SB3422 100TH GENERAL ASSEMBLY

LRB100 20449 MJP 35798 b

100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
SB3422

Introduced 2/16/2018, by Sen. Pamela J. Althoff

SYNOPSIS AS INTRODUCED:

See Index

Amends the Illinois Pension Code. Merges all Article 3 police pension funds into a single Downstate Police Pension Fund on January 1, 2020. Creates a Transition Board, which is responsible for planning, overseeing, and administering the consolidation. Authorizes the Transition Board to undertake numerous activities necessary for the consolidation, including making arrangements for staff, investments, transfer of assets and liabilities, acquisition of property, establishment of municipality accounts, and adopting rules and procedures. Authorizes the Transition Board to enter into contracts and to obligate and expend the assets of the Fund. Creates a new Board of Trustees for the Fund, and provides for administration of the Fund by the Transition Board until the new Board assumes its duties on January 1, 2021. Provides for investment of the Fund's assets by a custodian chosen by the Board of Trustees. Makes conforming and other changes. Amends the Property Tax Extension Limitation Law (PTELL) of the Property Tax Code to exclude from the definition of "aggregate extension" special purpose extensions made for contributions to the Downstate Police Pension Fund. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately, except that certain changes to the Illinois Pension Code and PTELL of the Property Tax Code take effect January 1, 2020.

FISCAL NOTE ACT MAY APPLY

PENSION IMPACT NOTE ACT MAY APPLY

STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

A BILL FOR

AN ACT concerning public employee benefits.

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

Section 5. The Property Tax Code is amended by changing Section 18-185 as follows:

(35 ILCS 200/18-185)

Sec. 18-185. Short title; definitions. This Division 5 may be cited as the Property Tax Extension Limitation Law. As used in this Division 5:

"Consumer Price Index" means the Consumer Price Index for All Urban Consumers for all items published by the United States Department of Labor.

"Extension limitation" means (a) the lesser of 5% or the percentage increase in the Consumer Price Index during the 12-month calendar year preceding the levy year or (b) the rate of increase approved by voters under Section 18-205.

"Affected county" means a county of 3,000,000 or more inhabitants or a county contiguous to a county of 3,000,000 or more inhabitants.

"Taxing district" has the same meaning provided in Section 1-150, except as otherwise provided in this Section. For the 1991 through 1994 levy years only, "taxing district" includes only each non-home rule taxing district having the majority of its 1990 equalized assessed value within any county or counties contiguous to a county with 3,000,000 or more inhabitants. Beginning with the 1995 levy year, "taxing district" includes only each non-home rule taxing district subject to this Law before the 1995 levy year and each non-home rule taxing district not subject to this Law before the 1995 levy year having the majority of its 1994 equalized assessed value in an affected county or counties. Beginning with the levy year in which this Law becomes applicable to a taxing district as provided in Section 18-213, "taxing district" also includes those taxing districts made subject to this Law as provided in Section 18-213.

