Public Act 90-0448 of the 90th General Assembly

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Public Act 90-0448

SB665 Enrolled                                 LRB9000602EGfg

    AN ACT in relation to public employee pensions.

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

    Section  5.  The State Salary and Annuity Withholding Act
is amended by changing Sections 2, 4, 8, and 9 as follows:

    (5 ILCS 365/2) (from Ch. 127, par. 352)
    Sec. 2. Definitions.  As used in  this  Act,  unless  the
context otherwise requires:
    "Office"  means  the  State  Comptroller,  the  Board  of
Trustees  of the State Universities Retirement System, or the
Board of Trustees of any of the following  institutions:  the
University  of  Illinois,  the  Board of Trustees of Southern
Illinois  University,  Chicago  State   University,   Eastern
Illinois  University,  Governors  State  University, Illinois
State University, Northeastern Illinois University,  Northern
Illinois  University,  and  Western  Illinois  University the
Board of Governors of State Colleges and Universities and the
universities and colleges  under  its  jurisdiction  and  the
Board of Regents and the universities under its jurisdiction.
    "Department"  means  any  department,  board, commission,
institution, officer, court,  or  any  agency  of  the  State
government,  other  than the University of Illinois, Southern
Illinois  University,  Chicago  State   University,   Eastern
Illinois  University,  Governors  State  University, Illinois
State University, Northeastern Illinois University,  Northern
Illinois   University,   and   Western  Illinois  University,
receiving  State  appropriations  and  having  the  power  to
certify payrolls to the Comptroller authorizing  payments  of
salary  or wages from such appropriations from any State fund
or from trust funds held by  the  State  Treasurer;  and  the
Board  of Trustees of the General Assembly Retirement System,
the Board of Trustees  of  the  State  Employees'  Retirement
System  of  Illinois,  the Board of Trustees of the Teachers'
Retirement System of the State of Illinois,  and the Board of
Trustees of the Judges Retirement System of Illinois  created
respectively  by  Articles 2, 14, 16, and 18 of the "Illinois
Pension  Code.",  approved  March  18,  1963,  as  heretofore
amended;
    "Employee" means any  regular  officer  or  employee  who
receives salary or wages for personal service rendered to the
State  of  Illinois and, for the purpose of deduction for the
purchase of United States Savings Bonds, includes  any  State
contractual employee.;
    "Annuitant" means a person receiving a service retirement
annuity   allowance  or  ordinary  or  accidental  disability
benefits under Article 2, Article 14, 15, 16, or  Article  18
of  the "Illinois Pension Code.", approved March 18, 1963, as
heretofore and hereafter amended;
    "Annuity" means the service retirement annuity  allowance
or accidental disability benefits received by an annuitant.
(Source: P.A. 89-4, eff. 1-1-96; revised 2-7-97.)

    (5 ILCS 365/4) (from Ch. 127, par. 354)
    Sec.  4.   Authorization  of withholding.  An employee or
annuitant may authorize the withholding of a portion  of  his
salary,  wages,  or  annuity  for  any  one  or  more  of the
following purposes:
    (1)  for purchase of United States Savings Bonds;
    (2)  for payment of premiums  on  life  or  accident  and
health  insurance  as  defined  in Section 4 of the "Illinois
Insurance Code", approved June 29, 1937, as amended, and  for
payment  of  premiums  on policies of automobile insurance as
defined in Section 143.13 of the "Illinois  Insurance  Code",
as  amended,  and  the personal multiperil coverages commonly
known as  homeowner's  insurance.   However,  no  portion  of
salaries,  wages or annuities may be withheld to pay premiums
on automobile,  homeowner's,  life  or  accident  and  health
insurance  policies  issued  by  any one insurance company or
insurance service company unless a minimum of  100  employees
or   annuitants   insured   by  that  company  authorize  the
withholding  by  an  Office  within  6  months   after   such
withholding  begins.   If  such  minimum is not satisfied the
Office may discontinue withholding for such company. For  any
insurance  company or insurance service company which has not
previously had withholding, the Office may allow  withholding
for premiums, where less than 100 policies have been written,
to  cover  a probationary period.  An insurance company which
has  discontinued   withholding   may   reinstate   it   upon
presentation   of   facts   indicating   new   management  or
re-organization satisfactory to the Office;
    (3)  for payment to any labor organization designated  by
the employee;
    (4)  for   payment   of   dues  to  any  association  the
membership of which consists of State  employees  and  former
State employees;
    (5)  for  deposit  in  any  credit  union, in which State
employees are within the field of membership as a  result  of
their employment;
    (6)  for  payment to or for the benefit of an institution
of higher education by an employee of that institution;
    (7)  for payment  of  parking  fees  at  the  underground
facility  located  south  of  the  William  G. Stratton State
Office Building in Springfield, the parking ramp  located  at
401  South  College  Street,  west of the William G. Stratton
State Office Building  in  Springfield,  or  at  the  parking
facilities  located  on  the  Urbana-Champaign  campus of the
University of Illinois;.
    (8)  for voluntary payment to the State  of  Illinois  of
amounts then due and payable to the State;.
    (9)  for  investment  purchases  made as a participant in
College Savings  Programs  established  pursuant  to  Section
30-15.8a of the School Code;.
    (10)  for voluntary payment to the Illinois Department of
Revenue  of  amounts  due or to become due under the Illinois
Income Tax Act;
    (11)  for  payment  of  optional   contributions   to   a
retirement  system  subject to the provisions of the Illinois
Pension Code.
(Source: P.A. 88-161.)

    (5 ILCS 365/8) (from Ch. 127, par. 358)
    Sec. 8. Payment of certain amounts withheld.
    (a)  If a withholding authorization is for the purpose of
payment of insurance premiums  or  for  payment  to  a  labor
union,  each  Office  shall make payments, as soon as payroll
warrants are prepared and verified, on behalf of the employee
or annuitant to the payee  named  in  the  authorization  the
amount  specified  in the authorization.  Such payments shall
be made by warrants prepared  at  the  time  the  payroll  is
processed.
    (b)  If a withholding authorization is for the purpose of
purchasing United States Savings Bonds, each Office, whenever
a sufficient sum has accumulated in the employee's account to
purchase  a bond of the denomination directed by the employee
in his authorization, shall purchase  such  a  United  States
Savings  Bond  in  the  name  designated  by the employee and
deliver it to the employee.
    (c)  If a withholding authorization is for the purpose of
payment of parking fees pursuant to paragraph 7 of Section 4,
the  State  Comptroller  shall  deposit  80%  of  the  amount
withheld in  the  Capital  Development  Bond  Retirement  and
Interest  Fund  in  the  State Treasury and 20% of the amount
withheld in the State Parking Facility  Maintenance  Fund  in
the State Treasury.
    (d)  If a withholding authorization is for the purpose of
payment  of  amounts  due or to become due under the Illinois
Income Tax Act, the Office shall  pay  the  amounts  withheld
without  delay  directly to the Department of Revenue or to a
depositary designated by the Department of Revenue.
(Source: P.A. 83-619.)

    (5 ILCS 365/9) (from Ch. 127, par. 359)
    Sec. 9. Any authorization to withhold  from  the  salary,
wages  or annuity of an employee or annuitant shall terminate
and such withholding shall cease upon the happening of any of
the following events:
    (1)  termination of employment or termination of  payment
of an annuity, as the case may be;
    (2)  written  notice  by  the  employee  or  annuitant of
cancellation of such former  authorization,  except  that  an
authorization   to  withhold  for  the  payment  of  optional
contributions to a  retirement  system  through  an  employer
pickup is irrevocable;
    (3)  expiration of the time during which such withholding
was authorized;
    (4)  when  the total amount authorized to be withheld has
been so withheld.
    Upon termination  of  authorization  to  purchase  United
States  Savings Bonds, any amount withheld from the salary or
wages of an employee for such purpose and which has not  been
so  used  shall be immediately remitted by each Office to the
person from whose salary or wages such amount was withheld.
(Source: Laws 1965, p. 1244.)

    Section 10.  The State Employees Group Insurance  Act  of
1971 is amended by changing Sections 3 and 6.6 as follows:
    (5 ILCS 375/3) (from Ch. 127, par. 523)
    (Text of Section before amendment by P.A. 89-507)
    Sec.   3.  Definitions.   Unless  the  context  otherwise
requires, the following words and phrases as used in this Act
shall have the following meanings.  The Department may define
these and other words and phrases separately for the  purpose
of  implementing  specific  programs providing benefits under
this Act.
    (a)  "Administrative  service  organization"  means   any
person,  firm  or  corporation experienced in the handling of
claims  which  is  fully  qualified,  financially  sound  and
capable of meeting the service requirements of a contract  of
administration executed with the Department.
    (b)  "Annuitant"  means  (1)  an employee who retires, or
has retired, on or after January  1,  1966  on  an  immediate
annuity under the provisions of Articles 2, 14, 15 (including
an  employee  who  has  retired and is receiving a retirement
annuity under the an optional retirement program  established
under  Section  15-158.2 and who would also be eligible for a
retirement annuity had that person been a participant in  the
State University Retirement System), paragraphs (b) or (c) of
Section  16-106,  or Article 18 of the Illinois Pension Code;
(2) any person who was  receiving  group  insurance  coverage
under  this  Act as of March 31, 1978 by reason of his status
as an annuitant, even though the annuity in relation to which
such coverage was provided is a proportional annuity based on
less than the  minimum  period  of  service  required  for  a
retirement annuity in the system involved; (3) any person not
otherwise   covered   by  this  Act  who  has  retired  as  a
participating member under Article 2 of the Illinois  Pension
Code  but  is  ineligible  for  the  retirement annuity under
Section 2-119 of the Illinois Pension Code; (4) the spouse of
any person  who  is  receiving  a  retirement  annuity  under
Article  18  of  the Illinois Pension Code and who is covered
under  a  group  health  insurance  program  sponsored  by  a
governmental employer other than the State  of  Illinois  and
who  has  irrevocably  elected  to  waive his or her coverage
under this Act and to have his or her  spouse  considered  as
the  "annuitant"  under this Act and not as a "dependent"; or
(5) an employee who retires, or has retired, from a qualified
position, as determined according to rules promulgated by the
Director, under a qualified local government or  a  qualified
rehabilitation  facility  or  a  qualified  domestic violence
shelter or service. (For definition  of  "retired  employee",
see (p) post).
    (c)  "Carrier"   means   (1)   an  insurance  company,  a
corporation  organized  under  the  Limited  Health   Service
Organization Act or the Voluntary Health Services Plan Act, a
partnership,  or other nongovernmental organization, which is
authorized  to  do  group  life  or  group  health  insurance
business in Illinois, or (2)  the  State  of  Illinois  as  a
self-insurer.
    (d)  "Compensation"  means  salary  or wages payable on a
regular payroll by the State Treasurer on a  warrant  of  the
State Comptroller out of any State, trust or federal fund, or
by  the Governor of the State through a disbursing officer of
the State out of a trust or out of federal funds, or  by  any
Department  out  of State, trust, federal or other funds held
by the State Treasurer or the Department, to any  person  for
personal   services  currently  performed,  and  ordinary  or
accidental disability  benefits  under  Articles  2,  14,  15
(including  ordinary  or accidental disability benefits under
the an optional retirement program established under  Section
15-158.2),  paragraphs  (b)  or  (c)  of  Section  16-106, or
Article 18 of  the  Illinois  Pension  Code,  for  disability
incurred after January 1, 1966, or benefits payable under the
Workers'   Compensation   or  Occupational  Diseases  Act  or
benefits  payable  under  a  sick  pay  plan  established  in
accordance  with  Section  36  of  the  State  Finance   Act.
"Compensation" also means salary or wages paid to an employee
of any qualified local government or qualified rehabilitation
facility or a qualified domestic violence shelter or service.
    (e)  "Commission"   means   the   State  Employees  Group
Insurance  Advisory  Commission  authorized  by   this   Act.
Commencing  July  1,  1984,  "Commission" as used in this Act
means  the  Illinois  Economic  and  Fiscal   Commission   as
established  by the Legislative Commission Reorganization Act
of 1984.
    (f)  "Contributory", when  referred  to  as  contributory
coverage,  shall  mean optional coverages or benefits elected
by the member toward the cost  of  which  such  member  makes
contribution, or which are funded in whole or in part through
the acceptance of a reduction in earnings or the foregoing of
an increase in earnings by an employee, as distinguished from
noncontributory  coverage or benefits which are paid entirely
by the State of Illinois without reduction  of  the  member's
salary.
    (g)  "Department"   means  any  department,  institution,
board, commission, officer, court or any agency of the  State
government  receiving  appropriations  and  having  power  to
certify  payrolls  to the Comptroller authorizing payments of
salary and wages against such appropriations as are  made  by
the  General  Assembly  from any State fund, or against trust
funds held by the State  Treasurer  and  includes  boards  of
trustees of the retirement systems created by Articles 2, 14,
15,  16  and  18  of the Illinois Pension Code.  "Department"
also includes the  Illinois  Comprehensive  Health  Insurance
Board and the Illinois Rural Bond Bank.
    (h)  "Dependent", when the term is used in the context of
the  health  and  life  plan, means a member's spouse and any
unmarried child (1) from birth to age 19 including an adopted
child, a child who lives with the member from the time of the
filing of a petition for adoption until entry of an order  of
adoption,  a stepchild or recognized child who lives with the
member in a parent-child relationship, or a child  who  lives
with  the member if such member is a court appointed guardian
of the child, or (2) age 19 to 23  enrolled  as  a  full-time
student  in any accredited school, financially dependent upon
the member, and eligible as a dependent  for  Illinois  State
income tax purposes, or (3) age 19 or over who is mentally or
physically  handicapped  as defined in the Illinois Insurance
Code. For the health plan only,  the  term  "dependent"  also
includes  any  person enrolled prior to the effective date of
this Section who is dependent upon the member to  the  extent
that  the  member  may  claim  such person as a dependent for
Illinois State income tax deduction purposes; no  other  such
person may be enrolled.
    (i)  "Director"   means  the  Director  of  the  Illinois
Department of Central Management Services.
    (j)  "Eligibility period" means  the  period  of  time  a
member  has  to  elect  enrollment  in  programs or to select
benefits without regard to age, sex or health.
    (k)  "Employee"  means  and  includes  each  officer   or
employee  in the service of a department who (1) receives his
compensation for service rendered  to  the  department  on  a
warrant   issued   pursuant  to  a  payroll  certified  by  a
department or on a warrant or check issued  and  drawn  by  a
department  upon  a  trust,  federal  or  other  fund or on a
warrant issued pursuant to a payroll certified by an  elected
or  duly  appointed  officer  of  the  State  or who receives
payment of the performance of personal services on a  warrant
issued  pursuant  to  a payroll certified by a Department and
drawn by the Comptroller upon  the  State  Treasurer  against
appropriations  made by the General Assembly from any fund or
against trust funds held by the State Treasurer, and  (2)  is
employed  full-time  or  part-time  in  a  position  normally
requiring actual performance of duty during not less than 1/2
of  a  normal  work period, as established by the Director in
cooperation with each department, except that persons elected
by popular vote  will  be  considered  employees  during  the
entire  term  for  which they are elected regardless of hours
devoted to the service of the  State,  and  (3)  except  that
"employee" does not include any person who is not eligible by
reason  of  such person's employment to participate in one of
the State retirement systems under Articles 2, 14, 15 (either
the regular Article 15 system or the an  optional  retirement
program  established  under Section 15-158.2) or 18, or under
paragraph (b) or (c)  of  Section  16-106,  of  the  Illinois
Pension  Code,  but  such  term  does include persons who are
employed during the 6 month qualifying period  under  Article
14 of the Illinois Pension Code.  Such term also includes any
person  who  (1) after January 1, 1966, is receiving ordinary
or accidental disability benefits under Articles  2,  14,  15
(including  ordinary  or accidental disability benefits under
the an optional retirement program established under  Section
15-158.2),  paragraphs  (b)  or  (c)  of  Section  16-106, or
Article 18 of  the  Illinois  Pension  Code,  for  disability
incurred  after January 1, 1966, (2) receives total permanent
or total temporary disability under the Workers' Compensation
Act or Occupational Disease  Act  as  a  result  of  injuries
sustained  or  illness contracted in the course of employment
with the State of Illinois, or (3) is not  otherwise  covered
under  this  Act  and  has  retired as a participating member
under  Article  2  of  the  Illinois  Pension  Code  but   is
ineligible  for the retirement annuity under Section 2-119 of
the Illinois Pension Code.  However, a person  who  satisfies
the criteria of the foregoing definition of "employee" except
that  such  person  is  made ineligible to participate in the
State Universities Retirement System by  clause  (4)  of  the
first  paragraph  of  Section  15-107 of the Illinois Pension
Code is also an "employee" for  the  purposes  of  this  Act.
"Employee" also includes any person receiving or eligible for
benefits under a sick pay plan established in accordance with
Section 36 of the State Finance Act. "Employee" also includes
each  officer or employee in the service of a qualified local
government,  including  persons  appointed  as  trustees   of
sanitary districts regardless of hours devoted to the service
of the sanitary district, and each employee in the service of
a   qualified  rehabilitation  facility  and  each  full-time
employee in the service  of  a  qualified  domestic  violence
shelter   or   service,  as  determined  according  to  rules
promulgated by the Director.
    (l)  "Member"  means  an  employee,  annuitant,   retired
employee or survivor.
    (m)  "Optional   coverages   or   benefits"  means  those
coverages or benefits available to the member on his  or  her
voluntary election, and at his or her own expense.
    (n)  "Program"  means  the  group  life insurance, health
benefits and other employee benefits designed and  contracted
for by the Director under this Act.
    (o)  "Health  plan" means a self-insured health insurance
program offered by the State of Illinois for the purposes  of
benefiting  employees  by  means  of providing, among others,
wellness programs, utilization reviews, second  opinions  and
medical  fee  reviews, as well as for paying for hospital and
medical care up to the maximum coverage provided by the plan,
to its members and their dependents.
    (p)  "Retired employee" means any person who would be  an
annuitant  as  that  term  is defined herein but for the fact
that such person retired prior to January 1, 1966.  Such term
also includes any person formerly employed by the  University
of Illinois in the Cooperative Extension Service who would be
an  annuitant  but  for  the  fact  that such person was made
ineligible  to  participate   in   the   State   Universities
Retirement  System  by  clause  (4) of the first paragraph of
Section 15-107 of the Illinois Pension Code.
    (q)  "Survivor" means a person receiving an annuity as  a
survivor  of  an employee or of an annuitant. "Survivor" also
includes:  (1)  the  surviving  dependent  of  a  person  who
satisfies the  definition  of  "employee"  except  that  such
person  is  made  ineligible  to  participate  in  the  State
Universities  Retirement  System  by  clause (4) of the first
paragraph of Section 15-107 of the Illinois Pension Code; and
(2) the surviving dependent of any person  formerly  employed
by  the  University  of Illinois in the Cooperative Extension
Service who would be an annuitant except for  the  fact  that
such  person  was made ineligible to participate in the State
Universities Retirement System by clause  (4)  of  the  first
paragraph of Section 15-107 of the Illinois Pension Code.
    (r)  "Medical   services"  means  the  services  provided
within the scope of their licenses by  practitioners  in  all
categories licensed under the Medical Practice Act of 1987.
    (s)  "Unit   of   local  government"  means  any  county,
municipality, township, school district, special district  or
other  unit, designated as a unit of local government by law,
which exercises limited  governmental  powers  or  powers  in
respect  to limited governmental subjects, any not-for-profit
association  with  a  membership  that   primarily   includes
townships  and  township  officials,  that  has  duties  that
include  provision  of  research  service,  dissemination  of
information,  and  other  acts  for  the purpose of improving
township government, and that is funded wholly or  partly  in
accordance  with  Section  85-15  of  the  Township Code; any
not-for-profit corporation or association, with a  membership
consisting primarily of municipalities, that operates its own
utility    system,    and    provides   research,   training,
dissemination  of  information,  or  other  acts  to  promote
cooperation between and  among  municipalities  that  provide
utility  services  and  for  the advancement of the goals and
purposes of its membership; and the Illinois  Association  of
Park Districts.  "Qualified local government" means a unit of
local  government  approved by the Director and participating
in a program created under subsection (i) of  Section  10  of
this Act.
    (t)  "Qualified   rehabilitation   facility"   means  any
not-for-profit  organization  that  is  accredited   by   the
Commission  on  Accreditation of Rehabilitation Facilities or
certified  by  the  Department     of   Mental   Health   and
Developmental  Disabilities  to  provide  services to persons
with disabilities and which receives funds from the State  of
Illinois  for  providing  those  services,  approved  by  the
Director   and  participating  in  a  program  created  under
subsection (j) of Section 10 of this Act.
    (u)  "Qualified domestic  violence  shelter  or  service"
means  any  Illinois domestic violence shelter or service and
its administrative offices funded by the Illinois  Department
of  Public Aid, approved by the Director and participating in
a program created under subsection (k) of Section 10.
    (v)  "TRS benefit recipient" means a person who:
         (1)  is not a "member" as defined in  this  Section;
    and
         (2)  is  receiving  a  monthly benefit or retirement
    annuity under Article 16 of the  Illinois  Pension  Code;
    and
         (3)  either  (i)  has at least 8 years of creditable
    service under Article 16 of the Illinois Pension Code, or
    (ii) was enrolled in the health insurance program offered
    under that Article on January 1, 1996, or  (iii)  is  the
    survivor  of a benefit recipient who had at least 8 years
    of creditable service under Article 16  of  the  Illinois
    Pension  Code  or  was  enrolled  in the health insurance
    program offered under that Article on the effective  date
    of this amendatory Act of 1995, or (iv) is a recipient or
    survivor  of  a  recipient  of a disability benefit under
    Article 16 of the Illinois Pension Code.
    (w)  "TRS dependent beneficiary" means a person who:
         (1)  is not a "member" or "dependent" as defined  in
    this Section; and
         (2)  is  a  TRS benefit recipient's: (A) spouse, (B)
    dependent parent who is receiving at least half of his or
    her support  from  the  TRS  benefit  recipient,  or  (C)
    unmarried  natural  or adopted child who is (i) under age
    19, or  (ii)  enrolled  as  a  full-time  student  in  an
    accredited  school,  financially  dependent  upon the TRS
    benefit recipient, eligible as a dependent  for  Illinois
    State  income tax purposes, and either is under age 23 24
    or was, on January 1, 1996, participating as a  dependent
    beneficiary in the health insurance program offered under
    Article  16 of the Illinois Pension Code, or (iii) age 19
    or over who is  mentally  or  physically  handicapped  as
    defined in the Illinois Insurance Code.
    (x)  "Military  leave  with  pay  and benefits" refers to
individuals in basic training for reserves,  special/advanced
training,  annual  training, emergency call up, or activation
by the President of the United States with approved  pay  and
benefits.
    (y)  "Military  leave without pay and benefits" refers to
individuals who enlist for active duty in a regular component
of the U.S. Armed Forces  or  other  duty  not  specified  or
authorized under military leave with pay and benefits.
(Source:  P.A.  88-670,  eff.  12-2-94;  89-21, eff. 6-21-95;
89-25,  eff.  6-21-95;  89-76,  eff.  7-1-95;  89-324,   eff.
8-13-95;  89-430, eff. 12-15-95; 89-502, eff. 7-1-96; 89-628,
eff. 8-9-96; revised 8-23-96.)

    (Text of Section after amendment by P.A. 89-507)
    Sec.  3.  Definitions.   Unless  the  context   otherwise
requires, the following words and phrases as used in this Act
shall have the following meanings.  The Department may define
these  and other words and phrases separately for the purpose
of implementing specific programs  providing  benefits  under
this Act.
    (a)  "Administrative   service  organization"  means  any
person, firm or corporation experienced in  the  handling  of
claims  which  is  fully  qualified,  financially  sound  and
capable  of meeting the service requirements of a contract of
administration executed with the Department.
    (b)  "Annuitant" means (1) an employee  who  retires,  or
has  retired,  on  or  after  January 1, 1966 on an immediate
annuity under the provisions of Articles 2, 14, 15 (including
an employee who has retired and  is  receiving  a  retirement
annuity  under the an optional retirement program established
under Section 15-158.2 and who would also be eligible  for  a
retirement  annuity had that person been a participant in the
State University Retirement System), paragraphs (b) or (c) of
Section 16-106, or Article 18 of the Illinois  Pension  Code;
(2)  any  person  who  was receiving group insurance coverage
under this Act as of March 31, 1978 by reason of  his  status
as an annuitant, even though the annuity in relation to which
such coverage was provided is a proportional annuity based on
less  than  the  minimum  period  of  service  required for a
retirement annuity in the system involved; (3) any person not
otherwise  covered  by  this  Act  who  has  retired   as   a
participating  member under Article 2 of the Illinois Pension
Code but is  ineligible  for  the  retirement  annuity  under
Section 2-119 of the Illinois Pension Code; (4) the spouse of
any  person  who  is  receiving  a  retirement  annuity under
Article 18 of the Illinois Pension Code and  who  is  covered
under  a  group  health  insurance  program  sponsored  by  a
governmental  employer  other  than the State of Illinois and
who has irrevocably elected to  waive  his  or  her  coverage
under  this  Act  and to have his or her spouse considered as
the "annuitant" under this Act and not as a  "dependent";  or
(5) an employee who retires, or has retired, from a qualified
position, as determined according to rules promulgated by the
Director,  under  a qualified local government or a qualified
rehabilitation facility  or  a  qualified  domestic  violence
shelter  or  service.  (For definition of "retired employee",
see (p) post).
    (c)  "Carrier"  means  (1)  an   insurance   company,   a
corporation   organized  under  the  Limited  Health  Service
Organization Act or the Voluntary Health Services Plan Act, a
partnership, or other nongovernmental organization, which  is
authorized  to  do  group  life  or  group  health  insurance
business  in  Illinois,  or  (2)  the  State of Illinois as a
self-insurer.
    (d)  "Compensation" means salary or wages  payable  on  a
regular  payroll  by  the State Treasurer on a warrant of the
State Comptroller out of any State, trust or federal fund, or
by the Governor of the State through a disbursing officer  of
the  State  out of a trust or out of federal funds, or by any
Department out of State, trust, federal or other  funds  held
by  the  State Treasurer or the Department, to any person for
personal  services  currently  performed,  and  ordinary   or
accidental  disability  benefits  under  Articles  2,  14, 15
(including ordinary or accidental disability  benefits  under
the  an optional retirement program established under Section
15-158.2), paragraphs  (b)  or  (c)  of  Section  16-106,  or
Article  18  of  the  Illinois  Pension  Code, for disability
incurred after January 1, 1966, or benefits payable under the
Workers'  Compensation  or  Occupational  Diseases   Act   or
benefits  payable  under  a  sick  pay  plan  established  in
accordance   with  Section  36  of  the  State  Finance  Act.
"Compensation" also means salary or wages paid to an employee
of any qualified local government or qualified rehabilitation
facility or a qualified domestic violence shelter or service.
    (e)  "Commission"  means  the   State   Employees   Group
Insurance   Advisory   Commission  authorized  by  this  Act.
Commencing July 1, 1984, "Commission" as  used  in  this  Act
means   the   Illinois  Economic  and  Fiscal  Commission  as
established by the Legislative Commission Reorganization  Act
of 1984.
    (f)  "Contributory",  when  referred  to  as contributory
coverage, shall mean optional coverages or  benefits  elected
by  the  member  toward  the  cost of which such member makes
contribution, or which are funded in whole or in part through
the acceptance of a reduction in earnings or the foregoing of
an increase in earnings by an employee, as distinguished from
noncontributory coverage or benefits which are paid  entirely
by  the  State  of Illinois without reduction of the member's
salary.
    (g)  "Department"  means  any  department,   institution,
board,  commission, officer, court or any agency of the State
government  receiving  appropriations  and  having  power  to
certify payrolls to the Comptroller authorizing  payments  of
salary  and  wages against such appropriations as are made by
the General Assembly from any State fund,  or  against  trust
funds  held  by  the  State  Treasurer and includes boards of
trustees of the retirement systems created by Articles 2, 14,
15, 16 and 18 of the  Illinois  Pension  Code.   "Department"
also  includes  the  Illinois  Comprehensive Health Insurance
Board and the Illinois Rural Bond Bank.
    (h)  "Dependent", when the term is used in the context of
the health and life plan, means a  member's  spouse  and  any
unmarried child (1) from birth to age 19 including an adopted
child, a child who lives with the member from the time of the
filing  of a petition for adoption until entry of an order of
adoption, a stepchild or recognized child who lives with  the
member  in  a parent-child relationship, or a child who lives
with the member if such member is a court appointed  guardian
of  the  child,  or  (2) age 19 to 23 enrolled as a full-time
student in any accredited school, financially dependent  upon
the  member,  and  eligible as a dependent for Illinois State
income tax purposes, or (3) age 19 or over who is mentally or
physically handicapped as defined in the  Illinois  Insurance
Code.  For  the  health  plan only, the term "dependent" also
includes any person enrolled prior to the effective  date  of
this  Section  who is dependent upon the member to the extent
that the member may claim such  person  as  a  dependent  for
Illinois  State  income tax deduction purposes; no other such
person may be enrolled.
    (i)  "Director"  means  the  Director  of  the   Illinois
Department of Central Management Services.
    (j)  "Eligibility  period"  means  the  period  of time a
member has to elect  enrollment  in  programs  or  to  select
benefits without regard to age, sex or health.
    (k)  "Employee"   means  and  includes  each  officer  or
employee in the service of a department who (1) receives  his
compensation  for  service  rendered  to  the department on a
warrant  issued  pursuant  to  a  payroll  certified   by   a
department  or  on  a  warrant or check issued and drawn by a
department upon a trust,  federal  or  other  fund  or  on  a
warrant  issued pursuant to a payroll certified by an elected
or duly appointed  officer  of  the  State  or  who  receives
payment  of the performance of personal services on a warrant
issued pursuant to a payroll certified by  a  Department  and
drawn  by  the  Comptroller  upon the State Treasurer against
appropriations made by the General Assembly from any fund  or
against  trust  funds held by the State Treasurer, and (2) is
employed  full-time  or  part-time  in  a  position  normally
requiring actual performance of duty during not less than 1/2
of a normal work period, as established by  the  Director  in
cooperation with each department, except that persons elected
by  popular  vote  will  be  considered  employees during the
entire term for which they are elected  regardless  of  hours
devoted  to  the  service  of  the State, and (3) except that
"employee" does not include any person who is not eligible by
reason of such person's employment to participate in  one  of
the State retirement systems under Articles 2, 14, 15 (either
the  regular  Article 15 system or the an optional retirement
program established under Section 15-158.2) or 18,  or  under
paragraph  (b)  or  (c)  of  Section  16-106, of the Illinois
Pension Code, but such term  does  include  persons  who  are
employed  during  the 6 month qualifying period under Article
14 of the Illinois Pension Code.  Such term also includes any
person who (1) after January 1, 1966, is  receiving  ordinary
or  accidental  disability  benefits under Articles 2, 14, 15
(including ordinary or accidental disability  benefits  under
the  an optional retirement program established under Section
15-158.2), paragraphs  (b)  or  (c)  of  Section  16-106,  or
Article  18  of  the  Illinois  Pension  Code, for disability
incurred after January 1, 1966, (2) receives total  permanent
or total temporary disability under the Workers' Compensation
Act  or  Occupational  Disease  Act  as  a result of injuries
sustained or illness contracted in the course  of  employment
with  the  State of Illinois, or (3) is not otherwise covered
under this Act and has  retired  as  a  participating  member
under   Article  2  of  the  Illinois  Pension  Code  but  is
ineligible for the retirement annuity under Section 2-119  of
the  Illinois  Pension Code.  However, a person who satisfies
the criteria of the foregoing definition of "employee" except
that such person is made ineligible  to  participate  in  the
State  Universities  Retirement  System  by clause (4) of the
first paragraph of Section 15-107  of  the  Illinois  Pension
Code  is  also  an  "employee"  for the purposes of this Act.
"Employee" also includes any person receiving or eligible for
benefits under a sick pay plan established in accordance with
Section 36 of the State Finance Act. "Employee" also includes
each officer or employee in the service of a qualified  local
government,   including  persons  appointed  as  trustees  of
sanitary districts regardless of hours devoted to the service
of the sanitary district, and each employee in the service of
a  qualified  rehabilitation  facility  and  each   full-time
employee  in  the  service  of  a qualified domestic violence
shelter  or  service,  as  determined  according   to   rules
promulgated by the Director.
    (l)  "Member"   means  an  employee,  annuitant,  retired
employee or survivor.
    (m)  "Optional  coverages  or   benefits"   means   those
coverages  or  benefits available to the member on his or her
voluntary election, and at his or her own expense.
    (n)  "Program" means the  group  life  insurance,  health
benefits  and other employee benefits designed and contracted
for by the Director under this Act.
    (o)  "Health plan" means a self-insured health  insurance
program  offered by the State of Illinois for the purposes of
benefiting employees by means  of  providing,  among  others,
wellness  programs,  utilization reviews, second opinions and
medical fee reviews, as well as for paying for  hospital  and
medical care up to the maximum coverage provided by the plan,
to its members and their dependents.
    (p)  "Retired  employee" means any person who would be an
annuitant as that term is defined herein  but  for  the  fact
that such person retired prior to January 1, 1966.  Such term
also  includes any person formerly employed by the University
of Illinois in the Cooperative Extension Service who would be
an annuitant but for the  fact  that  such  person  was  made
ineligible   to   participate   in   the  State  Universities
Retirement System by clause (4) of  the  first  paragraph  of
Section 15-107 of the Illinois Pension Code.
    (q)  "Survivor"  means a person receiving an annuity as a
survivor of an employee or of an annuitant.  "Survivor"  also
includes:  (1)  the  surviving  dependent  of  a  person  who
satisfies  the  definition  of  "employee"  except  that such
person  is  made  ineligible  to  participate  in  the  State
Universities Retirement System by clause  (4)  of  the  first
paragraph of Section 15-107 of the Illinois Pension Code; and
(2)  the  surviving dependent of any person formerly employed
by the University of Illinois in  the  Cooperative  Extension
Service  who  would  be an annuitant except for the fact that
such person was made ineligible to participate in  the  State
Universities  Retirement  System  by  clause (4) of the first
paragraph of Section 15-107 of the Illinois Pension Code.
    (r)  "Medical  services"  means  the  services   provided
within  the  scope  of their licenses by practitioners in all
categories licensed under the Medical Practice Act of 1987.
    (s)  "Unit  of  local  government"  means   any   county,
municipality,  township, school district, special district or
other unit, designated as a unit of local government by  law,
which  exercises  limited  governmental  powers  or powers in
respect to limited governmental subjects, any  not-for-profit
association   with   a  membership  that  primarily  includes
townships  and  township  officials,  that  has  duties  that
include  provision  of  research  service,  dissemination  of
information, and other acts  for  the  purpose  of  improving
township  government,  and that is funded wholly or partly in
accordance with Section  85-15  of  the  Township  Code;  any
not-for-profit  corporation or association, with a membership
consisting primarily of municipalities, that operates its own
utility   system,   and    provides    research,    training,
dissemination  of  information,  or  other  acts  to  promote
cooperation  between  and  among  municipalities that provide
utility services and for the advancement  of  the  goals  and
purposes  of  its membership; and the Illinois Association of
Park Districts.  "Qualified local government" means a unit of
local government approved by the Director  and  participating
in  a  program  created under subsection (i) of Section 10 of
this Act.
    (t)  "Qualified  rehabilitation   facility"   means   any
not-for-profit   organization   that  is  accredited  by  the
Commission on Accreditation of Rehabilitation  Facilities  or
certified  by  the Department of Human Services (as successor
to  the  Department  of  Mental  Health   and   Developmental
Disabilities)   to   provide   services   to   persons   with
disabilities  and  which  receives  funds  from  the State of
Illinois  for  providing  those  services,  approved  by  the
Director  and  participating  in  a  program  created   under
subsection (j) of Section 10 of this Act.
    (u)  "Qualified  domestic  violence  shelter  or service"
means any Illinois domestic violence shelter or  service  and
its  administrative offices funded by the Department of Human
Services (as successor to the Illinois Department  of  Public
Aid), approved by the Director and participating in a program
created under subsection (k) of Section 10.
    (v)  "TRS benefit recipient" means a person who:
         (1)  is  not  a "member" as defined in this Section;
    and
         (2)  is receiving a monthly  benefit  or  retirement
    annuity  under  Article  16 of the Illinois Pension Code;
    and
         (3)  either (i) has at least 8 years  of  creditable
    service under Article 16 of the Illinois Pension Code, or
    (ii) was enrolled in the health insurance program offered
    under  that  Article  on January 1, 1996, or (iii) is the
    survivor of a benefit recipient who had at least 8  years
    of  creditable  service  under Article 16 of the Illinois
    Pension Code or was  enrolled  in  the  health  insurance
    program  offered under that Article on the effective date
    of this amendatory Act of 1995, or (iv) is a recipient or
    survivor of a recipient of  a  disability  benefit  under
    Article 16 of the Illinois Pension Code.
    (w)  "TRS dependent beneficiary" means a person who:
         (1)  is  not a "member" or "dependent" as defined in
    this Section; and
         (2)  is a TRS benefit recipient's: (A)  spouse,  (B)
    dependent parent who is receiving at least half of his or
    her  support  from  the  TRS  benefit  recipient,  or (C)
    unmarried natural or adopted child who is (i)  under  age
    19,  or  (ii)  enrolled  as  a  full-time  student  in an
    accredited school, financially  dependent  upon  the  TRS
    benefit  recipient,  eligible as a dependent for Illinois
    State income tax purposes, and either is under age 23  24
    or  was, on January 1, 1996, participating as a dependent
    beneficiary in the health insurance program offered under
    Article 16 of the Illinois Pension Code, or (iii) age  19
    or  over  who  is  mentally  or physically handicapped as
    defined in the Illinois Insurance Code.
    (x)  "Military leave with pay  and  benefits"  refers  to
individuals  in basic training for reserves, special/advanced
training, annual training, emergency call up,  or  activation
by  the  President of the United States with approved pay and
benefits.
    (y)  "Military leave without pay and benefits" refers  to
individuals who enlist for active duty in a regular component
of  the  U.S.  Armed  Forces  or  other duty not specified or
authorized under military leave with pay and benefits.
(Source: P.A. 88-670,  eff.  12-2-94;  89-21,  eff.  6-21-95;
89-25,   eff.  6-21-95;  89-76,  eff.  7-1-95;  89-324,  eff.
8-13-95; 89-430, eff. 12-15-95; 89-502, eff. 7-1-96;  89-507,
eff. 7-1-97; 89-628, eff. 8-9-96; revised 8-23-96.)

