SB2389ham002 98TH GENERAL ASSEMBLY

Rep. Elaine Nekritz

Filed: 5/31/2013

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 2389

2    AMENDMENT NO. ______. Amend Senate Bill 2389, AS AMENDED,
3by replacing everything after the enacting clause with the
4following:
 
5    "Section 5. If and only if Senate Bill 1687 of the 98th
6General Assembly becomes law, the Illinois Pension Code is
7amended by changing Section 15-155 as follows:
 
8    (40 ILCS 5/15-155)  (from Ch. 108 1/2, par. 15-155)
9    Sec. 15-155. State and employer contributions.
10    (a) The State of Illinois shall make contributions by
11appropriations of amounts which, together with contributions
12paid by employers, other employer contributions from trust,
13federal, and other funds, employee contributions, income from
14investments, and other income of this System, will be
15sufficient to meet the cost of maintaining and administering
16the System in accordance with actuarial recommendations.

 

 

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1    The Board shall determine the amount of State and employer
2contributions required for each fiscal year on the basis of the
3actuarial tables and other assumptions adopted by the Board and
4the recommendations of the System's actuary, using the formulas
5provided in this Section.
6    The System shall make all necessary assumptions to
7determine and allocate total demographic gains and losses for
8the purpose of determining State and employer contributions
9under this Section. Such assumptions shall include but not be
10limited to the rates of retirement, termination, disability,
11and mortality.
12    (a-1) For State fiscal years 2012 through 2014, the minimum
13contribution to the System to be made by the State for each
14fiscal year shall be an amount determined by the System to be
15sufficient to bring the total assets of the System up to 90% of
16the total actuarial liabilities of the System by the end of
17State fiscal year 2045. In making these determinations, the
18required State contribution shall be calculated each year as a
19level percentage of payroll over the years remaining to and
20including fiscal year 2045 and shall be determined under the
21projected unit credit actuarial cost method.
22    For State fiscal years 2015 through 2044, the minimum
23contribution to the System to be made by the State for each
24fiscal year shall be an amount determined by the System to be
25sufficient to bring the total actuarial assets of the System
26attributable to the State up to 100% of the total actuarial

 

 

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1liabilities of the System attributable to the State by the end
2of State fiscal year 2044. 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 2044 and shall be determined under the
6entry age normal actuarial cost method.
7    If at the end of State fiscal year 2044 the total actuarial
8assets of the System attributable to the State are less than
9100% of the total actuarial liabilities of the System
10attributable to the State, the System shall determine the
11amount necessary to bring that those assets up to 100% of those
12liabilities and shall certify that amount as a required State
13contribution for State fiscal year 2046, and the State shall
14pay that amount to the System in State fiscal year 2046.
15    Beginning when the State has paid the contribution required
16under this subsection (a-1) for fiscal year 2046, or in State
17fiscal year 2045 if no such contribution for fiscal year 2046
18is required, the State has no further obligation to make
19contributions to the System under this subsection (a-1).
20    For the purposes of this Article, "total actuarial
21liabilities of the System attributable to the State" means the
22total liabilities of the System less any notional liabilities
23assigned to employer accounts under Section 15-155.2.
24    For the purposes of this Article, "total actuarial assets
25of the System attributable to the State" means the total assets
26of the System less any notional assets assigned to employer

 

 

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1accounts under Section 15-155.2.
2    For State fiscal years 1996 through 2005, the State
3contribution to the System, as a percentage of the applicable
4employee payroll, shall be increased in equal annual increments
5so that by State fiscal year 2011, the State is contributing at
6the rate required under this Section.
7    Notwithstanding any other provision of this Article, the
8total required State contribution for State fiscal year 2006 is
9$166,641,900.
10    Notwithstanding any other provision of this Article, the
11total required State contribution for State fiscal year 2007 is
12$252,064,100.
13    For each of State fiscal years 2008 through 2009, the State
14contribution to the System, as a percentage of the applicable
15employee payroll, shall be increased in equal annual increments
16from the required State contribution for State fiscal year
172007, so that by State fiscal year 2011, the State is
18contributing at the rate otherwise required under this Section.
19    Notwithstanding any other provision of this Article, the
20total required State contribution for State fiscal year 2010 is
21$702,514,000 and shall be made from the State Pensions Fund and
22proceeds of bonds sold in fiscal year 2010 pursuant to Section
237.2 of the General Obligation Bond Act, less (i) the pro rata
24share of bond sale expenses determined by the System's share of
25total bond proceeds, (ii) any amounts received from the General
26Revenue Fund in fiscal year 2010, (iii) any reduction in bond

