093_HB0045ham001

 










                                     LRB093 00004 EFG 11555 a

 1                     AMENDMENT TO HOUSE BILL 45

 2        AMENDMENT NO.     .  Amend House Bill 45 by replacing the
 3    title with the following:
 4        "AN ACT in relation to public employee benefits."; and

 5    by replacing everything after the enacting  clause  with  the
 6    following:

 7        "Section  5.   The  Illinois  Pension  Code is amended by
 8    changing Section 7-141.1 as follows:

 9        (40 ILCS 5/7-141.1)
10        Sec. 7-141.1. Early retirement incentive.
11        (a)  The General Assembly finds and declares that:
12             (1)  Units of local government across the State have
13        been functioning under a financial crisis.
14             (2)  This financial crisis is expected to continue.
15             (3)  Units  of  local  government  must  depend   on
16        additional sources of revenue and, when those sources are
17        not forthcoming, must establish cost-saving programs.
18             (4)  An    early   retirement   incentive   designed
19        specifically to target highly-paid senior employees could
20        result in significant annual cost savings.
21             (5)  The early retirement incentive should  be  made
 
                            -2-      LRB093 00004 EFG 11555 a
 1        available  only  to  those units of local government that
 2        determine that an early retirement incentive is in  their
 3        best interest.
 4             (6)  A  unit  of local government adopting a program
 5        of early retirement  incentives  under  this  Section  is
 6        encouraged to implement personnel procedures to prohibit,
 7        for at least 5 years, the rehiring (whether on payroll or
 8        by  independent  contract) of employees who receive early
 9        retirement incentives.
10             (7)  A unit of local government adopting  a  program
11        of early retirement incentives under this Section is also
12        encouraged   to  replace  as  few  of  the  participating
13        employees as possible and to hire  replacement  employees
14        for  salaries  totaling  no  more  than  80% of the total
15        salaries formerly paid to the employees  who  participate
16        in the early retirement program.
17        It  is  the  primary purpose of this Section to encourage
18    units of local government that can realize true cost savings,
19    or have determined that an early  retirement  program  is  in
20    their   best  interest,  to  implement  an  early  retirement
21    program.
22        (b)  Until the effective date of this amendatory  Act  of
23    1997,  this  Section does not apply to any employer that is a
24    city, village, or incorporated town, nor to the employees  of
25    any  such  employer.  Beginning on the effective date of this
26    amendatory Act of 1997,  any  employer  under  this  Article,
27    including   an   employer   that   is  a  city,  village,  or
28    incorporated  town,   may  establish  an   early   retirement
29    incentive  program for its employees under this Section.  The
30    decision of a city, village, or incorporated town to consider
31    or establish an early  retirement  program  is  at  the  sole
32    discretion  of  that city, village, or incorporated town, and
33    nothing in this amendatory Act of 1997  limits  or  otherwise
34    diminishes   this  discretion.   Nothing  contained  in  this
 
                            -3-      LRB093 00004 EFG 11555 a
 1    Section shall be construed to require  a  city,  village,  or
 2    incorporated  town  to  establish an early retirement program
 3    and no city, village, or incorporated town may  be  compelled
 4    to implement such a program.
 5        The  benefits provided in this Section are available only
 6    to members employed by  a  participating  employer  that  has
 7    filed  with  the  Board of the Fund a resolution or ordinance
 8    expressly providing for the creation of an  early  retirement
 9    incentive  program  under  this Section for its employees and
10    specifying  the  effective  date  of  the  early   retirement
11    incentive  program.   Subject to the limitation in subsection
12    (h),  an  employer  may  adopt  a  resolution  or   ordinance
13    providing a program of early retirement incentives under this
14    Section at any time.
15        The resolution or ordinance shall be in substantially the
16    following form:

