State of Illinois
92nd General Assembly
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92_HB1100

 
                                               LRB9204570EGdv

 1        AN ACT in relation to public employee benefits.

 2        Be it enacted by the People of  the  State  of  Illinois,
 3    represented in the General Assembly:

 4        Section  5.   The  Illinois  Pension  Code  is amended by
 5    changing Sections  7-171  and  7-173.2  and  adding  Sections
 6    7-199.4 and 7-199.5 as follows:

 7        (40 ILCS 5/7-171) (from Ch. 108 1/2, par. 7-171)
 8        Sec. 7-171. Finance; taxes.
 9        (a)  Each municipality other than a school district shall
10    appropriate  an  amount sufficient to provide for the current
11    municipality contributions  required  by  Section  7-172  and
12    Section  7-199.4  of  this  Article,  for the fiscal year for
13    which the appropriation is  made  and  all  amounts  due  for
14    municipal   contributions   for   previous   years.     Those
15    municipalities which have been assessed an annual  amount  to
16    amortize its unfunded obligation, as provided in subparagraph
17    5  of  paragraph  (a) of Section 7-172 of this Article, shall
18    include in the appropriation an amount sufficient to pay  the
19    amount  assessed.   The  appropriation shall be based upon an
20    estimate of assets available for  municipality  contributions
21    and  liabilities  therefor  for  the  fiscal  year  for which
22    appropriations are to be made, including funds available from
23    levies for this purpose in prior years.
24        (b)  For the purpose of providing monies for municipality
25    contributions, beginning for the year in which a municipality
26    is included in this fund:
27             (1)  A municipality other than a school district may
28        levy a tax which shall not exceed the amount appropriated
29        for municipality contributions.
30             (2)  A school district may levy a tax in  an  amount
31        reasonably  calculated at the time of the levy to provide
 
                            -2-                LRB9204570EGdv
 1        for the municipality contributions required under Section
 2        7-172 and Section 7-199.4 of this Article for the  fiscal
 3        years  for  which revenues from the levy will be received
 4        and all  amounts  due  for  municipal  contributions  for
 5        previous  years.   Any  levy adopted before the effective
 6        date of this amendatory Act of 1995 by a school  district
 7        shall  be  considered  valid and authorized to the extent
 8        that the amount was reasonably calculated at the time  of
 9        the  levy  to  provide for the municipality contributions
10        required under Section 7-172 for  the  fiscal  years  for
11        which  revenues  from  the  levy will be received and all
12        amounts due  for  municipal  contributions  for  previous
13        years.    In  no event shall a budget adopted by a school
14        district limit a levy of  that  school  district  adopted
15        under this Section.
16        (c)  Any  county  which is served by a regional office of
17    education that serves 2 or more counties may include  in  its
18    appropriation   an   amount   sufficient   to   provide   its
19    proportionate  share  of  the  municipality contributions for
20    that regional office of education.  The tax  levy  authorized
21    by  this  Section  may include an amount necessary to provide
22    monies for this contribution.
23        (d)  Any county that  is  a  part  of  a  multiple-county
24    health  department or consolidated health department which is
25    formed under "An Act in relation  to  the  establishment  and
26    maintenance  of  county  and  multiple-county  public  health
27    departments", approved July 9, 1943, as amended, and which is
28    a  participating  instrumentality may include in the county's
29    appropriation   an   amount   sufficient   to   provide   its
30    proportionate share  of  municipality  contributions  of  the
31    department.   The  tax  levy  authorized  by this Section may
32    include the amount  necessary  to  provide  monies  for  this
33    contribution.
34        (d-5)  A  school  district  participating  in  a  special
 
                            -3-                LRB9204570EGdv
 1    education  joint  agreement created under Section 10-22.31 of
 2    the School Code that is a participating  instrumentality  may
 3    include  in the school district's tax levy under this Section
 4    an amount sufficient to provide its  proportionate  share  of
 5    the  municipality contributions for current and prior service
 6    by employees of  the  participating  instrumentality  created
 7    under the joint agreement.
 8        (e)  Such  tax  shall  be  levied  and  collected in like
 9    manner, with the general taxes of the municipality and  shall
10    be  in  addition to all other taxes which the municipality is
11    now or may hereafter be authorized to levy upon  all  taxable
12    property  therein,  and shall be exclusive of and in addition
13    to the amount  of  tax  levied  for  general  purposes  under
14    Section  8-3-1 of the "Illinois Municipal Code", approved May
15    29, 1961, as amended, or under any other law  or  laws  which
16    may  limit  the amount of tax which the municipality may levy
17    for general purposes.  The tax may be levied by the governing
18    body of the municipality without being  authorized  as  being
19    additional  to all other taxes by a vote of the people of the
20    municipality.
21        (f)  The county clerk of the county  in  which  any  such
22    municipality  is  located,  in  reducing tax levies shall not
23    consider any such tax as a part of the general tax  levy  for
24    municipality  purposes, and shall not include the same in the
25    limitation of any other tax rate which may be extended.
26        (g)  The amount of the tax  to  be  levied  in  any  year
27    shall,  within the limits herein prescribed, be determined by
28    the governing body of the respective municipality.
29        (h)  The revenue derived from any such tax levy shall  be
30    used  only for the purposes specified in this Article and, as
31    collected, shall be paid to the treasurer of the municipality
32    levying the tax.  Monies received by a county  treasurer  for
33    use in making contributions to a regional office of education
34    for  its  municipality contributions shall be held by him for
 