 

 

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1proceeds due to the issuance of discounted bonds, if
2applicable.
3    Notwithstanding any other provision of this Article, the
4total required State contribution for State fiscal year 2011 is
5the amount recertified by the System on or before April 1, 2011
6pursuant to Section 15-165 and shall be made from the State
7Pensions Fund and proceeds of bonds sold in fiscal year 2011
8pursuant to Section 7.2 of the General Obligation Bond Act,
9less (i) the pro rata share of bond sale expenses determined by
10the System's share of total bond proceeds, (ii) any amounts
11received from the General Revenue Fund in fiscal year 2011, and
12(iii) any reduction in bond proceeds due to the issuance of
13discounted bonds, if applicable.
14    Amounts received by the System pursuant to Section 25 of
15the Budget Stabilization Act or Section 8.12 of the State
16Finance Act in any fiscal year do not reduce and do not
17constitute payment of any portion of the minimum State
18contribution required under this Article in that fiscal year.
19Such amounts shall not reduce, and shall not be included in the
20calculation of, the required State contributions under this
21Article in any future year until the System has reached a
22funding ratio of at least 90%. A reference in this Article to
23the "required State contribution" or any substantially similar
24term does not include or apply to any amounts payable to the
25System under Section 25 of the Budget Stabilization Act.
26    Notwithstanding any other provision of this Section, the

 

 

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1required State contribution for State fiscal year 2005 and for
2fiscal year 2008 through fiscal year 2014, as calculated under
3this Section and certified under Section 15-165, shall not
4exceed an amount equal to (i) the amount of the required State
5contribution that would have been calculated under this Section
6for that fiscal year if the System had not received any
7payments under subsection (d) of Section 7.2 of the General
8Obligation Bond Act, minus (ii) the portion of the State's
9total debt service payments for that fiscal year on the bonds
10issued in fiscal year 2003 for the purposes of that Section
117.2, as determined and certified by the Comptroller, that is
12the same as the System's portion of the total moneys
13distributed under subsection (d) of Section 7.2 of the General
14Obligation Bond Act. In determining this maximum for State
15fiscal years 2008 through 2010, however, the amount referred to
16in item (i) shall be increased, as a percentage of the
17applicable employee payroll, in equal increments calculated
18from the sum of the required State contribution for State
19fiscal year 2007 plus the applicable portion of the State's
20total debt service payments for fiscal year 2007 on the bonds
21issued in fiscal year 2003 for the purposes of Section 7.2 of
22the General Obligation Bond Act, so that, by State fiscal year
232011, the State is contributing at the rate otherwise required
24under this Section.
25    (a-5) In addition to the contributions that the State is
26otherwise required to make under this Article, beginning in

 

 

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1fiscal year 2015 and in each fiscal year thereafter until the
2State has no further obligation to make contributions to the
3System under subsection (a-1), the State shall be required to
4make an additional contribution to the System equal to the
5projected dollar amount of contributions to be made by
6employers pursuant to items (i) and (vi) of subsection (a-10)
7for that fiscal year. Contributions required to be made
8pursuant to this subsection do not reduce and do not constitute
9payment of any portion of the required State contribution made
10to the System pursuant to subsection (a-1) in that fiscal year.
11A contribution required to be made pursuant to this subsection
12shall not reduce, and shall not be included in the calculation
13of, the required contribution to be made by the State pursuant
14to subsection (a-1) in any future year, until the System has
15received the contribution pursuant to this subsection.
16    (a-10) Subject to the limitations provided in subsection
17(a-15) of this Section, beginning with State fiscal year 2015,
18each employer under this Article shall pay to the System a
19required contribution determined as a percentage of projected
20payroll and sufficient to produce an annual amount equal to:
21        (i) the employer normal cost for that fiscal year for
22    participating employees of that employer (excluding costs
23    attributable to any new benefit increases approved by that
24    employer pursuant to Section 15-198), determined as a
25    percentage of applicable payroll; plus
26        (ii) the amount required for that fiscal year to

 

 