    (5 ILCS 375/6.6)
    Sec.  6.6.  Contributions to the Teacher Health Insurance
Security Fund.
    (a)  Beginning July 1, 1995, all active  contributors  of
the Teachers' Retirement System (established under Article 16
of  the  Illinois  Pension  Code)  who are not employees of a
department as defined in Section 3 of  this  Act  shall  make
contributions  toward  the  cost  of  annuitant  and survivor
health benefits at the rate of 0.5% of salary.
    These contributions shall be deducted by the employer and
paid to the System as service agent  for  the  Department  of
Central  Management  Services.   The  System may use the same
processes for collecting the contributions required  by  this
subsection  that  it  uses  to collect contributions received
from school  districts  and  other  covered  employers  under
Sections  16-154 and 16-155 of the Illinois Pension Code.  An
employer may agree  to  pick  up  or  pay  the  contributions
required under this subsection on behalf of the teacher; such
contributions  shall  be  deemed  to  have  been  paid by the
teacher.
    A  person  required  to  make  contributions  under  this
subsection (a) who purchases optional  service  credit  under
Article 16 of the Illinois Pension Code for a period services
actually  performed  after  June  30,  1995  must also make a
contribution under this subsection for that optional  credit,
at  the  applicable  rate  of  0.5%  of  the  salary  used in
computing the optional service credit, based on the  required
employee contributions for that optional service credit, plus
the    interest   on   this   those   employee   contribution
contributions.  This contribution shall be collected  by  the
System  as  service  agent  for  the  Department  of  Central
Management   Services.   at   the   time  of  receiving   The
contribution required under this subsection for the  optional
service  credit must be paid in full before any annuity based
on that credit begins.
    (b)  The  Teachers'  Retirement  System  shall   promptly
deposit  all  moneys  collected  under subsection (a) of this
Section into  the  Teacher  Health  Insurance  Security  Fund
created  in  Section  6.5  of this Act.  The moneys collected
under this Section  shall  be  used  only  for  the  purposes
authorized  in  Section  6.5  of  this  Act  and shall not be
considered to be assets of the Teachers'  Retirement  System.
Contributions made under this Section are not transferable to
other  pension  funds  or  retirement  systems  and  are  not
refundable upon termination of service.
    (c)  On  or before November 15 of each year, the Board of
Trustees of the Teachers' Retirement System shall certify  to
the  Governor,  the  Director of Central Management Services,
and the State Comptroller its estimate of the total amount of
contributions to be paid under subsection (a) of this Section
6.6 for  the  next  fiscal  year.   The  certification  shall
include a detailed explanation of the methods and information
that  the  Board  relied  upon in preparing its estimate.  As
soon as possible after the effective date  of  this  Section,
the Board shall submit its estimate for fiscal year 1996.
    (d)  Beginning  in  fiscal year 1996, on the first day of
each month, or as soon thereafter as may  be  practical,  the
State Treasurer and the State Comptroller shall transfer from
the  General  Revenue  Fund  to  the Teacher Health Insurance
Security Fund 1/12 of the annual amount appropriated for that
fiscal year to the State Comptroller  for  deposit  into  the
Teacher  Health  Insurance Security Fund under Section 1.3 of
the State Pension Funds Continuing Appropriation Act.
    (e)  Except where otherwise specified  in  this  Section,
the  definitions  that  apply  to  Article 16 of the Illinois
Pension Code apply to this Section.
(Source: P.A. 89-21, eff. 6-21-95; 89-25, eff. 6-21-95.)

    Section 15.  The Illinois Income Tax Act  is  amended  by
changing Section 804 as follows:
    (35 ILCS 5/804) (from Ch. 120, par. 8-804)
    Sec. 804.  Failure to Pay Estimated Tax.
    (a)  In general. In case of any underpayment of estimated
tax  by  a  taxpayer, except as provided in subsection (d) or
(e), the taxpayer shall be liable to a penalty in  an  amount
determined  at  the  rate  prescribed  by  Section 3-3 of the
Uniform Penalty and Interest  Act  upon  the  amount  of  the
underpayment  (determined  under  subsection  (b))  for  each
required installment.
    (b)  Amount  of  underpayment. For purposes of subsection
(a), the amount of the underpayment shall be the excess of:
         (1)  the amount of the installment  which  would  be
    required to be paid under subsection (c), over
         (2)  the  amount, if any, of the installment paid on
    or before the last date prescribed for payment.
    (c)  Amount of Required Installments.
         (1)  Amount.
              (A)  In  General.   Except   as   provided   in
         paragraph   (2),   the   amount   of   any  required
         installment shall be  25%  of  the  required  annual
         payment.
              (B)  Required  Annual Payment.  For purposes of
         subparagraph (A), the term "required annual payment"
         means the lesser of
                   (i)  90% of the tax shown  on  the  return
              for the taxable year, or if no return is filed,
              90% of the tax for such year, or
                   (ii)  100%  of the tax shown on the return
              of the taxpayer for the preceding taxable  year
              if  a  return  showing  a liability for tax was
              filed by the taxpayer for the preceding taxable
              year and such preceding year was a taxable year
              of 12 months.
         (2)  Lower  Required  Installment  where  Annualized
    Income Installment is Less Than Amount  Determined  Under
    Paragraph (1).
              (A)  In  General.   In the case of any required
         installment  if  a  taxpayer  establishes  that  the
         annualized  income  installment  is  less  than  the
         amount determined under paragraph (1),
                   (i)  the   amount   of    such    required
              installment  shall  be  the  annualized  income
              installment, and
                   (ii)  any    reduction   in   a   required
              installment resulting from the  application  of
              this   subparagraph   shall  be  recaptured  by
              increasing the  amount  of  the  next  required
              installment  determined  under paragraph (1) by
              the amount of such reduction, and by increasing
              subsequent required installments to the  extent
              that  the  reduction  has  not  previously been
              recaptured under this clause.
              (B)  Determination   of    Annualized    Income
         Installment.    In   the   case   of   any  required
         installment, the annualized  income  installment  is
         the excess, if any, of
                   (i)  an  amount  equal  to  the applicable
              percentage of the  tax  for  the  taxable  year
              computed  by placing on an annualized basis the
              net income  for  months  in  the  taxable  year
              ending before the due date for the installment,
              over
                   (ii)  the  aggregate  amount  of any prior
              required installments for the taxable year.
              (C)  Applicable Percentage.
         In the case of the following          The applicable
         required installments:                percentage is:
         1st ...............................            22.5%
         2nd ...............................              45%
         3rd ...............................            67.5%
         4th ...............................              90%
              (D)  Annualized Net Income;  Individuals.   For
         individuals,  net  income  shall  be  placed  on  an
         annualized basis by:
                   (i)  multiplying  by 12, or in the case of
              a taxable year of less than 12 months,  by  the
              number  of  months in the taxable year, the net
              income computed without regard to the  standard
              exemption  for  the  months in the taxable year
              ending  before   the   month   in   which   the
              installment is required to be paid;
                   (ii)  dividing the resulting amount by the
              number  of  months  in  the taxable year ending
              before the month in which such installment date
              falls; and
                   (iii)  deducting  from  such  amount   the
              standard  exemption  allowable  for the taxable
              year, such standard exemption being  determined
              as  of  the last date prescribed for payment of
              the installment.
              (E)  Annualized Net Income; Corporations.   For
         corporations,  net  income  shall  be  placed  on an
         annualized basis by multiplying by  12  the  taxable
         income
                   (i)  for the first 3 months of the taxable
              year,  in  the case of the installment required
              to be paid in the 4th month,
                   (ii)  for the first 3 months  or  for  the
              first 5 months of the taxable year, in the case
              of  the  installment required to be paid in the
              6th month,
                   (iii)  for the first 6 months or  for  the
              first 8 months of the taxable year, in the case
              of  the  installment required to be paid in the
              9th month, and
                   (iv)  for the first 9 months  or  for  the
              first  11  months  of  the taxable year, in the
              case of the installment required to be paid  in
              the 12th month of the taxable year,
         then  dividing the resulting amount by the number of
         months in the taxable year (3, 5, 6, 8, 9, or 11  as
         the case may be).
    (d)  Exceptions.  Notwithstanding  the  provisions of the
preceding subsections, the penalty imposed by subsection  (a)
shall not be imposed if the taxpayer was not required to file
an Illinois income tax return for the preceding taxable year,
or  if the taxpayer has underpaid taxes solely because of the
increased rate in effect during the period from July 1,  1989
through  December  1989, or, for individuals, if the taxpayer
had no tax liability for the preceding taxable year and  such
year was a taxable year of 12 months.
    (e)  The  penalty  imposed  for underpayment of estimated
tax by subsection (a) of this Section shall not be imposed to
the extent that the Department or his  designate  determines,
pursuant  to  Section 3-8 of the Uniform Penalty and Interest
Act that the penalty should not be imposed.
    (f)  Definition of tax. For purposes of  subsections  (b)
and  (c),  the term "tax" means the excess of the tax imposed
under Article 2  of  this  Act,  over  the  amounts  credited
against such tax under Sections 601(b) (3) and (4).
    (g)  Application  of  Section  in case of tax withheld on
compensation.  For purposes of applying this Section  in  the
case  of  an individual, tax withheld under Article 7 for the
taxable year shall be deemed a payment of estimated tax,  and
an  equal  part  of  such amount shall be deemed paid on each
installment date for such taxable year, unless  the  taxpayer
establishes  the  dates  on  which  all amounts were actually
withheld, in which case the  amounts  so  withheld  shall  be
deemed  payments  of estimated tax on the dates on which such
amounts were actually withheld.
    (g-5)  Amounts  withheld  under  the  State  Salary   and
Annuity  Withholding  Act.   An  individual  who  has amounts
withheld under paragraph (10)  of  Section  4  of  the  State
Salary  and  Annuity  Withholding Act may elect to have those
amounts treated as payments of  estimated  tax  made  on  the
dates on which those amounts are actually withheld.
    (i)  Short taxable year.  The application of this Section
to  taxable  years  of  less  than  12  months  shall  be  in
accordance with regulations prescribed by the Department.
    The  changes  in  this  Section made by Public Act 84-127
shall apply to taxable years ending on or  after  January  1,
1986.
(Source: P.A. 86-678; 86-953; 86-1028; 87-205.)

    Section  20.   The  Illinois  Pension  Code is amended by
changing Sections  2-123,  2-126.1,  7-109.3,  7-111,  7-113,
7-116, 7-118, 7-132.2, 7-139, 7-145, 7-171, 7-172, 14-103.05,
14-104,  14-108,  14-118,  14-119,  14-120,  14-128,  14-130,
14-133,  14-133.1,  15-107,  15-131,  15-134, 15-136, 15-141,
15-142, 15-145, 15-146, 15-154, 15-157,  15-157.1,  15-158.2,
15-165,  15-185,  16-106,  16-140,  16-143, 16-151, 16-152.1,
16-154,  16-155, 16-158.1, 16-179, 16-185, 16-187,  17-116.1,
18-133.1,  21-103,  21-109,  and  21-115  and adding Sections
7-199.3, 15-136.4, 16-169.1, 16-181.3, 17-134.1, and 18-112.6
as follows:

    (40 ILCS 5/2-123) (from Ch. 108 1/2, par. 2-123)
    Sec. 2-123.  Refunds.
    (a)  A participant who ceases to be a member, other  than
an  annuitant,  shall, upon written request, receive a refund
of his or her total  contributions,  without  interest.   The
refund  shall  include  the  additional contributions for the
automatic increase in retirement annuity.  By  accepting  the
refund,   a  participant  forfeits  all  accrued  rights  and
benefits in the System and  loses  credit  for  all  service.
However,  if  he or she again becomes a member, he or she may
resume status as a participant and reestablish any  forfeited
service  credit  by  paying  to  the  System  the full amount
refunded, together with interest at 4%  per  annum  from  the
time  the refund is paid to the date the member again becomes
a participant.
    A former member of the General Assembly  may  reestablish
any  service  credit  forfeited  by acceptance of a refund by
paying to the System on or before February 1, 1993, the  full
amount  refunded, together with interest at 4% per annum from
the date of payment of the refund to the date of repayment.
    When a member or former member owes money to the  System,
interest  at  the  rate  of  4% per annum shall accrue and be
payable on  such  amounts  owed  beginning  on  the  date  of
termination  of  service  as a member until the contributions
due have been paid in full.
    (b)  A participant who  has  no  eligible  survivor  upon
becoming  an  annuitant  or  who terminates service with less
than 8 years of service  is  entitled  to  a  refund  of  the
contributions for a survivor's annuity, without interest.  If
such  person later marries, a survivor's annuity shall not be
payable upon his or her death,  unless  the  amount  of  such
refund is repaid to the System, together with interest at the
rate  of  4%  per year from the date of refund to the date of
repayment.
    (c)  If  at  the  date  of  retirement  or  death  of   a
participant who served as an officer of the General Assembly,
the  total  period  of such service is less than 4 years, the
additional  contributions  made  by  such   member   on   the
additional  salary as an officer shall be refunded unless the
participant served as an officer for at least 2 years and has
contributed the amount he or she would have contributed if he
or she had served as an officer for 4 years  as  provided  in
Section 2-126.
    (d)  Upon  the termination of the last survivor's annuity
payable to a survivor of a deceased participant, the  excess,
if  any,  of  the total contributions made by the participant
for retirement and survivor's annuity, without interest, over
the  total  amount  of  retirement  and  survivor's   annuity
payments  received  by  the participant and the participant's
survivors shall be refunded upon request:
         (i)  if there was a surviving spouse of the deceased
    participant who was eligible for a survivor's annuity, to
    the designated beneficiary of  that  spouse  or,  if  the
    designated   beneficiary  is  deceased  or  there  is  no
    designated beneficiary, to that spouse's estate;
         (ii)  if there was no eligible surviving  spouse  of
    the  deceased  participant, to the designated beneficiary
    of  the  deceased  participant  or,  if  the   designated
    beneficiary   is  deceased  or  there  is  no  designated
    beneficiary, to the deceased participant's estate.
    Upon death of the last survivor of a participant and  his
or her spouse, a death benefit shall be payable consisting of
the  excess,  if  any,  of  the  contributions  made  by  the
participant  for  retirement  and survivor's annuity, without
interest, over the total amount of retirement and  survivor's
annuity payments made by the System.
    (e)  Upon  the  death  of  a participant, if a survivor's
annuity is not payable  under  this  Article,  a  beneficiary
designated  by  the participant shall be entitled to a refund
of all  contributions  made  by  the  participant.    If  the
participant  has  not  designated  a  refund beneficiary, the
surviving  spouse  shall  be  entitled  to  the   refund   of
contributions;   if   there   is  no  surviving  spouse,  the
contributions  shall  be  refunded   to   the   participant's
surviving  children,  if any, and if no children survive, the
refund payment shall be made to the participant's estate.
(Source: P.A. 86-273; 87-1265.)

    (40 ILCS 5/2-126.1) (from Ch. 108 1/2, par. 2-126.1)
    Sec. 2-126.1.  Pickup Pick up of contributions.
    (a)  The   State   shall   pick   up   the    participant
contributions  required  under  Section  2-126 for all salary
earned after December 31, 1981. The contributions  so  picked
up  shall be treated as employer contributions in determining
tax treatment under the United States Internal Revenue  Code.
The  State shall pay these participant contributions from the
same source of funds which is used in paying  salary  to  the
participant.   The State may pick up these contributions by a
reduction  in  the  cash  salary  of  the  participant.    If
participant contributions are picked up they shall be treated
for all purposes of this Article 2  in  the  same  manner  as
participant  contributions  that  were made prior to the date
that the pick up of contributions began.
    (b)  Subject  to  the  requirements  of  federal  law,  a
participant may elect to have the employer pick  up  optional
contributions  that the participant has elected to pay to the
System, and the contributions so picked up shall  be  treated
as  employer  contributions  for  the purposes of determining
federal tax  treatment.   The  employer  shall  pick  up  the
contributions  by  a  reduction  in  the  cash  salary of the
participant and shall pay the  contributions  from  the  same
fund  that  is  used to pay earnings to the participant.  The
election  to  have  optional  contributions  picked   up   is
irrevocable and the optional contributions may not thereafter
be prepaid, by direct payment or otherwise.
(Source: P.A. 83-1440.)
    (40 ILCS 5/7-109.3) (from Ch. 108 1/2, par. 7-109.3)
    Sec. 7-109.3.  "Sheriff's Law Enforcement Employees".
    (a)  "Sheriff's law enforcement employee" means:
         (1)  A  county  sheriff and all deputies, other than
    special deputies, employed on a full time  basis  in  the
    office of the sheriff.
         (2)  A person who has elected to participate in this
    Fund  under  Section  3-109.1  of  this  Code, and who is
    employed  by  a  participating  municipality  to  perform
    police duties.
         (3)  A law enforcement officer employed  on  a  full
    time  basis  by a Forest Preserve District, provided that
    such officer shall be deemed a "sheriff's law enforcement
    employee" for the purposes of this Article,  and  service
    in  that  capacity  shall  be  deemed  to be service as a
    sheriff's law enforcement employee, only if the board  of
    commissioners of the District have so elected by adoption
    of  an affirmative resolution.  Such election, once made,
    may not be rescinded.
         (4)  A person not eligible to participate in a  fund
    established  under Article 3 of this Code who is employed
    on a full-time basis by a participating  municipality  or
    participating instrumentality to perform police duties at
    an  airport,  but  only if the governing authority of the
    employer has approved sheriff's law enforcement  employee
    status for its airport police employees by adoption of an
    affirmative  resolution.   Such approval, once given, may
    not be rescinded.
    (b)  An employee  who  is  a  sheriff's  law  enforcement
employee  and  prior  to  the  time  for  which he is granted
military leave or authorized leave of absence  shall  receive
service  credit  in that capacity.  Sheriff's law enforcement
employees shall not be  entitled  to  out  of  State  service
credit under Section 7-139.
(Source: P.A. 86-273; 87-850.)

    (40 ILCS 5/7-111) (from Ch. 108 1/2, par. 7-111)
    Sec.  7-111.   "Prior  Service":  The period beginning on
the day a participating employee first became an employee  of
a  municipality,  or  of  an instrumentality thereof, or of a
municipality or instrumentality that was  superseded  by  the
employing  participating  municipality, or of a participating
instrumentality,  and  ending  on  the  effective   date   of
participation    of   the   municipality   or   participating
instrumentality, or upon the latest  termination  of  service
prior   to   such  effective  date,  but  excluding  (a)  the
intervening periods during which the employee  was  separated
from    the    service    of   the   municipality   and   all
instrumentalities   thereof,   or   of   the    participating
instrumentality, or (b) periods during which the employee was
employed in a position normally requiring less than 600 hours
of service during a year, and or (c) periods during which the
employee served by persons beginning participating employment
in  a  position  normally  requiring performance of duty less
than 1000  hours  per  year,  if  the  with  a  participating
municipality  or participating instrumentality adopted, which
prior to its effective  the  date  of  participation,  it  is
included  and  subject to this Article adopts a resolution or
ordinance  excluding   persons   in   such   positions   from
participation.
(Source: P.A. 82-459.)

    (40 ILCS 5/7-113) (from Ch. 108 1/2, par. 7-113)
    Sec.  7-113.  "Creditable  Service": All periods of prior
service or current service  for  which  credits  are  granted
under  the provisions of Section 7-139, including all periods
during which a participating employee was an  employee  of  a
municipality  or  instrumentality which was superseded by the
employing participating municipality.
(Source: Laws 1967, p. 2091.)

    (40 ILCS 5/7-116) (from Ch. 108 1/2, par. 7-116)
    Sec. 7-116. "Final rate of earnings":
    (a)  For retirement and survivor annuities,  the  monthly
earnings  obtained by dividing the total earnings received by
the  employee  during  the  period  of  either  (1)  the   48
consecutive  months  of service within the last 120 months of
service in which his total earnings were the highest, or  (2)
the  employee's  (his total period of service,) by the number
of months of service in such period.
    (b)  For  death  benefits,  the  higher   of   the   rate
determined  under  paragraph  (a)  of  this  Section or total
earnings received in the last 12 months of service divided by
twelve.  If the deceased employee has less than 12 months  of
service,  the monthly final rate shall be the monthly rate of
pay the employee was receiving when he began service.
    (c)  For disability benefits, the  total  earnings  of  a
participating  employee  in  the  last  12 calendar months of
service prior to the date he becomes disabled divided by 12.
    (d)  In computing the final rate  of  earnings:  (1)  the
earnings  rate  for  all  periods  of  prior service shall be
considered equal to the average earnings rate for the last  3
calendar  years of prior service for which creditable service
is received under Section 7-139  most  immediately  preceding
the  effective  date,  or,  if  there is less than 3 years of
creditable prior service, the average  for  the  total  prior
service period for which creditable service is received under
Section  7-139;  (2)  for out of state service and authorized
leave, the earnings rate shall be the rate upon which service
credits are granted; (3) periods of military leave shall  not
be  considered;  (4)  the  earnings  rate  for all periods of
disability shall be considered equal to the rate of  earnings
upon  which  the  employee's disability benefits are computed
for such periods; (5) the earnings to be considered for  each
of  the final three months of the final earnings period shall
not exceed 125% of the highest earnings of any other month in
the final earnings period; and (6) the annual amount of final
rate of earnings shall be the monthly  amount  multiplied  by
the  number  of  months  of  service normally required by the
position in a year.
(Source: P.A. 78-255.)

    (40 ILCS 5/7-118) (from Ch. 108 1/2, par. 7-118)
    Sec. 7-118.  "Beneficiary":
    (a)  The  surviving  spouse  of  an  employee  or  of  an
employee annuitant, or if no surviving spouse  survives,  the
person  or  persons designated by a participating employee or
employee annuitant, or if no person so  designated  survives,
or  if  no designation is on file, the estate of the employee
or employee annuitant.  The person or persons designated by a
beneficiary annuitant, or if no person  designated  survives,
or   if  no  designation  is  on  file,  the  estate  of  the
beneficiary annuitant.  The  estate  of  a  surviving  spouse
annuitant  where  the employee or employee annuitant filed no
designation, or no person designated survives at the death of
a surviving spouse annuitant.  Designations of  beneficiaries
shall  be  in  writing  on  forms prescribed by the board and
effective upon filing in the fund offices.   The  designation
forms  shall  provide for contingent beneficiaries.  Divorce,
dissolution or annulment of marriage revokes the  designation
of  an  employee's  former  spouse  as  a  beneficiary  on  a
designation   executed  before entry of judgment for divorce,
dissolution or annulment of marriage.
    (b)  Notwithstanding the foregoing, an  employee,  former
employee  who  has  not  yet received a retirement annuity or
separation benefit, or employee annuitant may elect  to  name
any person, trust or charity to be the primary beneficiary of
any  death  benefit  payable  by  reason  of his death.  Such
election shall state specifically whether it is his intention
to exclude the spouse,  shall  be  in  writing,  and  may  be
revoked  at any time.  Such election or revocation shall take
effect upon being filed in the fund offices.
    (c)  If a surviving spouse annuity is payable to a former
spouse upon the death of an employee  annuitant,  the  former
spouse,  unless  designated  by  the employee annuitant after
dissolution of the marriage, shall not be the beneficiary for
the purposes  of  the  $3,000  death  benefit  payable  under
subparagraph  6 of Section 7-164.  This benefit shall be paid
to the designated beneficiary of the employee  annuitant  or,
if  there  is  no  designation,  then  to  the  estate of the
employee annuitant.
(Source: P.A. 89-136, eff. 7-14-95.)

    (40 ILCS 5/7-132.2) (from Ch. 108 1/2, par. 7-132.2)
    Sec. 7-132.2.  Regional office of  education  Educational
Service Regions.
    (a)  A regional office of education serving 2 Educational
Service  Regions  comprised  of  two or more counties, except
those serving including a county of 1,000,000 inhabitants  or
more,  formed pursuant to Article 3A of the School Code shall
be included within and be subject to this Article,  effective
as  of  the effective date of consolidation.  For the purpose
of this Article, a regional office of education serving 2  an
Educational  Service Region comprised of two or more counties
shall be considered a participating instrumentality  but  the
requirements  of  Sections 7-106 and 7-132 shall not apply to
it.  Each county served by a  regional  office  of  education
that  serves  2 in an Educational Service Region comprised of
two or more counties shall pay its proportional cost  of  the
office's  region's  municipality  contributions.   This  cost
shall   be   included   in  the  budget  prepared  under  and
apportioned in the manner provided by  Section  3A-7  of  the
School  Code.  Each county may include the cost for its share
of the municipality contributions required for  the  regional
office  of education region in its appropriation and tax levy
under Section 7-171 of this Article.
    (b)  At  the  request  of  the  county,  the  Board   may
designate  any  participating  regional  office  of education
Educational Service Region to be a separate reporting  entity
distinct from the county.
(Source: P.A. 87-740.)