17                   RESOLUTION (ORDINANCE) NO. ....
18             A RESOLUTION (ORDINANCE) ADOPTING AN EARLY
19             RETIREMENT INCENTIVE PROGRAM FOR EMPLOYEES
20              IN THE ILLINOIS MUNICIPAL RETIREMENT FUND
21        WHEREAS,  Section  7-141.1  of  the Illinois Pension Code
22    provides that a participating employer may elect to adopt  an
23    early  retirement  incentive  program offered by the Illinois
24    Municipal  Retirement  Fund  by  adopting  a  resolution   or
25    ordinance; and
26        WHEREAS, The goal of adopting an early retirement program
27    is  to  realize  a  substantial savings in personnel costs by
28    offering early retirement incentives to  employees  who  have
29    accumulated many years of service credit; and
30        WHEREAS,  Implementation  of the early retirement program
31    will provide a budgeting tool to aid in  controlling  payroll
32    costs; and
33        WHEREAS, The (name of governing body) has determined that
34    the  adoption  of an early retirement incentive program is in
 
                            -4-      LRB093 00004 EFG 11555 a
 1    the best interests of the (name of  participating  employer);
 2    therefore be it
 3        RESOLVED  (ORDAINED)  by  the (name of governing body) of
 4    (name of participating employer) that:
 5        (1)  The (name of  participating  employer)  does  hereby
 6    adopt the Illinois Municipal Retirement Fund early retirement
 7    incentive  program  as  provided  in  Section  7-141.1 of the
 8    Illinois  Pension  Code.   The  early  retirement   incentive
 9    program shall take effect on (date).
10        (2)  In  order  to  help  achieve  a true cost savings, a
11    person who  retires  under  the  early  retirement  incentive
12    program  shall  lose  those  incentives  if  he  or she later
13    accepts employment with any IMRF employer in a  position  for
14    which  participation in IMRF is required or is elected by the
15    employee.
16        (3)  In order to utilize an early retirement incentive as
17    a budgeting tool, the (name of participating  employer)  will
18    use  its best efforts either to limit the number of employees
19    who  replace  the  employees  who  retire  under  the   early
20    retirement  program  or  to  limit  the  salaries paid to the
21    employees who replace the  employees  who  retire  under  the
22    early retirement program.
23        (4)  The  effective  date  of  each employee's retirement
24    under this early retirement program shall be set by (name  of
25    employer)  and shall be no earlier than the effective date of
26    the program and no later than one year after  that  effective
27    date;   except   that  the  employee  may  require  that  the
28    retirement date set by the employer be no later than the June
29    30 next occurring after the effective date of the program and
30    no earlier than the date upon which  the  employee  qualifies
31    for retirement.
32        (5)  To  be  eligible  for the early retirement incentive
33    under this Section, the employee must have  attained  age  50
34    and  have  at  least 20 years of creditable service by his or
 
                            -5-      LRB093 00004 EFG 11555 a
 1    her retirement date.
 2        (6)  The (clerk  or  secretary)  shall  promptly  file  a
 3    certified  copy of this resolution (ordinance) with the Board
 4    of Trustees of the Illinois Municipal Retirement Fund.
 5    CERTIFICATION
 6        I, (name), the (clerk  or  secretary)  of  the  (name  of
 7    participating  employer)  of  the  County of (name), State of
 8    Illinois, do hereby certify that I am the keeper of the books
 9    and records of the (name of employer) and that the  foregoing
10    is  a  true and correct copy of a resolution (ordinance) duly
11    adopted by the (governing body) at a  meeting  duly  convened
12    and held on (date).
13    SEAL
14    (Signature of clerk or secretary)

