97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB4672

 

Introduced 2/3/2012, by Rep. Norine Hammond

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/15-155  from Ch. 108 1/2, par. 15-155

    Amends the State Universities Article of the Illinois Pension Code. Extends to July 1, 2016 certain exemptions from the requirement that an employer must pay to the System the present value of the increase in benefits resulting from the portion of any increase in earnings that exceeds 6%. Also includes a technical correction. Effective immediately.


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FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning public employee benefits.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Pension Code is amended by changing
5Section 15-155 as follows:
 
6    (40 ILCS 5/15-155)  (from Ch. 108 1/2, par. 15-155)
7    Sec. 15-155. Employer contributions.
8    (a) The State of Illinois shall make contributions by
9appropriations of amounts which, together with the other
10employer contributions from trust, federal, and other funds,
11employee contributions, income from investments, and other
12income of this System, will be sufficient to meet the cost of
13maintaining and administering the System on a 90% funded basis
14in accordance with actuarial recommendations.
15    The Board shall determine the amount of State contributions
16required for each fiscal year on the basis of the actuarial
17tables and other assumptions adopted by the Board and the
18recommendations of the actuary, using the formula in subsection
19(a-1).
20    (a-1) For State fiscal years 2012 through 2045, the minimum
21contribution to the System to be made by the State for each
22fiscal year shall be an amount determined by the System to be
23sufficient to bring the total assets of the System up to 90% of

 

 

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1the total actuarial liabilities of the System by the end of
2State fiscal year 2045. In making these determinations, the
3required State contribution shall be calculated each year as a
4level percentage of payroll over the years remaining to and
5including fiscal year 2045 and shall be determined under the
6projected unit credit actuarial cost method.
7    For State fiscal years 1996 through 2005, the State
8contribution to the System, as a percentage of the applicable
9employee payroll, shall be increased in equal annual increments
10so that by State fiscal year 2011, the State is contributing at
11the rate required under this Section.
12    Notwithstanding any other provision of this Article, the
13total required State contribution for State fiscal year 2006 is
14$166,641,900.
15    Notwithstanding any other provision of this Article, the
16total required State contribution for State fiscal year 2007 is
17$252,064,100.
18    For each of State fiscal years 2008 through 2009, the State
19contribution to the System, as a percentage of the applicable
20employee payroll, shall be increased in equal annual increments
21from the required State contribution for State fiscal year
222007, so that by State fiscal year 2011, the State is
23contributing at the rate otherwise required under this Section.
24    Notwithstanding any other provision of this Article, the
25total required State contribution for State fiscal year 2010 is
26$702,514,000 and shall be made from the State Pensions Fund and

 

 

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1proceeds of bonds sold in fiscal year 2010 pursuant to Section
27.2 of the General Obligation Bond Act, less (i) the pro rata
3share of bond sale expenses determined by the System's share of
4total bond proceeds, (ii) any amounts received from the General
5Revenue Fund in fiscal year 2010, (iii) any reduction in bond
6proceeds due to the issuance of discounted bonds, if
7applicable.
8    Notwithstanding any other provision of this Article, the
9total required State contribution for State fiscal year 2011 is
10the amount recertified by the System on or before April 1, 2011
11pursuant to Section 15-165 and shall be made from the State
12Pensions Fund and proceeds of bonds sold in fiscal year 2011
13pursuant to Section 7.2 of the General Obligation Bond Act,
14less (i) the pro rata share of bond sale expenses determined by
15the System's share of total bond proceeds, (ii) any amounts
16received from the General Revenue Fund in fiscal year 2011, and
17(iii) any reduction in bond proceeds due to the issuance of
18discounted bonds, if applicable.
19    Beginning in State fiscal year 2046, the minimum State
20contribution for each fiscal year shall be the amount needed to
21maintain the total assets of the System at 90% of the total
22actuarial liabilities of the System.
23    Amounts received by the System pursuant to Section 25 of
24the Budget Stabilization Act or Section 8.12 of the State
25Finance Act in any fiscal year do not reduce and do not
26constitute payment of any portion of the minimum State

 

 

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1contribution required under this Article in that fiscal year.
2Such amounts shall not reduce, and shall not be included in the
3calculation of, the required State contributions under this
4Article in any future year until the System has reached a
5funding ratio of at least 90%. A reference in this Article to
6the "required State contribution" or any substantially similar
7term does not include or apply to any amounts payable to the
8System under Section 25 of the Budget Stabilization Act.
9    Notwithstanding any other provision of this Section, the
10required State contribution for State fiscal year 2005 and for
11fiscal year 2008 and each fiscal year thereafter, as calculated
12under this Section and certified under Section 15-165, shall
13not exceed an amount equal to (i) the amount of the required
14State contribution that would have been calculated under this
15Section for that fiscal year if the System had not received any
16payments under subsection (d) of Section 7.2 of the General
17Obligation Bond Act, minus (ii) the portion of the State's
18total debt service payments for that fiscal year on the bonds
19issued in fiscal year 2003 for the purposes of that Section
207.2, as determined and certified by the Comptroller, that is
21the same as the System's portion of the total moneys
22distributed under subsection (d) of Section 7.2 of the General
23Obligation Bond Act. In determining this maximum for State
24fiscal years 2008 through 2010, however, the amount referred to
25in item (i) shall be increased, as a percentage of the
26applicable employee payroll, in equal increments calculated