    (40 ILCS 5/7-139) (from Ch. 108 1/2, par. 7-139)
    Sec. 7-139.  Credits and creditable service to employees.
    (a)  Each participating employee shall be granted credits
and  creditable  service,  for  purposes  of  determining the
amount of any annuity or benefit to which he or a beneficiary
is entitled, as follows:
    1.  For prior service: Each participating employee who is
an employee of a participating municipality or  participating
instrumentality  on  the  effective  date  shall  be  granted
creditable  service, but no credits under paragraph 2 of this
subsection (a),  for  periods  his  entire  period  of  prior
service  for  which  credit  has  not been received under any
other pension fund or  retirement  system  established  under
this Code, as follows:.
    If   the   effective   date   of  participation  for  the
participating municipality or  participating  instrumentality
is  on or before January 1, 1998, creditable service shall be
granted for the entire period  of  prior  service  with  that
employer without any employee contribution.
    If   the   effective   date   of  participation  for  the
participating municipality or  participating  instrumentality
is after January 1, 1998, creditable service shall be granted
for  the  last  20%  of the period of prior service with that
employer, but no more than  5  years,  without  any  employee
contribution.    A   participating   employee  may  establish
creditable service for the remainder of the period  of  prior
service  with  that  employer  by  making  an  application in
writing, accompanied by payment of an  employee  contribution
in  an  amount  determined by the Fund, based on the employee
contribution rates in effect at the time of  application  for
the  creditable service and the employee's salary rate on the
effective date  of  participation  for  that  employer,  plus
interest  at  the  effective  rate from the date of the prior
service  to  the  date  of  payment.   Application  for  this
creditable service may be made at any time while the employee
is still in service.
    Any person who  has  withdrawn  from  the  service  of  a
participating  municipality  or participating instrumentality
prior to the effective date, who reenters the service of  the
same  municipality or participating instrumentality after the
effective  date  and  becomes  a  participating  employee  is
entitled to creditable service for prior service as otherwise
provided in this subdivision (a)(1) only if he or she renders
2 years of service as  a  participating  employee  after  the
effective  date.  provided  Application for such service must
be is made while in a participating status.  The salary  rate
to  be  used  in  the  calculation  of  the required employee
contribution, if any, shall be the employee's salary rate  at
the  time of first reentering service with the employer after
the employer's effective date of participation.
    2.  For  current  service,  each  participating  employee
shall be credited with:
         a.  Additional credits  of  amounts  equal  to  each
    payment  of  additional  contributions  received from him
    under Section 7-173, as of  the  date  the  corresponding
    payment of earnings is payable to him.
         b.  Normal  credits of amounts equal to each payment
    of normal contributions received from him, as of the date
    the corresponding payment of earnings is payable to  him,
    and   normal   contributions  made  for  the  purpose  of
    establishing out-of-state service  credits  as  permitted
    under  the  conditions  set  forth in paragraph 6 of this
    subsection (a).
         c.  Municipality credits in an amount equal  to  1.4
    times  the  normal  credits,  except those established by
    out-of-state  service  credits,  as  of   the   date   of
    computation   of  any  benefit  if  these  credits  would
    increase the benefit.
         d.  Survivor  credits  equal  to  each  payment   of
    survivor  contributions  received  from the participating
    employee as of the  date  the  corresponding  payment  of
    earnings  is payable, and survivor contributions made for
    the purpose of establishing out-of-state service credits.
    3.  For periods of  temporary  and  total  and  permanent
disability   benefits,  each  employee  receiving  disability
benefits shall be granted creditable service for  the  period
during  which  disability  benefits  are payable.  Normal and
survivor credits, based upon the rate of earnings applied for
disability benefits, shall also be granted  if  such  credits
would  result in a higher benefit to any such employee or his
beneficiary.
    4.  For authorized  leave  of  absence  without  pay:   A
participating   employee   shall   be   granted  credits  and
creditable service for periods of authorized leave of absence
without pay under the following conditions:
         a.  An  application  for  credits   and   creditable
    service  is  shall  be  submitted  to the board while the
    employee is in a status of active employment, and  within
    2  years after termination of the leave of absence period
    for which credits and creditable service are sought.
         b.  Not more than 12 complete months  of  creditable
    service for authorized leave of absence without pay shall
    be  counted  for  purposes  of  determining  any benefits
    payable under this Article.
         c.  Credits and creditable service shall be  granted
    for  leave  of  absence only if such leave is approved by
    the  governing  body  of  the   municipality,   including
    approval   of   the   estimated   cost   thereof  to  the
    municipality as determined  by  the  fund,  and  employee
    contributions,   plus  interest  at  the  effective  rate
    applicable for each year from the end of  the  period  of
    leave  to  date of payment, have been paid to the fund in
    accordance with Section 7-173.  The  contributions  shall
    be computed upon the assumption earnings continued during
    the  period of leave at the rate in effect when the leave
    began.
         d.  Benefits under the provisions of Sections 7-141,
    7-146, 7-150 and 7-163 shall become payable to  employees
    on  authorized  leave  of  absence,  or  their designated
    beneficiary, only if such leave of absence is  creditable
    hereunder,  and  if the employee has at least one year of
    creditable service other than  the  service  granted  for
    leave  of  absence. Any employee contributions due may be
    deducted from any benefits payable.
         e.  No  credits  or  creditable  service  shall   be
    allowed  for  leave  of  absence  without  pay during any
    period of prior service.
    5.  For  military  service:  The  governing  body  of   a
municipality  or  participating  instrumentality may elect to
allow creditable service to participating employees who leave
their employment to serve in the armed forces of  the  United
States  for  all  periods  of such service, provided that the
such person returns to active employment within 90 days after
completion of  full  time  active  duty,  but  no  creditable
service  shall be allowed such person for any period that can
be used in the computation of a pension or any other  pay  or
benefit,  other  than pay for active duty, for service in any
branch  of  the  armed  forces  of  the  United  States.   If
necessary to the computation of any benefit, the board  shall
establish  municipality  credits  for participating employees
under this paragraph on  the  assumption  that  the  employee
received  earnings  at  the rate received at the time he left
the employment to enter the armed  forces.   A  participating
employee  in  the  armed  forces  shall  not be considered an
employee during such period  of  service  and  no  additional
death  and  no  disability  benefits are payable for death or
disability during such period.
    Any participating employee who left his employment with a
municipality or participating instrumentality to serve in the
armed forces of the United States  and  who  again  became  a
participating  employee  within  90  days after completion of
full time active duty by entering the service of a  different
municipality  or  participating  instrumentality,  which  has
elected  to  allow creditable service for periods of military
service under the preceding paragraph, shall also be  allowed
creditable  service for his period of military service on the
same terms that would apply if he had been  employed,  before
entering   military   service,   by   the   municipality   or
instrumentality which employed him after he left the military
service  and  the  employer costs arising in relation to such
grant of creditable service shall be charged to and  paid  by
that municipality or instrumentality.
    Notwithstanding the foregoing, any participating employee
shall  be  entitled  to creditable service as required by any
federal law relating to re-employment rights of  persons  who
served  in the United States Armed Services.  Such creditable
service shall be granted upon payment by  the  member  of  an
amount  equal  to the employee contributions which would have
been required had the employee continued in  service  at  the
same  rate of earnings during the military leave period, plus
interest at the effective rate.
    5.1.  In addition to any creditable  service  established
under  paragraph 5 of this subsection (a), creditable service
may be granted for up to 24 months of service  in  the  armed
forces of the United States.
    In  order  to  receive  creditable  service  for military
service under this paragraph 5.1,  a  participating  employee
must (1) apply to the Fund in writing and provide evidence of
the  military  service that is satisfactory to the Board; (2)
obtain the written approval of the current employer; and  (3)
make  contributions  to  the  Fund  equal to (i) the employee
contributions that would have been required had  the  service
been  rendered as a member, plus (ii) an amount determined by
the board to be equal to the employer's normal  cost  of  the
benefits  accrued  for  that  military  service,  plus  (iii)
interest  on  items  (i)  and  (ii)  from  the  date of first
membership in the Fund to the date of payment.  If payment is
made during the 6-month period that begins 3 months after the
effective date of this amendatory Act of 1997,  the  required
interest  shall  be  at the rate of 2.5% per year, compounded
annually;  otherwise,  the   required   interest   shall   be
calculated at the regular interest rate.
    6.  For out-of-state service: Creditable service shall be
granted   for  service  rendered  to  an  out-of-state  local
governmental  body  under  the  following   conditions:   The
employee  had  participated and has irrevocably forfeited all
rights to  benefits  in  the  out-of-state  public  employees
pension  system;  the  governing  body  of  his participating
municipality or instrumentality authorizes  the  employee  to
establish  such  service;  the  employee  has 2 years current
service   with    this    municipality    or    participating
instrumentality;    the   employee   makes   a   payment   of
contributions, which shall be computed at 8% (normal) plus 2%
(survivor)  times  length  of  service  purchased  times  the
average rate of earnings for the first  2  years  of  service
with  the municipality or participating instrumentality whose
governing  body  authorizes  the  service  established   plus
interest  at  the effective rate on the date such credits are
established, payable from the date the employee completes the
required 2 years of current service to date of  payment.   In
no  case  shall more than 120 months of creditable service be
granted under this provision.
    7.  For retroactive service:  Any employee who could have
but did not elect to become a participating employee, or  who
should  have  been  a  participant  in  the  Municipal Public
Utilities Annuity and  Benefit  Fund  before  that  fund  was
superseded,  may receive creditable service for the period of
service not to exceed 50 months; however, a current or former
county board member may establish credit under this paragraph
7 for more than 50 months of  service  as  a  member  of  the
county  board  if  the  excess  over 50 months is approved by
resolution of the affected county board filed with  the  Fund
before January 1, 1999.
    Any  employee who is a participating employee on or after
September 24, 1981 and who was excluded from participation by
the age restrictions removed by Public Act 82-596 may receive
creditable service for the period, on  or  after  January  1,
1979,  excluded  by  the age restriction and, in addition, if
the governing  body  of  the  participating  municipality  or
participating  instrumentality  elects  to  allow  creditable
service  for  all  employees  excluded by the age restriction
prior to January 1, 1979, for service during the period prior
to that date excluded by the age restriction.   Any  employee
who  was  excluded  from participation by the age restriction
removed by Public Act 82-596 and who is not  a  participating
employee   on   or  after  September  24,  1981  may  receive
creditable  service  for  service  after  January  1,   1979.
Creditable service under this paragraph shall be granted upon
payment  of  the employee contributions which would have been
required had he participated, with interest at the  effective
rate  for  each  year  from  the end of the period of service
established to date of payment.
    8.  For accumulated unused sick leave:   A  participating
employee  who  is  applying for a retirement annuity shall be
entitled to  creditable  service  for  that  portion  of  the
employee's  his  accumulated  unused  sick  leave  for  which
payment is not received, as follows:
         a.  Sick  leave  days  shall  be  limited  to  those
    accumulated  under  a  sick  leave  plan established by a
    participating     municipality      or      participating
    instrumentality  which is available to all employees or a
    class of employees.
         b.  Only  sick  leave  days   accumulated   with   a
    participating      municipality      or     participating
    instrumentality with which the employee  was  in  service
    within  60  days  of the effective date of his retirement
    annuity shall be credited; If the employee was in service
    with more than one employer during this period  only  the
    sick leave days with the employer with which the employee
    has  the  greatest number of unpaid sick leave days shall
    be considered.
         c.  The  creditable   service   granted   shall   be
    considered solely for the purpose of computing the amount
    of  the  retirement  annuity  and  shall  not  be used to
    establish any minimum  service  period  required  by  any
    provision  of  the  Illinois  Pension Code, the effective
    date of the retirement annuity,  or  the  final  rate  of
    earnings.
         d.  The  creditable  service shall be at the rate of
    1/20 of a month for each full sick day, provided that  no
    more   than   12   months  may  be  credited  under  this
    subdivision 8.
         e.  Employee contributions shall not be required for
    creditable service under this subdivision 8.
         f.  Each     participating     municipality      and
    participating  instrumentality with which an employee has
    service within 60 days  of  the  effective  date  of  his
    retirement  annuity shall certify to the board the number
    of accumulated unpaid sick leave  days  credited  to  the
    employee at the time of termination of service.
    9.  For service transferred from another system:  Credits
and  creditable  service  shall  be granted for service under
Article 3, 4, 5, 14 or 16 of this Act, to any  active  member
of  this  Fund,  and  to  any  inactive member who has been a
county sheriff, upon transfer of  such  credits  pursuant  to
Section  3-110.3,  4-108.3,  5-235, 14-105.6 or 16-131.4, and
payment by the member of the amount by which (1) the employer
and employee contributions that would have been  required  if
he   had  participated  in  this  Fund  as  a  sheriff's  law
enforcement employee during the period for  which  credit  is
being  transferred,  plus  interest  thereon at the effective
rate for each year,  compounded annually, from  the  date  of
termination   of  the  service  for  which  credit  is  being
transferred to the date of payment, exceeds  (2)  the  amount
actually  transferred  to  the Fund. Such transferred service
shall be deemed to be service as a sheriff's law  enforcement
employee for the purposes of Section 7-142.1.
    (b)  Creditable  service  -  amount:  1.   One  month  of
creditable  service shall be allowed for each month for which
a participating employee made contributions as required under
Section 7-173, or for which creditable service  is  otherwise
granted hereunder.  Not more than 1 month of service shall be
credited  and counted for 1 calendar month, and not more than
1 year of service shall  be  credited  and  counted  for  any
calendar  year.   A  calendar  month  means  a  nominal month
beginning on the first day thereof, and a calendar year means
a year beginning January 1 and ending December 31.
    2.  A seasonal employee  shall  be  given  12  months  of
creditable  service  if  he  renders  the number of months of
service normally required  by  the  position  in  a  12-month
period  and  he  remains  in  service for the entire 12-month
period.  Otherwise a fractional year of service in the number
of months of service rendered shall be credited.
    3.  An intermittent employee shall  be  given  creditable
service for only those months in which a contribution is made
under Section 7-173.
    (c)  No   application   for   correction  of  credits  or
creditable service  shall  be  considered  unless  the  board
receives   an   application  for  correction  while  (1)  the
applicant  is  a  participating  employee   and   in   active
employment    with    a    participating    municipality   or
instrumentality, or  (2)  while  the  applicant  is  actively
participating in a pension fund or retirement system which is
a   participating   system   under   the  Retirement  Systems
Reciprocal Act.  A participating employee or other  applicant
shall not be entitled to credits or creditable service unless
the required employee contributions are made in a lump sum or
in installments made in accordance with board rule.
    (d)  Upon  the granting of a retirement, surviving spouse
or child annuity, a death benefit or a separation benefit, on
account of any employee, all individual  accumulated  credits
shall  thereupon terminate. Upon the withdrawal of additional
contributions, the credits applicable thereto shall thereupon
terminate.
(Source: P.A. 86-273; 86-1028; 87-740.)

    (40 ILCS 5/7-145) (from Ch. 108 1/2, par. 7-145)
    Sec. 7-145. Reversionary annuities.
    (a)  An employee entitled to  a  retirement  annuity  may
elect to provide a reversionary annuity for a beneficiary if,
at the time such retirement annuity begins:
    1.  Under  the  provisions  of paragraph (a) 1 of Section
7-142 he is entitled to an immediate annuity of at least  $10
per month; and
    2.  His  accumulated  additional and optional credits are
sufficient to provide a reversionary annuity, of at least $10
per month, for the beneficiary.
    (b)  An election shall become effective only:
    1.  If a  written  notice  thereof  by  the  employee  is
received  by  the  board  together  with  his application for
retirement annuity; and
    2.  If  the  amount  of  the  beneficiary's  reversionary
annuity specified in the notice is not less than $10 nor more
than that  which  can  be  provided,  at  the  time,  by  the
accumulation of additional and optional credits.
    (c)  The amount of the reversionary annuity shall be that
specified in the notice of election.
    (d)  Reversionary  annuity  shall  begin the first day of
the month following the month in which the  last  payment  of
the  employee  annuity  is payable because of death, provided
the beneficiary is alive at such  time.  If  the  beneficiary
does not survive the annuitant, no reversionary annuity shall
be  payable,  but  only  the  death  benefit  as  provided in
Sections 7-163 and 7-164.
    (e)  No reversionary  annuity  shall  be  awarded  to  be
effective  on  or  after  January  1,  1986, but reversionary
annuities granted prior to that date  shall  continue  to  be
paid.
(Source: P.A. 84-812.)

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

    (40 ILCS 5/7-172) (from Ch. 108 1/2, par. 7-172)
    Sec.     7-172.      Contributions    by    participating
municipalities and participating instrumentalities.
    (a)  Each    participating    municipality    and    each
participating instrumentality shall make payment to the  fund
as follows:
         1.  municipality    contributions   in   an   amount
    determined by applying the municipality contribution rate
    to  each  payment  of  earnings  paid  to  each  of   its
    participating employees;
         2.  an  amount  equal  to the employee contributions
    provided by paragraphs (a)  and  (b)  of  Section  7-173,
    whether or not the employee contributions are withheld as
    permitted by that Section;
         3.  all  accounts receivable, together with interest
    charged thereon, as provided in Section 7-209;
         4.  if  it  has  no  participating  employees   with
    current  earnings, an amount payable which, over a period
    of 20 years beginning with the year following an award of
    benefit, will amortize, at the effective  rate  for  that
    year,  any  negative  balance in its municipality reserve
    resulting from the award.  This amount  when  established
    will be payable as a separate contribution whether or not
    it later has participating employees.
    (b)  A  separate  municipality contribution rate shall be
determined for  each  calendar  year  for  all  participating
municipalities  together  with all instrumentalities thereof.
The municipality contribution rate shall  be  determined  for
participating instrumentalities as if they were participating
municipalities.   The municipality contribution rate shall be
the sum of the following percentages:
         1.  The  percentage   of   earnings   of   all   the
    participating     employees    of    all    participating
    municipalities and participating instrumentalities which,
    if paid over the entire period of their service, will  be
    sufficient  when combined with all employee contributions
    available for the payment of  benefits,  to  provide  all
    annuities  for  participating  employees,  and the $3,000
    death benefit payable under  Sections  7-158  and  7-164,
    such percentage to be known as the normal cost rate.
         2.  The  percentage of earnings of the participating
    employees  of   each   participating   municipality   and
    participating  instrumentalities  necessary to adjust for
    the difference between the present value of all benefits,
    excluding temporary and total  and  permanent  disability
    and  death benefits, to be provided for its participating
    employees and the sum  of  its  accumulated  municipality
    contributions  and the accumulated employee contributions
    and the present value of  expected  future  employee  and
    municipality  contributions pursuant to subparagraph 1 of
    this paragraph (b).  This adjustment shall be spread over
    the remainder of the period of 40 years from the first of
    the year following the date of determination.
         3.  The percentage of earnings of the  participating
    employees   of   all   municipalities  and  participating
    instrumentalities necessary to provide the present  value
    of  all  temporary  and  total  and  permanent disability
    benefits granted during the most recent  year  for  which
    information is available.
         4.  The  percentage of earnings of the participating
    employees  of  all   participating   municipalities   and
    participating  instrumentalities necessary to provide the
    present value  of  the  net  single  sum  death  benefits
    expected  to  become payable from the reserve established
    under Section 7-206 during the year for which  this  rate
    is fixed.
         5.  The percentage of earnings necessary to meet any
    deficiency   arising   in   the  Terminated  Municipality
    Reserve.
    (c)  A separate municipality contribution rate  shall  be
computed for each participating municipality or participating
instrumentality  for its sheriff's law enforcement employees.
    A  separate  municipality  contribution  rate  shall   be
computed  for the sheriff's law enforcement employees of each
forest preserve district that elects to have such  employees.
For  the  period  from  January 1, 1986 to December 31, 1986,
such rate shall be the  forest  preserve  district's  regular
rate plus 2%.
    In  the  event that the Board determines that there is an
actuarial deficiency in the account of any municipality  with
respect  to  a  person  who has elected to participate in the
Fund under Section 3-109.1 of this Code, the Board may adjust
the municipality's contribution rate so as to  make  up  that
deficiency  over  such reasonable period of time as the Board
may determine.
    (d)  The Board  may  establish  a  separate  municipality
contribution   rate   for   all  employees  who  are  program
participants  employed  under   the   Federal   Comprehensive
Employment   Training   Act   by  all  of  the  participating
municipalities and instrumentalities.   The  Board  may  also
provide  that,  in  lieu  of a separate municipality rate for
these employees, a portion of the municipality  contributions
for  such  program participants shall be refunded or an extra
charge  assessed  so  that   the   amount   of   municipality
contributions  retained  or received by the fund for all CETA
program participants shall be an amount equal to  that  which
would  be  provided by the separate municipality contribution
rate for all such program  participants.   Refunds  shall  be
made to prime sponsors of programs upon submission of a claim
therefor and extra charges shall be assessed to participating
municipalities  and  instrumentalities.   In establishing the
municipality contribution rate as provided in  paragraph  (b)
of   this   Section,  the  use  of  a  separate  municipality
contribution rate for program participants or the refund of a
portion of the municipality contributions, as  the  case  may
be, may be considered.
    (e)  Computations  of municipality contribution rates for
the following calendar  year  shall  be  made  prior  to  the
beginning of each year, from the information available at the
time  the  computations  are made, and on the assumption that
the  employees  in   each   participating   municipality   or
participating  instrumentality  at such time will continue in
service  until  the  end  of  such  calendar  year  at  their
respective rates of earnings at such time.
    (f)  Any municipality which is  the  recipient  of  State
allocations  representing  that  municipality's contributions
for retirement annuity purposes on behalf of its employees as
provided in Section 12-21.16 of the Illinois Public Aid  Code
shall  pay  the allocations so received to the Board for such
purpose.  Estimates  of  State  allocations  to  be  received
during   any   taxable   year  shall  be  considered  in  the
determination of the municipality's tax rate  for  that  year
under  Section  7-171.   If  a  special  tax  is levied under
Section 7-171, none of the proceeds may be used to  reimburse
the municipality for the amount of State allocations received
and  paid  to the Board.  Any multiple-county or consolidated
health department which receives contributions from a  county
under  Section  11.2  of "An Act in relation to establishment
and  maintenance  of  county   and   multiple-county   health
departments",   approved   July   9,  1943,  as  amended,  or
distributions under Section 3 of  the  Department  of  Public
Health   Act,   shall   use   these   only  for  municipality
contributions by the health department.
    (g)  Municipality contributions for the several  purposes
specified shall, for township treasurers and employees in the
offices  of  the  township treasurers who meet the qualifying
conditions for coverage hereunder,  be  allocated  among  the
several  school  districts  and  parts  of  school  districts
serviced  by  such treasurers and employees in the proportion
which the amount of school funds of each district or part  of
a district handled by the treasurer bears to the total amount
of all school funds handled by the treasurer.
    From  the funds subject to allocation among districts and
parts of districts pursuant to the School Code, the  trustees
shall  withhold  the proportionate share of the liability for
municipality contributions imposed  upon  such  districts  by
this  Section,  in  respect  to  such township treasurers and
employees and remit the same to the Board.
    The municipality contribution  rate  for  an  educational
service center shall initially be the same rate for each year
as  the regional office of education consolidated educational
service  region  or  school  district  which  serves  as  its
administrative agent.  When actuarial data become  available,
a   separate   rate  shall  be  established  as  provided  in
subparagraph (i) of this Section.
    The municipality contribution rate for a  public  agency,
other  than  a vocational education cooperative, formed under
the Intergovernmental Cooperation Act shall initially be  the
average  rate for the municipalities which are parties to the
intergovernmental  agreement.   When  actuarial  data  become
available, a separate rate shall be established  as  provided
in subparagraph (i) of this Section.
    (h)  Each  participating  municipality  and participating
instrumentality shall make the contributions in  the  amounts
provided  in  this Section in the manner prescribed from time
to time by the Board and  all  such  contributions  shall  be
obligations  of  the  respective participating municipalities
and  participating  instrumentalities  to  this  fund.    The
failure  to  deduct  any  employee  contributions  shall  not
relieve   the  participating  municipality  or  participating
instrumentality of its obligation to this  fund.   Delinquent
payments  of  contributions  due under this Section may, with
interest,  be  recovered  by   civil   action   against   the
participating       municipalities      or      participating
instrumentalities.  Municipality  contributions,  other  than
the  amount  necessary  for employee contributions and Social
Security contributions, for periods of service  by  employees
from  whose  earnings  no  deductions  were made for employee
contributions to the fund, may be charged to the municipality
reserve    for    the    municipality    or     participating
instrumentality.
    (i)  Contributions   by  participating  instrumentalities
shall be  determined  as  provided  herein  except  that  the
percentage  derived  under subparagraph 2 of paragraph (b) of
this Section, and the amount payable under subparagraph 5  of
paragraph   (a)  of  this  Section,  shall  be  based  on  an
amortization period of 10 years.
(Source: P.A. 86-273; 87-850.)

    (40 ILCS 5/7-199.3 new)
    Sec.  7-199.3.  To  establish  and  administer   deferred
compensation  and  tax-deferred annuity programs for units of
local government.
    The  Board  may   establish   and   administer   deferred
compensation,  tax  deferred annuity, and similar tax-savings
programs for employees of units of  local  government,  which
shall be known as the "IMRF-Plus" program.  The program shall
provide for the Board to review proposed investment offerings
and  shall  require  that  only  investments determined to be
acceptable  by  the  Board  may   be   used   for   investing
compensation contributed to the program.
    The   program   shall   include   appropriate  provisions
pertaining to its day to day operation, including methods  of
electing to contribute income, methods of changing the amount
of  income  contributed,  methods  of  selecting  from  among
investment options available under the program, and any other
provisions that the Board may deem appropriate.
    The   program   shall  provide  for  the  preparation  of
pamphlets describing the program and  outlining  the  options
and  opportunities  available  to  local government employees
under the program.  These pamphlets shall be distributed from
time to time to all eligible employees.
    The program established under this Section shall  not  be
implemented  or  amended  until  the  Board is satisfied that
compensation contributed under the program is not subject  to
income  tax  for  the year in which it is earned and that the
taxation of such compensation will be deferred until the time
of its distribution to the employee.
    The program shall also provide for the  recovery  of  the
expenses  of  its  administration  by charging those expenses
against the  earnings  from  investments,  by  charging  fees
equitably  prorated  among the participating local government
employees, or by some other appropriate and equitable  method
determined  by  the Board.  Different methods for recovery of
administrative  expenses  may  be  provided  in  relation  to
different types of investment programs,  and  the  Board  may
provide  for  the allocation of administration expenses among
varying types of programs for this purpose.
    The Board shall review and oversee the administration  of
the program.
    This Section does not limit the power or authority of any
unit  of  local  government,  school district, or institution
supported in whole or in part by public  funds  to  establish
and  administer  any  other  deferred  compensation  plans or
tax-deferred annuity programs that may be authorized by law.

    (40 ILCS 5/14-103.05) (from Ch. 108 1/2, par. 14-103.05)
    Sec. 14-103.05.  Employee.   Any  person  employed  by  a
Department who receives salary for personal services rendered
to  the  Department on a warrant issued pursuant to a payroll
voucher certified by a Department  and  drawn  by  the  State
Comptroller  upon  the  State Treasurer, including an elected
official described in subparagraph  (d)  of  Section  14-104,
shall  become  an  employee  for purpose of membership in the
Retirement System on the first day of such employment.
    A person entering service on or after January 1, 1972 and
prior to January 1, 1984 shall become a member as a condition
of employment and shall begin making contributions as of  the
first day of employment.
    A  person  entering  service  on or after January 1, 1984
shall, upon completion of  6  months  of  continuous  service
which  is  not  interrupted by a break of more than 2 months,
become a member as a condition of employment.   Contributions
shall  begin  the  first of the month after completion of the
qualifying period.
    The qualifying period of  6  months  of  service  is  not
applicable  to:  (1) a person who has been granted credit for
service in a  position  covered  by  the  State  Universities
Retirement  System,  the  Teachers'  Retirement System of the
State of Illinois, the General Assembly Retirement System, or
the Judges Retirement System of Illinois unless that  service
has  been  forfeited  under  the laws of those systems; (2) a
person entering service  on  or  after  July  1,  1991  in  a
noncovered   position;  or  (3)  a  person  to  whom  Section
14-108.2a or 14-108.2b applies.
    The term "employee" does not include the following:
         (1)  members of the State Legislature,  and  persons
    electing  to  become  members  of  the  General  Assembly
    Retirement System pursuant to Section 2-105;
         (2)  incumbents  of  offices normally filled by vote
    of the people;
         (3)  except as otherwise provided in  this  Section,
    any  person appointed by the Governor with the advice and
    consent of  the  Senate  unless  that  person  elects  to
    participate in this system;
         (4)  except  as  provided  in  Section 14-108.2, any
    person who is covered or eligible to be  covered  by  the
    Teachers' Retirement System of the State of Illinois, the
    State  Universities  Retirement  System,  or  the  Judges
    Retirement System of Illinois;
         (5)  an  employee  of  a  municipality  or any other
    political subdivision of the State;
         (6)  any person who becomes an employee  after  June
    30,   1979   as   a  public  service  employment  program
    participant under the  Federal  Comprehensive  Employment
    and  Training  Act and whose wages or fringe benefits are
    paid in whole or in part by  funds  provided  under  such
    Act;
         (7)  enrollees   of   the   Illinois   Young   Adult
    Conservation   Corps   program,   administered   by   the
    Department   of  Natural  Resources,  authorized  grantee
    pursuant to Title VIII of the  "Comprehensive  Employment
    and  Training  Act  of  1973",  29  USC  993,  as  now or
    hereafter amended;
         (8)  enrollees  and  temporary  staff  of   programs
    administered by the Department of Natural Resources under
    the Youth Conservation Corps Act of 1970;
         (9)  any  person who is a member of any professional
    licensing or disciplinary  board  created  under  an  Act
    administered by the Department of Professional Regulation
    or  a successor agency or created or re-created after the
    effective date of this amendatory Act of  1997,  and  who
    receives  per  diem  compensation  rather  than a salary,
    notwithstanding that such per diem compensation  is  paid
    by  warrant  issued  pursuant  to a payroll voucher; such
    persons have never been included  in  the  membership  of
    this  System,  and  this  amendatory  Act  of  1987 (P.A.
    84-1472) is not intended to  effect  any  change  in  the
    status of such persons;
         (10)  any  person  who  is  a member of the Illinois
    Health Care Cost Containment Council,  and  receives  per
    diem  compensation  rather than a salary, notwithstanding
    that such per diem compensation is paid by warrant issued
    pursuant to a payroll voucher; such  persons  have  never
    been  included in the membership of this System, and this
    amendatory Act of 1987 is  not  intended  to  effect  any
    change in the status of such persons; or
         (11)  any  person who is a member of the Oil and Gas
    Board created by Section 1.2 of the Illinois Oil and  Gas
    Act,  and  receives  per  diem compensation rather than a
    salary, notwithstanding that such per  diem  compensation
    is paid by warrant issued pursuant to a payroll voucher.
(Source:  P.A.  88-535;  89-246;  eff.  8-4-95;  89-445, eff.
2-7-96.)