"Aggregate extension" for taxing districts to which this Law applied before the 1995 levy year means the annual corporate extension for the taxing district and those special purpose extensions that are made annually for the taxing district, excluding special purpose extensions: (a) made for the taxing district to pay interest or principal on general obligation bonds that were approved by referendum; (b) made for any taxing district to pay interest or principal on general obligation bonds issued before October 1, 1991; (c) made for any taxing district to pay interest or principal on bonds issued to refund or continue to refund those bonds issued before October 1, 1991; (d) made for any taxing district to pay interest or principal on bonds issued to refund or continue to refund bonds issued after October 1, 1991 that were approved by referendum; (e) made for any taxing district to pay interest or principal on revenue bonds issued before October 1, 1991 for payment of which a property tax levy or the full faith and credit of the unit of local government is pledged; however, a tax for the payment of interest or principal on those bonds shall be made only after the governing body of the unit of local government finds that all other sources for payment are insufficient to make those payments; (f) made for payments under a building commission lease when the lease payments are for the retirement of bonds issued by the commission before October 1, 1991, to pay for the building project; (g) made for payments due under installment contracts entered into before October 1, 1991; (h) made for payments of principal and interest on bonds issued under the Metropolitan Water Reclamation District Act to finance construction projects initiated before October 1, 1991; (i) made for payments of principal and interest on limited bonds, as defined in Section 3 of the Local Government Debt Reform Act, in an amount not to exceed the debt service extension base less the amount in items (b), (c), (e), and (h) of this definition for non-referendum obligations, except obligations initially issued pursuant to referendum; (j) made for payments of principal and interest on bonds issued under Section 15 of the Local Government Debt Reform Act; (k) made by a school district that participates in the Special Education District of Lake County, created by special education joint agreement under Section 10-22.31 of the School Code, for payment of the school district's share of the amounts required to be contributed by the Special Education District of Lake County to the Illinois Municipal Retirement Fund under Article 7 of the Illinois Pension Code; the amount of any extension under this item (k) shall be certified by the school district to the county clerk; (l) made to fund expenses of providing joint recreational programs for persons with disabilities under Section 5-8 of the Park District Code or Section 11-95-14 of the Illinois Municipal Code; (m) made for temporary relocation loan repayment purposes pursuant to Sections 2-3.77 and 17-2.2d of the School Code; (n) made for payment of principal and interest on any bonds issued under the authority of Section 17-2.2d of the School Code; (o) made for contributions to a firefighter's pension fund created under Article 4 of the Illinois Pension Code, to the extent of the amount certified under item (5) of Section 4-134 of the Illinois Pension Code; and (p) made for road purposes in the first year after a township assumes the rights, powers, duties, assets, property, liabilities, obligations, and responsibilities of a road district abolished under the provisions of Section 6-133 of the Illinois Highway Code; and (q) made for contributions to the Downstate Police Pension Fund under Article 3 of the Illinois Pension Code.

"Aggregate extension" for the taxing districts to which this Law did not apply before the 1995 levy year (except taxing districts subject to this Law in accordance with Section 18-213) means the annual corporate extension for the taxing district and those special purpose extensions that are made annually for the taxing district, excluding special purpose extensions: (a) made for the taxing district to pay interest or principal on general obligation bonds that were approved by referendum; (b) made for any taxing district to pay interest or principal on general obligation bonds issued before March 1, 1995; (c) made for any taxing district to pay interest or principal on bonds issued to refund or continue to refund those bonds issued before March 1, 1995; (d) made for any taxing district to pay interest or principal on bonds issued to refund or continue to refund bonds issued after March 1, 1995 that were approved by referendum; (e) made for any taxing district to pay interest or principal on revenue bonds issued before March 1, 1995 for payment of which a property tax levy or the full faith and credit of the unit of local government is pledged; however, a tax for the payment of interest or principal on those bonds shall be made only after the governing body of the unit of local government finds that all other sources for payment are insufficient to make those payments; (f) made for payments under a building commission lease when the lease payments are for the retirement of bonds issued by the commission before March 1, 1995 to pay for the building project; (g) made for payments due under installment contracts entered into before March 1, 1995; (h) made for payments of principal and interest on bonds issued under the Metropolitan Water Reclamation District Act to finance construction projects initiated before October 1, 1991; (h-4) made for stormwater management purposes by the Metropolitan Water Reclamation District of Greater Chicago under Section 12 of the Metropolitan Water Reclamation District Act; (i) made for payments of principal and interest on limited bonds, as defined in Section 3 of the Local Government Debt Reform Act, in an amount not to exceed the debt service extension base less the amount in items (b), (c), and (e) of this definition for non-referendum obligations, except obligations initially issued pursuant to referendum and bonds described in subsection (h) of this definition; (j) made for payments of principal and interest on bonds issued under Section 15 of the Local Government Debt Reform Act; (k) made for payments of principal and interest on bonds authorized by Public Act 88-503 and issued under Section 20a of the Chicago Park District Act for aquarium or museum projects; (l) made for payments of principal and interest on bonds authorized by Public Act 87-1191 or 93-601 and (i) issued pursuant to Section 21.2 of the Cook County Forest Preserve District Act, (ii) issued under Section 42 of the Cook County Forest Preserve District Act for zoological park projects, or (iii) issued under Section 44.1 of the Cook County Forest Preserve District Act for botanical gardens projects; (m) made pursuant to Section 34-53.5 of the School Code, whether levied annually or not; (n) made to fund expenses of providing joint recreational programs for persons with disabilities under Section 5-8 of the Park District Code or Section 11-95-14 of the Illinois Municipal Code; (o) made by the Chicago Park District for recreational programs for persons with disabilities under subsection (c) of Section 7.06 of the Chicago Park District Act; (p) made for contributions to a firefighter's pension fund created under Article 4 of the Illinois Pension Code, to the extent of the amount certified under item (5) of Section 4-134 of the Illinois Pension Code; (q) made by Ford Heights School District 169 under Section 17-9.02 of the School Code; and (r) made for the purpose of making employer contributions to the Public School Teachers' Pension and Retirement Fund of Chicago under Section 34-53 of the School Code; and (s) made for contributions to the Downstate Police Pension Fund under Article 3 of the Illinois Pension Code.

