers and perform
5any of the duties of that System. The Illinois Teachers'
6Retirement Fund may, in its discretion, either continue,
7renegotiate, or terminate any personnel, service contract,
8lease, or other contract of any of the retirement systems
9consolidated under this Article.
10    (f) The consolidation of the System established under this
11Article shall not diminish or impair the benefits of any person
12who participated in that System, or of any such person's
13surviving spouse, children, or other dependents.
14    Benefits already payable by the System on June 30, 2015
15shall become payable from the Illinois Teachers' Retirement
16Fund beginning on July 1, 2015, and shall not be subject to
17recalculation or combination due to the consolidation.
18    Benefits that first become payable on or after July 1, 2015
19shall be calculated and paid as provided in this Article 15.
20    The consolidation of the System established under this
21Article does not entitle any person to a recalculation of any
22benefit previously granted or a refund of any contribution
23previously paid.
24(Source: P.A. 83-1440.)
 
25    (40 ILCS 5/15-103)  (from Ch. 108 1/2, par. 15-103)

 

 

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1    Sec. 15-103. System. "System": Until July 1, 2015, the The
2State Universities Retirement System.
3    Beginning July 1, 2015, "system" or "fund" means the
4Illinois Teachers' Retirement Fund created under this Article
5to consolidate the retirement systems previously established
6under this Article and Articles 16 and 17 of this Code;
7depending on the context, the terms may include one or more of
8those previously established retirement systems.
9(Source: P.A. 83-1440.)
 
10    (40 ILCS 5/15-111)  (from Ch. 108 1/2, par. 15-111)
11    Sec. 15-111. Earnings.
12    (a) "Earnings": An amount paid for personal services equal
13to the sum of the basic compensation plus extra compensation
14for summer teaching, overtime or other extra service. For
15periods for which an employee receives service credit under
16subsection (c) of Section 15-113.1 or Section 15-113.2,
17earnings are equal to the basic compensation on which
18contributions are paid by the employee during such periods.
19Compensation for employment which is irregular, intermittent
20and temporary shall not be considered earnings, unless the
21participant is also receiving earnings from the employer as an
22employee under Section 15-107.
23    With respect to transition pay paid by the University of
24Illinois to a person who was a participating employee employed
25in the fire department of the University of Illinois's

 

 

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1Champaign-Urbana campus immediately prior to the elimination
2of that fire department:
3        (1) "Earnings" includes transition pay paid to the
4    employee on or after the effective date of this amendatory
5    Act of the 91st General Assembly.
6        (2) "Earnings" includes transition pay paid to the
7    employee before the effective date of this amendatory Act
8    of the 91st General Assembly only if (i) employee
9    contributions under Section 15-157 have been withheld from
10    that transition pay or (ii) the employee pays to the System
11    before January 1, 2001 an amount representing employee
12    contributions under Section 15-157 on that transition pay.
13    Employee contributions under item (ii) may be paid in a
14    lump sum, by withholding from additional transition pay
15    accruing before January 1, 2001, or in any other manner
16    approved by the System. Upon payment of the employee
17    contributions on transition pay, the corresponding
18    employer contributions become an obligation of the State.
19    (b) For a Tier 2 member, the annual earnings shall not
20exceed $106,800; however, that amount shall annually
21thereafter be increased by the lesser of (i) 3% of that amount,
22including all previous adjustments, or (ii) one half the annual
23unadjusted percentage increase (but not less than zero) in the
24consumer price index-u for the 12 months ending with the
25September preceding each November 1, including all previous
26adjustments.

 

 

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1    For the purposes of this Section, "consumer price index u"
2means the index published by the Bureau of Labor Statistics of
3the United States Department of Labor that measures the average
4change in prices of goods and services purchased by all urban
5consumers, United States city average, all items, 1982-84 =
6100. The new amount resulting from each annual adjustment shall
7be determined by the Public Pension Division of the Department
8of Insurance and made available to the boards of the retirement
9systems and pension funds by November 1 of each year.
10    (c) Notwithstanding any other provision of this Code, the
11annual earnings of a Tier 1 member for the purposes of this
12Code shall not exceed, for periods of service on or after the
13effective date of this amendatory Act of the 98th General
14Assembly, the greater of (i) the annual limitation determined
15from time to time under subsection (b-5) of Section 1-160 of
16this Code, (ii) the annualized rate of earnings of the Tier 1
17member as of that effective date, or (iii) the annualized rate
18of earnings of the Tier 1 member immediately preceding the
19expiration, renewal, or amendment of an employment contract or
20collective bargaining agreement in effect on that effective
21date.
22    (d) Notwithstanding any other provision of this Section,
23"earnings", except as used in Section 15-158.2, does not
24include any future increase in income due to a provision in a
25collectively bargained contract that grants an increase in
26earnings based on an employee's expected date of retirement.

 

 

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1The changes made to this Section by this amendatory Act of the
299th General Assembly do not apply to an employee who is
3covered by a collective bargaining agreement or employment
4contract that is in effect on the effective date of this
5amendatory Act of the 99th General Assembly and that provides
6for such increases, until that agreement or contract expires or
7is amended or renewed.
8(Source: P.A. 98-92, eff. 7-16-13; 98-599, eff. 6-1-14.)
 
9    (40 ILCS 5/15-112.1 new)
10    Sec. 15-112.1. Limitation on earnings and required
11participation in the self-managed plan.
12    (a) For the purpose of calculating traditional benefit
13package benefits and contributions, the annual earnings,
14salary, or wages of a participant shall not exceed the greater
15of (i) the amount specified under subsection (b-5) of Section
161-160 or (ii) the annual earnings of the participant during the
17365 days immediately before the effective date of this Section.
18If, however, an employment contract that is in place on or
19before the effective date of this Section authorizes an
20increase in earnings, salary, or wages on or after the
21effective date of this Section, then the annual earnings,
22salary, or wages of the participant during the 365 days that
23immediately precede the date that the contract expires may be
24used in lieu of the amount specified in item (ii) of this
25subsection.

 

 

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1    (b) Notwithstanding any other provision of this Code, (i)
2for a participant who has not made an election under Section
315-134.5 to participate in the self-managed plan, any portion
4of his or her earnings that exceeds the limit specified in
5subsection (a) of this Section for that year shall be subject
6to the self-managed plan and (ii) for a participant who has
7made an election under Section 15-134.5 to participate in the
8self-managed plan, the entirety of the participant's earnings
9shall, after the effective date of the election, be subject to
10the self-managed plan as provided in Section 15-158.2.
 