                            -4-                LRB9204570EGdv
 1    that purpose and paid to the regional office of education  in
 2    the  same manner as other monies appropriated for the expense
 3    of the regional office.
 4    (Source: P.A. 89-329, eff.  8-17-95;  90-448,  eff.  8-16-97;
 5    90-511, eff. 8-22-97; 90-655, eff. 7-30-98.)

 6        (40 ILCS 5/7-173.2) (from Ch. 108 1/2, par. 7-173.2)
 7        Sec. 7-173.2. Pickup of employee contributions.
 8        (a)  Until  July 1, 1984, each participating municipality
 9    and each participating instrumentality may elect, for all  of
10    its employees, to pick up the employee contributions required
11    by  subparagraphs  1 and 3 of subsection (a) of Section 7-173
12    and, in the case  of  sheriff's  law  enforcement  employees,
13    required by Section 7-173.1.  The pick up may be for employee
14    contributions   on   earnings  received  by  employees  after
15    December  31,  1981  and   shall   be   applicable   to   the
16    contributions  on  total  earnings  paid  in  any month.  The
17    decision to pick  up  contributions  shall  be  made  by  the
18    governing body.
19        Beginning   July   1,  1984,  the  pick  up  of  employee
20    contributions shall cease to be optional.  Each participating
21    municipality and participating instrumentality shall pick  up
22    the  employee contributions required by subparagraphs 1 and 3
23    of subsection (a) of  Section  7-173  and,  in  the  case  of
24    sheriff's  law  enforcement employees, contributions required
25    by Section 7-173.1, for all compensation  earned  after  such
26    date.    Beginning   April   1,   2002,   each  participating
27    municipality and participating instrumentality shall pick  up
28    the  employee  contributions  required  by  subsection (d) of
29    Section 7-199.4, for all compensation earned on or after that
30    date.
31        (b)  Contributions that are picked up shall be treated as
32    employer contributions in determining tax treatment under the
33    United  States   Internal   Revenue   Code.    The   employee
 
                            -5-                LRB9204570EGdv
 1    contribution  shall  be paid from the same source of funds as
 2    is used in payment of earnings to the employee and may not be
 3    paid from funds raised by the tax levy authorized by  Section
 4    7-171.   The  contributions shall be picked up by a reduction
 5    in earnings payment  to  employees.   Employee  contributions
 6    that  are  picked  up  shall  be considered as earnings under
 7    Section  7-114.    If   a   participating   municipality   or
 8    participating  instrumentality  fails to report participating
 9    employee earnings which should have been reported to the fund
10    and pays the employee the full amount of  earnings  including
11    employee  contributions  which should have been picked up and
12    forwarded to the fund, then the employee shall  make  payment
13    of  the  employee  contributions  to  the  fund  on behalf of
14    employer and such contributions shall be considered as picked
15    up contributions if  paid  in  the  year  the  earnings  were
16    received,  or  by January 31st of the following year, and are
17    reflected as picked up on reports  to  the  Internal  Revenue
18    Service.   If  they  cannot  be  so reflected, or if received
19    after that date, they shall  not  be  treated  as  picked  up
20    contributions.   Picked  up  employee  contributions shall be
21    considered as employee contributions  in  computing  benefits
22    paid under this Article 7.
23        (c)  Subject  to  the  requirements  of  federal  law, an
24    employee may elect to have  the  employer  pick  up  optional
25    contributions  that  the  employee  has elected to pay to the
26    Fund, and the contributions so picked up shall be treated  as
27    employer   contributions  for  the  purposes  of  determining
28    federal tax treatment.    The  employer  shall  pick  up  the
29    contributions  by  a  reduction  in  the  cash  salary of the
30    employee and shall pay the contributions from the same source
31    of funds that is used to pay earnings to the  employee.   The
32    employee's election to have the optional contributions picked
33    up  is  irrevocable  and  the  optional contributions may not
34    thereafter be prepaid, by direct payment or otherwise.
 