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1    amortize any unfunded actuarial accrued liability
2    associated with the present value of liabilities
3    attributable to the employer's account under Section
4    15-155.2 (excluding costs attributable to any new benefit
5    increases approved by that employer pursuant to Section
6    15-198), determined as a level percentage of payroll over a
7    30-year rolling amortization period; plus
8        (iii) that employer's normal cost for that fiscal year
9    attributable to all new benefit increases approved by that
10    employer pursuant to Section 15-198; plus
11        (iv) the amounts required for that fiscal year to
12    amortize any unfunded actuarial accrued liability
13    associated with the present value of each new benefit
14    increase approved by that employer pursuant to Section
15    15-198, determined as a level percentage of payroll over a
16    fixed 10-year amortization period; plus
17        (v) beginning when the State has no further obligation
18    to make contributions to the System under subsection (a-1),
19    the amount required for that fiscal year to amortize any
20    unfunded actuarial accrued liability of the System not
21    attributable to any employer's account under Section
22    15-155.2, determined as a level percentage of payroll over
23    a 30-year rolling amortization period; plus
24        (vi) the amount of employer contributions for that
25    fiscal year required for employees of that employer who
26    participate in the self-managed plan under Section

 

 

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1    15-158.2.
2    In determining contributions required under item (i) of
3this subsection, the System shall determine an aggregate rate
4for all employers, expressed as a percentage of projected
5payroll, exclusive of costs attributable to any new benefit
6increase approved pursuant to Section 15-198 and exclusive of
7employer contributions required for participating employees of
8the self-managed plan under Section 15-158.2.
9    In determining contributions required under item (ii) of
10this subsection, the System shall determine an individual rate
11determined as a percentage of projected payroll applicable to
12each employer based on that employer's individual account under
13Section 15-155.2, exclusive of (i) any liabilities
14attributable to the System as a whole rather than to the
15employer's account and (ii) costs attributable to any new
16benefit increase approved pursuant to Section 15-198.
17    In determining contributions required under items (iii)
18and (iv) of this subsection, the System shall determine an
19individual rate determined as a percentage of projected payroll
20applicable to each employer that approves a new benefit
21increase pursuant to Section 15-198.
22    In determining contributions required under item (v) of
23this subsection, the System shall determine an aggregate rate
24determined as a percentage of projected payroll applicable to
25all employers under the System.
26    The contributions required under this subsection (a-10)

 

 

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1shall be paid by an employer concurrently with that employer's
2payroll payment period.
3    (a-15) For State fiscal year 2015, the required
4contribution of employers under item (i) of subsection (a-10)
5shall be reduced to an amount equal to 0.5% of applicable
6payroll. For each fiscal year thereafter, the required
7contribution of employers under item (i) of subsection (a-10)
8shall be the percentage of projected payroll required under
9this subsection (a-15) for the previous fiscal year, increased
10by 0.5% of payroll, except that when the percentage of
11projected payroll required under this subsection (a-15) first
12reaches the percentage of payroll required under item (i) of
13subsection (a-10), this subsection (a-15) shall cease to apply.
14    For State fiscal year 2015, the required contribution of
15employers under item (vi) of subsection (a-10) shall be reduced
16to an amount equal to 0.5% of applicable payroll. For each
17fiscal year thereafter, the required contribution of employers
18under item (vi) of subsection (a-10) shall be the percentage of
19projected payroll required under this subsection (a-15) for the
20previous fiscal year, increased by 0.5% of payroll, except that
21when the percentage of payroll required under this subsection
22(a-15) first reaches the percentage of payroll required under
23item (vi) of subsection (a-10), this subsection (a-15) shall
24cease to apply.
25    The limitations in this subsection (a-15) do not apply to
26(i) employer contributions required to be made under subsection

 

 

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1(b) of this Section for employees who are compensated out of
2trust or federal funds, (ii) contributions required to be made
3by the City of Champaign or the City of Urbana for individuals
4described under subsection (h) of Section 15-107, (iii)
5contributions required to be made by a teacher organization for
6individuals described under subsection (i) of Section 15-107,
7or (iv) contributions required to be made by a teacher
8organization for individuals on special leave of absence under
9Section 15-113.2.
10    (b) If an employee is paid from trust or federal funds, the
11employer shall pay to the Board contributions from those funds
12which are sufficient to cover the accruing normal costs on
13behalf of the employee. However, universities having employees
14who are compensated out of local auxiliary funds, income funds,
15or service enterprise funds are not required to pay such
16contributions on behalf of those employees prior to July 1,
172014. Beginning July 1, 2014, universities having employees who
18are compensated out of local auxiliary funds, income funds, or
19service enterprise funds shall pay to the Board contributions
20from those funds that are sufficient to cover the accruing
21normal costs on behalf of those employees. The local auxiliary
22funds, income funds, and service enterprise funds of
23universities shall not be considered trust funds for the
24purpose of this Article, but funds of alumni associations,
25foundations, and athletic associations which are affiliated
26with the universities included as employers under this Article