"Aggregate extension" for all taxing districts to which this Law applies in accordance with Section 18-213, except for those taxing districts subject to paragraph (2) of subsection (e) of Section 18-213, means the annual corporate extension for the taxing district and those special purpose extensions that are made annually for the taxing district, excluding special purpose extensions: (a) made for the taxing district to pay interest or principal on general obligation bonds that were approved by referendum; (b) made for any taxing district to pay interest or principal on general obligation bonds issued before the date on which the referendum making this Law applicable to the taxing district is held; (c) made for any taxing district to pay interest or principal on bonds issued to refund or continue to refund those bonds issued before the date on which the referendum making this Law applicable to the taxing district is held; (d) made for any taxing district to pay interest or principal on bonds issued to refund or continue to refund bonds issued after the date on which the referendum making this Law applicable to the taxing district is held if the bonds were approved by referendum after the date on which the referendum making this Law applicable to the taxing district is held; (e) made for any taxing district to pay interest or principal on revenue bonds issued before the date on which the referendum making this Law applicable to the taxing district is held for payment of which a property tax levy or the full faith and credit of the unit of local government is pledged; however, a tax for the payment of interest or principal on those bonds shall be made only after the governing body of the unit of local government finds that all other sources for payment are insufficient to make those payments; (f) made for payments under a building commission lease when the lease payments are for the retirement of bonds issued by the commission before the date on which the referendum making this Law applicable to the taxing district is held to pay for the building project; (g) made for payments due under installment contracts entered into before the date on which the referendum making this Law applicable to the taxing district is held; (h) made for payments of principal and interest on limited bonds, as defined in Section 3 of the Local Government Debt Reform Act, in an amount not to exceed the debt service extension base less the amount in items (b), (c), and (e) of this definition for non-referendum obligations, except obligations initially issued pursuant to referendum; (i) made for payments of principal and interest on bonds issued under Section 15 of the Local Government Debt Reform Act; (j) made for a qualified airport authority to pay interest or principal on general obligation bonds issued for the purpose of paying obligations due under, or financing airport facilities required to be acquired, constructed, installed or equipped pursuant to, contracts entered into before March 1, 1996 (but not including any amendments to such a contract taking effect on or after that date); (k) made to fund expenses of providing joint recreational programs for persons with disabilities under Section 5-8 of the Park District Code or Section 11-95-14 of the Illinois Municipal Code; (l) made for contributions to a firefighter's pension fund created under Article 4 of the Illinois Pension Code, to the extent of the amount certified under item (5) of Section 4-134 of the Illinois Pension Code; and (m) made for the taxing district to pay interest or principal on general obligation bonds issued pursuant to Section 19-3.10 of the School Code; and (n) made for contributions to the Downstate Police Pension Fund under Article 3 of the Illinois Pension Code.

