State of Illinois
2011 and 2012


Introduced 2/23/2011, by Rep. David Harris


40 ILCS 5/7-172  from Ch. 108 1/2, par. 7-172
30 ILCS 805/8.35 new

    Amends the Illinois Municipal Retirement Fund (IMRF) Article of the Illinois Pension Code. Provides that, if the amount of a participating employee's earnings for any calendar year used to determine the participating employee's retirement annuity exceeds the amount of his or her earnings with the same participating municipality or participating instrumentality for the previous calendar year by more than 6%, then the participating municipality or participating instrumentality must pay to the fund the present value of the increase in benefits resulting from the portion of the increase in earnings that is in excess of 6%. Provides that the Fund must exclude certain earnings when assessing payment for any amount due under this provision. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.

LRB097 06263 JDS 46339 b






HB3076LRB097 06263 JDS 46339 b

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
5Section 7-172 as follows:
6    (40 ILCS 5/7-172)  (from Ch. 108 1/2, par. 7-172)
7    Sec. 7-172. Contributions by participating municipalities
8and participating instrumentalities.
9    (a) Each participating municipality and each participating
10instrumentality shall make payment to the fund as follows:
11        1. municipality contributions in an amount determined
12    by applying the municipality contribution rate to each
13    payment of earnings paid to each of its participating
14    employees;
15        2. an amount equal to the employee contributions
16    provided by paragraphs (a) and (b) of Section 7-173,
17    whether or not the employee contributions are withheld as
18    permitted by that Section;
19        3. all accounts receivable, together with interest
20    charged thereon, as provided in Section 7-209;
21        4. if it has no participating employees with current
22    earnings, an amount payable which, over a closed period of
23    20 years for participating municipalities and 10 years for



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1    participating instrumentalities, will amortize, at the
2    effective rate for that year, any unfunded obligation. The
3    unfunded obligation shall be computed as provided in
4    paragraph 2 of subsection (b);
5        5. if it has fewer than 7 participating employees or a
6    negative balance in its municipality reserve, the greater
7    of (A) an amount payable that, over a period of 20 years,
8    will amortize at the effective rate for that year any
9    unfunded obligation, computed as provided in paragraph 2 of
10    subsection (b) or (B) the amount required by paragraph 1 of
11    this subsection (a).
12    (b) A separate municipality contribution rate shall be
13determined for each calendar year for all participating
14municipalities together with all instrumentalities thereof.
15The municipality contribution rate shall be determined for
16participating instrumentalities as if they were participating
17municipalities. The municipality contribution rate shall be
18the sum of the following percentages:
19        1. The percentage of earnings of all the participating
20    employees of all participating municipalities and
21    participating instrumentalities which, if paid over the
22    entire period of their service, will be sufficient when
23    combined with all employee contributions available for the
24    payment of benefits, to provide all annuities for
25    participating employees, and the $3,000 death benefit
26    payable under Sections 7-158 and 7-164, such percentage to



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1    be known as the normal cost rate.
2        2. The percentage of earnings of the participating
3    employees of each participating municipality and
4    participating instrumentalities necessary to adjust for
5    the difference between the present value of all benefits,
6    excluding temporary and total and permanent disability and
7    death benefits, to be provided for its participating
8    employees and the sum of its accumulated municipality
9    contributions and the accumulated employee contributions
10    and the present value of expected future employee and
11    municipality contributions pursuant to subparagraph 1 of
12    this paragraph (b). This adjustment shall be spread over
13    the remainder of the period that is allowable under
14    generally accepted accounting principles.
15        3. The percentage of earnings of the participating
16    employees of all municipalities and participating
17    instrumentalities necessary to provide the present value
18    of all temporary and total and permanent disability
19    benefits granted during the most recent year for which
20    information is available.
21        4. The percentage of earnings of the participating
22    employees of all participating municipalities and
23    participating instrumentalities necessary to provide the
24    present value of the net single sum death benefits expected
25    to become payable from the reserve established under
26    Section 7-206 during the year for which this rate is fixed.