15        (c)  To  be  eligible  for the benefits provided under an
16    early  retirement  incentive  program  adopted   under   this
17    Section, a member must:
18             (1)  be  a  participating employee of this Fund who,
19        on the effective date of the program, (i)  is  in  active
20        payroll status as an employee of a participating employer
21        that  has filed the required ordinance or resolution with
22        the Board, (ii) is on layoff status from such a  position
23        with a right of re-employment or recall to service, (iii)
24        is on a leave of absence from such a position, or (iv) is
25        on  disability  but has not been receiving benefits under
26        Section 7-146 or 7-150 for a period of more than 2  years
27        from the date of application;
28             (2)  have  never  previously  received  a retirement
29        annuity  under  this  Article  or  under  the  Retirement
30        Systems Reciprocal Act using service  credit  established
31        under this Article;
32             (3)  (blank);
33             (4)  have at least 20 years of creditable service in
34        the  Fund  by  the date of retirement, without the use of
 
                            -6-      LRB093 00004 EFG 11555 a
 1        any creditable service established under this Section;
 2             (5)  have attained age 50 by the date of retirement,
 3        without the use of any  age  enhancement  received  under
 4        this Section; and
 5             (6)  be  eligible  to  receive  a retirement annuity
 6        under this Article by the date of retirement,  for  which
 7        purpose   the  age  enhancement  and  creditable  service
 8        established under this Section may be considered.
 9        (d)  The employer shall determine the retirement date for
10    each employee participating in the early  retirement  program
11    adopted  under this Section.  The retirement date shall be no
12    earlier than the effective date of the program and  no  later
13    than  one  year  after  that  effective date, except that the
14    employee may require that the  retirement  date  set  by  the
15    employer  be  no  later than the June 30 next occurring after
16    the effective date of the program and  no  earlier  than  the
17    date  upon  which the employee qualifies for retirement.  The
18    employer shall give each employee participating in the  early
19    retirement  program  at  least  30 days written notice of the
20    employee's designated retirement date,  unless  the  employee
21    waives this notice requirement.
22        (e)  An  eligible  person  may establish up to 5 years of
23    creditable service under this Section.  In addition, for each
24    period of creditable service established under this  Section,
25    a  person  shall  have  his  or  her age at retirement deemed
26    enhanced by an equivalent period.
27        The creditable service established under this Section may
28    be  used  for  all  purposes  under  this  Article  and   the
29    Retirement Systems Reciprocal Act, except for the computation
30    of  final rate of earnings and the determination of earnings,
31    salary, or compensation under this or any  other  Article  of
32    the Code.
33        The age enhancement established under this Section may be
34    used   for   all   purposes  under  this  Article  (including
 
                            -7-      LRB093 00004 EFG 11555 a
 1    calculation  of  the  reduction  imposed  under   subdivision
 2    (a)1b(iv)  of  Section  7-142),   except  for  purposes  of a
 3    reversionary   annuity   under   Section   7-145   and    any
 4    distributions  required  because of age.  The age enhancement
 5    established under this Section may be used in  calculating  a
 6    proportionate   annuity   payable  by  this  Fund  under  the
 7    Retirement Systems Reciprocal Act, but shall not be  used  in
 8    determining  benefits  payable  under  other Articles of this
 9    Code under the Retirement Systems Reciprocal Act.
10        (f)  For all creditable service  established  under  this
11    Section,  the  member  must  pay  to  the  Fund  an  employee
12    contribution  consisting  of  4.5%  of  the  member's highest
13    annual salary rate used in the  determination  of  the  final
14    rate  of  earnings  for  retirement annuity purposes for each
15    year of creditable service granted under this  Section.   For
16    creditable service established under this Section by a person
17    who  is  a  sheriff's  law  enforcement employee to be deemed
18    service as a sheriff's law enforcement employee, the employee
19    contribution shall be at the rate of 6.5% of  highest  annual
20    salary per year of creditable service granted.  Contributions
21    for  fractions  of  a year of service shall be prorated.  Any
22    amounts that are disregarded in determining the final rate of
23    earnings under subdivision (d)(5) of Section 7-116 (the  125%
24    rule)  shall  also be disregarded in determining the required
25    contribution under this subsection (f).
26        The employee contribution shall be paid to  the  Fund  as
27    follows:  If the member is entitled to a lump sum payment for
28    accumulated  vacation,  sick  leave,  or  personal leave upon
29    withdrawal  from  service,  the  employer  shall  deduct  the
30    employee contribution from that lump sum and pay the deducted
31    amount directly to the Fund.  If there is no  such  lump  sum
32    payment or the required employee contribution exceeds the net
33    amount  of  the  lump  sum payment, then the remaining amount
34    due, at the option of the employee, may either be paid to the
 