"Aggregate extension" for all taxing districts to which this Law applies in accordance with paragraph (2) of subsection (e) of Section 18-213 means the annual corporate extension for the taxing district and those special purpose extensions that are made annually for the taxing district, excluding special purpose extensions: (a) made for the taxing district to pay interest or principal on general obligation bonds that were approved by referendum; (b) made for any taxing district to pay interest or principal on general obligation bonds issued before the effective date of this amendatory Act of 1997; (c) made for any taxing district to pay interest or principal on bonds issued to refund or continue to refund those bonds issued before the effective date of this amendatory Act of 1997; (d) made for any taxing district to pay interest or principal on bonds issued to refund or continue to refund bonds issued after the effective date of this amendatory Act of 1997 if the bonds were approved by referendum after the effective date of this amendatory Act of 1997; (e) made for any taxing district to pay interest or principal on revenue bonds issued before the effective date of this amendatory Act of 1997 for payment of which a property tax levy or the full faith and credit of the unit of local government is pledged; however, a tax for the payment of interest or principal on those bonds shall be made only after the governing body of the unit of local government finds that all other sources for payment are insufficient to make those payments; (f) made for payments under a building commission lease when the lease payments are for the retirement of bonds issued by the commission before the effective date of this amendatory Act of 1997 to pay for the building project; (g) made for payments due under installment contracts entered into before the effective date of this amendatory Act of 1997; (h) made for payments of principal and interest on limited bonds, as defined in Section 3 of the Local Government Debt Reform Act, in an amount not to exceed the debt service extension base less the amount in items (b), (c), and (e) of this definition for non-referendum obligations, except obligations initially issued pursuant to referendum; (i) made for payments of principal and interest on bonds issued under Section 15 of the Local Government Debt Reform Act; (j) made for a qualified airport authority to pay interest or principal on general obligation bonds issued for the purpose of paying obligations due under, or financing airport facilities required to be acquired, constructed, installed or equipped pursuant to, contracts entered into before March 1, 1996 (but not including any amendments to such a contract taking effect on or after that date); (k) made to fund expenses of providing joint recreational programs for persons with disabilities under Section 5-8 of the Park District Code or Section 11-95-14 of the Illinois Municipal Code; and (l) made for contributions to a firefighter's pension fund created under Article 4 of the Illinois Pension Code, to the extent of the amount certified under item (5) of Section 4-134 of the Illinois Pension Code; and (m) made for contributions to the Downstate Police Pension Fund under Article 3 of the Illinois Pension Code.

"Debt service extension base" means an amount equal to that portion of the extension for a taxing district for the 1994 levy year, or for those taxing districts subject to this Law in accordance with Section 18-213, except for those subject to paragraph (2) of subsection (e) of Section 18-213, for the levy year in which the referendum making this Law applicable to the taxing district is held, or for those taxing districts subject to this Law in accordance with paragraph (2) of subsection (e) of Section 18-213 for the 1996 levy year, constituting an extension for payment of principal and interest on bonds issued by the taxing district without referendum, but not including excluded non-referendum bonds. For park districts (i) that were first subject to this Law in 1991 or 1995 and (ii) whose extension for the 1994 levy year for the payment of principal and interest on bonds issued by the park district without referendum (but not including excluded non-referendum bonds) was less than 51% of the amount for the 1991 levy year constituting an extension for payment of principal and interest on bonds issued by the park district without referendum (but not including excluded non-referendum bonds), "debt service extension base" means an amount equal to that portion of the extension for the 1991 levy year constituting an extension for payment of principal and interest on bonds issued by the park district without referendum (but not including excluded non-referendum bonds). A debt service extension base established or increased at any time pursuant to any provision of this Law, except Section 18-212, shall be increased each year commencing with the later of (i) the 2009 levy year or (ii) the first levy year in which this Law becomes applicable to the taxing district, by the lesser of 5% or the percentage increase in the Consumer Price Index during the 12-month calendar year preceding the levy year. The debt service extension base may be established or increased as provided under Section 18-212. "Excluded non-referendum bonds" means (i) bonds authorized by Public Act 88-503 and issued under Section 20a of the Chicago Park District Act for aquarium and museum projects; (ii) bonds issued under Section 15 of the Local Government Debt Reform Act; or (iii) refunding obligations issued to refund or to continue to refund obligations initially issued pursuant to referendum.

"Special purpose extensions" include, but are not limited to, extensions for levies made on an annual basis for unemployment and workers' compensation, self-insurance, contributions to pension plans, and extensions made pursuant to Section 6-601 of the Illinois Highway Code for a road district's permanent road fund whether levied annually or not. The extension for a special service area is not included in the aggregate extension.