                            -6-                LRB9204570EGdv
 1    (Source: P.A. 90-766, eff. 8-14-98.)

 2        (40 ILCS 5/7-199.4 new)
 3        Sec. 7-199.4. To administer a  program  of  group  health
 4    benefits.   To  administer a program of group health benefits
 5    for retired employees and their dependents and survivors  and
 6    to provide subsidies for those retired employees who elect to
 7    continue to participate in their former IMRF employer's group
 8    health plan under the continuation privilege.
 9        (a)  For the purposes of this Section:
10        "Active  employee"  means an employee of an IMRF employer
11    who is participating in IMRF per Section 7-137.
12        "Continuation privilege" means  the  right  of  a  former
13    employee  to  continue participation in the former employer's
14    health plan, as established under the Illinois Insurance Code
15    and applicable federal law.
16        "IMRF employer" means  a  participating  municipality  or
17    participating instrumentality.
18        "IMRF   group   health   plan"  means  the  plan  (either
19    self-funded  or  a  policy  of  group  accident  and   health
20    insurance)  selected by the IMRF Board of Trustees to provide
21    health  insurance  benefits  to  retired   employees,   their
22    dependents and survivors.
23        "Retired  employee"  means  a  person  who is receiving a
24    retirement annuity from the Fund.
25        "Surviving spouse" means a  person  who  is  receiving  a
26    surviving spouse annuity under Section 7-154.
27        "Eligible  retired employee" means a retired employee who
28    had at least 8 years of IMRF service credit and who made  the
29    contributions  required under subsection (d) for at least one
30    month.
31        "Eligible surviving  spouse"  means  a  surviving  spouse
32    whose  deceased  spouse  had at least 8 years of IMRF service
33    credit and made the contributions required  under  subsection
 
                            -7-                LRB9204570EGdv
 1    (d) for at least one month.
 2        "Transitional subsidy program" means the health insurance
 3    premium  subsidy  provided  under  this  Section  for retired
 4    employees, age 65  and  over,  who  left  service  as  active
 5    employees  prior to the effective date of this amendatory Act
 6    of  the  92nd  General  Assembly  or   did   not   make   any
 7    contributions   required   under   subsection  (d),  and  for
 8    surviving spouses who began receiving  the  surviving  spouse
 9    annuity prior to the effective date of this amendatory Act or
10    whose deceased spouse did not make any contributions required
11    under subsection (d).
12        "Dependent"  means a person or persons to be covered with
13    the retired employee or surviving spouse as allowed under the
14    terms of the IMRF  group  health  plan  or  the  former  IMRF
15    employer's group health plan.
16        (b)  The  Board  shall establish and administer a program
17    of group health benefits providing medical care  benefits  as
18    defined  in  Section 213 of the Internal Revenue Code of 1986
19    for retired employees  and  their  dependents  and  surviving
20    spouses,  which  benefits are intended to qualify for federal
21    income tax exclusion.  This program  may  be  self-funded  or
22    operated   under  a  policy  of  group  accident  and  health
23    insurance.  As part of this program,  the  Board  shall  also
24    establish and administer a program of subsidies to offset the
25    cost  of  participation for those retired employees who elect
26    to continue to participate in their  former  IMRF  employer's
27    group  health  plan  under  the  continuation privilege.  The
28    Board  may  adopt  any  structures  and  rules  that  may  be
29    necessary or convenient relating  to  the  establishment  and
30    administration  of the program or to the conditions and terms
31    of participation in the program.  The Board rules may require
32    use of the continuation privilege by  retired  employees  who
33    are  eligible  to use that privilege but are not eligible for
34    Medicare.
 