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1        5. The percentage of earnings necessary to meet any
2    deficiency arising in the Terminated Municipality Reserve.
3    (c) A separate municipality contribution rate shall be
4computed for each participating municipality or participating
5instrumentality for its sheriff's law enforcement employees.
6    A separate municipality contribution rate shall be
7computed for the sheriff's law enforcement employees of each
8forest preserve district that elects to have such employees.
9For the period from January 1, 1986 to December 31, 1986, such
10rate shall be the forest preserve district's regular rate plus
12    In the event that the Board determines that there is an
13actuarial deficiency in the account of any municipality with
14respect to a person who has elected to participate in the Fund
15under Section 3-109.1 of this Code, the Board may adjust the
16municipality's contribution rate so as to make up that
17deficiency over such reasonable period of time as the Board may
19    (d) The Board may establish a separate municipality
20contribution rate for all employees who are program
21participants employed under the federal Comprehensive
22Employment Training Act by all of the participating
23municipalities and instrumentalities. The Board may also
24provide that, in lieu of a separate municipality rate for these
25employees, a portion of the municipality contributions for such
26program participants shall be refunded or an extra charge



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1assessed so that the amount of municipality contributions
2retained or received by the fund for all CETA program
3participants shall be an amount equal to that which would be
4provided by the separate municipality contribution rate for all
5such program participants. Refunds shall be made to prime
6sponsors of programs upon submission of a claim therefor and
7extra charges shall be assessed to participating
8municipalities and instrumentalities. In establishing the
9municipality contribution rate as provided in paragraph (b) of
10this Section, the use of a separate municipality contribution
11rate for program participants or the refund of a portion of the
12municipality contributions, as the case may be, may be
14    (e) Computations of municipality contribution rates for
15the following calendar year shall be made prior to the
16beginning of each year, from the information available at the
17time the computations are made, and on the assumption that the
18employees in each participating municipality or participating
19instrumentality at such time will continue in service until the
20end of such calendar year at their respective rates of earnings
21at such time.
22    (f) Any municipality which is the recipient of State
23allocations representing that municipality's contributions for
24retirement annuity purposes on behalf of its employees as
25provided in Section 12-21.16 of the Illinois Public Aid Code
26shall pay the allocations so received to the Board for such



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1purpose. Estimates of State allocations to be received during
2any taxable year shall be considered in the determination of
3the municipality's tax rate for that year under Section 7-171.
4If a special tax is levied under Section 7-171, none of the
5proceeds may be used to reimburse the municipality for the
6amount of State allocations received and paid to the Board. Any
7multiple-county or consolidated health department which
8receives contributions from a county under Section 11.2 of "An
9Act in relation to establishment and maintenance of county and
10multiple-county health departments", approved July 9, 1943, as
11amended, or distributions under Section 3 of the Department of
12Public Health Act, shall use these only for municipality
13contributions by the health department.
14    (g) Municipality contributions for the several purposes
15specified shall, for township treasurers and employees in the
16offices of the township treasurers who meet the qualifying
17conditions for coverage hereunder, be allocated among the
18several school districts and parts of school districts serviced
19by such treasurers and employees in the proportion which the
20amount of school funds of each district or part of a district
21handled by the treasurer bears to the total amount of all
22school funds handled by the treasurer.
23    From the funds subject to allocation among districts and
24parts of districts pursuant to the School Code, the trustees
25shall withhold the proportionate share of the liability for
26municipality contributions imposed upon such districts by this



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1Section, in respect to such township treasurers and employees
2and remit the same to the Board.
3    The municipality contribution rate for an educational
4service center shall initially be the same rate for each year
5as the regional office of education or school district which
6serves as its administrative agent. When actuarial data become
7available, a separate rate shall be established as provided in
8subparagraph (i) of this Section.
9    The municipality contribution rate for a public agency,
10other than a vocational education cooperative, formed under the
11Intergovernmental Cooperation Act shall initially be the
12average rate for the municipalities which are parties to the
13intergovernmental agreement. When actuarial data become
14available, a separate rate shall be established as provided in
15subparagraph (i) of this Section.
16    (h) Each participating municipality and participating
17instrumentality shall make the contributions in the amounts
18provided in this Section in the manner prescribed from time to
19time by the Board and all such contributions shall be
20obligations of the respective participating municipalities and
21participating instrumentalities to this fund. The failure to
22deduct any employee contributions shall not relieve the
23participating municipality or participating instrumentality of
24its obligation to this fund. Delinquent payments of
25contributions due under this Section may, with interest, be
26recovered by civil action against the participating