"Aggregate extension base" means the taxing district's last preceding aggregate extension as adjusted under Sections 18-135, 18-215, 18-230, and 18-206. An adjustment under Section 18-135 shall be made for the 2007 levy year and all subsequent levy years whenever one or more counties within which a taxing district is located (i) used estimated valuations or rates when extending taxes in the taxing district for the last preceding levy year that resulted in the over or under extension of taxes, or (ii) increased or decreased the tax extension for the last preceding levy year as required by Section 18-135(c). Whenever an adjustment is required under Section 18-135, the aggregate extension base of the taxing district shall be equal to the amount that the aggregate extension of the taxing district would have been for the last preceding levy year if either or both (i) actual, rather than estimated, valuations or rates had been used to calculate the extension of taxes for the last levy year, or (ii) the tax extension for the last preceding levy year had not been adjusted as required by subsection (c) of Section 18-135.

Notwithstanding any other provision of law, for levy year 2012, the aggregate extension base for West Northfield School District No. 31 in Cook County shall be $12,654,592.

"Levy year" has the same meaning as "year" under Section 1-155.

"New property" means (i) the assessed value, after final board of review or board of appeals action, of new improvements or additions to existing improvements on any parcel of real property that increase the assessed value of that real property during the levy year multiplied by the equalization factor issued by the Department under Section 17-30, (ii) the assessed value, after final board of review or board of appeals action, of real property not exempt from real estate taxation, which real property was exempt from real estate taxation for any portion of the immediately preceding levy year, multiplied by the equalization factor issued by the Department under Section 17-30, including the assessed value, upon final stabilization of occupancy after new construction is complete, of any real property located within the boundaries of an otherwise or previously exempt military reservation that is intended for residential use and owned by or leased to a private corporation or other entity, (iii) in counties that classify in accordance with Section 4 of Article IX of the Illinois Constitution, an incentive property's additional assessed value resulting from a scheduled increase in the level of assessment as applied to the first year final board of review market value, and (iv) any increase in assessed value due to oil or gas production from an oil or gas well required to be permitted under the Hydraulic Fracturing Regulatory Act that was not produced in or accounted for during the previous levy year. In addition, the county clerk in a county containing a population of 3,000,000 or more shall include in the 1997 recovered tax increment value for any school district, any recovered tax increment value that was applicable to the 1995 tax year calculations.

"Qualified airport authority" means an airport authority organized under the Airport Authorities Act and located in a county bordering on the State of Wisconsin and having a population in excess of 200,000 and not greater than 500,000.

"Recovered tax increment value" means, except as otherwise provided in this paragraph, the amount of the current year's equalized assessed value, in the first year after a municipality terminates the designation of an area as a redevelopment project area previously established under the Tax Increment Allocation Development Act in the Illinois Municipal Code, previously established under the Industrial Jobs Recovery Law in the Illinois Municipal Code, previously established under the Economic Development Project Area Tax Increment Act of 1995, or previously established under the Economic Development Area Tax Increment Allocation Act, of each taxable lot, block, tract, or parcel of real property in the redevelopment project area over and above the initial equalized assessed value of each property in the redevelopment project area. For the taxes which are extended for the 1997 levy year, the recovered tax increment value for a non-home rule taxing district that first became subject to this Law for the 1995 levy year because a majority of its 1994 equalized assessed value was in an affected county or counties shall be increased if a municipality terminated the designation of an area in 1993 as a redevelopment project area previously established under the Tax Increment Allocation Development Act in the Illinois Municipal Code, previously established under the Industrial Jobs Recovery Law in the Illinois Municipal Code, or previously established under the Economic Development Area Tax Increment Allocation Act, by an amount equal to the 1994 equalized assessed value of each taxable lot, block, tract, or parcel of real property in the redevelopment project area over and above the initial equalized assessed value of each property in the redevelopment project area. In the first year after a municipality removes a taxable lot, block, tract, or parcel of real property from a redevelopment project area established under the Tax Increment Allocation Development Act in the Illinois Municipal Code, the Industrial Jobs Recovery Law in the Illinois Municipal Code, or the Economic Development Area Tax Increment Allocation Act, "recovered tax increment value" means the amount of the current year's equalized assessed value of each taxable lot, block, tract, or parcel of real property removed from the redevelopment project area over and above the initial equalized assessed value of that real property before removal from the redevelopment project area.