                            -8-                LRB9204570EGdv
 1        This program shall be entirely independent of  the  other
 2    functions  and  assets  of  the  Fund,  and  the  assets  and
 3    liabilities  arising  out  of  the  operation of this program
 4    shall remain separate from the other assets  and  liabilities
 5    of  the  Fund, with this program being intended to constitute
 6    an accident and health program  within  the  meaning  of  the
 7    Internal  Revenue Code of 1986.  Moneys received by the Board
 8    relating to the program established under this Section  shall
 9    not  be  deemed  contributions to or assets of the Fund.  All
10    such moneys shall be held by the Board in  separate  accounts
11    and  used  only  for  the purposes of the program established
12    under this Section.
13        (c)  Beginning on January  1,  2003,  from  the  separate
14    account  established  for  this purpose, the Fund shall pay a
15    portion of  the  cost  of  participation  for  each  eligible
16    retired  employee  or eligible surviving spouse who elects to
17    participate in either the former IMRF employer's group health
18    plan or the IMRF group health plan.  The portion of the  cost
19    paid  shall  not  exceed  5%  of  the  cost  of  the eligible
20    employee's participation  (not  including  any  dependent  or
21    optional  coverages)  for  each  year he or she was an active
22    employee, up to a maximum of 20 years.  The  portion  of  the
23    cost paid on behalf of an eligible surviving spouse shall not
24    exceed 5% of the cost of the surviving spouse's participation
25    (not  including any dependent or optional coverages) for each
26    year the deceased member was an  active  employee,  up  to  a
27    maximum  of 20 years.  The portion of the cost paid on behalf
28    of an eligible retired employee or eligible surviving  spouse
29    who  elects to participate in the former IMRF employer's plan
30    shall not exceed the amount the program would pay  if  he  or
31    she was in the IMRF group health plan.
32        The  balance  of the cost of participation in the program
33    for an eligible retired employee or eligible surviving spouse
34    who elects to participate, together with the entire  cost  of
 
                            -9-                LRB9204570EGdv
 1    any  optional  coverage  or coverage for dependents, shall be
 2    paid by  deductions  authorized  by  the  participant  to  be
 3    withheld from his or her monthly annuity payment, except that
 4    any  amount  by which the monthly premium balance exceeds the
 5    net amount of the  monthly  annuity  payment  shall  be  paid
 6    directly  to  the Fund or its designee (or to the employer in
 7    the case of utilization of the continuation privilege) by the
 8    participant. All amounts so withheld  or  paid  to  the  Fund
 9    shall  be  held in trust for the purposes of paying the costs
10    of the eligible  retired  employee's  or  eligible  surviving
11    spouse's  participation  in  the  group  health  plan.  If  a
12    participant  fails to pay premiums, then participation in the
13    program shall be terminated.
14        (d)  Beginning on April 1,  2002,  all  active  employees
15    shall  contribute  1%  of  earnings  toward  the  cost of the
16    program   established   under   subsection   (b).       These
17    contributions  shall  be deducted by the employer and paid to
18    the Fund for deposit into the  separate  account  established
19    under  subsection  (c).   The Fund may use the same processes
20    for collecting the contributions required by this  subsection
21    that  it  uses  to collect contributions from employees under
22    Section 7-173.   An  IMRF  employer  may  agree  to  pay  the
23    contributions required under this subsection on behalf of the
24    employee.   Contributions  made under this subsection are not
25    transferable to other pension funds or retirement systems and
26    are not refundable upon termination of service.
27        (e)  Beginning on April  1,  2002,  every  IMRF  employer
28    shall  contribute  toward the cost of the program established
29    under subsection (b) an amount equal to 1% of the earnings of
30    its active employees.  These contributions shall be  paid  by
31    the  employer  to  the  Fund  for  deposit  into the separate
32    account established under subsection (c).  The Fund  may  use
33    the  same processes for collecting the contributions required
34    by this subsection that it uses to collect contributions from
 
                            -10-               LRB9204570EGdv
 1    employers under Sections 7-172 and  7-172.1.   If  the  Board
 2    determines   that  the  separate  account  established  under
 3    subsection (c) is at a level that would  jeopardize  the  tax
 4    qualification of the Fund, the board may lower or suspend the
 5    contributions    required    under   this   subsection   (e).
 6    Contributions for the program established under this  Section
 7    are  separate  from  the  contributions  to the Fund required
 8    under  Section  7-172  and  shall  not  be  included  in  the
 9    calculation of the contribution rate under that Section.
10        (f)  The  Board  shall   establish   and   administer   a
11    transitional  subsidy  program  under this subsection (f) for
12    retired employees who left service as active employees  prior
13    to  the  effective  date  of  this amendatory Act of the 92nd
14    General Assembly  or  who  did  not  make  any  contributions
15    required  under subsection (d), and for surviving spouses who
16    began receiving the surviving spouse  annuity  prior  to  the
17    effective  date  of  this  amendatory  Act  or whose deceased
18    spouse  did  not  make  any  contributions   required   under
19    subsection (d).
20        Beginning on April 1, 2002 and ending upon termination of
21    the  transitional subsidy program as determined by the Board,
22    in addition to the contributions  required  under  subsection
23    (e),  every IMRF employer shall contribute toward the cost of
24    the  transitional  subsidy  program  established  under  this
25    subsection (f) an amount equal to 0.25% of  the  earnings  of
26    its  active  employees.  These contributions shall be paid by
27    the employer to the Fund for deposit into a separate  account
28    established   under  this  subsection  for  the  transitional
29    subsidy program.  The Fund may use  the  same  processes  for
30    collecting the contributions required by this subsection that
31    it   uses  to  collect  contributions  from  employers  under
32    Sections  7-172   and   7-172.1.    Contributions   for   the
33    transitional   subsidy   program   established   under   this
34    subsection  are  separate  from the contributions to the Fund
 