 

 

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1and other employers which do not receive State appropriations
2are considered to be trust funds for the purpose of this
3Article. Beginning July 1, 2014, the provisions of this
4subsection (b) apply to the payment of employer contributions
5required under subsection (a-10) of this Section and shall not
6be construed as a separate or additional contribution.
7    (b-1) The City of Urbana and the City of Champaign shall
8each make employer contributions to this System for their
9respective firefighter employees who participate in this
10System pursuant to subsection (h) of Section 15-107. The rate
11of contributions to be made by those municipalities shall be
12determined annually by the Board on the basis of the actuarial
13assumptions adopted by the Board and the recommendations of the
14actuary, and shall be expressed as a percentage of salary for
15each such employee. The Board shall certify the rate to the
16affected municipalities as soon as may be practical. The
17employer contributions required under this subsection shall be
18remitted by the municipality to the System at the same time and
19in the same manner as employee contributions.
20    (c) Through State fiscal year 1995: The total employer
21contribution shall be apportioned among the various funds of
22the State and other employers, whether trust, federal, or other
23funds, in accordance with actuarial procedures approved by the
24Board. State of Illinois contributions for employers receiving
25State appropriations for personal services shall be payable
26from appropriations made to the employers or to the System. The

 

 

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1contributions for Class I community colleges covering earnings
2other than those paid from trust and federal funds, shall be
3payable solely from appropriations to the Illinois Community
4College Board or the System for employer contributions.
5    (d) Beginning in State fiscal year 1996, the required State
6contributions to the System shall be appropriated directly to
7the System and shall be payable through vouchers issued in
8accordance with subsection (c) of Section 15-165, except as
9provided in subsection (g).
10    (e) The State Comptroller shall draw warrants payable to
11the System upon proper certification by the System or by the
12employer in accordance with the appropriation laws and this
13Code.
14    (f) Normal costs under this Section means liability for
15pensions and other benefits which accrues to the System because
16of the credits earned for service rendered by the participants
17during the fiscal year and expenses of administering the
18System, but shall not include the principal of or any
19redemption premium or interest on any bonds issued by the Board
20or any expenses incurred or deposits required in connection
21therewith.
22    (g) If the amount of a participant's earnings for any
23academic year used to determine the final rate of earnings,
24determined on a full-time equivalent basis, exceeds the amount
25of his or her earnings with the same employer for the previous
26academic year, determined on a full-time equivalent basis, by

 

 

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1more than 6%, the participant's employer shall pay to the
2System, in addition to all other payments required under this
3Section and in accordance with guidelines established by the
4System, the present value of the increase in benefits resulting
5from the portion of the increase in earnings that is in excess
6of 6%. This present value shall be computed by the System on
7the basis of the actuarial assumptions and tables used in the
8most recent actuarial valuation of the System that is available
9at the time of the computation. The System may require the
10employer to provide any pertinent information or
11documentation.
12    Whenever it determines that a payment is or may be required
13under this subsection (g), the System shall calculate the
14amount of the payment and bill the employer for that amount.
15The bill shall specify the calculations used to determine the
16amount due. If the employer disputes the amount of the bill, it
17may, within 30 days after receipt of the bill, apply to the
18System in writing for a recalculation. The application must
19specify in detail the grounds of the dispute and, if the
20employer asserts that the calculation is subject to subsection
21(h) or (i) of this Section, must include an affidavit setting
22forth and attesting to all facts within the employer's
23knowledge that are pertinent to the applicability of subsection
24(h) or (i). Upon receiving a timely application for
25recalculation, the System shall review the application and, if
26appropriate, recalculate the amount due.

 

 

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1    The employer contributions required under this subsection
2(g) may be paid in the form of a lump sum within 90 days after
3receipt of the bill. If the employer contributions are not paid
4within 90 days after receipt of the bill, then interest will be
5charged at a rate equal to the System's annual actuarially
6assumed rate of return on investment compounded annually from
7the 91st day after receipt of the bill. Payments must be
8concluded within 3 years after the employer's receipt of the
9bill.
10    (h) This subsection (h) applies only to (1) payments made
11or salary increases given on or after June 1, 2005 but before
12July 1, 2011 and (2) payments made or salary increases given
13after the limitation on employer contributions under
14subsection (a-15) of Section 15-155 ceases to apply to
15contributions under item (i) of subsection (a-10) of that
16Section. The changes made by Public Act 94-1057 shall not
17require the System to refund any payments received before July
1831, 2006 (the effective date of Public Act 94-1057).
19    When assessing payment for any amount due under subsection
20(g), the System shall exclude earnings increases paid to
21participants under contracts or collective bargaining
22agreements entered into, amended, or renewed before June 1,
232005.
24    When assessing payment for any amount due under subsection
25(g), the System shall exclude earnings increases paid to a
26participant at a time when the participant is 10 or more years