                            -8-      LRB093 00004 EFG 11555 a
 1    Fund before  the  annuity  commences  or  deducted  from  the
 2    retirement annuity in 24 equal monthly installments.
 3        (g)  An annuitant who has received any age enhancement or
 4    creditable  service under this Section and thereafter accepts
 5    employment with or enters into a personal  services  contract
 6    with an employer under this Article thereby forfeits that age
 7    enhancement  and creditable service; except that beginning on
 8    the effective date of this amendatory Act of the 93rd General
 9    Assembly, this prohibition applies only to (1) employment for
10    which the person is required (or is allowed and has  elected)
11    to  participate  in  this  Fund  and (2) contractual personal
12    services which, if performed as an  employee,  would  require
13    the employee to participate in this Fund.
14        A  person  forfeiting  early  retirement incentives under
15    this subsection (i) must repay to the Fund  that  portion  of
16    the retirement annuity already received which is attributable
17    to  the early retirement incentives that are being forfeited,
18    (ii) shall not be eligible to participate in any future early
19    retirement program adopted under this Section, and  (iii)  is
20    entitled  to a refund of the employee contribution paid under
21    subsection  (f).   The  Board  shall  deduct   the   required
22    repayment from the refund and may impose a reasonable payment
23    schedule  for  repaying  the  amount,  if  any,  by which the
24    required repayment exceeds the refund amount.
25        The change made to this subsection by this amendatory Act
26    of the 93rd General Assembly is not  limited  to  persons  in
27    service  on  or  after  its  effective  date, but it does not
28    restore eligibility for  early  retirement  benefits  to  any
29    person  who  has  previously  forfeited those benefits due to
30    employment accepted (or a contract entered into) before  that
31    effective date.
32        (h)  The  additional  unfunded  liability  accruing  as a
33    result of the adoption  of  a  program  of  early  retirement
34    incentives  under  this  Section  by  an  employer  shall  be
 
                            -9-      LRB093 00004 EFG 11555 a
 1    amortized over a period of 10 years beginning on January 1 of
 2    the second calendar year following the calendar year in which
 3    the latest date for beginning to receive a retirement annuity
 4    under  the  program  (as  determined  by  the  employer under
 5    subsection (d) of  this  Section)  occurs;  except  that  the
 6    employer may provide for a shorter amortization period (of no
 7    less  than  5  years)  by adopting an ordinance or resolution
 8    specifying  the  length  of  the  amortization   period   and
 9    submitting a certified copy of the ordinance or resolution to
10    the  Fund  no later than 6 months after the effective date of
11    the program.  An employer, at its discretion, may  accelerate
12    payments to the Fund.
13        An  employer  may  provide more than one early retirement
14    incentive program  for  its  employees  under  this  Section.
15    However,  an  employer  that has provided an early retirement
16    incentive program for its employees under  this  Section  may
17    not  provide another early retirement incentive program under
18    this Section until the liability  arising  from  the  earlier
19    program has been fully paid to the Fund.
20    (Source: P.A. 90-32, eff. 6-27-97; 91-887, eff. 7-6-00.)

21        Section  90.  The State Mandates Act is amended by adding
22    Section 8.27 as follows:

23        (30 ILCS 805/8.27 new)
24        Sec. 8.27. Exempt mandate.   Notwithstanding  Sections  6
25    and  8 of this Act, no reimbursement by the State is required
26    for  the  implementation  of  any  mandate  created  by  this
27    amendatory Act of the 93rd General Assembly.

28        Section 99. Effective date.  This Act takes  effect  upon
29    becoming law.".