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1municipalities or participating instrumentalities.
2Municipality contributions, other than the amount necessary
3for employee contributions and Social Security contributions,
4for periods of service by employees from whose earnings no
5deductions were made for employee contributions to the fund,
6may be charged to the municipality reserve for the municipality
7or participating instrumentality.
8    (i) Contributions by participating instrumentalities shall
9be determined as provided herein except that the percentage
10derived under subparagraph 2 of paragraph (b) of this Section,
11and the amount payable under subparagraph 4 of paragraph (a) of
12this Section, shall be based on an amortization period of 10
14    (j) Notwithstanding the other provisions of this Section,
15the additional unfunded liability accruing as a result of this
16amendatory Act of the 94th General Assembly shall be amortized
17over a period of 30 years beginning on January 1 of the second
18calendar year following the calendar year in which this
19amendatory Act takes effect, except that the employer may
20provide for a longer amortization period by adopting a
21resolution or ordinance specifying a 35-year or 40-year period
22and submitting a certified copy of the ordinance or resolution
23to the fund no later than June 1 of the calendar year following
24the calendar year in which this amendatory Act takes effect.
25    (k) If the amount of a participating employee's earnings
26for any calendar year used to determine the participating



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1employee's retirement annuity, determined on a full-time
2equivalent basis, exceeds the amount of his or her earnings
3with the same participating municipality or participating
4instrumentality for the previous calendar year, determined on a
5full-time equivalent basis, by more than 6%, then the
6participating municipality or participating instrumentality
7shall pay to the fund, in addition to all other payments
8required under this Article and in accordance with guidelines
9established by the fund, the present value of the increase in
10benefits resulting from the portion of the increase in earnings
11that is in excess of 6%. This present value shall be computed
12by the fund on the basis of the actuarial assumptions and
13tables used in the most recent actuarial valuation of the fund
14that is available at the time of the computation. The fund may
15require the participating municipality or participating
16instrumentality to provide any pertinent information or
18    Whenever it determines that a payment is or may be required
19under this subsection (k), the fund shall calculate the amount
20of the payment and bill the participating municipality or
21participating instrumentality for that amount. The bill shall
22specify the calculations used to determine the amount due. If
23the participating municipality or participating
24instrumentality disputes the amount of the bill, it may, within
2530 days after receipt of the bill, apply to the fund in writing
26for a recalculation. The application must specify in detail the



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1grounds of the dispute. Upon receiving a timely application for
2recalculation, the fund shall review the application and, if
3appropriate, recalculate the amount due. The participating
4municipality and participating instrumentality contributions
5required under this subsection (k) may be paid in the form of a
6lump sum within 90 days after receipt of the bill. If the
7participating municipality and participating instrumentality
8contributions are not paid within 90 days after receipt of the
9bill, then interest will be charged at a rate equal to the
10fund's annual actuarially assumed rate of return on investment
11compounded annually from the 91st day after receipt of the
12bill. Payments must be concluded within 3 years after receipt
13of the bill by the participating municipality or participating
15    When assessing payment for any amount due under this
16subsection (k), the fund shall exclude earnings increases
17resulting from overload or overtime earnings.
18    When assessing payment for any amount due under this
19subsection (k), the fund shall also exclude earnings increases
20attributable to standard employment promotions resulting in
21increased responsibility and workload.
22(Source: P.A. 96-1084, eff. 7-16-10; 96-1140, eff. 7-21-10;
23revised 9-16-10.)
24    Section 90. The State Mandates Act is amended by adding
25Section 8.35 as follows:



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1    (30 ILCS 805/8.35 new)
2    Sec. 8.35. Exempt mandate. Notwithstanding Sections 6 and 8
3of this Act, no reimbursement by the State is required for the
4implementation of any mandate created by this amendatory Act of
5the 97th General Assembly.
6    Section 99. Effective date. This Act takes effect upon
7becoming law.