    (40 ILCS 5/14-104) (from Ch. 108 1/2, par. 14-104)
    Sec. 14-104.  Service for which contributions  permitted.
Contributions provided for in this Section  shall  cover  the
period  of  service  granted,  and  be  based upon employee's
compensation and contribution rate in effect on the  date  he
last  became  a  member  of the System; provided that for all
employment prior to January 1,  1969  the  contribution  rate
shall be that in effect for a noncovered employee on the date
he  last  became  a  member  of  the  System.   Contributions
permitted  under  this Section shall include regular interest
from the date an employee last became a member of the  System
to date of payment.
    These   contributions   must   be  paid  in  full  before
retirement either in a lump sum or in installment payments in
accordance with such rules as may be adopted by the board.
    (a)  Any member may make  contributions  as  required  in
this  Section  for  any  period of service, subsequent to the
date of establishment, but prior to the date of membership.
    (b)  Any employee who had been previously  excluded  from
membership  because  of  age at entry and subsequently became
eligible may elect to make contributions as required in  this
Section  for  the  period  of  service  during  which  he was
ineligible.
    (c)  An employee of  the  Department  of  Insurance  who,
after  January  1,  1944  but  prior to becoming eligible for
membership, received salary from funds of insurance companies
in the process of rehabilitation,  liquidation,  conservation
or  dissolution,  may elect to make contributions as required
in this Section for such service.
    (d)  Any employee who rendered service in a State  office
to  which he was elected, or rendered service in the elective
office of Clerk of the Appellate Court prior to the  date  he
became  a  member, may make contributions for such service as
required  in  this  Section.   Any  member  who   served   by
appointment  of  the  Governor under the Civil Administrative
Code of Illinois and did not participate in this  System  may
make  contributions  as  required  in  this  Section for such
service.
    (e)  Any person employed by the United States  government
or any instrumentality or agency thereof from January 1, 1942
through  November  15,  1946 as the result of a transfer from
State service by executive order  of  the  President  of  the
United  States  shall  be  entitled  to  prior service credit
covering the period from January 1, 1942 through December 31,
1943 as provided  for  in  this  Article  and  to  membership
service  credit   for the period from January 1, 1944 through
November 15, 1946 by making  the  contributions  required  in
this  Section.   A  person so employed on January 1, 1944 but
whose employment began after January 1, 1942 may qualify  for
prior  service  and  membership service credit under the same
conditions.
    (f)  An employee of the Department of Labor of the  State
of   Illinois  who  performed  services  for  and  under  the
supervision of that Department prior to January 1,  1944  but
who  was  compensated  for those services directly by federal
funds and not by a warrant of the Auditor of Public  Accounts
paid  by  the  State  Treasurer may establish credit for such
employment by  making  the  contributions  required  in  this
Section.  An employee of the Department of Agriculture of the
State of Illinois, who performed services for and  under  the
supervision of that Department prior to June 1, 1963, but was
compensated  for those services directly by federal funds and
not paid by a warrant of the Auditor of Public Accounts  paid
by  the  State  Treasurer,  and who did not contribute to any
other public employee retirement system for such service, may
establish  credit  for  such   employment   by   making   the
contributions required in this Section.
    (g)  Any  employee  who  executed  a waiver of membership
within 60 days prior to January 1,  1944  may,  at  any  time
while  in  the service of a department, file with the board a
rescission of such waiver.   Upon  making  the  contributions
required  by  this  Section,  the member shall be granted the
creditable service that  would  have  been  received  if  the
waiver had not been executed.
    (h)  Until May 1, 1990, an employee who was employed on a
full-time  basis  by  a  regional  planning commission for at
least 5 continuous years may establish creditable service for
such employment by making the  contributions  required  under
this  Section,  provided  that  any  credits  earned  by  the
employee  in  the  commission's  retirement  plan  have  been
terminated.
    (i)  Any   person  who  rendered  full  time  contractual
services to the General Assembly as a member of a legislative
staff may establish service credit for up to 8 years of  such
services  by  making  the  contributions  required under this
Section, provided that application therefor is made not later
than July 1, 1991.
    (j)  By paying the contributions otherwise required under
this Section, plus an amount determined by the  Board  to  be
equal  to  the  employer's  normal  cost  of the benefit plus
interest, an employee may  establish  service  credit  for  a
period  of up to 2 years spent in active military service for
which he does not qualify for credit  under  Section  14-105,
provided  that  (1)  he  was not dishonorably discharged from
such military service, and (2) the amount of  service  credit
established by a member under this subsection (j), when added
to  the  amount  of  military  service  credit granted to the
member under subsection (b)  of  Section  14-105,  shall  not
exceed 5 years.
    (k)  An employee who was employed on a full-time basis by
the   Illinois   State's   Attorneys   Association  Statewide
Appellate Assistance Service LEAA-ILEC grant project prior to
the time that project became the State's Attorneys  Appellate
Service  Commission,  now the Office of the State's Attorneys
Appellate Prosecutor, an  agency  of  State  government,  may
establish  creditable  service  for  not  more than 60 months
service for such employment by making contributions  required
under this Section.
    (l)  Any  person  who  rendered contractual services to a
member of the General Assembly as a worker  in  the  member's
district  office may establish creditable service for up to 3
years  of  those   contractual   services   by   making   the
contributions  required under this Section.  The System shall
determine a full-time salary equivalent for  the  purpose  of
calculating  the  required contribution.  To establish credit
under this subsection, the applicant must apply to the System
by March 1, 1998.
(Source: P.A. 86-273; 86-1488; 87-794; 87-895; 87-1265.)

    (40 ILCS 5/14-108) (from Ch. 108 1/2, par. 14-108)
    (Text of Section before amendment by P.A. 89-507)
    Sec. 14-108.  Amount of retirement annuity. A member  who
has  contributed  to the System for at least 12 months, shall
be entitled to a prior  service  annuity  for  each  year  of
certified prior service credited to him, except that a member
shall  receive 1/3 of the prior service annuity for each year
of service for which contributions have been made and all  of
such  annuity  shall  be  payable  after  the member has made
contributions for a period of 3 years.  Proportionate amounts
shall be payable for service of less than a full  year  after
completion of at least 12 months.
    The   total   period  of  service  to  be  considered  in
establishing the  measure  of  prior  service  annuity  shall
include  service  credited in the Teachers' Retirement System
of  the  State  of  Illinois  and  the   State   Universities
Retirement  System  for which contributions have been made by
the member to such systems; provided that at least 1 year  of
the total period of 3 years prescribed for the allowance of a
full  measure  of  prior  service  annuity  shall  consist of
membership service in this system for which credit  has  been
granted.
    (a)  In  the  case  of  a  member  who  is  a  noncovered
employee,  the  retirement annuity for membership service and
prior service shall be 1.67% of  final  average  compensation
for  each of the first 10 years of service; 1.90% for each of
the next 10 years of service; 2.10% for each year of  service
in excess of 20 but not exceeding 30; and 2.30% for each year
in excess of 30.  Any service credit established as a covered
employee  shall  be  considered in determining the applicable
percentages and computed as stated in paragraph (b).
    (b)  In the case of a covered  employee,  the  retirement
annuity  for  membership  service  and prior service shall be
computed as stated in paragraph (a) for  all  service  credit
established  as  a  noncovered  employee;  for service credit
established as a covered employee it shall be 1% for each  of
the  first 10 years of service; 1.10% for each of the next 10
years of service; 1.30% for each year of service in excess of
20 but not exceeding 30; and 1.50% for each year  of  service
in  excess  of  30.   Any  service  credit  established  as a
noncovered employee shall be considered  in  determining  the
applicable percentages.
    (c)  For  a  member  with  30  but  less than 35 years of
creditable service retiring after attaining age 55 but before
age 60, the retirement annuity shall be reduced by 1/2 of  1%
for  each  month that the member's age is under age 60 at the
time of retirement.
    (d)  A retirement annuity shall not exceed 75%  of  final
average compensation, subject to such extension as may result
from the application of Section 14-114 or Section 14-115.
    (e)  The   retirement  annuity  payable  to  any  covered
employee who is a member of the  System  and  in  service  on
January 1, 1969, or in service thereafter in 1969 as a result
of  legislation  enacted  by  the  Illinois  General Assembly
transferring the  member  to  State  employment  from  county
employment  in  a county Department of Public Aid in counties
of 3,000,000 or more population, under a plan of coordination
with  the  Old  Age,  Survivors  and  Disability   provisions
thereof,  if not fully insured for Old Age Insurance payments
under the Federal Old Age, Survivors and Disability Insurance
provisions at the date of acceptance of a retirement annuity,
shall not be less than the amount for which the member  would
have been eligible if coordination were not applicable.
    (f)  The   retirement  annuity  payable  to  any  covered
employee who is a member of the  System  and  in  service  on
January 1, 1969, or in service thereafter in 1969 as a result
of  the  legislation  designated in the immediately preceding
paragraph, if fully insured for Old  Age  Insurance  payments
under  the  Federal  Social  Security  Act  at  the  date  of
acceptance of a retirement annuity, shall not be less than an
amount  which  when  added  to  the Primary Insurance Benefit
payable to the member upon attainment of age  65  under  such
Federal  Act, will equal the annuity which would otherwise be
payable  if  the  coordinated  plan  of  coverage  were   not
applicable.
    (g)  In  the  case  of  a  member  who  is  a  noncovered
employee,  the retirement annuity for membership service as a
full-time security employee of the Department of  Corrections
or  security  employee of the Department of Mental Health and
Developmental Disabilities shall be  1.9%  of  final  average
compensation  for each of the first 10 years of service; 2.1%
for each of the next 10 years of service; 2.25% for each year
of service in excess of 20 but not exceeding 30; and 2.5% for
each year in excess of 30.
    (h)  In the case of a covered  employee,  the  retirement
annuity  for  membership  service  as  a  full-time  security
employee   of  the  Department  of  Corrections  or  security
employee of the Department of Mental Health and Developmental
Disabilities shall be 1.67% of final average compensation for
each of the first 10 years of service; 1.90% for each of  the
next  10  years of service; 2.10% for each year of service in
excess of 20 but not exceeding 30; and 2.30% for each year in
excess of 30.
    (i)  For the purposes of this Section and Section  14-133
of this Act, the term "security employee of the Department of
Corrections"   and   the   term  "security  employee  of  the
Department of Mental Health and  Developmental  Disabilities"
shall have the meanings ascribed to them in subsection (c) of
Section 14-110.
    (j)  The   retirement   annuity   computed   pursuant  to
paragraphs (g) or (h)  shall  be  applicable  only  to  those
security  employees  of  the  Department  of  Corrections and
security employees of the Department  of  Mental  Health  and
Developmental  Disabilities  who  have  at  least 20 years of
membership  service  and  who  are  not  eligible   for   the
alternative retirement annuity provided under Section 14-110.
However,  persons  transferring  to this System under Section
14-108.2 who have service credit under  Article  16  of  this
Code   may  count  such  service  toward  establishing  their
eligibility under the 20-year  service  requirement  of  this
subsection;   but   such   service   may  be  used  only  for
establishing such eligibility, and not  for  the  purpose  of
increasing or calculating any benefit.
    (k)  In the case of a member who has at least 10 years of
creditable  service  as  a  court  reporter,  the  retirement
annuity  for  service  as  a  court reporter shall be 2.2% of
final average compensation for each year of such service as a
noncovered employee, and 1.5% of final  average  compensation
for each year of such service as a covered employee.
(Source: P.A. 86-272; 86-273; 86-1028.)

    (Text of Section after amendment by P.A. 89-507)
    Sec. 14-108.  Amount of retirement annuity.  A member who
has  contributed  to the System for at least 12 months, shall
be entitled to a prior  service  annuity  for  each  year  of
certified prior service credited to him, except that a member
shall  receive 1/3 of the prior service annuity for each year
of service for which contributions have been made and all  of
such  annuity  shall  be  payable  after  the member has made
contributions for a period of 3 years.  Proportionate amounts
shall be payable for service of less than a full  year  after
completion of at least 12 months.
    The   total   period  of  service  to  be  considered  in
establishing the  measure  of  prior  service  annuity  shall
include  service  credited in the Teachers' Retirement System
of  the  State  of  Illinois  and  the   State   Universities
Retirement  System  for which contributions have been made by
the member to such systems; provided that at least 1 year  of
the total period of 3 years prescribed for the allowance of a
full  measure  of  prior  service  annuity  shall  consist of
membership service in this system for which credit  has  been
granted.
    (a)  In  the  case  of  a  member  who  is  a  noncovered
employee,  the  retirement annuity for membership service and
prior service shall be 1.67% of  final  average  compensation
for  each of the first 10 years of service; 1.90% for each of
the next 10 years of service; 2.10% for each year of  service
in excess of 20 but not exceeding 30; and 2.30% for each year
in excess of 30.  Any service credit established as a covered
employee  shall  be  considered in determining the applicable
percentages and computed as stated in paragraph (b).
    (b)  In the case of a covered  employee,  the  retirement
annuity  for  membership  service  and prior service shall be
computed as stated in paragraph (a) for  all  service  credit
established  as  a  noncovered  employee;  for service credit
established as a covered employee it shall be 1% for each  of
the  first 10 years of service; 1.10% for each of the next 10
years of service; 1.30% for each year of service in excess of
20 but not exceeding 30; and 1.50% for each year  of  service
in  excess  of  30.   Any  service  credit  established  as a
noncovered employee shall be considered  in  determining  the
applicable percentages.
    (c)  For  a  member  with  30  but  less than 35 years of
creditable service retiring after attaining age 55 but before
age 60, the retirement annuity shall be reduced by 1/2 of  1%
for  each  month that the member's age is under age 60 at the
time of retirement.
    (d)  A retirement annuity shall not exceed 75%  of  final
average compensation, subject to such extension as may result
from the application of Section 14-114 or Section 14-115.
    (e)  The   retirement  annuity  payable  to  any  covered
employee who is a member of the  System  and  in  service  on
January 1, 1969, or in service thereafter in 1969 as a result
of  legislation  enacted  by  the  Illinois  General Assembly
transferring the  member  to  State  employment  from  county
employment  in  a county Department of Public Aid in counties
of 3,000,000 or more population, under a plan of coordination
with  the  Old  Age,  Survivors  and  Disability   provisions
thereof,  if not fully insured for Old Age Insurance payments
under the Federal Old Age, Survivors and Disability Insurance
provisions at the date of acceptance of a retirement annuity,
shall not be less than the amount for which the member  would
have been eligible if coordination were not applicable.
    (f)  The   retirement  annuity  payable  to  any  covered
employee who is a member of the  System  and  in  service  on
January 1, 1969, or in service thereafter in 1969 as a result
of  the  legislation  designated in the immediately preceding
paragraph, if fully insured for Old  Age  Insurance  payments
under  the  Federal  Social  Security  Act  at  the  date  of
acceptance of a retirement annuity, shall not be less than an
amount  which  when  added  to  the Primary Insurance Benefit
payable to the member upon attainment of age  65  under  such
Federal  Act, will equal the annuity which would otherwise be
payable  if  the  coordinated  plan  of  coverage  were   not
applicable.
    (g)  In  the  case  of  a  member  who  is  a  noncovered
employee,  the retirement annuity for membership service as a
full-time security employee of the Department of  Corrections
or  security  employee  of  the  Department of Human Services
shall be 1.9% of final average compensation for each  of  the
first 10 years of service; 2.1% for each of the next 10 years
of  service;  2.25%  for each year of service in excess of 20
but not exceeding 30; and 2.5% for each year in excess of 30.
    (h)  In the case of a covered  employee,  the  retirement
annuity  for  membership  service  as  a  full-time  security
employee   of  the  Department  of  Corrections  or  security
employee of the Department of Human Services shall  be  1.67%
of  final average compensation for each of the first 10 years
of service; 1.90% for each of the next 10 years  of  service;
2.10%  for  each  year  of  service  in  excess of 20 but not
exceeding 30; and 2.30% for each year in excess of 30.
    (i)  For the purposes of this Section and Section  14-133
of this Act, the term "security employee of the Department of
Corrections"   and   the   term  "security  employee  of  the
Department  of  Human  Services"  shall  have  the   meanings
ascribed to them in subsection (c) of Section 14-110.
    (j)  The   retirement   annuity   computed   pursuant  to
paragraphs (g) or (h)  shall  be  applicable  only  to  those
security  employees  of  the  Department  of  Corrections and
security employees of the Department of  Human  Services  who
have  at least 20 years of membership service and who are not
eligible for  the  alternative  retirement  annuity  provided
under  Section 14-110.  However, persons transferring to this
System under Section 14-108.2 who have service  credit  under
Article  16  of  this  Code  may  count  such  service toward
establishing their  eligibility  under  the  20-year  service
requirement  of this subsection; but such service may be used
only for establishing  such  eligibility,  and  not  for  the
purpose of increasing or calculating any benefit.
    (k)  In the case of a member who has at least 10 years of
creditable  service  as  a  court  reporter,  the  retirement
annuity  for  service  as  a  court reporter shall be 2.2% of
final average compensation for each year of such service as a
noncovered employee, and 1.5% of final  average  compensation
for each year of such service as a covered employee.
(Source: P.A. 89-507, eff. 7-1-97.)

    (40 ILCS 5/14-118) (from Ch. 108 1/2, par. 14-118)
    Sec.  14-118.   Widow's annuity - Conditions for payment.
A widow who exercises the right of  election  to  receive  an
annuity  pursuant  to  this Section is entitled to a lump sum
payment of $500 plus a widow's annuity, if
         (1)  she was married to the deceased member  for  at
    least  1 year prior to his death or retirement, whichever
    first occurs, and also on the day of the last termination
    of his service as a State employee;
         (2)  the deceased member had at  least  8  years  of
    creditable service if death occurred while in service, or
    while  on  leave  of  absence  from  service, or while in
    receipt of a nonoccupational disability  or  occupational
    disability benefit, or after retirement;
         (3)  she  was  nominated  exclusively to receive the
    entire death benefit payable under this Article;
         (4)  death of the member occurred after  withdrawal,
    and  he  had  fulfilled  the  prescribed  age and service
    conditions for  establishing  a  right  in  a  retirement
    annuity; and
         (5)  she  elected  to  receive  the  widow's annuity
    within 6 months from the date of death of  the  employee,
    otherwise  the  survivors annuity if applicable, shall be
    payable.
      If a widow's annuity beneficiary becomes entitled to  a
survivors  annuity  and a widow's annuity, she shall elect to
receive only one of such annuities.
    The surviving spouse of a person who (1) died on or after
January 1, 1985, (2) withdrew from service prior to August 1,
1953, (3) was receiving an annuity from  the  system  at  the
time  of  death, and (4) meets all other requirements of this
Section, shall be entitled to  the  benefits  provided  under
this Section.
    A widow's annuity shall be payable beginning on the first
of the month following the date of death of the member if the
widow  has then attained age 50 or, if she is under age 50 on
such date, on the first of the month following her attainment
of such age; provided, that if an unmarried child or children
of the member under age 18 (or under age 22  if  a  full-time
student)  also  survive  him,  and  the child or children are
under the care of the eligible  widow,  the  widow's  annuity
shall  begin on the first of the month following the member's
death without regard to the age of  the  widow.   If  she  is
under age 50 at the death of the member and she qualifies for
a  widow's  annuity,  she is entitled to receive the lump sum
payment immediately upon  application,  but  payment  of  the
widow's annuity shall be deferred as provided above.
    The   provision  for  a  widow's  annuity  shall  not  be
construed to affect the payment of  a  reversionary  annuity.
If  a  widow  qualifies for more than one widow's annuity, or
for a widow's annuity and  a  survivors  annuity,  she  shall
elect to receive only one of such annuities.
    This  Section  shall  not  apply to the widow of any male
person who first became a member after July 19, 1961.
(Source: P.A. 84-1028.)

    (40 ILCS 5/14-119) (from Ch. 108 1/2, par. 14-119)
    Sec. 14-119.  Amount of widow's annuity.
    (a)  The widow's annuity shall be 50% of  the  amount  of
retirement annuity payable to the member on the date of death
while  on  retirement  if an annuitant, or on the date of his
death while in service if an employee, regardless of his  age
on  such date, or on the date of withdrawal if death occurred
after termination of service under the conditions  prescribed
in the preceding Section.
    (b)  If  an eligible widow, regardless of age, has in her
care any unmarried child or children of the member under  age
18 (under age 22 if a full-time student), the widow's annuity
shall  be  increased  in  the  amount of 5% of the retirement
annuity for each such child, but the combined payments for  a
widow  and  children shall not exceed 66 2/3% of the member's
earned retirement annuity.
    The amount of retirement annuity from which  the  widow's
annuity is derived shall be that earned by the member without
regard  to whether he attained age 60 prior to his withdrawal
under the conditions stated or prior to his death.
    (c)  Adopted children shall be considered as children  of
the   member  only  if  the  proceedings  for  adoption  were
commenced at least 1 year prior to the member's death.
    Marriage of a child shall render the child ineligible for
further consideration in the increase in the  amount  of  the
widow's annuity.
    Attainment of age 18 (age 22 if a full-time student) of a
child  shall  render  a  child  him  ineligible  for  further
consideration in the increase of the widow's annuity, but the
annuity  to  the widow shall be continued thereafter, without
regard to her age at that time.
    (d)  A widow's annuity payable on account of any  covered
employee  who shall have been a covered employee for at least
18 months shall be reduced by 1/2 of the amount of  survivors
benefits  to  which  his beneficiaries are eligible under the
provisions of the Federal Social Security  Act,  except  that
(1)  the  amount  of  any  widow's annuity payable under this
Article shall not be reduced by reason of any increase  under
that  Act  which  occurs  after  the  offset required by this
subsection is first applied to  that  annuity,  and  (2)  for
benefits  granted  on  or  after  January 1, 1992, the offset
under this subsection (d) shall not exceed 50% of the  amount
of widow's annuity otherwise payable.
    (e)  Upon  the  death of a recipient of a widow's annuity
the  excess,  if     any,   of   the   member's   accumulated
contributions   plus   credited  interest  over  all  annuity
payments to the member and widow, exclusive of the $500  lump
sum  payment,  shall  be paid to the named beneficiary of the
widow, or if none has been named, to the estate of the widow,
provided no reversionary annuity is payable.
    (f)  On January 1,  1981,  any  recipient  of  a  widow's
annuity  who  was  receiving  a  widow's annuity on or before
January 1, 1971, shall have her widow's  annuity  then  being
paid  increased  by  1%  for each full year which has elapsed
from the date the widow's annuity began.  On January 1, 1982,
any recipient of a widow's  annuity  who  began  receiving  a
widow's  annuity after January 1, 1971, but before January 1,
1981,  shall  have  her  widow's  annuity  then  being   paid
increased by 1% for each full year which has elapsed from the
date  the  widow's  annuity  began.   On January 1, 1987, any
recipient of  a  widow's  annuity  who  began  receiving  the
widow's  annuity on or before January 1, 1977, shall have the
monthly widow's annuity increased by $1 for  each  full  year
which has elapsed since the date the annuity began.
    (g)  Beginning  January  1,  1990,  every widow's annuity
shall be increased (1) on each  January  1  occurring  on  or
after  the commencement of the annuity if the deceased member
died while receiving a retirement annuity, or  (2)  in  other
cases,  on  each  January  1  occurring on or after the first
anniversary of the commencement of the annuity, by an  amount
equal  to  3% of the current amount of the annuity, including
any previous increases under  this  Article.  Such  increases
shall apply without regard to whether the deceased member was
in  service  on  or  after  the  effective date of Public Act
86-1488, but shall not accrue for any period prior to January
1, 1990.
(Source: P.A. 86-273; 86-1488; 87-794.)

    (40 ILCS 5/14-120) (from Ch. 108 1/2, par. 14-120)
    Sec.  14-120.   Survivors  annuities  -  Conditions   for
payments.  A survivors annuity is established for all members
of  the  System.  Upon the death of any male person who was a
member on July 19, 1961, however,  his  widow  may  have  the
option  of  receiving  the  widow's  annuity provided in this
Article, in lieu of the survivors annuity.
    (a)  A survivors annuity beneficiary, as herein  defined,
is  eligible  for  a survivors annuity if the deceased member
had completed at least 1 1/2 years of contributing creditable
service if death occurred:
         (1)  while in service;
         (2)  while on an approved  or  authorized  leave  of
    absence    from   service,   not   exceeding   one   year
    continuously; or
         (3)  while  in   receipt   of   a   non-occupational
    disability or an occupational disability benefit.
    (b)  If  death of the member occurs after withdrawal, the
survivors annuity beneficiary is eligible  for  such  annuity
only  if  the  member had fulfilled at the date of withdrawal
the prescribed service conditions for establishing a right in
a retirement annuity.
    (c)  Payment  of  the  survivors  annuity   shall   begin
immediately  if  the beneficiary is 50 years or over, or upon
attainment of age 50 if the beneficiary is under that age  at
the date of the member's death. In the case of survivors of a
member whose death occurred between November 1, 1970 and July
15,  1971,  the  payment of the survivors annuity shall begin
upon October 1, 1977, if the beneficiary is then 50 years  of
age  or  older,  or  upon  the  attainment  of  age 50 if the
beneficiary is under that age on October 1, 1977.
    If an eligible child or children, under the care  of  the
spouse  also  survive the member, the survivors annuity shall
begin immediately without regard to whether  the  beneficiary
has attained age 50.
    Benefits  under  this Section shall accrue and be payable
for whole calendar months, beginning on the first day of  the
month  after  the  initiating  event occurs and ending on the
last day of the month in which the terminating event occurs.
    (d)  A survivor annuity beneficiary means:
         (1)  A spouse  of  a  member  or  annuitant  if  the
    current  marriage  with member was in effect at least one
    year at the date of the member's death or  at  least  one
    year  at  the  date  of  his or her withdrawal, whichever
    first occurs.;
         (2)  An unmarried child under age 18 (under  age  22
    if  a  full-time  student) of the member or annuitant; an
    unmarried stepchild under age  18  (under  age  22  if  a
    full-time  student)  who  has  been such for at least one
    year at the date of the member's death or  at  least  one
    year  at  the date of withdrawal, whichever first occurs;
    an unmarried adopted child under age 18 (under age 22  if
    a  full-time  student)  if  the adoption proceedings were
    initiated at  least  one  year  prior  to  the  death  or
    withdrawal  of  the  member or annuitant, whichever first
    occurs; and an unmarried child over age 18 if he  or  she
    is   dependent   by   reason  of  a  physical  or  mental
    disability, so  long  as  the  such  physical  or  mental
    disability  continues.   For  purposes of this subsection
    sub-section, disability means inability to engage in  any
    substantial  gainful  activity by reason of any medically
    determinable physical or mental impairment which  can  be
    expected to result in death or which has lasted or can be
    expected to last for a continuous period of not less than
    12 months.;
         (3)  A  dependent parent of the member or annuitant;
    a dependent step-parent by a marriage  contracted  before
    the  member  or annuitant attained age 18; or a dependent
    adopting parent by  whom  the  member  or  annuitant  was
    adopted before he or she attained age 18.
    (e)  Remarriage  before  age  55  or  death  of a spouse;
marriage or death of a child; or remarriage before age 55  or
death of a parent terminates the survivors annuity payable on
account  of  such  beneficiary.   Remarriage of a prospective
beneficiary prior to the attainment of  age  50  disqualifies
the   beneficiary   for  the  annuity  expectancy  hereunder.
Termination  due  to  a  marriage  or  remarriage  shall   be
permanent regardless of any future changes in marital status.
    Any  person whose survivors annuity was terminated during
1978 or 1979 due to remarriage at age 55  or  over  shall  be
eligible  to  apply,  not  later  than  July  1,  1990, for a
resumption of that annuity, to begin on July 1, 1990.
    (f)  The term "dependent" relating to a survivors annuity
means a beneficiary of a survivors annuity who was  receiving
from  the  member  at the date of the member's death at least
1/2 of the support for maintenance including board,  lodging,
medical care and like living costs.
    (g)  If there is no eligible spouse surviving the member,
or  if  a survivors annuity beneficiary includes a spouse who
dies or remarries, the annuity is  payable  to  an  unmarried
child  or  children.   If  at the date of death of the member
there is no spouse or unmarried child, payments shall be made
to a dependent parent or parents.  If no  eligible  survivors
annuity beneficiary survives the member, the non-occupational
death  benefit  is  payable  in  the  manner provided in this
Article.
    (h)  Survivor benefits do  not  affect  any  reversionary
annuity.
    (i)  If  a survivors annuity beneficiary becomes entitled
to a widow's annuity or one or more  survivors  annuities  or
both  such  annuities, the beneficiary shall elect to receive
only one of such annuities.
    (j)  Contributing  creditable  service  under  the  State
Universities Retirement System and  the  Teachers  Retirement
System  of  the  State  of  Illinois  shall  be considered in
determining whether  the  member  has  met  the  contributing
service requirements of this Section.
    (k)  In  lieu of the Survivor's Annuity described in this
Section, the spouse of the member has the  option  to  select
the  Nonoccupational Death Benefit described in this Article,
provided the  spouse  is  the  sole  survivor  and  the  sole
nominated beneficiary of the member.
    (l)  The  changes  made  to  this  Section  and  Sections
14-118,  14-119,  and  14-128 by this amendatory Act of 1997,
relating to benefits for certain unmarried children  who  are
full-time  students  under  age  22,  apply without regard to
whether the deceased member was in service on  or  after  the
effective date of this amendatory Act of 1997.  These changes
do  not  authorize the repayment of a refund or a re-election
of  benefits,  and  any  benefit  or  increase  in   benefits
resulting from these changes is not payable retroactively for
any  period  before the effective date of this amendatory Act
of 1997.
(Source: P.A. 86-273.)

    (40 ILCS 5/14-128) (from Ch. 108 1/2, par. 14-128)
    Sec.   14-128.    Occupational   death   benefit.      An
occupational  death  benefit  is provided for a member of the
System whose death, prior to  retirement,  is  the  proximate
result  of  bodily  injuries  sustained or a hazard undergone
while in the performance and within the scope of the member's
duties.
    (a)  Conditions for payment.
    Exclusive of the lump sum payment  provided  for  herein,
all  annuities under this Section shall accrue and be payable
for complete calendar months, beginning on the first  day  of
the  month  next  following the month in which the initiating
event occurs and ending on the last day of the month in which
the terminating event occurs.
    The following  named  survivors  of  the  member  may  be
eligible for an annuity under this Section:
         (i)  The member's spouse.
         (ii)  An  unmarried child of the member under age 18
    (under age 22  if  a  full-time  student);  an  unmarried
    stepchild  under  age  18  (under  age  22 if a full-time
    student) who has been such for at least one year  at  the
    date  of  the  member's death; an unmarried adopted child
    under age 18 (under age 22 if a full-time student) if the
    adoption proceedings were initiated  at  least  one  year
    prior  to the death of the member; and an unmarried child
    over age 18 who is dependent by reason of a  physical  or
    mental disability, for so long as such physical or mental
    disability  continues.   For the purposes of this Section
    disability means inability to engage in  any  substantial
    gainful  activity by reason of any medically determinable
    physical or mental impairment which can  be  expected  to
    result in death or which has lasted or can be expected to
    last for a continuous period of not less than 12 months.
         (iii)  If  no spouse or eligible children survive: a
    dependent parent of the member; a  dependent  step-parent
    by  a  marriage contracted before the member attained age
    18; or a dependent adopting parent by whom the member was
    adopted before he or she attained age 18.
    The term "dependent" relating to  an  Occupational  Death
Benefit means a survivor of the member who was receiving from
the  member at the date of the member's death at least 1/2 of
the support for maintenance including board, lodging, medical
care and like living costs.
    Payment  of  the  annuity  shall   continue   until   the
occurrence of the following:
         (1)  remarriage  before age 55 or death, in the case
    of a surviving spouse;
         (2)  attainment  of  age  18   or   termination   of
    disability,  death,  or  marriage,  in  the  case  of  an
    eligible child;
         (3)  remarriage  before age 55 or death, in the case
    of a dependent parent.
    If none of the aforementioned beneficiaries is living  at
the  date  of  death  of  the  member,  no occupational death
benefit shall  be  payable,  but  the  nonoccupational  death
benefit shall be payable as provided in this Article.
    (b)  Amount of benefit.
    The  member's  accumulated  contributions  plus  credited
interest shall be payable in a lump sum to such person as the
member  has nominated by written direction, duly acknowledged
and filed with the Board, or if no  such  nomination  to  the
estate  of the member.  When an annuitant is re-employed by a
Department,  the  accumulated  contributions  plus   credited
interest payable on the member's account shall, if the member
has not previously elected a reversionary annuity, consist of
the  excess,  if  any,  of  the  member's  total  accumulated
contributions  plus  credited  interest  for  all  creditable
service  over  the  total  amount  of  all retirement annuity
payments received by the member prior to death.
    In addition to  the  foregoing  payment,  an  annuity  is
provided for eligible survivors as follows:
         (1)  If  the  survivor is a spouse only, the annuity
    shall be 50% of the member's final average compensation.
         (2)  If the spouse has in her care an eligible child
    or children, the annuity shall be increased by an  amount
    equal to 15% of the final average compensation on account
    of  each  such  child,  subject  to  a  limitation on the
    combined annuities to a surviving spouse and children  of
    75% of final average compensation.
         (3)  If  there  is  no  surviving  spouse, or if the
    surviving spouse dies or remarries while a child  remains
    eligible,  then  each  such child shall be entitled to an
    annuity of 15% of the  deceased  member's  final  average
    compensation,  subject  to  a  limitation of 50% of final
    average compensation to all such children.
         (4)  If there is no  surviving  spouse  or  eligible
    children,  then  an  annuity  shall  be  payable  to  the
    member's dependent parents, equal to 25% of final average
    compensation to each such beneficiary.
    If  any  annuity  payable under this Section is less than
the  corresponding  survivors  annuity,  the  beneficiary  or
beneficiaries of the annuity under this Section may elect  to
receive  the  survivors annuity and the Nonoccupational Death
Benefit provided for in this Article in lieu of  the  annuity
provided under this Section.
    (c)  Occupational  death  claims  pending adjudication by
the  Industrial  Commission  or  a  ruling  by   the   agency
responsible  for determining the liability of the State under
the "Workers' Compensation  Act"  or  "Workers'  Occupational
Diseases  Act"  shall be payable under the Survivor's Annuity
Section of this Article until a ruling or adjudication occurs
if the beneficiary or beneficiaries:  (1) meet all conditions
for payment as prescribed in this Article; and (2) execute an
assignment of benefits payable as a result of adjudication by
the  Industrial  Commission  or  a  ruling  by   the   agency
responsible  for determining the liability of the State under
such Acts.  The assignment shall be made to  the  System  and
shall  be  for an amount equal to the excess of benefits paid
under the Survivor's Annuity Section  of  this  Article  over
benefits  payable as a result of adjudication of the Workers'
Compensation claim computed from the date  of  death  of  the
member.
    (d)  Every  occupational death annuity payable under this
Section shall be increased on each January 1 occurring on  or
after  (i)  January 1, 1990, or (ii) the first anniversary of
the commencement of the annuity, whichever occurs  later,  by
an  amount  equal to 3% of the current amount of the annuity,
including any previous increases under this Article,  without
regard  to  whether the deceased member was in service on the
effective date of this amendatory Act of 1991.
(Source: P.A. 86-273; 86-1488.)