 

 

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1from the sum of the required State contribution for State
2fiscal year 2007 plus the applicable portion of the State's
3total debt service payments for fiscal year 2007 on the bonds
4issued in fiscal year 2003 for the purposes of Section 7.2 of
5the General Obligation Bond Act, so that, by State fiscal year
62011, the State is contributing at the rate otherwise required
7under this Section.
8    (b) If an employee is paid from trust or federal funds, the
9employer shall pay to the Board contributions from those funds
10which are sufficient to cover the accruing normal costs on
11behalf of the employee. However, universities having employees
12who are compensated out of local auxiliary funds, income funds,
13or service enterprise funds are not required to pay such
14contributions on behalf of those employees. The local auxiliary
15funds, income funds, and service enterprise funds of
16universities shall not be considered trust funds for the
17purpose of this Article, but funds of alumni associations,
18foundations, and athletic associations which are affiliated
19with the universities included as employers under this Article
20and other employers which do not receive State appropriations
21are considered to be trust funds for the purpose of this
22Article.
23    (b-1) The City of Urbana and the City of Champaign shall
24each make employer contributions to this System for their
25respective firefighter employees who participate in this
26System pursuant to subsection (h) of Section 15-107. The rate

 

 

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

 

 

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

 

 

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

 

 

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1salary increases given on or after June 1, 2005 but before July
21, 2016 2011. The changes made by Public Act 94-1057 shall not
3require the System to refund any payments received before July
431, 2006 (the effective date of Public Act 94-1057).
5    When assessing payment for any amount due under subsection
6(g), the System shall exclude earnings increases paid to
7participants under contracts or collective bargaining
8agreements entered into, amended, or renewed before June 1,
92005.
10    When assessing payment for any amount due under subsection
11(g), the System shall exclude earnings increases paid to a
12participant at a time when the participant is 10 or more years
13from retirement eligibility under Section 15-135.
14    When assessing payment for any amount due under subsection
15(g), the System shall exclude earnings increases resulting from
16overload work, including a contract for summer teaching, or
17overtime when the employer has certified to the System, and the
18System has approved the certification, that: (i) in the case of
19overloads (A) the overload work is for the sole purpose of
20academic instruction in excess of the standard number of
21instruction hours for a full-time employee occurring during the
22academic year that the overload is paid and (B) the earnings
23increases are equal to or less than the rate of pay for
24academic instruction computed using the participant's current
25salary rate and work schedule; and (ii) in the case of
26overtime, the overtime was necessary for the educational

 

 

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

 

 

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1    (j) The System shall prepare a report and file copies of
2the report with the Governor and the General Assembly by
3January 1, 2007 that contains all of the following information:
4        (1) The number of recalculations required by the
5    changes made to this Section by Public Act 94-1057 for each
6    employer.
7        (2) The dollar amount by which each employer's
8    contribution to the System was changed due to
9    recalculations required by Public Act 94-1057.
10        (3) The total amount the System received from each
11    employer as a result of the changes made to this Section by
12    Public Act 94-4.
13        (4) The increase in the required State contribution
14    resulting from the changes made to this Section by Public
15    Act 94-1057.
16    (k) The Illinois Community College Board shall adopt rules
17for recommending lists of promotional positions submitted to
18the Board by community colleges and for reviewing the
19promotional lists on an annual basis. When recommending
20promotional lists, the Board shall consider the similarity of
21the positions submitted to those positions recognized for State
22universities by the State Universities Civil Service System.
23The Illinois Community College Board shall file a copy of its
24findings with the System. The System shall consider the
25findings of the Illinois Community College Board when making
26determinations under this Section. The System shall not exclude

 

 

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1any earnings increases resulting from a promotion when the
2promotion was not submitted by a community college. Nothing in
3this subsection (k) shall require any community college to
4submit any information to the Community College Board.
5    (l) For purposes of determining the required State
6contribution to the System, the value of the System's assets
7shall be equal to the actuarial value of the System's assets,
8which shall be calculated as follows:
9    As of June 30, 2008, the actuarial value of the System's
10assets shall be equal to the market value of the assets as of
11that date. In determining the actuarial value of the System's
12assets for fiscal years after June 30, 2008, any actuarial
13gains or losses from investment return incurred in a fiscal
14year shall be recognized in equal annual amounts over the
155-year period following that fiscal year.
16    (m) For purposes of determining the required State
17contribution to the system for a particular year, the actuarial
18value of assets shall be assumed to earn a rate of return equal
19to the system's actuarially assumed rate of return.
20(Source: P.A. 95-331, eff. 8-21-07; 95-950, eff. 8-29-08;
2196-43, eff. 7-15-09; 96-1497, eff. 1-14-11; 96-1511, eff.
221-27-11; 96-1554, eff. 3-18-11; revised 4-6-11.)
 
23    Section 99. Effective date. This Act takes effect upon
24becoming law.