11    (40 ILCS 5/15-155)  (from Ch. 108 1/2, par. 15-155)
12    Sec. 15-155. Employer contributions.
13    (a) The State of Illinois shall make contributions by
14appropriations of amounts which, together with the other
15employer contributions from trust, federal, and other funds,
16employee contributions, income from investments, and other
17income of this System, will be sufficient to meet the cost of
18maintaining and administering the System on a 100% funded basis
19in accordance with actuarial recommendations by the end of
20State fiscal year 2047 2044.
21    The Board shall determine the amount of State contributions
22required for each fiscal year on the basis of the actuarial
23tables and other assumptions adopted by the Board and the
24recommendations of the actuary, using the formula in subsection
25(a-1).

 

 

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1    (a-1) For State fiscal years 2015 through 2044, the minimum
2contribution to the System to be made by the State for each
3fiscal year shall be an amount determined by the System to be
4equal to the sum of (1) the State's portion of the projected
5normal cost for that fiscal year, plus (2) an amount sufficient
6to bring the total assets of the System up to 100% of the total
7actuarial liabilities of the System by the end of the State
8fiscal year 2044. In making these determinations, the required
9State contribution shall be calculated each year as a level
10percentage of payroll over the years remaining to and including
11fiscal year 2044 and shall be determined under the projected
12unit cost method for fiscal year 2015 and under the entry age
13normal actuarial cost method for fiscal years 2016 through
142044.
15    For State fiscal years 2012 through 2015 2014, the minimum
16contribution to the System to be made by the State for each
17fiscal year shall be an amount determined by the System to be
18sufficient to bring the total assets of the System up to 90% of
19the total actuarial liabilities of the System by the end of
20State fiscal year 2045. In making these determinations, the
21required State contribution shall be calculated each year as a
22level percentage of payroll over the years remaining to and
23including fiscal year 2045 and shall be determined under the
24projected unit credit actuarial cost method.
25    Beginning July 1, 2015, the assets and liabilities of the
26Article 16 and 17 retirement systems shall be calculated as

 

 

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1assets and liabilities of the Illinois Teachers' Retirement
2Fund under this Article.
3    For State fiscal years 2016 through 2047 or until the State
4has amortized 100% of the total cost of benefits accrued by
5July 1, 2015, whichever is earlier, in addition to any employer
6contributions required from the State as an employer, the
7minimum contribution to the Fund to be made by the State for
8each fiscal year shall be an amount determined by the Board to
9be sufficient to amortize, by the end of State fiscal year
102047, the total cost of the benefits of the Fund arising before
11July 1, 2015. In making these determinations, the required
12State contribution shall be calculated each year as a level
13percentage of payroll over the years remaining to and including
14fiscal year 2047 and shall be determined under the projected
15unit credit actuarial cost method.
16    Beginning with State fiscal year 2016, the minimum required
17contribution of employers under this Article shall be
18determined as a percentage of projected payroll, and shall be
19sufficient to produce an annual amount equal to the employer's
20normal cost for that fiscal year and any unfunded accrued
21liability assigned to the employer that year arising from
22benefits accrued after July 1, 2015.
23    For use in determining the employer's contribution for
24unfunded accrued liability, the Fund shall maintain a separate
25account for each employer. The separate account shall be
26maintained in such form and detail as the Fund determines to be

 

 

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1appropriate. The separate account shall reflect the following
2items to the extent that they are attributable to that employer
3and arise on or after July 1, 2015: employer contributions,
4employee contributions, investment returns, payments of
5benefits, and that employer's proportionate share of the Fund's
6administrative expenses. In the event that the Board determines
7that there is a deficiency or surplus in the account of an
8employer, the Board shall determine the employer's
9contribution rate so as to address that deficiency or surplus
10over a reasonable period of time as determined by the Board,
11which shall be no more than 10 years.
12    The State shall also be required to make an annual
13contribution to each employer of a member who would have been
14considered a member of Article 15 or 16 before the effective
15date of this amendatory Act of the 99th General Assembly of the
16total employer normal cost as determined by the system for
17fiscal year 2016. Every 5 years the Commission on Government
18Forecasting and Accountability shall review the contribution
19in this paragraph and the total current employer normal cost
20and submit the findings to the General Assembly.
21    For State fiscal years 1996 through 2005, the State
22contribution to the System, as a percentage of the applicable
23employee payroll, shall be increased in equal annual increments
24so that by State fiscal year 2011, the State is contributing at
25the rate required under this Section.
26    Notwithstanding any other provision of this Article, the

 

 

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1total required State contribution for State fiscal year 2006 is
2$166,641,900.
3    Notwithstanding any other provision of this Article, the
4total required State contribution for State fiscal year 2007 is
5$252,064,100.
6    For each of State fiscal years 2008 through 2009, the State
7contribution to the System, as a percentage of the applicable
8employee payroll, shall be increased in equal annual increments
9from the required State contribution for State fiscal year
102007, so that by State fiscal year 2011, the State is
11contributing at the rate otherwise required under this Section.
12    Notwithstanding any other provision of this Article, the
13total required State contribution for State fiscal year 2010 is
14$702,514,000 and shall be made from the State Pensions Fund and
15proceeds of bonds sold in fiscal year 2010 pursuant to Section
167.2 of the General Obligation Bond Act, less (i) the pro rata
17share of bond sale expenses determined by the System's share of
18total bond proceeds, (ii) any amounts received from the General
19Revenue Fund in fiscal year 2010, (iii) any reduction in bond
20proceeds due to the issuance of discounted bonds, if
21applicable.
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 Section 15-165 and shall be made from the State
26Pensions Fund and proceeds of bonds sold in fiscal year 2011

 

 

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1pursuant to Section 7.2 of the General Obligation Bond Act,
2less (i) the pro rata share of bond sale expenses determined by
3the System's share of total bond proceeds, (ii) any amounts
4received from the General Revenue Fund in fiscal year 2011, and
5(iii) any reduction in bond proceeds due to the issuance of
6discounted bonds, if applicable.
7    Beginning in State fiscal year 2048, the minimum State
8contribution for each fiscal year shall be the amount needed to
9maintain the total assets of the System at 100% of the total
10liabilities of the System.
11    Beginning in State fiscal year 2045, the minimum
12contribution for each fiscal year shall be the amount needed to
13maintain the total assets of the System at 100% of the total
14liabilities 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 100% 100%. A reference in this
24Article to the "required State contribution" or any
25substantially similar term does not include or apply to any
26amounts payable to the System under Section 25 of the Budget

 

 