                            -11-               LRB9204570EGdv
 1    required under subsection (e) and Section 7-172 and shall not
 2    be included in the calculation of the contribution rate under
 3    that Section.
 4        Beginning on January 1, 2003, the Fund shall pay from the
 5    separate account established under this subsection a  portion
 6    of  the  cost  of participation for each retired employee and
 7    surviving spouse who elects to participate in the IMRF  group
 8    health plan and who (1) is not eligible for the subsidy under
 9    subsection  (c),  (2)  had  (or whose deceased spouse had) at
10    least 8 years of IMRF service credit, and (3) is at least age
11    65.  The amount of the subsidy under this subsection shall be
12    determined annually by the Fund, but shall not exceed  5%  of
13    the  cost  of  the  IMRF group health plan (not including any
14    dependent or optional coverages) for each year the member  or
15    deceased member was an active employee, up to a maximum of 20
16    years.
17        The  balance  of  the  cost  of participation in the IMRF
18    group health plan for a retired employee or surviving  spouse
19    who  elects  to participate, together with the entire cost of
20    any optional coverage or coverage for  dependents,  shall  be
21    paid by deductions authorized by the annuitant to be withheld
22    from  his  or  her  monthly  annuity payment, except that any
23    amount by which the monthly premium balance exceeds  the  net
24    amount  of the monthly annuity payment shall be paid directly
25    to the  Fund  or  its  designee  by  the  participant.  If  a
26    participant  fails  to  pay  premiums,  participation  in the
27    program shall be terminated.  All amounts so withheld or paid
28    to the Fund shall be held in trust for the purposes of paying
29    the costs of participation in the IMRF group health plan.
30        As the number of retired employees and surviving  spouses
31    eligible   to   participate   in   the  program  is  reduced,
32    contributions  required  under  this   subsection   for   the
33    transitional   subsidy   program   shall  be  proportionately
34    transferred  to  the  separate  account   established   under
 
                            -12-               LRB9204570EGdv
 1    subsection  (c),  as determined by the Board. At the time the
 2    Board determines the contributions are  no  longer  required,
 3    any  excess  contributions  in  the  separate account for the
 4    transitional subsidy program  shall  be  transferred  to  the
 5    separate   account  established  under  subsection  (c).  The
 6    subsidy established under this subsection  shall  be  payable
 7    notwithstanding Section 1-103.1 of this Code.
 8        (g)  The  Board  shall  submit  an  annual  report of its
 9    activities under this Section to each IMRF employer.
10        (h)  The  group  health  benefit  and  subsidy   programs
11    established  under  this  Section  are not intended to be and
12    shall not be construed to be pension or  retirement  benefits
13    for  purposes  of  Section  5 of Article XIII of the Illinois
14    Constitution.

15        (40 ILCS 5/7-199.5 new)
16        Sec.  7-199.5.  Reserves  for  program  of  group  health
17    benefits.  Appropriate reserves shall be created for  payment
18    of  the  benefits  in  the  program  authorized under Section
19    7-199.4, as follows:
20        (1)  A reserve  shall  be  created  for  the  payment  of
21    benefits  under  subsection  (c)  of  Section  7-199.4.   The
22    employee    and   employer   contributions   required   under
23    subsections (d) and (e) of Section 7-199.4 shall be  credited
24    to this reserve.
25        (2)  A   separate   reserve  shall  be  created  for  the
26    transitional subsidy program created under subsection (f)  of
27    Section  7-199.4.  The transitional subsidy benefits shall be
28    paid  from  this  reserve  and  the  employer   contributions
29    required  by  subsection  (f)  of  Section  7-199.4  shall be
30    credited to this reserve.

31        Section 90.  The State Mandates Act is amended by  adding
32    Section 8.25 as follows:
 
                            -13-               LRB9204570EGdv
 1        (30 ILCS 805/8.25 new)
 2        Sec.  8.25.  Exempt  mandate.  Notwithstanding Sections 6
 3    and 8 of this Act, no reimbursement by the State is  required
 4    for  the  implementation  of  any  mandate  created  by  this
 5    amendatory Act of the 92nd General Assembly.

 6        Section  99.  Effective date.  This Act takes effect upon
 7    becoming law.

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