    (40 ILCS 5/14-130) (from Ch. 108 1/2, par. 14-130)
    Sec. 14-130.  Refunds; rules.
    (a)  Upon withdrawal a member  is  entitled  to  receive,
upon written request, a refund of the member's contributions,
including  credits  granted  while  in  receipt of disability
benefits, without  credited  interest.   The  board,  in  its
discretion  may  withhold payment of the refund of a member's
contributions for a period not to exceed  1  year  after  the
member has ceased to be an employee.
    For purposes of this Section, a member will be considered
to  have  withdrawn  from service if a change in, or transfer
of, his position  results  in  his  becoming  ineligible  for
continued   membership   in  this  System  and  eligible  for
membership in another public  retirement  system  under  this
Act.
    (b)  A   member   receiving   a   refund   forfeits   and
relinquishes  all accrued rights in the System, including all
accumulated creditable service.  If the person again  becomes
a  member  of  the System and establishes at least 2 years of
creditable  service,  the  member  may   repay   the   moneys
previously  refunded.   However,  a former member may restore
credits  previously  forfeited  by  acceptance  of  a  refund
without returning to  service  by  applying  in  writing  and
repaying  to  the System, by April 1, 1993, the amount of the
refund plus regular interest  calculated  from  the  date  of
refund to the date of repayment.
    The  repayment of refunds issued prior to January 1, 1984
shall consist of the amount refunded  plus  5%  interest  per
annum compounded annually for the period from the date of the
refund  to  the  end of the month in which repayment is made.
The repayment of refunds issued after January 1,  1984  shall
consist  of the amount refunded plus regular interest for the
period from the date of refund to the end  of  the  month  in
which  repayment  is  made.  However, in the case of a refund
that is repaid in a lump sum between January 1, 1991 and July
1, 1991, repayment shall consist of the amount refunded  plus
interest  at  the  rate of 2.5% per annum compounded annually
from the date of the refund to the end of the month in  which
repayment is made.
    Upon  repayment,  the member shall receive credit for the
service, member contributions and regular interest  that  was
forfeited  by  acceptance  of  the  refund as well as regular
interest for the period of  non-membership.   Such  repayment
shall  be made in full before retirement either in a lump sum
or in installment payments in accordance with such  rules  as
may be adopted by the board.
    (b-5)  The  Board may adopt rules governing the repayment
of refunds and establishment of credits  in  cases  involving
awards of back pay or reinstatement.  The rules may authorize
repayment  of  a refund in installment payments and may waive
the payment of interest on  refund  amounts  repaid  in  full
within a specified period.
    (c)  A  member who is unmarried on the date of retirement
or  who  does  not  have  an   eligible   survivors   annuity
beneficiary   at  that  date  is  entitled  to  a  refund  of
contributions  for  widow's  annuity  or  survivors   annuity
purposes, or both, as the case may be, without interest.
    (d)  Any  member  who  has service credit in any position
for which an alternative retirement annuity is  provided  and
in  relation  to  which  an  increase in the rate of employee
contribution is required, shall  be  entitled  to  a  refund,
without  interest,  of  that  part  of  the member's employee
contribution which results from that increase in the employee
rate if the member does  not  qualify  for  that  alternative
retirement annuity at the time of retirement.
(Source: P.A. 86-1488; 87-1265.)

    (40 ILCS 5/14-133) (from Ch. 108 1/2, par. 14-133)
    (Text of Section before amendment by P.A. 89-507)
    Sec. 14-133. Contributions on behalf of members.
    (a)  Each participating employee shall make contributions
to the System,  based  on  the  employee's  compensation,  as
follows:
         (1)  Covered  employees,  except as indicated below,
    3.5% 3 1/2% for retirement annuity, and 0.5%  1/2  of  1%
    for a widow or survivors annuity;
         (2)  Noncovered   employees,   except  as  indicated
    below, 7% for retirement annuity and 1% for  a  widow  or
    survivors annuity;
         (3)  Noncovered  employees  serving in a position in
    which "eligible creditable service" as defined in Section
    14-110 may be earned, 8.5% 8 1/2% for retirement  annuity
    and 1% for a widow or survivors annuity;
         (4)  Covered  employees  serving  in  a  position in
    which "eligible creditable service" as defined in Section
    14-110 may be earned, 5% for retirement annuity and  0.5%
    for a widow or survivors annuity;
         (5)  Each   full-time   security   employee  of  the
    Department of Corrections or of the Department of  Mental
    Health  and  Developmental  Disabilities who is a covered
    employee, 5% for retirement annuity and 0.5%  1/2  of  1%
    for a widow or survivors annuity;
         (6)  Each   full-time   security   employee  of  the
    Department of Corrections or of the Department of  Mental
    Health  and  Developmental  Disabilities  who  is  not  a
    covered  employee, 8.5% 8 1/2% for retirement annuity and
    1% for a widow or survivors annuity.
    (b)  Contributions shall be in the form  of  a  deduction
from  compensation and shall be made notwithstanding that the
compensation paid in cash to the employee  shall  be  reduced
thereby  below  the  minimum prescribed by law or regulation.
Each member is deemed to consent and agree to the  deductions
from  compensation  provided  for  in this Article, and shall
receipt in full for salary or compensation.
(Source: P.A. 86-273.)

    (Text of Section after amendment by P.A. 89-507)
    Sec. 14-133. Contributions on behalf of members.
    (a)  Each participating employee shall make contributions
to the System,  based  on  the  employee's  compensation,  as
follows:
         (1)  Covered  employees,  except as indicated below,
    3.5% 3 1/2% for retirement annuity, and 0.5%  1/2  of  1%
    for a widow or survivors annuity;
         (2)  Noncovered   employees,   except  as  indicated
    below, 7% for retirement annuity and 1% for  a  widow  or
    survivors annuity;
         (3)  Noncovered  employees  serving in a position in
    which "eligible creditable service" as defined in Section
    14-110 may be earned, 8.5% 8 1/2% for retirement  annuity
    and 1% for a widow or survivors annuity;
         (4)  Covered  employees  serving  in  a  position in
    which "eligible creditable service" as defined in Section
    14-110 may be earned, 5% for retirement annuity and  0.5%
    for a widow or survivors annuity;
         (5)  Each   full-time   security   employee  of  the
    Department of Corrections or of the Department  of  Human
    Services  who  is  a  covered employee, 5% for retirement
    annuity and 0.5% 1/2 of  1%  for  a  widow  or  survivors
    annuity;
         (6)  Each   full-time   security   employee  of  the
    Department of Corrections or of the Department  of  Human
    Services  who  is not a covered employee, 8.5% 8 1/2% for
    retirement annuity  and  1%  for  a  widow  or  survivors
    annuity.
    (b)  Contributions  shall  be  in the form of a deduction
from compensation and shall be made notwithstanding that  the
compensation  paid  in  cash to the employee shall be reduced
thereby below the minimum prescribed by  law  or  regulation.
Each  member is deemed to consent and agree to the deductions
from compensation provided for in  this  Article,  and  shall
receipt in full for salary or compensation.
(Source: P.A. 89-507, eff. 7-1-97.)

    (40 ILCS 5/14-133.1) (from Ch. 108 1/2, par. 14-133.1)
    Sec. 14-133.1. Pickup of contributions.
    (a)  Each   department   shall   pick   up  the  employee
contributions required by Section 14-133 for all compensation
earned after December 31,  1981,  and  the  contributions  so
picked  up  shall  be  treated  as  employer contributions in
determining tax treatment under the  United  States  Internal
Revenue  Code;  however,  each  department  shall continue to
withhold federal and State  income  taxes  based  upon  these
contributions  until  the  Internal  Revenue  Service  or the
federal courts rule that pursuant to Section  414(h)  of  the
United  States  Internal  Revenue  Code,  these contributions
shall not be included as gross income of the  employee  until
such time as they are distributed or made available.
    The  department  shall  pay  these employee contributions
from the same fund which is used in paying  earnings  to  the
employee.   The department may pick up these contributions by
a reduction in the cash salary  of  the  employee  or  by  an
offset  against  a future salary increase or by a combination
of a reduction in salary and offset against a  future  salary
increase.  If employee contributions are picked up they shall
be  treated  for  all purposes of this Article 14 in the same
manner and to the same extent as employee contributions  made
prior to the date picked up.
    (b)  Subject  to  the  requirements  of  federal  law, an
employee of a department may elect  to  have  the  department
pick  up optional contributions that the employee has elected
to pay to the System, and  the  contributions  so  picked  up
shall  be  treated as employer contributions for the purposes
of determining federal tax treatment.  The  department  shall
pick  up  the contributions by a reduction in the cash salary
of the employee and shall pay the contributions from the same
fund that is used to pay  earnings  to  the  employee.    The
election   to   have  optional  contributions  picked  up  is
irrevocable and the optional contributions may not thereafter
be prepaid, by direct payment or otherwise.
(Source: P.A. 87-14.)

    (40 ILCS 5/15-107) (from Ch. 108 1/2, par. 15-107)
    Sec. 15-107.  Employee.
    (a)  "Employee" means  any  member  of  the  educational,
administrative,  secretarial,  clerical, mechanical, labor or
other staff of an employer whose employment is permanent  and
continuous or who is employed in a position in which services
are  expected  to  be  rendered  on a continuous basis for at
least 4 months or one academic term, whichever is  less,  who
(A)  receives  payment  for  personal  services  on a warrant
issued pursuant to a payroll voucher certified by an employer
and drawn by the State Comptroller upon the  State  Treasurer
or  by an employer upon trust, federal or other funds, or (B)
is on a leave of absence without pay.   Employment  which  is
irregular,  intermittent or temporary shall not be considered
continuous for purposes of this paragraph.
    However, a person is not an "employee" if he or she:
         (1)  is  a  student  enrolled   in   and   regularly
    attending  classes in a college or university which is an
    employer, and is employed on a temporary  basis  at  less
    than full time;
         (2)  is  currently receiving a retirement annuity or
    a disability retirement annuity  under  Section  15-153.2
    from this System;
         (3)  is on a military leave of absence;
         (4)  is eligible to participate in the Federal Civil
    Service   Retirement   System  and  is  currently  making
    contributions to that system based upon earnings paid  by
    an employer;
         (5)  is  on  leave  of  absence without pay for more
    than  60  days  immediately  following   termination   of
    disability benefits under this Article;
         (6)  is  hired  after  June  30,  1979  as  a public
    service employment program participant under the  Federal
    Comprehensive  Employment  and  Training Act and receives
    earnings in whole or in part from  funds  provided  under
    that Act;
         (7)  is employed on or after July 1, 1991 to perform
    services  that  are  excluded by subdivision (a)(7)(f) or
    (a)(19) of Section 210 of the federal Social Security Act
    from the definition of employment given in  that  Section
    (42 U.S.C. 410); or
         (8)  participates   in   an   optional  program  for
    part-time workers under Section 15-158.1.; or
         (9)  participates  in  an   optional   program   for
    employees under Section 15-158.2.
    (b)  Any  employer  may,  by filing a written notice with
the board, exclude from  the  definition  of  "employee"  all
persons  employed  pursuant  to  a  federally funded contract
entered into after July  1,  1982  with  a  federal  military
department  in  a  program  providing  training  in  military
courses  to  federal  military  personnel  on a military site
owned by the United States Government, if this  exclusion  is
not  prohibited  by  the federally funded contract or federal
laws or rules governing the administration of the contract.
    (c)  Any person appointed by the Governor under the Civil
Administrative Code of the State is an employee, if he or she
is a participant in this system on the effective date of  the
appointment.
    (d)  A  participant on lay-off status under civil service
rules is considered an employee for not more  than  120  days
from the date of the lay-off.
    (e)  A  participant  is considered an employee during (1)
the first 60 days of disability leave, (2) the period, not to
exceed  one  year,  in  which  his  or  her  eligibility  for
disability benefits is  being  considered  by  the  board  or
reviewed by the courts, and (3) the period he or she receives
disability  benefits  under the provisions of Section 15-152,
workers' compensation or occupational  disease  benefits,  or
disability income under an insurance contract financed wholly
or partially by the employer.
    (f)  Absences  without  pay,  other than formal leaves of
absence, of less than 30 calendar days, are not considered as
an interruption of a person's status as an employee.  If such
absences during any period of 12 months exceed 30 work  days,
the   employee   status   of  the  person  is  considered  as
interrupted as of the 31st work day.
    (g)  A staff member whose  employment  contract  requires
services  during  an  academic  term  is  to be considered an
employee during the summer and other vacation periods, unless
he or she declines an employment contract for the  succeeding
academic  term  or  his or her employment status is otherwise
terminated, and he or she receives no earnings  during  these
periods.
(Source: P.A. 89-430, eff. 12-15-95.)

    (40 ILCS 5/15-131) (from Ch. 108 1/2, par. 15-131)
    Sec. 15-131. Survivors insurance beneficiary.  "Survivors
insurance beneficiary": The spouse, dependent unmarried child
under age 18 (under age 22 if a full-time student), unmarried
child over age 18 who is dependent by reason of a physical or
mental  disability  which  began  prior to attainment of that
age, or dependent parent, who  could  qualify  for  survivors
insurance payments under this Article.
(Source: P.A. 86-273; 86-1488.)

    (40 ILCS 5/15-134) (from Ch. 108 1/2, par. 15-134)
    Sec. 15-134.  Participant.
    (a)  Each  person  shall,  as  a condition of employment,
become a participant and be subject to this  Article  on  the
date that he or she becomes an employee, makes an election to
participate  in, or otherwise becomes a participant in one of
the retirement programs offered under this Article, whichever
date is later.
    An employee who becomes a participant shall  continue  to
be  a  participant until he or she becomes an annuitant, dies
or accepts a refund of contributions, except  that  a  person
shall  not  be deemed a participant while participating in an
optional program  for  part-time  workers  established  under
Section  15-158.1 or participating in an optional program for
employees established under Section 15-158.2.
    (b)  A  person  employed  concurrently  by  2   or   more
employers  is  eligible  to  participate  in  the  system  on
compensation received from all employers; however, his or her
combined  basic  compensation and combined earnings shall not
exceed the basic compensation and earnings which  would  have
been  payable  for full-time employment by the employer under
which the  employee's  basic  compensation  is  the  highest.
However,  effective  for  all  employment on or after July 1,
1991, where a person is employed to  render  service  to  one
employer during an academic or summer term and is employed by
another   employer   to  render  service  to  it  during  the
succeeding, nonoverlapping  academic  or  summer  term,  then
exclusively  for  the  purposes  of  this Section, the person
shall be considered to be successively employed by more  than
one  employer, rather than concurrently employed by 2 or more
employers.
(Source: P.A. 89-430, eff. 12-15-95.)

    (40 ILCS 5/15-136) (from Ch. 108 1/2, par. 15-136)
    Sec. 15-136.  Retirement annuities - Amount.
    (a)  The  amount  of  the  retirement  annuity  shall  be
determined by whichever of the following rules is  applicable
and provides the largest annuity:
    Rule  1:  The  retirement annuity shall be 1.67% of final
rate of earnings for each of the first 10 years  of  service,
1.90%  for  each  of  the next 10 years of service, 2.10% for
each year of service in excess of 20 but  not  exceeding  30,
and  2.30%  for  each  year  in excess of 30, except that the
annuity for those  persons  having  made  an  election  under
Section 15-154(a-1) shall be calculated and payable under the
portable   retirement   benefit   program   pursuant  to  the
provisions of Section 15-136.4.
    Rule 2:  The retirement annuity shall be the sum  of  the
following,   determined   from   amounts   credited   to  the
participant in accordance with the actuarial tables  and  the
prescribed  rate  of  interest  in  effect  at  the  time the
retirement annuity begins:
    (i)  The normal annuity  which  can  be  provided  on  an
actuarially  actuarial  equivalent  basis, by the accumulated
normal contributions as of the date the annuity begins; and
    (ii)  an annuity from employer contributions of an amount
which can be provided on an actuarially equivalent basis from
the accumulated normal contributions made by the  participant
under  Section  15-113.6  and Section 15-113.7 plus 1.4 times
all  other  accumulated  normal  contributions  made  by  the
participant, except that the annuity for those persons having
made  an  election  under  Section   15-154(a-1)   shall   be
calculated  and payable under the portable retirement benefit
program pursuant to the provisions of Section 15-136.4.
    Rule 3:  The retirement annuity of a participant  who  is
employed  at  least  one-half time during the period on which
his or her final rate of earnings is based, shall be equal to
the  participant's  years  of  service  not  to  exceed   30,
multiplied  by  (1)  $96  if  the participant's final rate of
earnings is less than $3,500, (2) $108 if the final  rate  of
earnings is at least $3,500 but less than $4,500, (3) $120 if
the  final  rate of earnings is at least $4,500 but less than
$5,500, (4) $132 if the final rate of earnings  is  at  least
$5,500  but  less  than $6,500, (5) $144 if the final rate of
earnings is at least $6,500 but less than $7,500, (6) $156 if
the final rate of earnings is at least $7,500 but  less  than
$8,500,  (7)  $168  if the final rate of earnings is at least
$8,500 but less than $9,500, and (8) $180 if the  final  rate
of  earnings  is  $9,500 or more, except that the annuity for
those  persons  having  made  an   election   under   Section
15-154(a-1)   shall  be  calculated  and  payable  under  the
portable  retirement  benefit   program   pursuant   to   the
provisions of Section 15-136.4.
    Rule  4:  A participant who is at least age 50 and has 25
or more years of service as a police officer or  firefighter,
and  a  participant who is age 55 or over and has at least 20
but less than 25 years of service  as  a  police  officer  or
firefighter,  shall  be entitled to a retirement annuity of 2
1/4% of the final rate of earnings for each of the  first  10
years  of  service as a police officer or firefighter, 2 1/2%
for each of the next 10 years of service as a police  officer
or  firefighter,  and  2  3/4%  for each year of service as a
police officer or firefighter in excess of  20,  except  that
the  annuity  for those persons having made an election under
Section 15-154(a-1) shall be calculated and payable under the
portable  retirement  benefit   program   pursuant   to   the
provisions  of  Section 15-136.4.  The retirement annuity for
all other service shall be computed  under  Rule  1,  payable
under the portable retirement benefit program pursuant to the
provisions of Section 15-136.4, if applicable.
    (b)  The  retirement annuity provided under Rules 1 and 3
above shall be reduced by  1/2  of  1%  for  each  month  the
participant  is  under  age  60  at  the  time of retirement.
However, this reduction shall  not  apply  in  the  following
cases:
         (1)  For  a  disabled  participant  whose disability
    benefits have been discontinued because  he  or  she  has
    exhausted   eligibility  for  disability  benefits  under
    clause (6) (5) of Section 15-152;
         (2)  For a participant who has at least 35 years  of
    service; or
         (3)  For  that portion of a retirement annuity which
    has  been  provided  on  account  of   service   of   the
    participant  during  periods when he or she performed the
    duties of a  police  officer  or  firefighter,  if  these
    duties  were  performed  for at least 5 years immediately
    preceding the date the retirement annuity is to begin.
    (c)  The maximum retirement annuity provided under  Rules
1,  2,  and  4 shall be the lesser of (1) the annual limit of
benefits as specified in Section 415 of the Internal  Revenue
Code  of  1986,  as  such Section may be amended from time to
time and as such benefit limits  shall  be  adjusted  by  the
Commissioner  of  Internal Revenue, and (2) 75% of final rate
of earnings; however, this limitation of 75% of final rate of
earnings shall not apply to a person who is a participant  or
annuitant on September 15, 1977 if it results in a retirement
annuity  less  than that which is payable to the annuitant or
which would have been payable to the  participant  under  the
provisions of this Article in effect on June 30, 1977.
    (d)  An  annuitant whose status as an employee terminates
after August 14, 1969 shall receive  automatic  increases  in
his or her retirement annuity as follows:
    Effective  January  1  immediately following the date the
retirement annuity begins, the  annuitant  shall  receive  an
increase  in  his or her monthly retirement annuity of 0.125%
of the monthly retirement annuity provided under Rule 1, Rule
2, Rule 3, or Rule 4, contained in this  Section,  multiplied
by  the number of full months which elapsed from the date the
retirement annuity payments began to January  1,  1972,  plus
0.1667%  of  such  annuity,  multiplied by the number of full
months which elapsed from January 1, 1972, or  the  date  the
retirement  annuity  payments  began,  whichever is later, to
January 1, 1978, plus 0.25% of such annuity multiplied by the
number of full months which elapsed from January 1, 1978,  or
the  date the retirement annuity payments began, whichever is
later, to the effective date of the increase.
    The annuitant shall receive an increase  in  his  or  her
monthly  retirement  annuity  on  each  January  1 thereafter
during the annuitant's life of  3%  of  the  monthly  annuity
provided under Rule 1, Rule 2, Rule 3, or Rule 4 contained in
this  Section.  The change made under this subsection by P.A.
81-970 is effective January  1,  1980  and  applies  to  each
annuitant  whose  status  as an employee terminates before or
after that date.
    Beginning January 1, 1990, all automatic annual increases
payable  under  this  Section  shall  be  calculated   as   a
percentage  of  the  total annuity payable at the time of the
increase, including all increases  previously  granted  under
this Article.      The change made in this subsection by P.A.
85-1008  is  effective  January  26,  1988, and is applicable
without regard to whether status as  an  employee  terminated
before that date.
    (e)  If,  on  January 1, 1987, or the date the retirement
annuity payment period begins, whichever is later, the sum of
the retirement annuity provided under Rule 1  or  Rule  2  of
this  Section  and  the  automatic  annual increases provided
under the preceding subsection or Section  15-136.1,  amounts
to  less  than the retirement annuity which would be provided
by Rule 3, the retirement annuity shall be  increased  as  of
January  1,  1987, or the date the retirement annuity payment
period begins, whichever is later, to the amount which  would
be  provided by Rule 3 of this Section. Such increased amount
shall be considered as the retirement annuity in  determining
benefits  provided under other Sections of this Article. This
paragraph applies without regard  to  whether  status  as  an
employee   terminated  before  the  effective  date  of  this
amendatory Act of  1987,  provided  that  the  annuitant  was
employed  at  least  one-half time during the period on which
the final rate of earnings was based.
    (f)  A participant is entitled to such additional annuity
as may be provided on  an  actuarially  actuarial  equivalent
basis,  by any accumulated additional contributions to his or
her credit.  However, the additional  contributions  made  by
the  participant  toward  the  automatic increases in annuity
provided under this Section shall not be taken  into  account
in determining the amount of such additional annuity.
    (g)  If,  (1)  by law, a function of a governmental unit,
as defined by Section 20-107 of this Code, is transferred  in
whole  or  in  part  to  an  employer,  and (2) a participant
transfers employment from  such  governmental  unit  to  such
employer  within 6 months after the transfer of the function,
and (3) the sum of (A) the annuity payable to the participant
under Rule 1, 2, or 3 of this Section  (B)  all  proportional
annuities  payable to the participant by all other retirement
systems covered by Article 20, and (C)  the  initial  primary
insurance  amount  to which the participant is entitled under
the Social Security Act, is less than the retirement  annuity
which  would  have  been  payable if all of the participant's
pension credits  validated  under  Section  20-109  had  been
validated  under this system, a supplemental annuity equal to
the difference in  such  amounts  shall  be  payable  to  the
participant.
    (h)  On January 1, 1981, an annuitant who was receiving a
retirement  annuity  on  or before January 1, 1971 shall have
his or her retirement annuity then being  paid  increased  $1
per  month for each year of creditable service. On January 1,
1982, an annuitant  whose  retirement  annuity  began  on  or
before  January  1,  1977,  shall  have his or her retirement
annuity then being paid increased $1 per month for each  year
of creditable service.
    (i)  On  January  1, 1987, any annuitant whose retirement
annuity began on or before January 1, 1977,  shall  have  the
monthly retirement annuity increased by an amount equal to 8¢
per year of creditable service times the number of years that
have elapsed since the annuity began.
(Source: P.A. 86-272; 86-273; 86-1028; revised 5-17-96.)

    (40 ILCS 5/15-136.4 new)
    Sec. 15-136.4.  Portable Retirement Benefit Program.
    (a)  For  purposes  of  this  Section,  "eligible spouse"
means the husband or  wife  of  a  participant  to  whom  the
participant  is married on the date the participant's annuity
begins.  However, if the participant should die prior to  the
date  the  annuity  would  have begun, then "eligible spouse"
means the husband or wife, if any, to  whom  the  participant
was married throughout the one-year period preceding the date
of his or her death.
    (b)  If  a participant has an eligible spouse on the date
his or her annuity payments commence, the  annuity  shall  be
paid  in  the form of a 50% joint and survivor annuity unless
the participant elects otherwise in writing and  his  or  her
eligible spouse consents to that election.  Under a 50% joint
and  survivor  annuity, a reduced amount shall be paid to the
participant for his or her lifetime and his or  her  eligible
spouse,  if  surviving  at  the participant's death, shall be
entitled  to  receive  thereafter  a  lifetime   survivorship
annuity  in  a  monthly  amount  equal  to 50% of the reduced
monthly amount that was  payable  to  the  participant.   The
reduced amount payable to the participant under the 50% joint
and   survivor  annuity  shall  be  determined  so  that  the
aggregate of the annuity payments expected to be made to  the
participant  and  his or her eligible spouse is the actuarial
equivalent of a single-life annuity.  The last payment  of  a
50%  joint and survivor annuity shall be made as of the first
day of the month in which the death of the survivor occurs.
    (c)  Instead of the 50% joint  and  survivor  annuity,  a
participant  may  elect  in writing, within the 90-day period
prior to the date his or her annuity payments  commence,  and
only  with  the  consent  of  his  or her eligible spouse, to
receive a  monthly  amount  in  the  form  of  a  single-life
annuity.   A  participant  may also elect instead an optional
form of benefit  under  subsection  (k).    However,  if  the
participant  does  elect  an  optional  form of benefit under
subsection (k) and if  the  contingent  annuitant  under  the
option  is  not  the  participant's eligible spouse, then the
optional election shall be canceled and the annuity shall  be
paid  in the form of a 50% joint and survivor annuity unless,
within the 90-day period preceding the  annuity  commencement
date, the eligible spouse consents to the optional election.
    (d)  A  participant  may  also  revoke  any election made
under this Section at  any  time  during  the  90-day  period
preceding the date the participant's annuity commences if the
purpose of such revocation is to reinstate coverage under the
50% joint and survivor annuity.
    (e)  The  eligible  spouse's consent to any election made
pursuant to this Section that requires the eligible  spouse's
consent  shall be in writing and shall acknowledge the effect
of the consent.  In addition, the eligible spouse's signature
on the written consent must be witnessed by a notary  public.
The  eligible  spouse's  consent  need not be obtained if the
system is satisfied that there is no  eligible  spouse,  that
the  eligible  spouse  cannot  be  located, or because of any
other relevant circumstances.  An eligible  spouse's  consent
under  this  Section  is  valid  only  with  respect  to  the
specified  alternate  contingent  annuitant designated by the
participant.   If  the  alternate  contingent  annuitant   is
subsequently changed, a new consent by the eligible spouse is
required.   The eligible spouse's consent to an election made
by a participant pursuant to this Section, once made, may not
be revoked by the eligible spouse.
    (f)  Within a reasonable period  of  time  preceding  the
date  a  participant's annuity commences, a participant shall
be supplied with a written explanation of (1) the  terms  and
conditions  of  the  50%  joint and survivor annuity, (2) the
participant's right, if any, to elect a  single-life  annuity
or  an  optional form of payment under subsection (k) in lieu
of the 50% joint and survivor annuity and subject, in certain
cases, to his or her eligible spouse's consent, and  (3)  the
participant's right to reinstate coverage under the 50% joint
and survivor annuity prior to his or her annuity commencement
date  by  revoking an election of a single-life annuity or an
optional form of benefit under subsection (k).
    (g)  If a participant does not have  an  eligible  spouse
on  the  date  his  or  her  annuity  payments  commence, the
participant shall receive a single-life annuity,  subject  to
his  or  her  right,  if  any,  to  elect an optional form of
benefit. The last payment of the single-life annuity shall be
made as of the first day of the month in which the  death  of
the participant occurs.
    (h)  A  participant with a least 5 years of service whose
employment has not terminated shall be  covered  by  the  50%
joint  and  survivor  annuity provisions so that if he or she
dies prior to termination of employment, his or her  eligible
spouse  will  be  entitled to receive an annuity. The annuity
payable under this subsection  (h)  to  the  eligible  spouse
shall  be  actuarially equivalent to the amount that would be
payable as a survivor annuity under subsection (b) if (1)  in
the  case  of  a participant who dies after the date on which
the participant attained the  earliest  retirement  age,  the
participant had retired with an immediate qualified joint and
survivor annuity on the day before the participant's date  of
death;  or  (2)  in  the case of a participant who dies on or
before the date on which the participant would have  attained
the  earliest  retirement  age, the participant had separated
from service on the date of death, survived to  the  earliest
retirement age, retired with an immediate qualified joint and
survivor  annuity at the earliest retirement age, and died on
the day after the day on which  the  participant  would  have
attained the earliest retirement age.
    The   annuity   payable   to  an  eligible  spouse  of  a
participant shall commence as of the beginning of  the  month
next following the later of the date of death or the date the
participant  would  have met the eligibility requirements for
an annuity and shall continue through the  beginning  of  the
month in which the death of the eligible spouse occurs.
    No benefit shall be payable under this subsection (h) for
death  during  employment after the participant has satisfied
the requirements for retirement if  an  option  is  effective
under subsection (k).
    (i)  A participant who (1) has terminated employment with
at  least  5  years  of  service, (2) has not begun receiving
annuity payments, (3) has not taken a  refund  under  Section
15-154(a-2),  and  (4)  has  not  elected an effective option
under subsection (k), shall be covered by the 50%  joint  and
survivor  annuity provisions of subsection (b) until the date
his or her annuity payments  commence.   If  the  participant
dies  before  the  date his or her annuity payments commence,
the participant's surviving eligible spouse shall receive  an
annuity computed in accordance with the applicable provisions
of  this Section as if the participant's annuity payments had
commenced on the first day of the month  coincident  with  or
next  following  the later of his or her date of death or the
date  the  participant  would  have  been  eligible   for   a
retirement  annuity  based  on  service  prior  to his or her
death.  The annuity payable to such an eligible spouse  shall
commence  on  the  first  day of the month coincident with or
next following the later of the participant's date  of  death
or  the  date  the participant would have been eligible for a
retirement annuity based on service prior to  his  death  and
shall  continue  through  the beginning of the month in which
the death of the eligible spouse occurs.
    (j)  The provisions of subsection (i)  shall  not  affect
the  right  of  a participant to elect a single-life annuity,
pursuant to the provisions of subsection (b).
    (k)  By filing a  timely  election  with  the  system,  a
participant  who  will  be  eligible  to receive a retirement
annuity under this Section may designate his or her spouse or
any person approved by the system as his  or  her  contingent
annuitant   and  elect  to  receive  an  annuity  payable  in
accordance with one of the following options, instead of  the
annuity to which he or she may otherwise become entitled:
         Option  1:  The  participant shall receive a reduced
    annuity payable for life, and payments in the  amount  of
    100%   of   such   reduced   amount   shall,   after  the
    participant's  death,  be  continued  to  the  contingent
    annuitant during the latter's lifetime.
         Option 2:  The participant shall receive  a  reduced
    annuity  payable  for life, and payments in the amount of
    75%  of   such   reduced   annuity   shall,   after   the
    participant's  death,  be  continued  to  the  contingent
    annuitant during the latter's lifetime.
         Option  3:  The  participant shall receive a reduced
    annuity payable for life, and payments in the  amount  of
    50%   of   such   reduced   annuity   shall,   after  the
    participant's  death,  be  continued  to  the  contingent
    annuitant during the latter's lifetime.
    The aggregate of the annuity payments expected to be paid
to a participant and his contingent annuitant  under  any  of
the  above  options  shall be the actuarial equivalent of the
annuity that the participant is otherwise entitled to receive
upon retirement.
    Under no circumstances may an option be elected, changed,
or  revoked  after  the  date   the   participant's   annuity
commences.   An option in favor of a contingent annuitant who
is not the participant's eligible spouse may  be  revoked  at
any time prior to the date the participant's annuity payments
commence.   If  the  contingent  annuitant  under the elected
option is not the participant's  eligible  spouse,  then  the
election is valid only if the eligible spouse consents to the
participant's   optional   election   and   to  the  specific
contingent annuitant within the 90-day period  preceding  the
date the participant's annuity commences.
    An  election  made  pursuant to this subsection (k) shall
become inoperative if the participant's employment terminates
before he or she is eligible for a retirement annuity, or  if
the  participant  or the contingent annuitant dies before the
date the participant's annuity payments commence, or  if  the
eligible  spouse's  consent  is  required  and not given.  An
effective option under this subsection (k) takes the place of
any benefit otherwise payable under  this  Section,  and  the
form  made available by the system for election of the option
shall so specify.
    (1)  Within  the  appropriate  applicable  period   under
Section  417 of the Internal Revenue Code of 1986, as amended
from time to time, a participant shall  be  supplied  with  a
written  explanation  of  (1) the terms and conditions of the
preretirement survivor annuity under subsections (h) and (i),
(2) the participant's right, if any, to elect  a  single-life
annuity  or  an optional form of payment under subsection (k)
in lieu of the preretirement survivor annuity and subject, in
certain cases, to his or her eligible spouse's  consent,  and
(3)  the  participant's right to reinstate coverage under the
preretirement survivor annuity by revoking an election  of  a
single-life  annuity  or  an  optional  form of benefit under
subsection (k).