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1Stabilization 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 through State
5fiscal year 2015 through State fiscal year 2014, as calculated
6under this Section and certified under Section 15-165, shall
7not exceed an amount equal to (i) the amount of the required
8State contribution that would have been calculated under this
9Section for that fiscal year if the System had not received any
10payments under subsection (d) of Section 7.2 of the General
11Obligation Bond Act, minus (ii) the portion of the State's
12total debt service payments for that fiscal year on the bonds
13issued in fiscal year 2003 for the purposes of that Section
147.2, as determined and certified by the Comptroller, that is
15the same as the System's portion of the total moneys
16distributed under subsection (d) of Section 7.2 of the General
17Obligation Bond Act. In determining this maximum for State
18fiscal years 2008 through 2010, however, the amount referred to
19in item (i) shall be increased, as a percentage of the
20applicable employee payroll, in equal increments calculated
21from the sum of the required State contribution for State
22fiscal year 2007 plus the applicable portion of the State's
23total debt service payments for fiscal year 2007 on the bonds
24issued in fiscal year 2003 for the purposes of Section 7.2 of
25the General Obligation Bond Act, so that, by State fiscal year
262011, the State is contributing at the rate otherwise required

 

 

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1under this Section.
2    (a-5) Pursuant to Article XIII of the 1970 Constitution of
3the State of Illinois, beginning on July 1, 2015, the State
4shall, as a retirement benefit to each participant and
5annuitant of the System, be contractually obligated to the
6System (as a fiduciary and trustee of the participants and
7annuitants) to pay the Annual Required State Contribution, as
8determined by the Board of the System using generally accepted
9actuarial principles, as is necessary to bring the total assets
10of the System up to 100% of the total actuarial liabilities of
11the System by the end of State fiscal year 2047. As a further
12retirement benefit and contractual obligation, each fiscal
13year, the State shall pay to each designated retirement system
14the Annual Required State Contribution certified by the Board
15for that fiscal year. Payments of the Annual Required State
16Contribution for each fiscal year shall be made in equal
17monthly installments. This Section, and the security it
18provides to participants and annuitants, is intended to be, and
19is, a contractual right that is part of the pension benefits
20provided to the participants and annuitants. Notwithstanding
21anything to the contrary in the Court of Claims Act or any
22other law, a designated retirement system has the exclusive
23right to and shall bring a Mandamus action in the Circuit Court
24of Champaign County against the State to compel the State to
25make any installment of the Annual Required State Contribution
26required by this Section, irrespective of other remedies that

 

 

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1may be available to the System. Each member or annuitant of the
2System has the right to bring a Mandamus action against the
3System in the Circuit Court in any judicial district in which
4the System maintains an office if the System fails to bring an
5action specified in this Section, irrespective of other
6remedies that may be available to the member or annuitant.
7    (b) If an employee is paid from trust or federal funds, the
8employer shall pay to the Board contributions from those funds
9which are sufficient to cover the accruing normal costs on
10behalf of the employee. However, universities having employees
11who are compensated out of local auxiliary funds, income funds,
12or service enterprise funds are not required to pay such
13contributions on behalf of those employees. The local auxiliary
14funds, income funds, and service enterprise funds of
15universities shall not be considered trust funds for the
16purpose of this Article, but funds of alumni associations,
17foundations, and athletic associations which are affiliated
18with the universities included as employers under this Article
19and other employers which do not receive State appropriations
20are considered to be trust funds for the purpose of this
21Article.
22    (b-1) The City of Urbana and the City of Champaign shall
23each make employer contributions to this System for their
24respective firefighter employees who participate in this
25System pursuant to subsection (h) of Section 15-107. The rate
26of contributions to be made by those municipalities shall be

 

 

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1determined annually by the Board on the basis of the actuarial
2assumptions adopted by the Board and the recommendations of the
3actuary, and shall be expressed as a percentage of salary for
4each such employee. The Board shall certify the rate to the
5affected municipalities as soon as may be practical. The
6employer contributions required under this subsection shall be
7remitted by the municipality to the System at the same time and
8in the same manner as employee contributions.
9    (c) Through State fiscal year 1995: The total employer
10contribution shall be apportioned among the various funds of
11the State and other employers, whether trust, federal, or other
12funds, in accordance with actuarial procedures approved by the
13Board. State of Illinois contributions for employers receiving
14State appropriations for personal services shall be payable
15from appropriations made to the employers or to the System. The
16contributions for Class I community colleges covering earnings
17other than those paid from trust and federal funds, shall be
18payable solely from appropriations to the Illinois Community
19College Board or the System for employer contributions.
20    (d) Beginning in State fiscal year 1996, the required State
21contributions to the System shall be appropriated directly to
22the System and shall be payable through vouchers issued in
23accordance with subsection (c) of Section 15-165, except as
24provided in subsection (g).
25    (e) The State Comptroller shall draw warrants payable to
26the System upon proper certification by the System or by the

 

 

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1employer in accordance with the appropriation laws and this
2Code.
3    (f) Normal costs under this Section means liability for
4pensions and other benefits which accrues to the System because
5of the credits earned for service rendered by the participants
6during the fiscal year and expenses of administering the
7System, but shall not include the principal of or any
8redemption premium or interest on any bonds issued by the Board
9or any expenses incurred or deposits required in connection
10therewith.
11    (g) If the amount of a participant's earnings for any
12academic year used to determine the final rate of earnings,
13determined on a full-time equivalent basis, exceeds the amount
14of his or her earnings with the same employer for the previous
15academic year, determined on a full-time equivalent basis, by
16more than 6%, the participant's employer shall pay to the
17System, in addition to all other payments required under this
18Section and in accordance with guidelines established by the
19System, the present value of the increase in benefits resulting
20from the portion of the increase in earnings that is in excess
21of 6%. This present value shall be computed by the System on
22the basis of the actuarial assumptions and tables used in the
23most recent actuarial valuation of the System that is available
24at the time of the computation. The System may require the
25employer to provide any pertinent information or
26documentation.