 

 

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1from retirement eligibility under Section 15-135.
2    When assessing payment for any amount due under subsection
3(g), the System shall exclude earnings increases resulting from
4overload work, including a contract for summer teaching, or
5overtime when the employer has certified to the System, and the
6System has approved the certification, that: (i) in the case of
7overloads (A) the overload work is for the sole purpose of
8academic instruction in excess of the standard number of
9instruction hours for a full-time employee occurring during the
10academic year that the overload is paid and (B) the earnings
11increases are equal to or less than the rate of pay for
12academic instruction computed using the participant's current
13salary rate and work schedule; and (ii) in the case of
14overtime, the overtime was necessary for the educational
15mission.
16    When assessing payment for any amount due under subsection
17(g), the System shall exclude any earnings increase resulting
18from (i) a promotion for which the employee moves from one
19classification to a higher classification under the State
20Universities Civil Service System, (ii) a promotion in academic
21rank for a tenured or tenure-track faculty position, or (iii) a
22promotion that the Illinois Community College Board has
23recommended in accordance with subsection (k) of this Section.
24These earnings increases shall be excluded only if the
25promotion is to a position that has existed and been filled by
26a member for no less than one complete academic year and the

 

 

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1earnings increase as a result of the promotion is an increase
2that results in an amount no greater than the average salary
3paid for other similar positions.
4    (i) When assessing payment for any amount due under
5subsection (g), the System shall exclude any salary increase
6described in subsection (h) of this Section given on or after
7July 1, 2011 but before July 1, 2014 under a contract or
8collective bargaining agreement entered into, amended, or
9renewed on or after June 1, 2005 but before July 1, 2011.
10    (j) The System shall prepare a report and file copies of
11the report with the Governor and the General Assembly by
12January 1, 2007 that contains all of the following information:
13        (1) The number of recalculations required by the
14    changes made to this Section by Public Act 94-1057 for each
15    employer.
16        (2) The dollar amount by which each employer's
17    contribution to the System was changed due to
18    recalculations required by Public Act 94-1057.
19        (3) The total amount the System received from each
20    employer as a result of the changes made to this Section by
21    Public Act 94-4.
22        (4) The increase in the required State contribution
23    resulting from the changes made to this Section by Public
24    Act 94-1057.
25    (k) The Illinois Community College Board shall adopt rules
26for recommending lists of promotional positions submitted to

 

 

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1the Board by community colleges and for reviewing the
2promotional lists on an annual basis. When recommending
3promotional lists, the Board shall consider the similarity of
4the positions submitted to those positions recognized for State
5universities by the State Universities Civil Service System.
6The Illinois Community College Board shall file a copy of its
7findings with the System. The System shall consider the
8findings of the Illinois Community College Board when making
9determinations under this Section. The System shall not exclude
10any earnings increases resulting from a promotion when the
11promotion was not submitted by a community college. Nothing in
12this subsection (k) shall require any community college to
13submit any information to the Community College Board.
14    (l) For purposes of determining the required State
15contribution to the System, the value of the System's assets
16shall be equal to the actuarial value of the System's assets,
17which shall be calculated as follows:
18    As of June 30, 2008, the actuarial value of the System's
19assets shall be equal to the market value of the assets as of
20that date. In determining the actuarial value of the System's
21assets for fiscal years after June 30, 2008, any actuarial
22gains or losses from investment return incurred in a fiscal
23year shall be recognized in equal annual amounts over the
245-year period following that fiscal year.
25    (m) For purposes of determining the required State
26contribution to the system for a particular year, the actuarial

 

 

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1value of assets shall be assumed to earn a rate of return equal
2to the system's actuarially assumed rate of return.
3(Source: P.A. 96-43, eff. 7-15-09; 96-1497, eff. 1-14-11;
496-1511, eff. 1-27-11; 96-1554, eff. 3-18-11; 97-813, eff.
57-13-12; 09800SB1687ham002.)
 
6    Section 99. Effective date. This Act takes effect upon
7becoming law, but no earlier than the effective date of Senate
8Bill 1687 of the 98th General Assembly.".