    (40 ILCS 5/15-141) (from Ch. 108 1/2, par. 15-141)
    Sec. 15-141.  Death benefits - Death of participant.  The
beneficiary of a participant is entitled to a  death  benefit
equal to the sum of (1) the employee's accumulated normal and
additional  contributions  on  the  date  of  death,  (2) the
employee's accumulated survivors insurance  contributions  on
the  date  of  death, if a survivors insurance benefit is not
payable, (3) an amount equal to the employee's final rate  of
earnings,  but  not  more than $5,000 if (i) the beneficiary,
under rules of the board, was dependent upon the participant,
(ii) the participant was a participating employee immediately
prior to his or her death, and (iii)  a  survivors  insurance
benefit is not payable, and (4) $2,500 if (i) the beneficiary
was  not dependent upon the participant, (ii) the participant
was a participating employee immediately prior to his or  her
death,  and  (iii)  a  survivors  insurance  benefit  is  not
payable.
    However, if the participant has elected to participate in
the   portable  retirement  benefit  program  by  making  the
election specified in Section 15-154(a-1), the death  benefit
shall  be  calculated as follows.  The death benefit shall be
equal to the employee's  accumulated  normal  and  additional
contributions  on  the date of death, or if the employee died
with 5 or more years of service for employment as defined  in
Section  15-113.1,  his  or  her  beneficiary  shall  also be
entitled to employer contributions in an amount equal to  the
sum  of  accumulated  normal  and  additional  contributions;
except  that  if  a  benefit to a surviving spouse is payable
under Section 15-136.4, the death benefit payable under  this
paragraph shall be reduced, but to not less than zero, by the
actuarial  value  of  the  benefit  payable  to the surviving
spouse.
    If payments are made under any State or Federal  Workers'
Compensation  or  Occupational  Diseases  Law  because of the
death of an  employee,  the  portion  of  the  death  benefit
payable  from  employer contributions shall be reduced by the
total amount of the payments.
(Source: P.A. 87-8.)

    (40 ILCS 5/15-142) (from Ch. 108 1/2, par. 15-142)
    Sec. 15-142.  Death benefits - Death of annuitant.   Upon
the  death  of an annuitant receiving a retirement annuity or
disability retirement annuity,  the  annuitant's  beneficiary
shall, if a survivor's insurance benefit is not payable under
Section  15-145  or  an  annuity is not payable under Section
15-136.4, be entitled to a death benefit equal to the greater
of the following: (1) the excess, if any, of the sum  of  the
accumulated   normal,   survivors  insurance  and  additional
contributions as of the date of retirement, or the  date  the
disability  retirement  annuity  began, whichever is earlier,
over the sum of all annuity payments made prior to  the  date
of death, or (2) $1,000.
(Source: P.A. 83-1440.)

    (40 ILCS 5/15-145) (from Ch. 108 1/2, par. 15-145)
    Sec.  15-145.   Survivors  insurance benefits; Conditions
and amounts.
    (a)  The survivors insurance benefits provided under this
Section  shall  be  payable  upon  the   death   of   (1)   a
participating  employee with at least 1 1/2 years of service,
(2) a participant who terminated employment with at least  10
years  of  service,  and  (3)  an  annuitant  in receipt of a
retirement annuity or  disability  retirement  annuity  under
this Article.
    Service  under  the State Employees' Retirement System of
Illinois, the Teachers' Retirement System  of  the  State  of
Illinois   and   the  Public  School  Teacher's  Pension  and
Retirement Fund of Chicago shall be considered in determining
eligibility for survivors benefits under this Section.
    If by law, a function of a governmental unit, as  defined
by  Section  20-107, is transferred in whole or in part to an
employer, and an  employee  transfers  employment  from  this
governmental  unit to such employer within 6 months after the
transfer  of  this  function,  the  service  credits  in  the
governmental  unit's  retirement  system  which   have   been
validated   under  Section  20-109  shall  be  considered  in
determining eligibility for  survivors  benefits  under  this
Section.
    (b)  A  surviving spouse of a deceased participant, or of
a  deceased  annuitant  who   had   a   survivors   insurance
beneficiary  at  the  time  of  retirement,  shall  receive a
survivors annuity of 30%  of  the  final  rate  of  earnings.
Payments  shall  begin on the day following the participant's
or annuitant's death or the date the surviving spouse attains
age 50, whichever is later, and continue until the  death  of
the  surviving  spouse.   The annuity shall be payable to the
surviving spouse  prior  to  attainment  of  age  50  if  the
surviving   spouse   has  in  his  or  her  care  a  deceased
participant's or annuitant's dependent unmarried child  under
age  18 (under age 22 if a full-time student) who is eligible
for a survivors annuity.  Remarriage of  a  surviving  spouse
prior to attainment of age 55 shall disqualify him or her for
the receipt of a survivors annuity.
    (c)  Each  dependent  unmarried child under age 18 (under
age 22 if a full-time student) of a deceased participant,  or
of  a  deceased  annuitant  who  had  a  survivors  insurance
beneficiary  at  the  time  of  his  or her retirement, shall
receive a survivors annuity equal to the sum of  (1)  20%  of
the  final rate of earnings, and (2) 10% of the final rate of
earnings divided by the number of children entitled  to  this
benefit.   Payments  shall  begin  on  the  day following the
participant's or annuitant's death  and  continue  until  the
child marries, dies, or attains age 18 (age 22 if a full-time
student).   If the child is in the care of a surviving spouse
who is eligible for survivors insurance benefits, the child's
benefit shall be paid to the surviving spouse.
    Each  unmarried  child  over  age  18   of   a   deceased
participant  or  of a deceased annuitant who had a survivor's
insurance beneficiary at the time of his or  her  retirement,
and  who  was  dependent upon the participant or annuitant by
reason of a physical or mental disability which  began  prior
to  the date the child attained age 18 (age 22 if a full-time
student), shall receive a survivor's annuity equal to the sum
of (1) 20% of the final rate of earnings, and (2) 10% of  the
final  rate  of  earnings  divided  by the number of children
entitled to survivors benefits.  Payments shall begin on  the
day  following  the  participant's  or  annuitant's death and
continue until the child  marries,  dies,  or  is  no  longer
disabled.   If the child is in the care of a surviving spouse
who is eligible for survivors insurance benefits, the child's
benefit may  be  paid  to  the  surviving  spouse.   For  the
purposes  of  this  Section,  disability  means  inability to
engage in any substantial gainful activity by reason  of  any
medically determinable physical or mental impairment that can
be  expected  to result in death or that has lasted or can be
expected to last for a continuous  period  of  at  least  one
year.
    (d)  Each  dependent parent of a deceased participant, or
of  a  deceased  annuitant  who  had  a  survivors  insurance
beneficiary at the time  of  his  or  her  retirement,  shall
receive  a  survivors  annuity equal to the sum of (1) 20% of
final rate of earnings, and (2) 10% of final rate of earnings
divided by the number of parents who qualify for the benefit.
Payments shall begin when the parent reaches age  55  or  the
day   following   the  participant's  or  annuitant's  death,
whichever is later,  and  continue  until  the  parent  dies.
Remarriage  of  a  parent prior to attainment of age 55 shall
disqualify the parent for the receipt of a survivors annuity.
    (e)  In addition to the survivors annuity provided above,
each survivors insurance beneficiary shall, upon death of the
participant or annuitant,  receive  a  lump  sum  payment  of
$1,000 divided by the number of such beneficiaries.
    (f)  The  changes  made  in  this  Section  by Public Act
81-712  pertaining  to  survivors  annuities  in   cases   of
remarriage  prior  to  age  55  shall apply to each survivors
insurance beneficiary who  remarries  after  June  30,  1979,
regardless  of  the  date  that  the participant or annuitant
terminated his employment or died.
    (g)  On January 1, 1981, any person who was  receiving  a
survivors annuity on or before January 1, 1971 shall have the
survivors  annuity  then  being paid increased by 1% for each
full year which has elapsed from the date the annuity  began.
On  January  1,  1982, any survivor whose annuity began after
January 1, 1971, but before January 1, 1981, shall  have  the
survivor's  annuity  then being paid increased by 1% for each
year which has elapsed from the date the  survivor's  annuity
began. On January 1, 1987, any survivor who began receiving a
survivor's  annuity  on or before January 1, 1977, shall have
the monthly survivor's annuity increased by $1 for each  full
year  which has elapsed since the date the survivor's annuity
began.
    (h)  If the  sum  of  the  lump  sum  and  total  monthly
survivor  benefits  payable under this Section upon the death
of a participant amounts to less than the sum  of  the  death
benefits  payable  under items (2) and (3) of Section 15-141,
the difference shall be paid in a lump sum to the beneficiary
of the participant who  is  living  on  the  date  that  this
additional amount becomes payable.
    (i)  If  the  sum  of  the  lump  sum  and  total monthly
survivor benefits payable under this Section upon  the  death
of  an annuitant receiving a retirement annuity or disability
retirement annuity amounts to less  than  the  death  benefit
payable under Section 15-142, the difference shall be paid to
the  beneficiary  of  the annuitant who is living on the date
that this additional amount becomes payable.
    (j)  Effective on the later of (1) January  1,  1990,  or
(2)  the  January  1  on  or next after the date on which the
survivor annuity begins, if the deceased  member  died  while
receiving  a  retirement  annuity,  or in all other cases the
January 1 nearest the  first  anniversary  of  the  date  the
survivor  annuity  payments  begin, every survivors insurance
beneficiary shall receive an increase in his or  her  monthly
survivors annuity of 3%.  On each January 1 after the initial
increase, the monthly survivors annuity shall be increased by
3%  of  the  total  survivors  annuity  provided  under  this
Article,   including  previous  increases  provided  by  this
subsection.  Such increases  shall  apply  to  the  survivors
insurance  beneficiaries  of  each participant and annuitant,
whether or not the employment status of  the  participant  or
annuitant  terminates  before  the  effective  date  of  this
amendatory Act of 1990.
    (k)  If  the  Internal  Revenue Code of 1986, as amended,
requires that the survivors benefits be  payable  at  an  age
earlier  than  that  specified  in  this Section the benefits
shall  begin  at  the  earlier  age,  in  which  event,   the
survivor's  beneficiary shall be entitled only to that amount
which is equal to the actuarial equivalent  of  the  benefits
provided by this Section.
    (l)  The  changes made to this Section and Section 15-131
by this amendatory Act of  1997,  relating  to  benefits  for
certain  unmarried  children who are full-time students under
age 22, apply without regard to whether the  deceased  member
was  in  service  on  or  after  the  effective  date of this
amendatory Act of 1997.  These changes do not  authorize  the
repayment  of  a refund or a re-election of benefits, and any
benefit or increase in benefits resulting from these  changes
is  not  payable  retroactively  for  any  period  before the
effective date of this amendatory Act of 1997.
(Source: P.A. 86-272; 86-273; 86-1028; 86-1488.)

    (40 ILCS 5/15-146) (from Ch. 108 1/2, par. 15-146)
    Sec. 15-146.   Survivors  insurance  benefits  -  Minimum
amounts.
    (a)  The  minimum  total  survivors  annuity  payable  on
account  of  the  death  of a participant shall be 50% of the
retirement annuity which would have been provided under  Rule
1, Rule 2, or Rule 3 of Section 15-136 upon the participant's
attainment  of the minimum age at which the penalty for early
retirement would  not  be  applicable  or  the  date  of  the
participant's  death,  whichever  is  later,  on the basis of
credits earned prior to the time of death.
    (b)  The  minimum  total  survivors  annuity  payable  on
account of the death of an annuitant  shall  be  50%  of  the
retirement  annuity  which is payable under Section 15-136 at
the time of death or 50% of the disability retirement annuity
payable  under  Section  15-153.2.  This  minimum   survivors
annuity  shall  apply  to  each participant and annuitant who
dies after September 16, 1979, whether  or  not  his  or  her
employee status terminates before or after that date.
    (c)  If  an annuitant has elected a reversionary annuity,
the retirement annuity referred to in this  Section  is  that
which  would  have  been  payable  had such election not been
filed.
    (d)  If a participant has made the election provided  for
under Section 15-154(a-1), the minimum survivor benefit shall
be determined under Section 15-136.4.
(Source: P.A. 83-1362; 83-1440.)

    (40 ILCS 5/15-154) (from Ch. 108 1/2, par. 15-154)
    Sec. 15-154.  Refunds.
    (a)  A   participant  whose  status  as  an  employee  is
terminated, regardless of cause, or who has been on  lay  off
status  for  more  than  120 days, and who is not on leave of
absence, is  entitled  to  a  refund  of  contributions  upon
application;  except  that  not  more  than  one  such refund
application may be made during any academic year.
    Except as set forth in subsections (a-1) and  (a-2),  the
refund shall be the sum of the accumulated normal, additional
and  survivors  insurance  contributions,  less the amount of
interest credited on these contributions each year in  excess
of 4 1/2% of the amount on which interest was calculated.
    (a-1)  Every  person who becomes a participating employee
after the date on which his or her employer first  offers  an
optional  retirement program under Section 15-158.2 may elect
within 60 days of becoming a participant to have  any  refund
calculated  pursuant  to  subsection  (a-2)  by  forgoing all
survivors insurance benefits to which the person's  survivors
would   otherwise  be  entitled  under  this  Article.   This
election is irrevocable and may be made by filing an election
with the system on such form as the Executive Director  shall
prescribe.
    Each  person  who is a participating employee on the date
on which  his  or  her  employer  first  offers  an  optional
retirement  program  under  Section  15-158.2  shall  have  a
one-time option to elect to have his or her refund calculated
pursuant  to  subsection  (a-2),  by  forgoing  all survivors
insurance benefits to  which  the  person's  survivors  would
otherwise  be entitled under this Article.  The election will
not be effective until one year after the election  is  filed
with  the  system.   This  election is irrevocable and may be
made by filing an election with the system, on such  form  as
the Executive Director shall prescribe, within one year after
the  date  on  which  his  or  her  employer  first offers an
optional retirement program under Section 15-158.2.
    A person  may  make  the  one-time  irrevocable  election
authorized  under  this  Section  or  the election authorized
under Section 15-158.2(g), but may not make  both  elections.
Any  person  interested  in  electing the portable retirement
benefit program  provided  under  this  Section  and  Section
15-136.4   must  be  given  a  consultation  with  the  State
Universities Retirement System before making that election.
    (a-2)  The refund elected under subsection (a-1) shall be
the  sum  of  the  participant's   accumulated   normal   and
additional  contributions,  as defined in Sections 15-116 and
15-117.  If the participant terminates with 5 or  more  years
of  service for employment as defined in Section 15-113.1, he
or she shall  also  be  entitled  to  a  refund  of  employer
contributions   in   an  amount  equal  to  the  sum  of  the
accumulated normal and additional contributions,  as  defined
in Sections 15-116 and 15-117.
    (b)  Upon   acceptance   of  a  refund,  the  participant
forfeits all accrued rights and credits in the System, and if
subsequently reemployed, the participant shall be  considered
a  new  employee subject to all the qualifying conditions for
participation and eligibility for benefits applicable to  new
employees.  If  such  person  again  becomes  a participating
employee and continues as such for 2 years, or is employed by
an employer and participates for at  least  2  years  in  the
Federal  Civil  Service  Retirement  System, all such rights,
credits, and  previous  status  as  a  participant  shall  be
restored upon repayment of the amount of the refund, together
with  compound  interest thereon from the date the refund was
received to the date of repayment at the rate of 6% per annum
through August 31, 1982, and at  the  effective  rates  after
that date.
    (c)  If   a  participant  has  made  survivors  insurance
contributions, but has  no  survivors  insurance  beneficiary
upon  retirement,  he or she shall be entitled to a refund of
the accumulated survivors insurance contributions, or  to  an
additional  annuity  the  value  of  which  is  equal  to the
accumulated survivors insurance contributions.
    (d)  A participant, upon application, is  entitled  to  a
refund  of  his  or  her accumulated additional contributions
except those covering the cost of the annual increase in  the
retirement  annuity  provided  under Section 15-136. Upon the
acceptance  of  such  a  refund  of  accumulated   additional
contributions,   the  participant  forfeits  all  rights  and
credits which may have accrued because of such contributions.
    (e)  A participant who terminates  his  or  her  employee
status  and  elects  to  waive  service  credit under Section
15-154.2, is entitled to a refund of the accumulated  normal,
additional  and  survivors  insurance  contributions, if any,
which were credited the participant for this service,  or  to
an  additional  annuity  the  value  of which is equal to the
accumulated  normal,  additional  and   survivors   insurance
contributions,  if  any;  except  that not more than one such
refund application may be made during any academic year. Upon
acceptance of  this  refund,  the  participant  forfeits  all
rights and credits accrued because of this service.
    (f)  If  a  police  officer  or  firefighter  receives  a
retirement  annuity  under Rule 1, 2, or 3 of Section 15-136,
he or she shall be entitled at retirement to a refund of  the
difference    between   his   or   her   accumulated   normal
contributions and the normal contributions which  would  have
accumulated  had such person filed a waiver of the retirement
formula provided by Rule 4 of Section 15-136.
    (g)  If, at the time of retirement, a  participant  would
be  entitled  to a retirement annuity under Rule 1, 2, 3 or 4
of Section 15-136  that  exceeds  the  maximum  specified  in
clause  (1)  of  subsection  (c) of Section 15-136, he or she
shall be entitled to a refund of the employee  contributions,
if  any,  paid under Section 15-157 after the date upon which
continuance of such contributions would have otherwise caused
the retirement annuity to exceed this maximum, plus  compound
interest at the effective rates.
(Source: P.A. 87-8; 87-794; 87-895; 87-1265; 88-45.)

    (40 ILCS 5/15-157) (from Ch. 108 1/2, par. 15-157)
    Sec. 15-157.  Employee Contributions.
    (a)  Each participating employee shall make contributions
towards  the  retirement  annuity of each payment of earnings
applicable to employment under this system on and  after  the
date   of  becoming  a  participant  as  follows:   Prior  to
September 1, 1949, 3 1/2% of earnings; from September 1, 1949
to August 31, 1955, 5%; from September 1, 1955 to August  31,
1969,   6%;   from   September   1,  1969,  6  1/2%.    These
contributions are to be considered  as  normal  contributions
for purposes of this Article.
    Each  participant  who is a police officer or firefighter
shall make normal contributions of  8%  of  each  payment  of
earnings  applicable  to  employment  as  a police officer or
firefighter under this system on or after September 1,  1981,
unless  he  or  she files with the board within 60 days after
the effective date of this amendatory Act of 1991 or 60  days
after the board receives notice that he or she is employed as
a  police  officer  or  firefighter,  whichever  is  later, a
written notice waiving the  retirement  formula  provided  by
Rule  4 of Section 15-136.  This waiver shall be irrevocable.
If a participant had met the conditions set forth in  Section
15-132.1  prior  to the effective date of this amendatory Act
of  1991  but  failed   to   make   the   additional   normal
contributions required by this paragraph, he or she may elect
to pay the additional contributions plus compound interest at
the  effective  rate.   If  such  payment  is received by the
board, the service shall  be  considered  as  police  officer
service in calculating the retirement annuity under Rule 4 of
Section 15-136.
    (b)  Starting   September  1,  1969,  each  participating
employee shall make additional contributions of 1/2 of 1%  of
earnings  to  finance  a  portion  of  the cost of the annual
increases  in  retirement  annuity  provided  under   Section
15-136.
    (c)  Each  participating  employee  shall make additional
survivors  insurance  contributions   of   1%   of   earnings
applicable  under  this  system  on and after August 1, 1959.
The contribution made under this subsection shall be used  to
finance  survivors insurance benefits, unless the participant
has made an election under Section 15-154(a-1), in which case
the contribution made under this subsection shall be used  to
finance   the   benefits   obtained   under   that  election.
Contributions  in  excess  of  $80  during  any  fiscal  year
beginning August 31, 1969 and in excess of  $120  during  any
fiscal  year  thereafter  until  September  1,  1971 shall be
considered as additional contributions for purposes  of  this
Article.
    (d)  If the board by board rule so permits and subject to
such  conditions  and  limitations as may be specified in its
rules, a participant may make other additional  contributions
of  such percentage of earnings or amounts as the participant
shall elect in a  written  notice  thereof  received  by  the
board.
    (e)  That  fraction  of a participant's total accumulated
normal contributions, the numerator of which is equal to  the
number  of  years  of  service  in  excess  of  that which is
required to qualify for the maximum retirement  annuity,  and
the denominator of which is equal to the total service of the
participant,  shall  be  considered as accumulated additional
contributions.  The determination of the  applicable  maximum
annuity  and the adjustment in contributions required by this
provision shall be made as of the date of  the  participant's
retirement.
    (f)  Notwithstanding   the   foregoing,  a  participating
employee shall not be required to  make  contributions  under
this  Section  after  the date upon which continuance of such
contributions would otherwise cause  his  or  her  retirement
annuity to exceed the maximum retirement annuity as specified
in clause (1) of subsection (c) of Section 15-136.
    (g)  A  participating employee may make contributions for
the purchase of service credit under this Article.
(Source: P.A. 86-272; 86-1488.)

    (40 ILCS 5/15-157.1) (from Ch. 108 1/2, par. 15-157.1)
    Sec. 15-157.1.  Pickup Pick up of employee contributions.
    (a)  Each   employer   shall   pick   up   the   employee
contributions required under subsections (a), (b), and (c) of
Section 15-157 for all earnings payments made  on  and  after
January  1, 1981, and the contributions so picked up shall be
treated  as  employer  contributions   in   determining   tax
treatment  under  the  United  States  Internal Revenue Code.
These contributions shall not be included as gross income  of
the  participant  until  such time as they are distributed or
made  available.   The  employer  shall  pay  these  employee
contributions from the same source of funds which is used  in
paying  earnings  to  the employee.  The employer may pick up
these contributions by a reduction in the cash salary of  the
participants,  or  by  an  offset  against  a  future  salary
increase,  or  by  a combination of a reduction in salary and
offset against a future salary increase.
    (b)  Subject  to  the  requirements  of  federal  law,  a
participating employee may elect to have the employer pick up
optional contributions that the participant  has  elected  to
pay   to   the   System  under  Section  15-157(g),  and  the
contributions so picked  up  shall  be  treated  as  employer
contributions  for  the  purposes  of determining federal tax
treatment under the federal Internal Revenue  Code  of  1986.
These  contributions shall not be included as gross income of
the participant until such time as they  are  distributed  or
made available.  The employer shall pick up the contributions
by  a  reduction  in  the  cash salary of the participant and
shall pay the contributions from the  same  source  of  funds
that  is  used  to  pay  earnings  to  the  participant.  The
election  to  have  optional  contributions  picked   up   is
irrevocable.
(Source: P.A. 83-1440.)