 

 

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1    Whenever it determines that a payment is or may be required
2under this subsection (g), the System shall calculate the
3amount of the payment and bill the employer for that amount.
4The bill shall specify the calculations used to determine the
5amount due. If the employer disputes the amount of the bill, it
6may, within 30 days after receipt of the bill, apply to the
7System in writing for a recalculation. The application must
8specify in detail the grounds of the dispute and, if the
9employer asserts that the calculation is subject to subsection
10(h) or (i) of this Section, must include an affidavit setting
11forth and attesting to all facts within the employer's
12knowledge that are pertinent to the applicability of subsection
13(h) or (i). Upon receiving a timely application for
14recalculation, the System shall review the application and, if
15appropriate, recalculate the amount due.
16    The employer contributions required under this subsection
17(g) may be paid in the form of a lump sum within 90 days after
18receipt of the bill. If the employer contributions are not paid
19within 90 days after receipt of the bill, then interest will be
20charged at a rate equal to the System's annual actuarially
21assumed rate of return on investment compounded annually from
22the 91st day after receipt of the bill. Payments must be
23concluded within 3 years after the employer's receipt of the
24bill.
25    (h) This subsection (h) applies only to payments made or
26salary increases given on or after June 1, 2005 but before July

 

 

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11, 2011. The changes made by Public Act 94-1057 shall not
2require the System to refund any payments received before July
331, 2006 (the effective date of Public Act 94-1057).
4    When assessing payment for any amount due under subsection
5(g), the System shall exclude earnings increases paid to
6participants under contracts or collective bargaining
7agreements entered into, amended, or renewed before June 1,
82005.
9    When assessing payment for any amount due under subsection
10(g), the System shall exclude earnings increases paid to a
11participant at a time when the participant is 10 or more years
12from retirement eligibility under Section 15-135.
13    When assessing payment for any amount due under subsection
14(g), the System shall exclude earnings increases resulting from
15overload work, including a contract for summer teaching, or
16overtime when the employer has certified to the System, and the
17System has approved the certification, that: (i) in the case of
18overloads (A) the overload work is for the sole purpose of
19academic instruction in excess of the standard number of
20instruction hours for a full-time employee occurring during the
21academic year that the overload is paid and (B) the earnings
22increases are equal to or less than the rate of pay for
23academic instruction computed using the participant's current
24salary rate and work schedule; and (ii) in the case of
25overtime, the overtime was necessary for the educational
26mission.

 

 

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1    When assessing payment for any amount due under subsection
2(g), the System shall exclude any earnings increase resulting
3from (i) a promotion for which the employee moves from one
4classification to a higher classification under the State
5Universities Civil Service System, (ii) a promotion in academic
6rank for a tenured or tenure-track faculty position, or (iii) a
7promotion that the Illinois Community College Board has
8recommended in accordance with subsection (k) of this Section.
9These earnings increases shall be excluded only if the
10promotion is to a position that has existed and been filled by
11a member for no less than one complete academic year and the
12earnings increase as a result of the promotion is an increase
13that results in an amount no greater than the average salary
14paid for other similar positions.
15    (i) When assessing payment for any amount due under
16subsection (g), the System shall exclude any salary increase
17described in subsection (h) of this Section given on or after
18July 1, 2011 but before July 1, 2014 under a contract or
19collective bargaining agreement entered into, amended, or
20renewed on or after June 1, 2005 but before July 1, 2011.
21Notwithstanding any other provision of this Section, any
22payments made or salary increases given after June 30, 2014
23shall be used in assessing payment for any amount due under
24subsection (g) of this Section.
25    (j) The System shall prepare a report and file copies of
26the report with the Governor and the General Assembly by

 

 

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1January 1, 2007 that contains all of the following information:
2        (1) The number of recalculations required by the
3    changes made to this Section by Public Act 94-1057 for each
4    employer.
5        (2) The dollar amount by which each employer's
6    contribution to the System was changed due to
7    recalculations required by Public Act 94-1057.
8        (3) The total amount the System received from each
9    employer as a result of the changes made to this Section by
10    Public Act 94-4.
11        (4) The increase in the required State contribution
12    resulting from the changes made to this Section by Public
13    Act 94-1057.
14    (k) The Illinois Community College Board shall adopt rules
15for recommending lists of promotional positions submitted to
16the Board by community colleges and for reviewing the
17promotional lists on an annual basis. When recommending
18promotional lists, the Board shall consider the similarity of
19the positions submitted to those positions recognized for State
20universities by the State Universities Civil Service System.
21The Illinois Community College Board shall file a copy of its
22findings with the System. The System shall consider the
23findings of the Illinois Community College Board when making
24determinations under this Section. The System shall not exclude
25any earnings increases resulting from a promotion when the
26promotion was not submitted by a community college. Nothing in

 

 

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1this subsection (k) shall require any community college to
2submit any information to the Community College Board.
3    (l) For purposes of determining the required State
4contribution to the System, the value of the System's assets
5shall be equal to the actuarial value of the System's assets,
6which shall be calculated as follows:
7    As of June 30, 2008, the actuarial value of the System's
8assets shall be equal to the market value of the assets as of
9that date. In determining the actuarial value of the System's
10assets for fiscal years after June 30, 2008, any actuarial
11gains or losses from investment return incurred in a fiscal
12year shall be recognized in equal annual amounts over the
135-year period following that fiscal year.
14    (m) For purposes of determining the required State
15contribution to the system for a particular year, the actuarial
16value of assets shall be assumed to earn a rate of return equal
17to the system's actuarially assumed rate of return.
18(Source: P.A. 97-813, eff. 7-13-12; 98-92, eff. 7-16-13;
1998-463, eff. 8-16-13; 98-599, eff. 6-1-14.)
 
20    (40 ILCS 5/15-155.1 new)
21    Sec. 15-155.1. Actions to enforce payments by employers
22other than the State. Any employer, other than the State, that
23fails to transmit to the System contributions required of it
24under this Article or contributions required of employees, for
25more than 90 days after such contributions are due, is subject

 

 

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1to the following: after giving notice to the employer, the
2System may certify to the State Comptroller or the Illinois
3Community College Board, whichever is applicable, the amounts
4of such delinquent payments and the State Comptroller or the
5Illinois Community College Board, whichever is applicable,
6shall deduct the amounts so certified or any part thereof from
7any State funds to be remitted to the employer and shall pay
8the amount so deducted to the System. If State funds from which
9such deductions may be made are not available, the System may
10proceed against the employer to recover the amounts of such
11delinquent payments in the appropriate circuit court.
12    The System may provide for an audit of the records of an
13employer, other than the State, as may be required to establish
14the amounts of required contributions. The employer shall make
15its records available to the System for the purpose of such
16audit. The cost of such audit shall be added to the amount of
17the delinquent payments and may be recovered by the System from
18the employer at the same time and in the same manner as the
19delinquent payments are recovered.
 
20    (40 ILCS 5/15-157)  (from Ch. 108 1/2, par. 15-157)
21    Sec. 15-157. Employee contributions.
22    (a) Each Except as provided in subsection (a-5), each
23participating employee shall make contributions towards the
24retirement benefits payable under the retirement program
25applicable to the employee from each payment of earnings

 

 

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1applicable to employment under this system on and after the
2date of becoming a participant as follows: Prior to September
31, 1949, 3 1/2% of earnings; from September 1, 1949 to August
431, 1955, 5%; from September 1, 1955 to August 31, 1969, 6%;
5from September 1, 1969, 6 1/2%. These contributions are to be
6considered as normal contributions for purposes of this
7Article.
8     Each Except as provided in subsection (a-5), each
9participant who is a police officer or firefighter shall make
10normal contributions of 8% of each payment of earnings
11applicable to employment as a police officer or firefighter
12under this system on or after September 1, 1981, unless he or
13she files with the board within 60 days after the effective
14date of this amendatory Act of 1991 or 60 days after the board
15receives notice that he or she is employed as a police officer
16or firefighter, whichever is later, a written notice waiving
17the retirement formula provided by Rule 4 of Section 15-136.
18This waiver shall be irrevocable. If a participant had met the
19conditions set forth in Section 15-132.1 prior to the effective
20date of this amendatory Act of 1991 but failed to make the
21additional normal contributions required by this paragraph, he
22or she may elect to pay the additional contributions plus
23compound interest at the effective rate. If such payment is
24received by the board, the service shall be considered as
25police officer service in calculating the retirement annuity
26under Rule 4 of Section 15-136. While performing service

 

 

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1described in clause (i) or (ii) of Rule 4 of Section 15-136, a
2participating employee shall be deemed to be employed as a
3firefighter for the purpose of determining the rate of employee
4contributions under this Section.
5    (a-5) Beginning July 1, 2014, in lieu of the contribution
6otherwise required under subsection (a), each Tier 1 member,
7other than a Tier 1 member who is a police officer or
8firefighter, shall contribute 6% of earnings toward the
9retirement benefits payable under the retirement programs
10applicable to the employee from each payment of earnings
11applicable to employment under this system.
12    Beginning July 1, 2014, in lieu of the contribution
13otherwise required under subsection (a), each Tier 1 member who
14is a police officer or firefighter shall contribute 7.5% of
15each payment of earnings applicable to employment as a police
16officer or firefighter under this system, unless he or she has
17filed a waiver with the board pursuant to subsection (a).
18    The contributions required under this subsection (a-5) are
19to be considered normal contributions for the purposes of this
20Article.
21    (b) Starting September 1, 1969 and, in the case of Tier 1
22members, ending on June 30, 2014, each participating employee
23shall make additional contributions of 1/2 of 1% of earnings to
24finance a portion of the cost of the annual increases in
25retirement annuity provided under Section 15-136, except that
26with respect to participants in the self-managed plan this

 

 

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1additional contribution shall be used to finance the benefits
2obtained under that retirement program.
3    (c) In addition to the amounts described in subsections (a)
4and (b) of this Section, each participating employee shall make
5contributions of 1% of earnings applicable under this system on
6and after August 1, 1959. The contributions made under this
7subsection (c) shall be considered as survivor's insurance
8contributions for purposes of this Article if the employee is
9covered under the traditional benefit package, and such
10contributions shall be considered as additional contributions
11for purposes of this Article if the employee is participating
12in the self-managed plan or has elected to participate in the
13portable benefit package and has completed the applicable
14one-year waiting period. Contributions in excess of $80 during
15any fiscal year beginning before August 31, 1969 and in excess
16of $120 during any fiscal year thereafter until September 1,
171971 shall be considered as additional contributions for
18purposes of this Article.
19    (d) If the board by board rule so permits and subject to
20such conditions and limitations as may be specified in its
21rules, a participant may make other additional contributions of
22such percentage of earnings or amounts as the participant shall
23elect in a written notice thereof received by the board.
24    (e) That fraction of a participant's total accumulated
25normal contributions, the numerator of which is equal to the
26number of years of service in excess of that which is required

 

 

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1to qualify for the maximum retirement annuity, and the
2denominator of which is equal to the total service of the
3participant, shall be considered as accumulated additional
4contributions. The determination of the applicable maximum
5annuity and the adjustment in contributions required by this
6provision shall be made as of the date of the participant's
7retirement.
8    (f) Notwithstanding the foregoing, a participating
9employee shall not be required to make contributions under this
10Section after the date upon which continuance of such
11contributions would otherwise cause his or her retirement
12annuity to exceed the maximum retirement annuity as specified
13in clause (1) of subsection (c) of Section 15-136.
14    (g) A participating employee may make contributions for the
15purchase of service credit under this Article.
16    (h) Except as provided in subsection (h-5) and in Section
1715-112.1, a A Tier 2 member shall not make contributions on
18earnings that exceed the limitation as prescribed under
19subsection (b) of Section 15-111 of this Article.
20    (h-5) Notwithstanding any provision of this Code to the
21contrary: (i) for a member who has not made an election under
22Section 15-134.5 to participate in the self-managed plan, any
23contributions on amounts of earnings in excess of the limit
24specified in Section 15-112.1 for that year shall instead be
25used to finance self-managed plan benefits; and (ii) for a
26member who has made an election under Section 15-134.5 to

 

 

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1participate in the self-managed plan, any contributions made
2after the effective date of the election, including the
3contributions for a survivor's annuity, shall be used to
4finance the benefits under Section 15-158.2.
5    Notwithstanding any provision of this Code to the contrary,
6a member who has not made an election under Section 15-134.5 to
7participate in the self-managed plan shall contribute toward
8the benefit package applicable to the employee a percentage of
9earnings equal to the greater of (i) one-half of the normal
10cost of the traditional benefit package or (ii) 6% of earnings.
11(Source: P.A. 98-92, eff. 7-16-13; 98-599, eff. 6-1-14.)
 
12    (40 ILCS 5/15-158.2)
13    Sec. 15-158.2. Self-managed plan.
14    (a) Purpose. The General Assembly finds that it is
15important for colleges and universities to be able to attract
16and retain the most qualified employees and that in order to
17attract and retain these employees, colleges and universities
18should have the flexibility to provide a defined contribution
19plan as an alternative for eligible employees who elect not to
20participate in a defined benefit retirement program provided
21under this Article. Accordingly, the State Universities
22Retirement System is hereby authorized to establish and
23administer a self-managed plan, which shall offer
24participating employees the opportunity to accumulate assets
25for retirement through a combination of employee and employer

 

 

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1contributions that may be invested in mutual funds, collective
2investment funds, or other investment products and used to
3purchase annuity contracts, either fixed or variable or a
4combination thereof. The plan must be qualified under the
5Internal Revenue Code of 1986.
6    (b) Adoption by employers. Each employer subject to this
7Article may elect to adopt the self-managed plan established
8under this Section; this election is irrevocable. An employer's
9election to adopt the self-managed plan makes available to the
10eligible employees of that employer the elections described in
11Section 15-134.5.
12    The State Universities Retirement System shall be the plan
13sponsor for the self-managed plan and shall prepare a plan
14document and prescribe such rules and procedures as are
15considered necessary or desirable for the administration of the
16self-managed plan. Consistent with its fiduciary duty to the
17participants and beneficiaries of the self-managed plan, the
18Board of Trustees of the System may delegate aspects of plan
19administration as it sees fit to companies authorized to do
20business in this State, to the employers, or to a combination
21of both.
22    (c) Selection of service providers and funding vehicles.
23The System, in consultation with the employers, shall solicit
24proposals to provide administrative services and funding
25vehicles for the self-managed plan from insurance and annuity
26companies and mutual fund companies, banks, trust companies, or