    (40 ILCS 5/15-158.2)
    Sec.    15-158.2.   Optional   retirement   program   for
educational employees.
    (a)  Purpose.  The General  Assembly  finds  that  it  is
important for colleges and universities to be able to attract
and  retain the most qualified employees and that in order to
attract and retain these employees, colleges and universities
should  have  the  flexibility  to  provide  an   alternative
retirement  program  for eligible employees persons who elect
not to participate in the other retirement programs  plan  of
contributions  and  benefits  otherwise  provided  under this
Article.
    (b)  Definitions.  For  the  purposes  of  this  Section,
"eligible employee person" means an employee who is  eligible
to   participate   in   the   State  Universities  University
Retirement System without respect to Section 15-107(a)(9) and
who does not have sufficient age and service to qualify for a
retirement  annuity  under  Section  15-135.   A   "currently
eligible employee person" is an employee a person who becomes
an  eligible  employee  person  on  the effective date of the
optional retirement program  established  by  the  employee's
person's  employer.  A "newly eligible employee person" is an
employee a person who becomes  an  eligible  employee  person
after  the  effective date of the optional retirement program
established by the employee's person's employer.
    (c)  Program.  Each employer subject to this Article  may
elect  to establish an optional retirement program under this
Section for the  eligible  employees  whom  persons  that  it
employs.   The  optional  retirement  program  shall  provide
retirement   benefits  for  participating  employees  persons
through the purchase of annuity contracts,  either  fixed  or
variable  or  a  combination thereof, through the purchase of
mutual funds, or through both and shall may also provide  for
death and disability benefits.
    The  State  Universities  Retirement  System shall be the
plan sponsor for the program.  Consistent with its  fiduciary
duty  to  the  participants and beneficiaries of the program,
the Board of Trustees of the System may delegate  aspects  of
program  administration  as  it  sees  fit to The program may
provide  for  administration  of  the  program  by  companies
authorized to do business in this State, to or the employers,
employer or to a combination of both, but shall  not  require
any action by the State Universities Retirement System or its
Board  of  Trustees.    Two  or  more  employers may agree to
establish a joint program under this Section.
    The plan program must be  qualified  under  the  Internal
Revenue Code of 1986.
    (d)  Proposals.   The  System,  in  consultation with the
employers, An  employer  under  this  Section  shall  solicit
proposals  to  participate  in the program from insurance and
annuity companies and mutual fund companies authorized to  do
conduct  such  business  in  this  State.   In  reviewing the
proposals received and  approving  and  contracting  with  no
fewer  than  2  and  no  more than 7 companies, at least 2 of
which must be insurance and annuity companies, the  Board  of
Trustees  of  the System deciding to implement a program, the
employer shall consider, among other  things,  the  following
criteria:
         (1)  the  nature  and  extent  of  the benefits that
    would be provided to the participants;
         (2)  the reasonableness of the benefits in  relation
    to the premium charged;
         (3)  the  suitability  of  the benefits to the needs
    and interests of the participating employees persons  and
    the employer;
         (4)  the  ability of the company to provide benefits
    under the contract and the  financial  stability  of  the
    company; and
         (5)  the efficacy of the contract in the recruitment
    and retention of employees.
    An  employer  that elects to offer an optional retirement
program  under   subsection   (c)   may   only   select   for
participation  in  the  program  2  or  more of the companies
approved by the Board of Trustees of the System.  The System,
in consultation with the employers, shall periodically review
each approved company; a company may continue to  participate
in the program only so long as it continues to be an approved
company under contract with the Board.
    (e)  System  Conflict  of Interest.  In order to preclude
any conflict of interest by the System,  only  insurance  and
annuity   companies   and  mutual  fund  companies  that  are
authorized to do business in this State may be  approved,  in
accordance   with   the  procedures  of  subsection  (d),  to
participate in this program and offer investment options  for
program participants.
    (f)  Account   Balance   Transfers.   Employees  who  are
participating in the program  must  be  allowed  to  transfer
their account balances from the investment options offered by
one  of  the  companies  selected  by  the  employer  to  the
investment  options  offered  by another company so selected,
subject to applicable contractual provisions.
    (g) (e)  Participation.   Any  eligible  employee  person
employed  by  an  employer  may  elect  to participate in the
optional retirement program offered  by  the  employer  under
subsection  (c)  that employer's optional retirement program.
The election must be  made  in  writing  and  in  the  manner
prescribed  by  the  System  employer.   A currently eligible
employee person must make take this election within one  year
after   the   effective   date  of  the  employer's  optional
retirement program.  A newly eligible  employee  person  must
make  take  this  election  within  60 days after becoming an
eligible employee person.  A person  may  make  the  one-time
irrevocable  election  authorized  under  this Section or the
election authorized under Section 15-154(a-1),  but  may  not
make   both   elections.    The   employer  shall  not  remit
contributions on behalf  of  a  newly  eligible  employee  to
either  the  optional  retirement  program  or  to  the State
Universities Retirement System until the  60-day  period  has
run unless an election by the employee has been made earlier.
Any  eligible  employee  person  interested  in  electing the
optional retirement program provided under this Section  must
be   given   a   consultation  with  the  State  Universities
Retirement System before making that an election.
    Participation in the optional  retirement  program  shall
begin  on the first day of the first pay period following the
date of election, but no earlier than January 1, 1998 July 1,
1996.  The employee's person's  participation  in  any  other
retirement  program  administered  by  the  System under this
Article the System, if any, with respect  to  the  qualifying
employment  shall terminate on the date that participation in
the optional retirement  program  begins,  and  the  employee
person  shall  thereby be deemed to have elected to receive a
refund of contributions as provided in Section 15-154, except
that  such  deemed  refund  shall  include  interest  at  the
effective rate for the respective years, and except that  any
funds  which  would  have  been  received  shall  instead  be
transferred  directly to the optional retirement program as a
tax free transfer in accordance with Internal Revenue Service
guidelines.
    Notwithstanding any other  provision  of  this  Code,  an
employee  a  person  may  not  purchase or receive service or
service credit applicable to  any  other  retirement  program
administered  by the System under this Article in this System
for any period during which the employee  was  a  participant
person was not a participant in the System due to an election
to   participate   in  the  an  optional  retirement  program
established under this Section.
    An employee A person who has elected  to  participate  in
the  an  optional  retirement program under this Section must
continue  participation  while  employed   in   an   eligible
position,  and  may  not  participate in any other retirement
program administered by the System under this Article  return
to  participation  in  this  System  while  employed  by that
employer,  unless  the   optional   retirement   program   is
terminated in accordance with subsection (i) (g).
    Participation  in  the  optional retirement program under
this  Section  shall  constitute  membership  in  the   State
Universities  Retirement System, although a participant under
this Section shall not be entitled to  receive  any  benefits
under  any  other  provisions of Article 15 or of Article 20.
An employee who receives a disability benefit or a retirement
benefit under this Section or an employee who receives a lump
sum distribution  from  a  mutual  fund  company  under  this
Section and uses the lump sum to purchase an annuity shall be
considered  an  employee or an annuitant under Article 15 for
purposes of the State Employees Group Insurance Act of  1971.
Participation  in  the optional retirement program under this
Section creates a contractual relationship  with  respect  to
the  investment of the employee's account balance between the
employee and the company providing the investment options for
the  employee's  account  balance.   Participation  does  not
create a contractual relationship between  the  employee  and
the System or between the employee and his or her employer.
    Participation   in   an   optional   retirement   program
established under this Section does not constitute membership
or  participation in the State Universities Retirement System
or any other pension fund or retirement system of the  State.
Participation  in  an optional retirement program established
under this Section creates a  contractual  relationship  only
between  the  person  and  the company providing the optional
retirement program, and not between the person and the System
or the person's employer.
    (h)  (f)  Contributions.   The  contribution   rate   for
employees persons participating in the an optional retirement
program  under  this  Section  shall be equal to the employee
contribution rate for other participants in the System.  This
required contribution may be made as  an  "employer  pick-up"
under  Section 414(h) of the Internal Revenue Code of 1986 or
any successor Section.  Any employee person participating  in
the  System  or  who  elects  to  participate in the optional
retirement  program  shall  continue  to  have  the  employer
"pick-up" the contribution.  However, amounts picked up after
the election of the  optional  retirement  program  shall  be
remitted  to the optional retirement plan.  In no event shall
an employee have an option  of  receiving  these  amounts  in
cash.   The  program shall provide for employer contributions
at  a  rate  of  no  more  than  7.6%  of  the  participating
employee's  person's  salary.   The  An  optional  retirement
program shall  be  funded  by  contributions  from  employees
persons   participating   in   the   program   and   employer
contributions  as  required  by  the plan.  The plan shall be
funded in a manner consistent with the  requirements  of  the
Internal   Revenue   Code   Section   412,   and  regulations
promulgated thereunder, and Proposed  Regulation  412(b)-1(a)
as  that  Section  applies  those  Sections  apply  to  money
purchase plans.
    The   State  of  Illinois  shall  make  contributions  by
appropriations to the System of  the  employer  contributions
required  for  employees  who  participate  in  the  optional
retirement  program  under this Section.  The amount required
shall be certified by the Board of Trustees of the System and
paid by the State in accordance  with  Section  15-165.   The
System  shall not be obligated to remit the required employer
contributions to any insurance and annuity  and  mutual  fund
companies  participating  in  the optional retirement program
under subsection (d)  until  it  has  received  the  required
employer  contributions  from  the  State.  In the event of a
deficiency in the amount of State contributions,  the  System
shall  implement those procedures described in subsection (c)
of Section 15-165 to obtain the  required  funding  from  the
General Revenue Fund.
    The  contributions and interest thereon, and any benefits
based upon them, shall be treated as provided in the  funding
vehicles  for  this  plan.   An  amount  of  up to 1% of each
participating employee's participant's salary  shall  may  be
taken   from   the  employer  contribution  to  the  optional
retirement program and  shall  may  be  contributed,  on  the
employee's  participant's  behalf, to a plan which the System
offers employer sets up to provide  for  life  or  disability
benefits.
    (i)  (g)  Termination.   An  optional  retirement program
authorized established under this Section may  be  terminated
by  the  employer,  subject  to  the  terms  of  any relevant
contracts, and the  employer  shall  have  no  obligation  to
reestablish  an  optional  retirement  renew  any contract or
program established under this Section.   This  Section  does
not create a right to continued continue participation in any
optional retirement program set up by an employer established
under  this  Section.   If  an optional retirement program is
terminated,  the  participants  shall  have  the   right   to
participate  in  one of the other retirement programs offered
by the System  and  receive  service  credit  in  such  other
retirement  program for any years of employment following the
termination.
    (j) (h)  Vesting.  Employer contributions shall be vested
after five years of employment.  If an employee a participant
terminates employment  prior  to  completing  five  years  of
service,  the  employee  participant  shall  be entitled to a
benefit in  accordance  with  the  terms  of  the  employer's
retirement  plan  which  is  based  on the accumulation value
attributable to the  employee's  participant's  contributions
and  any  investment return experience thereon.  Benefits for
employees participants who terminate with at least five years
of service shall be in  accordance  with  the  terms  of  the
optional   employer's   retirement  plan  and  based  on  the
accumulation value attributable to both the employer and  the
employee's  participant's  contributions  and  any investment
return experience thereon.  Any employer contributions  which
are  forfeited shall be held in escrow by the funding company
investing those contributions and shall be used to reduce the
next premium payment due from the employer.
(Source: P.A. 89-430, eff. 12-15-95.)
    (40 ILCS 5/15-165) (from Ch. 108 1/2, par. 15-165)
    Sec. 15-165.  To certify amounts and submit vouchers.
    (a)  The Board shall certify to the Governor on or before
November 15 of each  year  the  appropriation  required  from
State funds for the purposes of this System for the following
fiscal  year.   The certification shall include a copy of the
actuarial recommendations upon which it is based.
    (b)  The Board shall certify to the State Comptroller  or
employer,  as  the  case  may  be,  from time to time, by its
president and secretary, with its seal attached, the  amounts
payable to the System from the various funds.
    (c)  Beginning  in  State fiscal year 1996, on or as soon
as possible after the 15th day of each month the Board  shall
submit  vouchers  for  payment  of State contributions to the
System, in a total  monthly  amount  of  one-twelfth  of  the
required annual State contribution certified under subsection
(a).   These  vouchers shall be paid by the State Comptroller
and Treasurer by warrants drawn on the funds appropriated  to
the System for that fiscal year.
    If  in any month the amount remaining unexpended from all
other appropriations to the System for the applicable  fiscal
year  (including  the  appropriations  to  the  System  under
Section  8.12  of  the State Finance Act and Section 1 of the
State Pension Funds Continuing  Appropriation  Act)  is  less
than  the  amount  lawfully vouchered under this Section, the
difference shall be paid from the General Revenue Fund  under
the  continuing  appropriation  authority provided in Section
1.1 of the State Pension Funds Continuing Appropriation Act.
    (d)  So long as the payments received are the full amount
lawfully vouchered under this Section, payments  received  by
the  System  under this Section shall be applied first toward
the employer contribution to the optional retirement  program
established   under  Section  15-158.2.   Payments  shall  be
applied second toward the employer's portion  of  the  normal
costs  of the System, as defined in subsection (f) of Section
15-155.  The balance shall be  applied  toward  the  unfunded
actuarial liabilities of the System.
    (e)  In  the event that the System does not receive, as a
result  of  legislative  enactment  or  otherwise,   payments
sufficient  to  fully  fund  the employer contribution to the
optional  retirement  program   established   under   Section
15-158.2  and  to  fully  fund that portion of the employer's
portion of the normal costs of the System, as  calculated  in
accordance   with  Section  15-155(a-1),  then  any  payments
received shall be applied  proportionately  to  the  optional
retirement  program established under Section 15-158.2 and to
the employer's portion of the normal costs of the System,  as
calculated in accordance with Section 15-155(a-1).
(Source: P.A. 88-593, eff. 8-22-94.)

    (40 ILCS 5/15-185) (from Ch. 108 1/2, par. 15-185)
    Sec.  15-185.   Annuities, etc., exempt.  The accumulated
employee and employer contributions shall be  held  in  trust
for  each  participant and annuitant, and this trust shall be
treated as a spendthrift trust.  Except as provided  in  this
Article,  all  cash,  securities  and  other property of this
system, all annuities and other benefits payable  under  this
Article  and  all  accumulated  credits  of  participants and
annuitants in this system and the  right  of  any  person  to
receive  an annuity or other benefit under this Article, or a
refund of contributions, shall not be  subject  to  judgment,
execution,  garnishment,  attachment,  or  other  seizure  by
process,  in  bankruptcy  or  otherwise, nor to sale, pledge,
mortgage or other alienation, and shall  not  be  assignable.
The board, however, may deduct from the benefits, refunds and
credits payable to the participant, annuitant or beneficiary,
amounts  owed  by the participant or annuitant to the system.
No attempted sale, transfer or  assignment  of  any  benefit,
refund or credit shall prevent the right of the board to make
the  deduction  and  offset  authorized in this Section.  Any
participant or annuitant may authorize the  board  to  deduct
from disability benefits or annuities, premiums due under any
group  hospital-surgical insurance program which is sponsored
or approved by any employer;  however,  the  deductions  from
disability benefits may not begin prior to 6 months after the
disability occurs.
    A  person  receiving  an  annuity  or  benefit under this
Article  may  authorize  withholding  from  that  annuity  or
benefit in accordance with the provisions of the State Salary
and Annuity Withholding Act.
    This  amendatory  Act  of  1989  is  a  clarification  of
existing law and shall be applicable to every participant and
annuitant without regard to whether  status  as  an  employee
terminates  before  the effective date of this amendatory Act
of 1989.
(Source: P.A. 86-273; 86-1488.)

    (40 ILCS 5/16-106) (from Ch. 108 1/2, par. 16-106)
    (Text of Section before amendment by P.A. 89-507)
    Sec.   16-106.  Teacher.    "Teacher":   The    following
individuals,  provided  that, for employment prior to July 1,
1990, they are employed on  a  full-time  basis,  or  if  not
full-time,  on a permanent and continuous basis in a position
in which services are expected to be rendered  for  at  least
one school term:
         (1)  Any  educational,  administrative, professional
    or other staff employed  in  the  public  common  schools
    included  within  this  system  in  a  position requiring
    certification under the law governing  the  certification
    of teachers;
         (2)  Any  educational,  administrative, professional
    or other staff employed in any facility of the Department
    of Children and Family Services, the Department of Mental
    Health and Developmental Disabilities, or the  Department
    of  Rehabilitation  Services,  in  a  position  requiring
    certification  under  the law governing the certification
    of teachers, and any person  who  (i)  works  in  such  a
    position  for  the  Department of Corrections, (ii) was a
    member of this System on May 31, 1987, and (iii) did  not
    elect   to  become  a  member  of  the  State  Employees'
    Retirement System pursuant to Section  14-108.2  of  this
    Code;
         (3)  Any   regional   superintendent   of   schools,
    assistant   regional  superintendent  of  schools,  State
    Superintendent of Education; any person employed  by  the
    State  Board  of Education as an executive; any executive
    of the boards engaged in the  service  of  public  common
    school  education  in school districts covered under this
    system of which the State Superintendent of Education  is
    an ex-officio member;
         (4)  Any  employee  of  a  school  board association
    operating in compliance with Article  23  of  the  School
    Code  who  is  certificated  under  the law governing the
    certification of teachers;
         (5)  Any person employed by the retirement system as
    an executive, and any person employed by  the  retirement
    system  who  is  certificated under the law governing the
    certification of teachers;
         (6)  Any educational,  administrative,  professional
    or  other staff employed by and under the supervision and
    control of a regional superintendent of schools, provided
    such  employment  position  requires  the  person  to  be
    certificated under the law governing the certification of
    teachers and is in an educational program  serving  2  or
    more  districts  in  accordance  with  a  joint agreement
    authorized by the School Code or by federal legislation;
         (7)  Any educational,  administrative,  professional
    or  other  staff  employed  in   an  educational  program
    serving  2  or more school districts in accordance with a
    joint agreement authorized  by  the  School  Code  or  by
    federal   legislation   and   in   a  position  requiring
    certification under the laws governing the  certification
    of teachers;
         (8)  Any  officer or employee of a statewide teacher
    organization   or   officer   of   a   national   teacher
    organization who is certified  under  the  law  governing
    certification  of  teachers, provided: (i) the individual
    had previously established creditable service under  this
    Article, (ii) the individual files with the system, on or
    before January 1, 1990, an irrevocable election to become
    a  member,  and  (iii)  the  individual  does not receive
    credit for such service under any other Article  of  this
    Code;
         (9)  Any  educational, administrative, professional,
    or other staff employed in a charter school operating  in
    compliance   with   the   Charter   Schools  Law  who  is
    certificated under the law governing the certification of
    teachers.
    An annuitant receiving a retirement  annuity  under  this
Article  or  under Article 17 of this Code who is temporarily
employed by a  board  of  education  or  other  employer  not
exceeding  that  permitted  under  Section  16-118  is  not a
"teacher" for purposes of this Article.   A  person  who  has
received   a  single-sum  retirement  benefit  under  Section
16-136.4 of this Article is not a "teacher" for  purposes  of
this Article.
(Source: P.A. 89-450, eff. 4-10-96.)

    (Text of Section after amendment by P.A. 89-507)
    Sec.    16-106.  Teacher.    "Teacher":   The   following
individuals, provided that, for employment prior to  July  1,
1990,  they  are  employed  on  a  full-time basis, or if not
full-time, on a permanent and continuous basis in a  position
in  which  services  are expected to be rendered for at least
one school term:
         (1)  Any educational,  administrative,  professional
    or  other  staff  employed  in  the public common schools
    included within  this  system  in  a  position  requiring
    certification  under  the law governing the certification
    of teachers;
         (2)  Any educational,  administrative,  professional
    or other staff employed in any facility of the Department
    of  Children  and  Family  Services  or the Department of
    Human Services, in  a  position  requiring  certification
    under  the  law  governing the certification of teachers,
    and any person who (i) works in such a position  for  the
    Department  of  Corrections,  (ii)  was  a member of this
    System on May 31, 1987, and (iii) did not elect to become
    a  member  of  the  State  Employees'  Retirement  System
    pursuant to Section 14-108.2 of this Code;
         (3)  Any   regional   superintendent   of   schools,
    assistant  regional  superintendent  of  schools,   State
    Superintendent  of  Education; any person employed by the
    State Board of Education as an executive;  any  executive
    of  the  boards  engaged  in the service of public common
    school education in school districts covered  under  this
    system  of which the State Superintendent of Education is
    an ex-officio member;
         (4)  Any employee  of  a  school  board  association
    operating  in  compliance  with  Article 23 of the School
    Code who is certificated  under  the  law  governing  the
    certification of teachers;
         (5)  Any person employed by the retirement system as
    an  executive,  and any person employed by the retirement
    system who is certificated under the  law  governing  the
    certification of teachers;
         (6)  Any  educational,  administrative, professional
    or other staff employed by and under the supervision  and
    control of a regional superintendent of schools, provided
    such  employment  position  requires  the  person  to  be
    certificated under the law governing the certification of
    teachers  and  is  in an educational program serving 2 or
    more districts  in  accordance  with  a  joint  agreement
    authorized by the School Code or by federal legislation;
         (7)  Any  educational,  administrative, professional
    or  other  staff  employed  in   an  educational  program
    serving 2 or more school districts in accordance  with  a
    joint  agreement  authorized  by  the  School  Code or by
    federal  legislation  and   in   a   position   requiring
    certification  under the laws governing the certification
    of teachers;
         (8)  Any officer or employee of a statewide  teacher
    organization   or   officer   of   a   national   teacher
    organization  who  is  certified  under the law governing
    certification of teachers, provided: (i)  the  individual
    had  previously established creditable service under this
    Article, (ii) the individual files with the system, on or
    before January 1, 1990, an irrevocable election to become
    a member, and  (iii)  the  individual  does  not  receive
    credit  for  such service under any other Article of this
    Code;
         (9)  Any educational, administrative,  professional,
    or  other staff employed in a charter school operating in
    compliance  with  the  Charter   Schools   Law   who   is
    certificated under the law governing the certification of
    teachers.
    An  annuitant  receiving  a retirement annuity under this
Article or under Article 17 of this Code who  is  temporarily
employed  by  a  board  of  education  or  other employer not
exceeding that  permitted  under  Section  16-118  is  not  a
"teacher"  for  purposes  of  this Article.  A person who has
received  a  single-sum  retirement  benefit  under   Section
16-136.4  of  this Article is not a "teacher" for purposes of
this Article.
(Source: P.A. 89-450,  eff.  4-10-96;  89-507,  eff.  7-1-97;
revised 10-3-96.)

    (40 ILCS 5/16-140) (from Ch. 108 1/2, par. 16-140)
    Sec. 16-140.  Survivors' benefits - definitions.  For the
purpose  of  Sections  16-138 through 16-143.2, the following
terms shall have the following meanings, unless  the  context
otherwise requires:
    (1)  "Average salary": the average salary for the highest
4  consecutive  years  within the last 10 years of creditable
service immediately preceding date of  death  or  retirement,
whichever  is applicable, or the average salary for the total
creditable service if service is less than 4 years.
    (2)  "Member": any teacher included in the membership  of
the  system.  However,  a teacher who becomes an annuitant of
the system or a teacher whose  services  terminate  after  20
years  of  service  from  any  cause other than retirement is
considered  a  member,  subject   to   the   conditions   and
limitations stated in this Article.
    (3)  "Dependent beneficiary": (A) a surviving spouse of a
member  or  annuitant  who  was  married  to  the  member  or
annuitant  for  the 12 month period immediately preceding and
on the date of death of  such  member  or  annuitant,  except
where  a  child  is  born of such marriage, in which case the
qualifying period shall not be applicable; (A-1) a  surviving
spouse  of  a  member or annuitant who (i) was married to the
member or annuitant on the date of the member or  annuitant's
death,  (ii)  was  married  to  the member or annuitant for a
period of at least 12 months  (but  not  necessarily  the  12
months   immediately  preceding  the  member  or  annuitant's
death), (iii) first applied for a survivor's  benefit  before
January  1,  1994,  and (iv) has not received a benefit under
subsection (a) of Section 16-141 or paragraph (1) of  Section
16-142;  (B)  an eligible child of a member or annuitant; and
(C) a dependent parent.
    Unless otherwise designated by  the  member,  eligibility
for  benefits  shall  be  in  the  order named, except that a
dependent parent shall be eligible only if there is no  other
dependent beneficiary.  Any benefit to be received by or paid
to  a  dependent  beneficiary  to  be  determined  under this
paragraph as provided in Sections 16-141 and  16-142  may  be
received by or paid to a trust established for such dependent
beneficiary  if  such  dependent beneficiary is living at the
time such benefit would be received by or paid to such trust.
    (4)  "Eligible child": an unmarried  natural  or  adopted
child  of  the  member or annuitant under age 18 (age 22 if a
full-time student).  An unmarried natural or  adopted  child,
regardless  of  age, who is dependent by reason of a physical
or  mental  disability,  except  any  such  child   receiving
benefits  under  Article III of the Illinois Public Aid Code,
is eligible for so long as such physical or mental disability
continues.  An adopted child, however, is  eligible  only  if
the  proceedings  for adoption were finalized while the child
was a minor.
    For purposes of this subsection,  "disability"  means  an
inability  to  engage  in any substantial gainful activity by
reason of  any  medically  determinable  physical  or  mental
impairment  which can be expected to result in death or which
has lasted or can be expected to last for a continuous period
of not less than 12 months.
    The changes made to this Section by this  amendatory  Act
of  1997, relating to benefits for certain unmarried children
who are full-time students under age 22, apply without regard
to whether the deceased member was in service on or after the
effective date of this amendatory Act of 1997.  These changes
do not authorize the repayment of a refund or  a  re-election
of   benefits,  and  any  benefit  or  increase  in  benefits
resulting from these changes is not payable retroactively for
any period before the effective date of this  amendatory  Act
of 1997.
    (5)  "Dependent  parent":  a  parent who was receiving at
least 1/2 of his or her support from a  member  or  annuitant
for the 12-month period immediately preceding and on the date
of such member's or annuitant's death, provided however, that
such  dependent  status terminates upon a member's acceptance
of a refund for survivor benefit  contributions  as  provided
under Section 16-142.
    (6)  "Non-dependent     beneficiary":     any     person,
organization  or  other  entity  designated by the member who
does not qualify as a dependent beneficiary.
    (7)  "In service": the condition of  a  member  being  in
receipt  of  salary as a teacher at any time within 12 months
immediately before his  or  her  death,  being  on  leave  of
absence  for which the member, upon return to teaching, would
be eligible  to  purchase  service  credit  under  subsection
(b)(5) of Section 16-127, or being in receipt of a disability
or  occupational  disability  benefit.   This  term  does not
include any annuitant or member  who  previously  accepted  a
refund  of survivor benefit contributions under paragraph (1)
of  Section  16-142  unless  the  conditions   specified   in
subsection (b) of Section 16-143.2 are met.
(Source: P.A. 89-430, eff. 12-15-95.)

    (40 ILCS 5/16-143) (from Ch. 108 1/2, par. 16-143)
    Sec.  16-143.  Survivors' benefits - other conditions and
limitations. The benefits provided under Sections 16-141  and
16-142,  shall be subject to the following further conditions
and limitations:
    (1)  The period during which a member was in receipt of a
disability  or  occupational  disability  benefit  shall   be
considered as creditable service at the annual salary rate on
which the member last made contributions.
    (2)  All  service  prior  to  July  24,  1959,  for which
creditable service is granted towards  a  retirement  annuity
shall be considered as creditable service.
    (3)  No  benefits  shall be payable unless a member, or a
disabled member, returning to service, has made contributions
to the system for at least one month  after  July  24,  1959,
except  that an annuitant must have contributed to the system
for at least 1 year of  creditable  service  after  July  24,
1959.
    (4)  Creditable   service   under  the  State  Employees'
Retirement  System  of  Illinois,  the   State   Universities
Retirement System and the Public School Teachers' Pension and
Retirement Fund of Chicago shall be considered in determining
whether   the   member   has   met   the  creditable  service
requirement.
    (5)  If  an  eligible   beneficiary   qualifies   for   a
survivors'  benefit because of pension credits established by
the participant or annuitant in  another  system  covered  by
Article  20,  and the combined survivors' benefits exceed the
highest survivors' benefit payable  by  either  system  based
upon  the  combined  pension  credits, the survivors' benefit
payable by this system shall be reduced to that amount  which
when  added  to  the  survivors' benefit payable by the other
system would equal this highest survivors'  benefit.  If  the
other  system  has  a similar provision for adjustment of the
survivors' benefit, the  respective  proportional  survivors'
benefits  shall  be  reduced proportionately according to the
ratio  which  the  amount  of  each  proportional  survivors'
benefit bears to the aggregate of all proportional survivors'
benefits. If a  survivors'  benefit  is  payable  by  another
system  covered  by  Article  20,  and the survivor elects to
waive the monthly survivors' benefit and accept  a  lump  sum
payment  or  death  benefit in lieu of the monthly survivors'
benefit, this system shall, for the purpose of adjusting  the
monthly  survivors' benefit under this paragraph, assume that
the survivor  had  been  entitled  to  a  monthly  survivors'
benefit  which,  in  accordance with actuarial tables of this
system, is the actuarial equivalent of the amount of the lump
sum payment or death benefit.
    (6)  Remarriage of a surviving spouse prior to attainment
of age 55 shall terminate his or her survivors' benefits.
    (7)  The benefits payable  to  an  eligible  child  shall
terminate  when  the eligible child marries, dies, or attains
age 18 (age 22 if a full-time student); except that  benefits
payable   to   a  dependent  disabled  eligible  child  shall
terminate only when the eligible child dies or ceases  to  be
disabled.
(Source: P.A. 86-1488.)

    (40 ILCS 5/16-151) (from Ch. 108 1/2, par. 16-151)
    Sec. 16-151. Refund.  Upon termination of employment as a
teacher  for  any  cause  other  than  death or retirement, a
member shall be paid the following amount upon demand made at
least not previous to 4 months after ceasing to teach:
         (1)  from the  Members'  Contribution  Reserve,  the
    actual  total  contributions  paid by or on behalf of the
    member  for  membership  service  which  have  not   been
    previously  refunded  and  which are then credited to the
    member's individual account in the Members'  Contribution
    Reserve, without interest thereon, and
         (2)  from  the  Employer's Contribution Reserve, the
    actual contributions not previously refunded, paid by  or
    on behalf of the member for prior service and towards the
    cost  of  the  automatic  annual  increase  in retirement
    annuity  as  provided  under  Section   16-152,   without
    interest thereon.
    Any  such amounts may be paid to the member either in one
sum or,  at  the  election  of  the  board,  in  4  quarterly
payments.
    Contributions   credited  to  a  member  for  periods  of
disability as provided in Sections 16-149  and  16-149.1  are
not refundable.
    Upon  acceptance  of  a  refund,  all  accrued rights and
credits in the System are forfeited  and  may  be  reinstated
only  if the refund is repaid together with interest from the
date of the refund to the date of repayment at the  following
rates  compounded  annually:   for  periods  prior to July 1,
1965, regular interest; for periods from July 1, 1965 to June
30, 1977, 4% per year; for periods on and after July 1, 1977,
regular interest. Repayment shall be permitted upon return to
membership; however, service credit previously forfeited by a
refund and subsequently reinstated may not be used as a basis
for  the  payment  of  benefits,  other  than  a  refund   of
contributions,  prior  to  the  completion  of  one  year  of
creditable   service   following   the  refund,  except  when
repayment  is  permitted  under   the   provisions   of   the
"Retirement Systems Reciprocal Act" contained in Article 20.
(Source: P.A. 83-1440.)

    (40 ILCS 5/16-152.1) (from Ch. 108 1/2, par. 16-152.1)
    Sec. 16-152.1.  Pickup Pick up of contributions.
    (a)  Each  employer  may pick up the member contributions
required under Section 16-152 for  all  salary  earned  after
December 31, 1981.  If an employer decides not to pick up the
member  contributions, the amount that would have been picked
up  shall  continue  to  be   deducted   from   salary.    If
contributions  are  picked  up,  they  shall  be  treated  as
employer contributions in determining tax treatment under the
United  States Internal Revenue Code.  The employer shall pay
these member contributions from  the  same  source  of  funds
which  is  used in paying salary to the member.  The employer
may pick up these contributions by a reduction  in  the  cash
salary  of the member or by an offset against a future salary
increase or by a combination of a  reduction  in  salary  and
offset   against   a   future  salary  increase.   If  member
contributions are picked up, they shall be  treated  for  all
purposes  of  this  Article  16  in the same manner as member
contributions made prior to the date the pick up began.
    (b)  The State Board  of  Education  shall  pick  up  the
contributions  of  regional  superintendents  required  under
Section  16-152  for  all salary earned for the 1982 calendar
year and thereafter.
    (c)  Effective July 1, 1983, each employer shall pick  up
the  member  contributions  required under Section 16-152 for
all salary earned after such date.  Contributions  so  picked
up  shall be treated as employer contributions in determining
tax treatment under the United States Internal Revenue  Code.
The  employer  shall  pay these member contributions from the
same source of funds which is used in paying  salary  to  the
member.   The  employer  may pick up these contributions by a
reduction in the cash salary of the member or  by  an  offset
against  a  future  salary  increase or by a combination of a
reduction in  salary  and  offset  against  a  future  salary
increase.  Member contributions so picked up shall be treated
for  all  purposes  of  this Article 16 in the same manner as
member contributions made prior  to  the  date  the  pick  up
began.
    (d)  Subject  to  the requirements of federal law and the
rules of the board, beginning July 1, 1998 a  member  who  is
employed  on a full-time basis may elect to have the employer
pick up optional contributions that the member has elected to
pay to the System, and the contributions so picked  up  shall
be  treated  as  employer  contributions  for the purposes of
determining federal tax  treatment.   The  election  to  have
optional contributions picked up is irrevocable.  At the time
of  making  the election, the member shall execute a binding,
irrevocable payroll deduction authorization.  Upon  receiving
notice  of  the  election,  the  employer  shall  pick up the
contributions by a reduction in the cash salary of the member
and shall pay the contributions from the same source of funds
that is used to pay earnings to the member.
(Source: P.A. 83-1440.)

    (40 ILCS 5/16-154) (from Ch. 108 1/2, par. 16-154)
    Sec. 16-154. Deductions from salary.
    (a)  Required contributions.  The governing body of  each
school  district and of each employing unit State institution
coming under this System, and the State Comptroller or  other
State officer certifying payroll vouchers, including payments
of  salary  or  wages to teachers, shall pick up or retain on
every pay day the contributions required under Section 16-152
of each member.  Each governing body or officer shall furnish
a statement to each member showing the amount  picked  up  or
retained from his or her salary.
    (b)  Optional  contributions.   For  the purposes of this
Section and Section 16-152.1, "optional contributions"  means
contributions  that  a  member  elects  to  make  in order to
establish optional service credit or to reinstate  creditable
service that was terminated upon payment of a refund.
    The  governing  body  of each school district and of each
employing  unit  coming  under  this  System  and  the  State
Comptroller  or  other  State  officer   certifying   payroll
vouchers  shall  take  the steps necessary to comply with the
requirements of Section 414(h)(2)  of  the  Internal  Revenue
Code  of  1986,  as amended, to permit the pickup of optional
contributions on a tax-deferred  basis.   Beginning  July  1,
1998,  a  school  district  or other employing unit shall not
withhold optional contributions from the salary of any member
on an after-tax basis.
(Source: P.A. 83-1440.)

    (40 ILCS 5/16-155) (from Ch. 108 1/2, par. 16-155)
    Sec. 16-155.  Report to system and payment of deductions.
    (a)  The governing body of  each  school  district  shall
make  two  deposits  each  month.   The  deposit  for  member
contributions  for  salary  paid  between  the  first and the
fifteenth of the month is due by the 25th of the month.   The
deposit  of  member contributions for salary paid between the
sixteenth and last day of the month is due by the 10th of the
following  month.   All  required  contributions  for  salary
earned during a school term are due by July 10 next following
the close of such school term.
    The governing body of each State institution coming under
this retirement system, the State Comptroller or other  State
officer  certifying  payroll  vouchers  including payments of
salary or wages  to  teachers,  and  any  other  employer  of
teachers,  shall,  monthly,  forward  to the secretary of the
retirement system the  member  contributions  required  under
this Article.
    Each  employer  specified above shall, prior to August 15
of each year, forward to the  System  a  detailed  statement,
verified in all cases of school districts by the secretary or
clerk  of  the  district, of the amounts so contributed since
the period covered by the  last  previous  annual  statement,
together  with required contributions not yet forwarded, such
payments being payable to the System.
    The  board  may  prescribe  rules  governing  the   form,
content,  investigation,  control,  and  supervision  of such
statements.  The  governing  body  of  each  school  district
shall,  at the same time, send a copy of the statement to the
regional superintendent of schools for the  region  in  which
the  district under its control is located.  If no teacher in
a school district comes under the provisions of this Article,
the governing body of the district shall so state  under  the
oath  of  its secretary to this system, and shall at the same
time  forward  a  copy  of  the  statement  to  the  regional
superintendent of schools.
    (b)  If the governing body of an employer that is  not  a
State agency a school district fails to forward such required
contributions  within  the  time  permitted in subsection (a)
above, the System shall notify the employer  district  of  an
additional amount due, equal to the greater of the following:
(1)  an  amount  representing the interest lost by the system
due to late forwarding of contributions, calculated  for  the
number  of days which the employer school district is late in
forwarding contributions at a rate of interest prescribed  by
the board, based on its investment experience; or (2) $50.
    (c)  If  the  system,  on August 15, is not in receipt of
the detailed statements required under this  Section  of  any
school district or other employing unit, such school district
or  other  employing  unit  shall pay to the system an amount
equal to $250 for each day that elapses from August 15, until
the day such statement is filed with the system.
(Source: P.A. 86-273.)