 

 

HB3661- 37 -LRB099 05216 EFG 25250 b

1other financial institutions authorized to do business in this
2State. In reviewing the proposals received and approving and
3contracting with no fewer than 2 and no more than 7 companies,
4the Board of Trustees of the System shall consider, among other
5things, the following criteria:
6        (1) the nature and extent of the benefits that would be
7    provided to the participants;
8        (2) the reasonableness of the benefits in relation to
9    the premium charged;
10        (3) the suitability of the benefits to the needs and
11    interests of the participating employees and the employer;
12        (4) the ability of the company to provide benefits
13    under the contract and the financial stability of the
14    company; and
15        (5) the efficacy of the contract in the recruitment and
16    retention of employees.
17    The System, in consultation with the employers, shall
18periodically review each approved company. A company may
19continue to provide administrative services and funding
20vehicles for the self-managed plan only so long as it continues
21to be an approved company under contract with the Board.
22    (d) Employee Direction. Employees who are participating in
23the program must be allowed to direct the transfer of their
24account balances among the various investment options offered,
25subject to applicable contractual provisions. The participant
26shall not be deemed a fiduciary by reason of providing such

 

 

HB3661- 38 -LRB099 05216 EFG 25250 b

1investment direction. A person who is a fiduciary shall not be
2liable for any loss resulting from such investment direction
3and shall not be deemed to have breached any fiduciary duty by
4acting in accordance with that direction. Neither the System
5nor the employer guarantees any of the investments in the
6employee's account balances.
7    (e) Participation. An employee eligible to participate in
8the self-managed plan must make a written election in
9accordance with the provisions of Section 15-134.5 and the
10procedures established by the System or become subject to the
11limitation specified in Section 15-112.1. Participation in the
12self-managed plan by an electing employee shall begin on the
13first day of the first pay period following the later of the
14date the employee's election is filed with the System, or the
15effective date as of which the employee's employer begins to
16offer participation in the self-managed plan, or the date the
17participant's annual earnings exceeds the limitation specified
18in Section 15-112.1. Employers may not make the self-managed
19plan available earlier than January 1, 1998. An employee's
20participation in any other retirement program administered by
21the System under this Article shall terminate on the date that
22participation in the self-managed plan begins.
23    An employee who participates has elected to participate in
24the self-managed plan under this Section must continue
25participation while employed in an eligible position, and may
26not participate in any other retirement program administered by

 

 

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1the System under this Article while employed by that employer
2or any other employer that has adopted the self-managed plan,
3unless the self-managed plan is terminated in accordance with
4subsection (i).
5    Notwithstanding any other provision of this Article, a Tier
62 member shall have the option to enroll in the self-managed
7plan.
8    Participation in the self-managed plan under this Section
9shall constitute membership in the State Universities
10Retirement System.
11    A participant under this Section shall be entitled to the
12benefits of Article 20 of this Code.
13    (f) Establishment of Initial Account Balance. If at the
14time an employee elects to participate in the self-managed plan
15he or she has rights and credits in the System due to previous
16participation in the traditional benefit package, the System
17shall establish for the employee an opening account balance in
18the self-managed plan, equal to the amount of contribution
19refund that the employee would be eligible to receive under
20Section 15-154 if the employee terminated employment on that
21date and elected a refund of contributions, except that this
22hypothetical refund shall include interest at the effective
23rate for the respective years. The System shall transfer assets
24from the defined benefit retirement program to the self-managed
25plan, as a tax free transfer in accordance with Internal
26Revenue Service guidelines, for purposes of funding the

 

 

HB3661- 40 -LRB099 05216 EFG 25250 b

1employee's opening account balance.
2    (g) No Duplication of Service Credit. Notwithstanding any
3other provision of this Article, an employee may not purchase
4or receive service or service credit applicable to any other
5retirement program administered by the System under this
6Article for any period during which the employee was a
7participant in the self-managed plan established under this
8Section.
9    (h) Contributions.
10        (1) The self-managed plan shall be funded by
11    contributions from employees participating in the
12    self-managed plan and State and employer contributions as
13    provided in this Section.
14            (A) Before the effective date of this amendatory
15        Act of the 99th General Assembly, the The contribution
16        rate for employees participating in the self-managed
17        plan under this Section shall be equal to the employee
18        contribution rate for other participants in the
19        System, as provided in Section 15-157. This required
20        contribution shall be made as an "employer pick-up"
21        under Section 414(h) of the Internal Revenue Code of
22        1986 or any successor Section thereof. Any employee
23        participating in the System's traditional benefit
24        package prior to his or her election to participate in
25        the self-managed plan shall continue to have the
26        employer pick up the contributions required under

 

 

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1        Section 15-157. However, the amounts picked up after
2        the election of the self-managed plan shall be remitted
3        to and treated as assets of the self-managed plan. In
4        no event shall an employee have an option of receiving
5        these amounts in cash. Employees may make additional
6        contributions to the self-managed plan in accordance
7        with procedures prescribed by the System, to the extent
8        permitted under rules prescribed by the System.
9            (B) On and after the effective date of this
10        amendatory Act of the 99th General Assembly, the
11        contribution rate for participants in the self-managed
12        plan shall be: (i) for a participant who does not file
13        an election under subsection (e) of this Section, 6% of
14        the amount of earnings in excess of the limit specified
15        in 15-112.1 for that year, in addition to the amount
16        specified under subsection (h-5) of Section 15-157 for
17        that year; and (ii) for a participant who files an
18        election under subsection (e) of this Section, 8% of
19        any amount of earnings up to and including the limit
20        specified in Section 15-112.1 for that year and 6% of
21        any amount of earnings in excess of that limit for that
22        year. This required contribution shall be made as an
23        employer pick-up under Section 414(h) of the Internal
24        Revenue Code of 1986 or any successor Section thereof.
25        Any participant in the System's traditional benefit
26        package prior to his or her election to participate in

 

 

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1        the self-managed plan shall continue to have the
2        employer pick up the contributions required under
3        Section 15-157. However, the amounts picked up after
4        the election of the self-managed plan shall be remitted
5        to and treated as assets of the self-managed plan. In
6        no event shall a participant have the option of
7        receiving these amounts in cash. Participants may make
8        additional contributions to the self-managed plan in
9        accordance with procedures prescribed by the System,
10        to the extent permitted under rules adopted by the
11        System.
12        (2) The program shall provide for employer and State
13    contributions to the self-managed plan in the following
14    amounts: (i) for a member who does not file an election
15    under subsection (e) of this Section, 3% of the amount of
16    earnings in excess of the limit specified in Section
17    15-112.1 for that year, to be paid by the actual employer;
18    and (ii) for a member who files an election under
19    subsection (e) of this Section, 7.1% of any amount of
20    earnings up to and including the limit specified in Section
21    15-112.1 for that year, to be paid by the State, and 3% of
22    any amount of earnings in excess of that limit for that
23    year, to be paid by the actual employer.
24    The program shall provide for these employer and State
25contributions to be credited to each self-managed plan
26participant at a rate of 7.6% of the participating employee's

 

 

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1salary, less the amount used by the System to provide
2disability benefits for the employee. The amounts so credited
3shall be paid into the participant's self-managed plan accounts
4in a manner to be prescribed by the System.
5        (3) An amount of employer contribution, not exceeding
6    1% of the participating employee's salary, shall be used
7    for the purpose of providing the disability benefits of the
8    System to the employee. Prior to the beginning of each plan
9    year under the self-managed plan, the Board of Trustees
10    shall determine, as a percentage of salary, the amount of
11    employer contributions to be allocated during that plan
12    year for providing disability benefits for employees in the
13    self-managed plan.
14        (4) The State of Illinois shall make contributions by
15    appropriations to the System of the employer contributions
16    required for employees who participate in the self-managed
17    plan under this Section. The amount required shall be
18    certified by the Board of Trustees of the System and paid
19    by the State in accordance with Section 15-165. The System
20    shall not be obligated to remit the required employer
21    contributions to any of the insurance and annuity
22    companies, mutual fund companies, banks, trust companies,
23    financial institutions, or other sponsors of any of the
24    funding vehicles offered under the self-managed plan until
25    it has received the required employer contributions from
26    the State. In the event of a deficiency in the amount of

 

 

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1    State contributions, the System shall implement those
2    procedures described in subsection (c) of Section 15-165 to
3    obtain the required funding from the General Revenue Fund.
4    (i) Termination. The self-managed plan authorized under
5this Section may be terminated by the System, subject to the
6terms of any relevant contracts, and the System shall have no
7obligation to reestablish the self-managed plan under this
8Section. This Section does not create a right to continued
9participation in any self-managed plan set up by the System
10under this Section. If the self-managed plan is terminated, the
11participants shall have the right to participate in one of the
12other retirement programs offered by the System and receive
13service credit in such other retirement program for any years
14of employment following the termination.
15    (j) Vesting; Withdrawal; Return to Service. A participant
16in the self-managed plan becomes vested in the employer
17contributions credited to his or her accounts in the
18self-managed plan on the earliest to occur of the following:
19(1) completion of 5 years of service with an employer described
20in Section 15-106; (2) the death of the participating employee
21while employed by an employer described in Section 15-106, if
22the participant has completed at least 1 1/2 years of service;
23or (3) the participant's election to retire and apply the
24reciprocal provisions of Article 20 of this Code.
25    A participant in the self-managed plan who receives a
26distribution of his or her vested amounts from the self-managed

 

 

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1plan while not yet eligible for retirement under this Article
2(and Article 20, if applicable) shall forfeit all service
3credit and accrued rights in the System; if subsequently
4re-employed, the participant shall be considered a new
5employee. If a former participant again becomes a participating
6employee (or becomes employed by a participating system under
7Article 20 of this Code) and continues as such for at least 2
8years, all such rights, service credits, and previous status as
9a participant shall be restored upon repayment of the amount of
10the distribution, without interest.
11    (k) Benefit amounts. If an employee who is vested in
12employer contributions terminates employment, the employee
13shall be entitled to a benefit which is based on the account
14values attributable to both employer and employee
15contributions and any investment return thereon.
16    If an employee who is not vested in employer contributions
17terminates employment, the employee shall be entitled to a
18benefit based solely on the account values attributable to the
19employee's contributions and any investment return thereon,
20and the employer contributions and any investment return
21thereon shall be forfeited. Any employer contributions which
22are forfeited shall be held in escrow by the company investing
23those contributions and shall be used as directed by the System
24for future allocations of employer contributions or for the
25restoration of amounts previously forfeited by former
26participants who again become participating employees.

 

 

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1(Source: P.A. 98-92, eff. 7-16-13.)
 
2    (40 ILCS 5/15-159.1 new)
3    Sec. 15-159.1. New Board created.
4    (a) Beginning July 1, 2016, the Board created under Section
515-159 is abolished and a board of 8 members shall constitute
6the Board of Trustees authorized to carry out the provisions of
7this Article. Each trustee shall be a participating employee of
8a participating employer or an annuitant of the Fund and no
9person shall be eligible to become a trustee after January 1,
101979 who does not have at least 8 years of creditable service.
11    (b) The board shall consist of representatives of various
12groups as follows:
13        (1) Four trustees shall be a chief executive officer,
14    chief finance officer, or other officer, executive or
15    department head of a participating employer, and each such
16    trustee shall be designated as an executive trustee.
17        (2) Three trustees shall be employees of a
18    participating employer and each such trustee shall be
19    designated as an employee trustee.
20        (3) One trustee shall be an annuitant of the Fund, who
21    shall be designated the annuitant trustee.
22    (c) A person elected as a trustee shall qualify as a
23trustee, after declaration by the Board that he or she has been
24duly elected, upon taking and subscribing to the constitutional
25oath of office and filing same in the office of the Fund.

 

 

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1    (d) The term of office of each trustee shall begin upon
2January 1 of the year following the year in which he is elected
3and shall continue for a period of 5 years and until a
4successor has been elected and qualified, or until prior
5resignation, death, incapacity, or disqualification.
6    (e) Any elected trustee (other than the annuitant trustee)
7shall be disqualified immediately upon termination of
8employment with all participating employers or upon any change
9in status which removes any such trustee from all employments
10within the group he represents. The annuitant trustee shall be
11disqualified upon termination of his or her annuity.
12    (f) The trustees shall fill any vacancy in the Board by
13appointment, for the period until the next election of
14trustees, or, if the remaining term is less than 2 years, for
15the remainder of the term, and until a successor has been
16elected and has qualified.
17    (g) Trustees shall serve without compensation, but shall be
18reimbursed for any reasonable expenses incurred in attending
19meetings of the Board and in performing duties on behalf of the
20Fund and for the amount of any earnings withheld by any
21participating employer because of attendance at any Board
22meeting.
23    (h) Each trustee shall be entitled to one vote on any and
24all actions before the Board. At least 5 concurring votes shall
25be necessary for every decision or action by the Board at any
26of its meetings. No decision or action shall become effective

 

 

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1unless presented and so approved at a regular or duly called
2special meeting of the Board.
 