    (40 ILCS 5/16-158.1) (from Ch. 108 1/2, par. 16-158.1)
    Sec. 16-158.1.  Actions to  enforce  payments  by  school
districts  and other employing units.  Any school district or
other employing  unit  failing  to  transmit  to  the  System
contributions   required   of   it   under  this  Article  or
contributions required of teachers, for  more  than  90  days
after such contributions are due is subject to the following:
after giving notice to the district or other unit, the System
may   certify  to  the  State  Comptroller  or  the  Regional
Superintendent of Schools  the  amounts  of  such  delinquent
payments   and   the   State   Comptroller  or  the  Regional
Superintendent  of  Schools  shall  deduct  the  amounts   so
certified  or any part thereof from any grants of State funds
to be remitted to the school district or other employing unit
involved and shall pay the amount so deducted to the  System.
If State funds from which such deductions may be made are not
available, the System may proceed against the school district
or  other  employing  unit  to  recover  the  amounts of such
delinquent payments in the appropriate circuit court.
    The System may provide for an audit of the records  of  a
school district or other employing unit as may be required to
establish  the  amounts of required contributions. The school
district or other  employing  unit  shall  make  its  records
available  to  the System for the purpose of such audit.  The
cost of such audit shall  be  added  to  the  amount  of  the
delinquent payments and shall be recovered by the System from
the  school district or other employing unit at the same time
and in  the  same  manner  as  the  delinquent  payments  are
recovered.
(Source: P.A. 85-1008.)

    (40 ILCS 5/16-169.1 new)
    Sec.  16-169.1.  Testimony and the production of records.
The secretary of the Board shall  have  the  power  to  issue
subpoenas  to  compel  the  attendance  of  witnesses and the
production  of   documents   and   records,   including   law
enforcement  records  maintained by law enforcement agencies,
in conjunction with a disability claim, administrative review
proceeding, or felony forfeiture investigation.  The fees  of
witnesses  for attendance and travel shall be the same as the
fees of witnesses before the circuit courts of this State and
shall be paid by the party seeking the subpoena.   The  Board
may  apply  to  any  circuit  court in the State for an order
requiring  compliance  with  a  subpoena  issued  under  this
Section.   Subpoenas  issued  under  this  Section  shall  be
subject  to  applicable  provisions  of  the  Code  of  Civil
Procedure.

    (40 ILCS 5/16-179) (from Ch. 108 1/2, par. 16-179)
    Sec. 16-179.  To be trustee of  reserves  and  to  invest
funds.  To  be the trustee of the reserves created under this
Article, and to invest and reinvest such reserves, subject to
the requirements  and  restrictions  set  forth  in  Sections
1-109, 1-109.1, 1-109.2, 1-110, 1-111, 1-114 and 1-115.
    No  bank  or  savings  and loan association shall receive
investment funds as permitted by this Section, unless it  has
complied   with  the  requirements  established  pursuant  to
Section 6 of "An  Act  relating  to  certain  investments  of
public  funds by public agencies", approved July 23, 1943, as
now or hereafter amended.  The limitations set forth in  such
Section  6 shall be applicable only at the time of investment
and shall not require the liquidation of  any  investment  at
any time.
    The  board  shall  have  the authority to enter into such
agreements and to execute such documents as it determines  to
be necessary to complete any investment transaction.
    All  investments  shall be clearly held and accounted for
to indicate ownership by the system.  The  board  may  direct
the registration of securities or the holding in interests in
real  property  in the name of the system or in the name of a
nominee created for the express purpose  of  registration  of
securities  or  holding  interests  in  real  property  by  a
national or state bank or trust company authorized to conduct
a  trust  business  in  the State of Illinois.  The board may
hold title to interests in real property in the name  of  the
system  or in the name of a title holding corporation created
for the express purpose of holding title to interests in real
property.
    Investments shall be carried at cost or at a  book  value
determined  in  accordance with generally accepted accounting
principles.  No  adjustments  shall  be  made  in  investment
carrying   values   for   ordinary   current   market   price
fluctuations;  but  reserves  may  be provided to account for
possible losses or unrealized gains.
    The book value of  investments  held  by  the  retirement
system in one or more commingled investment accounts shall be
the  cost  of  its  units of participation in such commingled
account or accounts.
(Source: P.A. 86-272.)

    (40 ILCS 5/16-181.3 new)
    Sec. 16-181.3. To prescribe the manner  of  payment.   To
prescribe   by  rule  the  manner  of  repaying  refunds  and
purchasing the various  optional  service  credits  permitted
under  this  Article.  The rules may prescribe the conditions
under which installment payments or partial payments  may  be
accepted and may specify the method of computing any interest
due.

    (40 ILCS 5/16-185) (from Ch. 108 1/2, par. 16-185)
    Sec. 16-185.  Employer's contribution reserve.
    (a)  The Employer's Contribution Reserve shall serve as a
clearing  account  for  income  and expenses of the System as
well as transfers to and  from  the  other  reserve  accounts
established under this Article and adjustments thereto.
    (b)  This reserve shall be credited with:
         (1)  All  amounts  contributed  by the State, except
    those credited to other reserve accounts as  provided  in
    this Article.
         (2)  The  total  member  and  employer contributions
    except those required by other reserve accounts.
         (3)  The total income from invested  assets  of  the
    System, and other miscellaneous income.
         (4)  The   interest   portion   of  the  accumulated
    contributions of members granted refunds.
         (5)  Contributions made by annuitants to qualify for
    automatic  annual  increases  in  annuity,  except  those
    required by other reserve accounts.

    (c)  This reserve shall be charged with:
         (1)  All amounts necessary to be transferred to  the
    Members' Contribution Reserve.
         (2)  All  retirement  annuity, single-sum retirement
    benefit  and  disability  retirement  annuity   payments,
    including automatic annual increases in annuities, except
    as provided by other reserve accounts.
         (3)  All   amounts   necessary  to  be  refunded  to
    withdrawing members except as provided  by  the  Members'
    Contribution Reserve.
         (4)  All    benefits    paid   to   temporarily   or
    accidentally disabled members of  this  System,  and  all
    amounts credited to the accounts of such disabled members
    in lieu of contributions.
         (5)  All amounts payable as death benefits except as
    provided by the Members' Contribution Reserve.
         (6)  All  amounts necessary for the payment of costs
    for the health insurance program as provided  under  this
    Article.
         (7)  All  survivor benefit contributions refunded to
    an annuitant as provided under Section 16-143.2.
         (8)  All amounts paid  in  accordance  with  Section
    16-131.1  except as provided by the Members' Contribution
    Reserve.
         (9)  Interest  to  be  credited  to  other   reserve
    accounts as specified in this Article.
         (10)  Recognition  of  unrealized gains or losses in
    market  value,  upon  adoption  of   generally   accepted
    accounting principles that allow for such recognition.
(Source: P.A. 88-593, eff. 8-22-94; 89-235, eff. 8-4-95.)

    (40 ILCS 5/16-187) (from Ch. 108 1/2, par. 16-187)
    Sec. 16-187.  Custodian of fund - warrants and vouchers -
audits.  (a)  The  State Treasurer is ex-officio custodian of
the funds of the retirement system. He  or  she  may  process
payments from the funds of the system for the purposes herein
specified upon warrants or direct deposit transmittals of the
State  Comptroller.    Commencing  January 1, 1987, the State
Treasurer shall credit interest, at current  rates,  for  any
monies  directly  held.   Such  interest  shall be calculated
using an average daily cash basis. He or she shall be  liable
on  the  Treasurer's official bond for the proper performance
of duties and be held accountable for all cash and securities
in his or her custody.   He  or  she  shall  keep  books  and
accounts  in  the  manner  prescribed  by the board, and they
shall always be subject to the inspection of the board or any
member thereof.
    (b)  The State Comptroller may draw warrants  or  prepare
direct  deposit  transmittals  payable from the fund upon the
State Treasurer for the purposes  herein  provided  upon  the
presentation  of  vouchers  approved by the president and the
secretary of the board.  The board shall file with the  State
Comptroller an attested copy of a resolution designating such
persons  as  his  authority  for  making  payments  upon such
vouchers.
    (c)  At the end of each fiscal year, the board shall have
the accounts and records of the system audited  by  a  person
authorized  to  practice  public accounting under the laws of
this state selected by the Auditor General.   Copies  of  all
audits  performed  shall  be  filed  with  the State Board of
Education and the Auditor General.
(Source: P.A. 85-1008.)

    (40 ILCS 5/17-116.1) (from Ch. 108 1/2, par. 17-116.1)
    Sec. 17-116.1.  Early  retirement  without  discount.   A
member  retiring  after June 1, 1980 and before June 30, 2005
1995 and within 6 months of the  last  day  of  teaching  for
which  retirement  contributions  were required, may elect at
the  time  of  application  to  make  a  one  time   employee
contribution  to  the  system  and  thereby  avoid  the early
retirement reduction in allowance specified in paragraph  (4)
of  Section  17-116  of  this  Article.   The exercise of the
election shall obligate the employer to also make a one  time
non-refundable contribution to the fund.
    The  one-time  employee contribution shall be equal to 7%
of the retiring member's highest full-time annual salary rate
used in the determination of  the  average  salary  rate  for
retirement  pension,  or  if not full-time then the full-time
equivalent, multiplied by (1) the number of years the teacher
is under age 60, or (2) the number of  years  the  employee's
creditable  service is less than 35 years, whichever is less.
The  employer  contribution  shall  be  20%  of  such  salary
multiplied by such number of years.
    Upon receipt of the application and election,  the  board
shall   determine   the   one   time  employee  and  employer
contributions.  The provisions of this Section shall  not  be
applicable  until  all  the above outlined contributions have
been  received  by  the  fund;   however,   the   date   such
contributions   are  received  shall  not  be  considered  in
determining the effective date of retirement.
    The number of employees who may retire under this Section
in any year may be limited at the option of the employer to a
specified percentage of those eligible, not lower  than  30%,
with  the  right  to  participate to be allocated among those
applying on the basis of seniority  in  the  service  of  the
employer.
    Notwithstanding  Section  17-157,  the  extension  of the
deadline for early retirement  without  discount  under  this
Section  effected by this amendatory Act of 1997 also applies
to persons who withdrew from service on  or  after  June  30,
1995  and before the effective date of this amendatory Act of
1997.  Any such person who  qualifies  for  early  retirement
without  discount  under  this  Section,  applies to the Fund
within 90 days after the effective date  of  this  amendatory
Act  of 1997, and pays the required employee contribution may
have his or her retirement pension recalculated in accordance
with this Section; the resulting increase shall be  effective
retroactively to the starting date of the retirement pension.
(Source: P.A. 86-272.)

    (40 ILCS 5/17-134.1 new)
    Sec. 17-134.1. Labor organization employees.
    (a)  A  former  teacher  who  is employed by a teacher or
labor organization and is not eligible to  participate  under
subdivision (4) of Section 17-134 because he or she is not on
a  special  leave  of absence may elect to participate in the
Fund for the duration of that employment by so notifying  the
Fund  in writing.  Participation shall be subject to the same
conditions as are applicable to persons  participating  under
that  subdivision (4), and service credit shall be contingent
upon the required contributions being received by the Fund.
    (b)  A  person  who  participates  in  the   Fund   under
subsection  (a)  may  establish service credit for periods of
such   employment   that   took   place   before    beginning
participation  under  this  Section  by  submitting a written
application to  the  Fund.   Credit  shall  be  granted  upon
payment  to  the  Fund  of  an amount to be determined by the
Fund, equal to (i) the employee contributions that would have
been paid if the person had  participated  under  subdivision
(4)  of  Section  17-134  during the period for which service
credit is to be  established,  based  on  the  actual  salary
received,  plus  (ii)  the  employer's normal cost associated
with that service credit, plus (iii) interest  on  items  (i)
and  (ii)  at  the  rate of 6% per year, compounded annually,
from the date of the  service  established  to  the  date  of
payment.   Service  credit under this subsection shall not be
granted until the required  contribution  has  been  paid  in
full;  the  contribution  may  be  paid  at  any  time before
retirement.
    (c)  A  person  who  participates  in  the   Fund   under
subsection (a) may reestablish any service credits previously
forfeited by acceptance of a refund by paying to the Fund the
amount  of the refund plus interest thereon at the rate of 5%
per annum, compounded annually, from the date of  the  refund
to the date of payment.
    (d)  Rollover  contributions  from other retirement plans
qualified under the Internal Revenue Code of 1986 may be used
to make the payments required under subsections (b) and (c).
    (e)  No service credit  may  be  established  under  this
Section  for  any  period  of employment for which the person
receives service credit under any  other  provision  of  this
Code.

    (40 ILCS 5/18-112.6 new)
    Sec.  18-112.6.  Service credit for member of educational
board.  Until July 1, 1998, an  active  participant  in  this
System  who  has  at  least 6 years of service as a judge may
establish up to 2 years of service credit in this System  for
a period during which the participant held elective office as
a member of a board of education in this State or a member of
the board of trustees of a community college district in this
State,  by applying to the Board in writing and paying to the
System an amount equal to (1) employee contributions based on
the rate in effect for a judge on  the  date  of  becoming  a
participant  in  this  System  and the salary received by the
judge on that date, plus (2)  the  employer's  share  of  the
normal  cost  of  the  benefits  being  established, plus (3)
interest thereon at the prescribed rate, compounded annually,
from the date of membership to the date of payment.  However,
credit may not be established  under  this  Section  for  any
period  for  which  the  judge  has received credit under any
other pension fund or retirement system subject to this Code,
unless that credit has been terminated.

    (40 ILCS 5/18-133.1) (from Ch. 108 1/2, par. 18-133.1)
    Sec. 18-133.1.  Pickup Pick up of contributions.
    (a)  Each  employer   may   pick   up   the   participant
contributions  required  under  Section 18-133 for all salary
earned after December 31, 1981.  If an employer  decides  not
to  pick  up  the  contributions,  the employee contributions
shall continue to be deducted from salary.  If  contributions
are picked up they shall be treated as employer contributions
in determining tax treatment under the United States Internal
Revenue  Code.   However,  the  employer  shall  continue  to
withhold  Federal  and  State  income  taxes based upon these
contributions until  the  Internal  Revenue  Service  or  the
Federal  courts  rule  that pursuant to Section 414(h) of the
United States  Internal  Revenue  Code,  these  contributions
shall  not  be  included  as  gross income of the participant
until such time as they are distributed  or  made  available.
The  employer  shall pay these participant contributions from
the same source of funds which is used in paying earnings  to
the   participant.    The   employer   may   pick   up  these
contributions by a  reduction  in  the  cash  salary  of  the
participant  or by an offset against a future salary increase
or by a combination of  a  reduction  in  salary  and  offset
against   a   future   salary   increase.    If   participant
contributions  are  picked  up  they shall be treated for all
purposes of this Article as  participant  contributions  were
considered prior to the time they were picked up.
    (b)  Subject  to  the  requirements  of  federal  law,  a
participant  may  elect to have the employer pick up optional
contributions that the participant has elected to pay to  the
System,  and  the contributions so picked up shall be treated
as employer contributions for  the  purposes  of  determining
federal  tax  treatment.   The  employer  shall  pick  up the
contributions by a  reduction  in  the  cash  salary  of  the
participant  and  shall  pay  the contributions from the same
fund that is used to pay earnings to  the  participant.   The
election   to   have  optional  contributions  picked  up  is
irrevocable and the optional contributions may not thereafter
be prepaid, by direct payment or otherwise.
(Source: P.A. 83-1440.)

    (40 ILCS 5/21-103) (from Ch. 108 1/2, par. 21-103)
    Sec.  21-103.   Political  subdivision  -   election   of
coverage.
    (a)   Any  political  subdivision  other  than  a  school
district and other than  a  political  subdivision  which  is
participating in the Illinois Municipal Retirement Fund under
Article  7  of  this Code may, by resolution of the governing
body (in the case of a township, at an annual town meeting or
at a special town meeting called for  that  purpose),  or  by
referendum, elect to have its employees covered by the Social
Security Act.
    Whenever  a  petition requesting Social Security coverage
for employees, signed by not less than 5% of the legal voters
of the political subdivision, is presented to  the  governing
body,  such governing body shall cause such proposition to be
certified to the proper election officials who  shall  submit
the  proposition  to  the  voters  at  the  next  appropriate
election  in  accordance with the general election law, or in
the case of a township at the next annual town meeting if the
petition is received more than  15  and  less  than  60  days
before  the  annual  town  meeting, or else at a special town
meeting called for that purpose.  In  the  territory  of  the
political   subdivision  every  elector  may  vote  upon  the
proposition stated in the petition.  Such  proposition  shall
be in substantially the following form:
-------------------------------------------------------------
    Shall....(political subdivision)
enter into a coverage agreement with
the Social Security Division of                 YES
the State Employees' Retirement        ----------------------
System for extension of Federal Social          NO
Security coverage to employees
of....(political subdivision)?
-------------------------------------------------------------
    If  a  majority  of  all  of  the  votes  cast  upon  the
proposition is in favor thereof, or if the governing body has
adopted  a  resolution or ordinance providing for coverage of
its employees, the governing body shall execute the  coverage
agreement  provided  by  the  State  Agency  and  submit such
coverage agreement to the State  Agency  for  approval.   The
coverage  agreement  shall be approved by the State Agency if
it meets the requirements of subsection (b).
    (b)  Each coverage agreement of a  political  subdivision
and  any  amendment  thereof  shall  be approved by the State
Agency if it finds that  such  coverage  agreement,  or  such
coverage  agreement  as  amended,  is in conformity with such
requirements as are provided in the regulations of the  State
Agency,  except  that  no  such  coverage  agreement shall be
approved unless:
         (1)  it is in conformity with  the  requirements  of
    the  Social  Security  Act  and  with  the  Federal-State
    Agreement entered into under this Article;
         (2)  it  provides that all services which constitute
    employment  and  are  performed  in  the  employ  of  the
    political subdivision by any employees thereof  shall  be
    covered  by  the  coverage  agreement,  except  that such
    agreement may, if the political subdivision so  requests,
    exclude  all  services in one or more classes of elective
    positions, or positions the compensation for which is  on
    a fee basis;
         (3)  it  provides for such methods of administration
    of the coverage agreement by the political subdivision as
    are found by the State Agency to  be  necessary  for  the
    proper  and  efficient  administration  of  the  coverage
    agreement; and
         (4)  it  provides  for an effective date of coverage
    not earlier than the first day of the fifth calendar year
    preceding the year in which the resulting modification of
    the Federal-State Agreement is agreed to by the Secretary
    and the State.
    (c)  In addition to the requirements in  subsection  (b),
no coverage agreement which provides for an effective date of
coverage prior to January 1, 1987 shall be approved unless:
         (1)  it  specifies  the sources from which the funds
    required of  it  by  this  Article  are  expected  to  be
    derived,  and  contains  reasonable  assurance  that such
    sources will be adequate for such purpose;
         (2)  it contains a promise  to  deliver  the  proper
    funds to the State Agency on or before the date requested
    by the State Agency;
         (3)  it  specifies  some officer to act as custodian
    of all funds collected and to be responsible to the State
    Agency for the delivery of such funds;
         (4)  it  provides  that  the  political  subdivision
    shall pay into  the  Social  Security  Contribution  Fund
    contributions on covered wages at such times as the State
    Agency  may  by regulations prescribe, in the amounts and
    at the rates provided by this Article; and
         (5)  it provides that the political subdivision will
    make such reports as the State Agency may  from  time  to
    time  require,  and  comply  with  such provisions as the
    State Agency or the Secretary may from time to time  find
    necessary.
(Source: P.A. 85-442.)

    (40 ILCS 5/21-109) (from Ch. 108 1/2, par. 21-109)
    Sec. 21-109.  Payment of Contributions.
    (a)  Absolute coverage group:  Each political subdivision
which  has  established  Social  Security  coverage  for  its
employees  under  this  Article  shall  pay  into  the Social
Security Contribution Fund  contributions  on  covered  wages
paid prior to January 1, 1987 in the amounts and at the rates
prescribed  by  subchapters  A and B of the Federal Insurance
Contributions Act at the times prescribed in the  regulations
of  the  State  Agency.  Taxes due on wages covered under the
Social Security Coverage Agreement paid  after  December  31,
1986  shall  be  paid  by  each  political subdivision to the
Internal Revenue Service in the  amounts  and  at  the  rates
specified  in  the Federal Insurance Contributions Act and at
the times prescribed  in  the  regulations  of  the  Internal
Revenue Service.
    Every  political subdivision required to make payments is
authorized in consideration of the employee's  retention  in,
or  entry  upon,  employment  to  impose  upon  each  of  its
employees,  as  to services which are covered by the coverage
agreement, a contribution with respect to wages  computed  by
applying the rates of contribution prescribed by Subchapter A
of the Federal Insurance Contributions Act, and to deduct the
amount  of  such contribution from such employee's wages when
paid.
    Failure to deduct such contribution shall not relieve the
employee or employer of liability therefor.
    (b)  Retirement system coverage group:  As a condition of
its coverage  agreement,  the  governing  body  or  board  of
trustees  of  any  retirement system which has adopted Social
Security coverage for its members under  this  Article  shall
assume  responsibility  to the State Agency for the compiling
of  wage  data,  the  collection  of  related   contributions
prescribed  by  subchapters  A and B of the Federal Insurance
Contributions Act, and the timely reporting  and  payment  of
such items upon the wages of all covered employees paid prior
to  January 1, 1987 in the manner and at the times prescribed
by the State Agency.
    Coincident to the adoption  of  coverage,  the  governing
body  or  board  of  trustees  of the retirement system shall
promulgate rules and regulations in conformity  with  federal
regulations,  applicable  to  the State or local governmental
entities or  to  the  agencies  and  employees  participating
therein,  to  insure  the correct application of coverage and
the timely and accurate reporting of wages and collection  of
contributions.
    In  the  event of failure by the retirement system or the
governmental entities or agencies  participating  therein  to
comply  with  the  timely  reporting and payment requirements
imposed by this  Section,  the  retirement  system  shall  be
assessed  any  federal  interest  or  late  filing  penalties
arising therefrom.
    The  contributions  collected  under  this Section by any
retirement system which elects to  adopt  coverage  shall  be
remitted  at  such  times as the State Agency shall prescribe
for deposit into the Social Security Contribution Fund.
    The employees comprising the executive and administrative
staff of any retirement system  which  elects  to  adopt  the
provisions  of this Article shall have the contributions made
by the body employing them.
    (c)  If  more  or  less  than  the  correct   amount   of
contributions is paid to the State Agency, proper adjustment,
or  refund  without  interest  if  adjustment is impractical,
shall be made in such manner and at such times as  the  State
Agency shall prescribe.
(Source: P.A. 85-442.)

    (40 ILCS 5/21-115) (from Ch. 108 1/2, par. 21-115)
    Sec.  21-115.  Special  fund  abolished;  designation  of
remittance agents.
    (a)  The  Social  Security Contribution Fund is abolished
at the close of business on June 30, 1997.  Any balance  then
remaining  in  that  Fund  shall be transferred to the Social
Security Administration Fund created under Section  21-109.1,
and  any  amounts  thereafter designated for deposit into the
Social Security Contribution Fund shall instead be  deposited
into  the  Social  Security  Administration  Fund.   There is
hereby established a special fund to be known as  the  Social
Security  Contribution  Fund.  Such fund shall consist of and
there shall be deposited in such fund (1) all  contributions,
interest,  and penalties collected under this Article, except
as provided in subsection (f) of this Section, (2)  all  sums
recovered  upon  the  bond  of the custodian or otherwise for
losses sustained by the fund, (3) payments of Medicare  taxes
in  accordance  with  State  Agency  regulations, and (4) all
other moneys received for the fund from any other source. All
moneys in the fund shall be mingled and undivided. Subject to
the provisions of this Article, the State  Agency  is  vested
with  full  power,  authority and jurisdiction over the fund,
including all moneys and  property  or  securities  belonging
thereto,  and  may  perform  any  and all acts whether or not
specifically  designated,  which   are   necessary   to   the
administration thereof.
    (b)  The  Social  Security  Contribution  Fund  shall  be
established  and held separate and apart from any other funds
or moneys of the State of Illinois  and  shall  be  used  and
administered  exclusively  for  the  purpose of this Article.
Withdrawals from such fund  shall  be  made  solely  for  the
following purposes:
    (1)  payment  of  amounts  required  to  be  paid  to the
Secretary of the Treasury in relation to Social Security  and
Medicare coverage,
    (2)  payment  of  refunds  for overpayments which are not
otherwise adjustable,
    (3)  payment into the General Revenue Fund of the  amount
by  which  penalties  collected pursuant to Section 21-112 of
this Article exceed the  federal  interest  charges  for  the
corresponding period,
    (4)  payment   into  the  General  Revenue  Fund  of  the
necessary expenses  collected  for  the  performance  of  tax
audits  for  failure to pay contributions pursuant to Section
21-113 of this Article,
    (5)  pursuant   to   recovery    of    Social    Security
contributions  paid  to the Secretary of the Treasury for the
period from January 1, 1979 to June  30,  1981  on  sick  pay
excluded  from wages pursuant to Section 209(b) of the Social
Security Act, (i) payment of  a  fee  to  a  private  vendor,
selected  by  competitive  bidding  in  accordance  with  The
Illinois Purchasing Act, for the performance of all necessary
administrative actions required to obtain and distribute such
recovery,  the  fee  to  be contingent upon the amount of the
recovery and determined by contract,   (ii)  payment  to  the
Secretary   of   the   Treasury   of  State  Social  Security
contributions  for  nonpayroll  earnings  received  by  court
reporters between January 1, 1977 and December 31, 1986,  and
(iii) refund to the General Revenue Fund of the remainder  of
the employer's share of the contributions so recovered,
    (6)  payment  of reasonable expenses incurred in locating
former State employees  for  the  purpose  of  refunding  the
employees' share of Social Security contributions refunded to
the  State  as  a  result  of  the State's actions requesting
refunds  of  contributions  paid  to  the  Secretary  of  the
Treasury on sick pay as noted in item (5) and on  the  amount
of   voluntary   salary   reductions   by   State   employees
participating   in  the  State's  cafeteria  plan  of  fringe
benefits under Section 125 of the Internal Revenue Code,
    (7)  out  of  the  employer's  share   of   contributions
recovered  as  a  result  of  the  State's  action  to reduce
reported wages by the amount of voluntary salary reduction by
State employees participating in the State's  cafeteria  plan
of  fringe benefits under Section 125 of the Internal Revenue
Code, (i) payment to the Secretary of the Treasury  of  State
Social   Security   contributions   for  nonpayroll  earnings
received by court  reporters  between  January  1,  1977  and
December 31, 1986, and (ii) payment of the remainder into the
General Revenue Fund, and
    (8)  payment into the Social Security Administration Fund
established  by  Section  21-109.1 of this Article to satisfy
the  State's  liability  for  Social  Security  and  Medicare
contribution liability on wages paid after December 31, 1986,
and to  dispose  of  any  remaining  balance  in  the  Social
Security  Contribution  Fund  not  required  to  satisfy  the
State's liability on wages paid prior to January 1, 1987.
    (c)  From  the  Social  Security  Contribution  Fund  the
custodian  of  the  fund  shall  pay  to the Secretary of the
Treasury such amounts at such times as may be directed by the
State Agency.
    (d)  The Treasurer of the  State  of  Illinois  shall  be
ex-officio  treasurer  and  custodian  of the Social Security
Contribution  Fund  and  shall  administer   such   fund   in
accordance  with  the  provisions  of  this  Article  and the
directions of the State Agency, and shall pay all warrants of
the State Comptroller in accordance with  the  provisions  of
this  Section  and  with such regulations as the State Agency
may prescribe pursuant thereto.
    (e)  The  Comptroller  of  the  State  of   Illinois   is
authorized  and  is  directed to draw warrants upon the State
Treasurer payable from the Social Security Contribution  Fund
for  purposes  provided for in this Article upon presentation
of vouchers approved by the State Agency.
    (b) (f)  The State Agency is authorized to designate  any
retirement  system  which  has  adopted  coverage  under this
Article to act as remittance agent on  behalf  of  the  State
Agency   and   to   make   payment  of  the  Social  Security
contributions collected upon the wages  of  employees  within
the   retirement   system  coverage  group  directly  to  the
designated Federal Reserve  Bank  without  the  necessity  of
deposit  or  clearance of such collections through the Social
Security  Contribution  Fund.   Any  retirement   system   so
designated as a remittance agent shall continue to be subject
to  the  regulations  of  the  State  Agency  with respect to
coverage   determinations,   wage    reporting,    corrective
adjustments,  and  accountability  for tax collections in the
same manner as any other covered entity.
(Source: P.A. 86-272.)

    Section  25.   The   State   Pension   Funds   Continuing
Appropriation  Act  is  amended  by  changing  Section 1.1 as
follows:

    (40 ILCS 15/1.1)
    Sec. 1.1. Appropriations to certain retirement systems.
    (a)  There  is  hereby  appropriated  from  the   General
Revenue  Fund to the General Assembly Retirement System, on a
continuing monthly basis, the amount, if any,  by  which  the
total  available  amount  of all other appropriations to that
retirement system for the payment of State  contributions  is
less than the total amount of the vouchers for required State
contributions lawfully submitted by the retirement system for
that month under Section 2-134 of the Illinois Pension Code.
    (b)  There   is  hereby  appropriated  from  the  General
Revenue Fund to the State Universities Retirement System,  on
a  continuing monthly basis, the amount, if any, by which the
total available amount of all other  appropriations  to  that
retirement  system  for  the  payment of State contributions,
including any deficiency in the required contributions of the
optional  retirement  program   established   under   Section
15-158.2 of the Illinois Pension Code, is less than the total
amount  of  the  vouchers  for  required  State contributions
lawfully submitted by the retirement system  for  that  month
under Section 15-165 of the Illinois Pension Code.
    (c)  There  is hereby appropriated from the Common School
Fund to the Teachers'  Retirement  System  of  the  State  of
Illinois,  on a continuing monthly basis, the amount, if any,
by  which  the  total   available   amount   of   all   other
appropriations  to  that retirement system for the payment of
State contributions is less than  the  total  amount  of  the
vouchers  for required State contributions lawfully submitted
by the retirement system for that month under Section  16-158
of the Illinois Pension Code.
    (d)  There   is  hereby  appropriated  from  the  General
Revenue Fund to the Judges Retirement System of Illinois,  on
a  continuing monthly basis, the amount, if any, by which the
total available amount of all other  appropriations  to  that
retirement  system  for the payment of State contributions is
less than the total amount of the vouchers for required State
contributions lawfully submitted by the retirement system for
that month under Section 18-140 of the Illinois Pension Code.
    (e)  The  continuing  appropriations  provided  by   this
Section shall first be available in State fiscal year 1996.
(Source: P.A. 88-593, eff. 8-22-94.)

    Section  75.  The State Mandates Act is amended by adding
Section 8.21 as follows:

    (30 ILCS 805/8.21 new)
    Sec. 8.21. Exempt mandate.   Notwithstanding  Sections  6
and  8 of this Act, no reimbursement by the State is required
for  the  implementation  of  any  mandate  created  by  this
amendatory Act of 1997.

    Section 80.  No acceleration or delay.   Where  this  Act
makes changes in a statute that is represented in this Act by
text  that  is not yet or no longer in effect (for example, a
Section represented by multiple versions), the  use  of  that
text  does  not  accelerate or delay the taking effect of (i)
the changes made by this Act or (ii) provisions derived  from
any other Public Act.

    Section  85.  Effective date.  This Act takes effect upon
becoming law.

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