3    (40 ILCS 5/15-165.1 new)
4    Sec. 15-165.1. To calculate the normal cost of benefits. To
5calculate the normal cost of each plan offered by the system as
6a percentage of earnings and to update those amounts at least
7every 3 years.
 
8    (40 ILCS 5/16-101)  (from Ch. 108 1/2, par. 16-101)
9    Sec. 16-101. Creation of system; consolidation.
10    (a) Effective July 1, 1939 and until July 1, 2015, there is
11created the "Teachers' Retirement System of the State of
12Illinois" for the purpose of providing retirement annuities and
13other benefits for teachers, annuitants and beneficiaries. All
14of its business shall be transacted, its funds invested, and
15its assets held in such name.
16    (b) On July 1, 2015, the retirement system established
17under this Article is merged and consolidated with the Article
1815 retirement system and the Article 17 pension fund into a
19single retirement fund, to be known as the Illinois Teachers'
20Retirement Fund, which shall be established and administered as
21prescribed in Article 15 of this Code.
22    (c) In preparation for that consolidation, the Board of
23Trustees of this System and the participating employers under
24this Article shall cooperate with the Board of Trustees of the

 

 

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1Illinois Teachers' Retirement Fund.
2    (d) At the time of consolidation, or as otherwise directed
3by the Board of the Illinois Teachers' Retirement Fund, all
4assets and liabilities belonging to the System established
5under this Article shall become the assets and liabilities of
6the Illinois Teachers' Retirement Fund, and all current or
7former members and beneficiaries of the System established
8under this Article shall be deemed current or former
9participants and beneficiaries of the Illinois Teachers'
10Retirement Fund.
11    (e) The Illinois Teachers' Retirement Fund shall be the
12legal successor to the System established under this Article
13and it may exercise any of the rights and powers and perform
14any of the duties of that System. The Illinois Teachers'
15Retirement Fund may, in its discretion, either continue,
16renegotiate, or terminate any personnel, service contract,
17lease, or other contract of the System established under this
18Article.
19    (f) The consolidation of the System established under this
20Article shall not diminish or impair the benefits of any person
21who participated in that System, or of any such person's
22surviving spouse, children, or other dependents.
23    Benefits already payable by the System on June 30, 2015
24shall become payable from the Illinois Teachers' Retirement
25Fund beginning on July 1, 2015, and shall not be subject to
26recalculation or combination due to the consolidation.

 

 

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1    Benefits that first become payable on or after July 1, 2015
2shall be calculated and paid as provided in Article 15.
3    The consolidation of the System established under this
4Article does not entitle any person to a recalculation of any
5benefit previously granted or a refund of any contribution
6previously paid.
7(Source: P.A. 83-1440.)
 
8    (40 ILCS 5/17-101)  (from Ch. 108 1/2, par. 17-101)
9    Sec. 17-101. Creation of fund; consolidation.
10    Until July 1, 2015, in In each city with a population over
11500,000, there is created a Public School Teachers' Pension and
12Retirement Fund to be maintained and administered in the manner
13prescribed in this Article and to be known as the Public School
14Teachers' Pension and Retirement Fund of ....(city).
15    (b) On July 1, 2015, the Fund established under this
16Article is merged and consolidated with the Article 15 and 16
17retirement systems into a single retirement fund, to be known
18as the Illinois Teachers' Retirement Fund, which shall be
19established and administered as prescribed in Article 15 of
20this Code.
21    (c) In preparation for that consolidation, the Board of
22Education and the City shall cooperate with the Board of
23Trustees of the Illinois Teachers' Retirement Fund.
24    (d) At the time of consolidation, or as otherwise directed
25by the Board of the Illinois Teachers' Retirement Fund, all

 

 

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1assets and liabilities belonging to the Fund established under
2this Article shall become the assets and liabilities of the
3Illinois Teachers' Retirement Fund, and all current or former
4members and beneficiaries of the Fund established under this
5Article shall be deemed current or former participants and
6beneficiaries of the Illinois Teachers' Retirement Fund.
7    (e) The Illinois Teachers' Retirement Fund shall be the
8legal successor to the Fund established under this Article and
9it may exercise any of the rights and powers and perform any of
10the duties of that pension fund. The Illinois Teachers'
11Retirement Fund may, in its discretion, either continue,
12renegotiate, or terminate any personnel, service contract,
13lease, or other contract of the Fund established under this
14Article.
15    (f) The consolidation of the pension fund established under
16this Article shall not diminish or impair the benefits of any
17person who participated in that pension fund, or of any such
18person's surviving spouse, children, or other dependents.
19    Benefits already payable by this Fund on June 30, 2015
20shall become payable from the Illinois Teachers' Retirement
21Fund beginning on July 1, 2015, and shall not be subject to
22recalculation or combination due to the consolidation.
23    Benefits that first become payable on or after July 1, 2015
24shall be calculated as provided in Article 15.
25    The consolidation of the pension fund established under
26this Article does not entitle any person to a recalculation of

 

 

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1any benefit previously granted or a refund of any contribution
2previously paid.
3(Source: Laws 1963, p. 161.)
 
4    Section 90. The State Mandates Act is amended by adding
5Section 8.39 as follows:
 
6    (30 ILCS 805/8.39 new)
7    Sec. 8.39. Exempt mandate. Notwithstanding Sections 6 and 8
8of this Act, no reimbursement by the State is required for the
9implementation of any mandate created by this amendatory Act of
10the 99th General Assembly.
 
11    Section 99. Effective date. This Act takes effect upon
12becoming law.

 

 

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1 INDEX
2 Statutes amended in order of appearance
3    30 ILCS 122/20
4    30 ILCS 122/25
5    40 ILCS 5/15-101from Ch. 108 1/2, par. 15-101
6    40 ILCS 5/15-103from Ch. 108 1/2, par. 15-103
7    40 ILCS 5/15-111from Ch. 108 1/2, par. 15-111
8    40 ILCS 5/15-112.1 new
9    40 ILCS 5/15-155from Ch. 108 1/2, par. 15-155
10    40 ILCS 5/15-155.1 new
11    40 ILCS 5/15-157from Ch. 108 1/2, par. 15-157
12    40 ILCS 5/15-158.2
13    40 ILCS 5/15-159.1 new
14    40 ILCS 5/15-165.1 new
15    40 ILCS 5/16-101from Ch. 108 1/2, par. 16-101
16    40 ILCS 5/17-101from Ch. 108 1/2, par. 17-101
17    30 ILCS 805/8.39 new