Except as otherwise provided in this Section, "limiting rate" means a fraction the numerator of which is the last preceding aggregate extension base times an amount equal to one plus the extension limitation defined in this Section and the denominator of which is the current year's equalized assessed value of all real property in the territory under the jurisdiction of the taxing district during the prior levy year. For those taxing districts that reduced their aggregate extension for the last preceding levy year, except for school districts that reduced their extension for educational purposes pursuant to Section 18-206, the highest aggregate extension in any of the last 3 preceding levy years shall be used for the purpose of computing the limiting rate. The denominator shall not include new property or the recovered tax increment value. If a new rate, a rate decrease, or a limiting rate increase has been approved at an election held after March 21, 2006, then (i) the otherwise applicable limiting rate shall be increased by the amount of the new rate or shall be reduced by the amount of the rate decrease, as the case may be, or (ii) in the case of a limiting rate increase, the limiting rate shall be equal to the rate set forth in the proposition approved by the voters for each of the years specified in the proposition, after which the limiting rate of the taxing district shall be calculated as otherwise provided. In the case of a taxing district that obtained referendum approval for an increased limiting rate on March 20, 2012, the limiting rate for tax year 2012 shall be the rate that generates the approximate total amount of taxes extendable for that tax year, as set forth in the proposition approved by the voters; this rate shall be the final rate applied by the county clerk for the aggregate of all capped funds of the district for tax year 2012.

(Source: P.A. 99-143, eff. 7-27-15; 99-521, eff. 6-1-17; 100-465, eff. 8-31-17.)

Section 10. The Illinois Pension Code is amended by changing Section 3-101 by adding Sections 3-101.1, 3-101.2, and 7-199.5 as follows:

(40 ILCS 5/3-101) (from Ch. 108 1/2, par. 3-101)

Sec. 3-101. Creation of Fund fund.

(a) Until January 1, 2020, in In each municipality, as defined in Section 3-103, the city council or the board of trustees, as the case may be, shall establish and administer a police pension fund, as prescribed in this Article, for the benefit of its police officers and of their surviving spouses, children, and certain other dependents. The duty of the corporate authorities of a municipality to establish and administer a police pension fund shall be suspended during any period during which the fund is dissolved under Section 3-144.6 of this Code.

(b) On January 1, 2020, all of the individual police pension funds then existing under this Article are merged and consolidated into a single pension fund, to be known as the Downstate Police Pension Fund, which shall be established and administered as prescribed in this Article.

(c) Beginning January 1, 2020, each municipality, as defined in Section 3-103, shall participate in the Downstate Police Pension Fund for the benefit of its police officers and of their surviving spouses, children, and certain other dependents.

(d) It is the purpose of this consolidation to provide the advantages of (i) centralized custody and investment of pension fund assets, (ii) consistent interpretation and application of this Article in accordance with a single set of rules and procedures adopted by the consolidated pension fund, and (iii) securing the future funding of pension benefits through an independent determination of each municipality's required annual contribution rate.

(Source: P.A. 97-99, eff. 1-1-12.)

(40 ILCS 5/3-101.1 new)

Sec. 3-101.1. Transition Board.

(a) There is hereby created a Downstate Police Pension Fund Transition Board, which may be referred to as the "Transition Board". The Transition Board shall consist of 11 members as follows:

(1) The Director of the Illinois Department of Insurance, or his or her designee.

(2) Two persons with experience in managing or administering an Illinois public employee pension fund or retirement system, appointed by the Governor.

(3) One person with experience in providing actuarial services to an Illinois public employee pension fund or retirement system, appointed by the Governor.

(4) One person with experience in auditing Illinois public employee pension funds or retirement systems, appointed by the Auditor General.

(5) Two members of the labor organization representing the largest number of police officers participating in Article 3 pension funds, with one member being an active participant and the other being a retired participant, appointed by the Governor from recommendations of the President of that organization.

(6) Two persons who are mayors or chief elected officers of municipalities that maintain an Article 3 pension fund, appointed by the Governor from recommendations of the Executive Director of the organization representing the largest number of municipalities in the State.

(7) One person familiar with the operation and administration of the Illinois Municipal Retirement Fund, appointed by the Executive Director of that Fund.

(8) One person familiar with the investment authority and practices of the Illinois State Board of Investment, appointed by the Executive Director of the Illinois State Board of Investment.

All such appointments and designations shall be made by filing a written notice thereof with the Secretary of State no later than 30 days after the effective date of this amendatory Act of the 100th General Assembly.

(b) The Transition Board shall be responsible for planning, overseeing, and administering the consolidation and merger of all existing Article 3 pension funds into a single Downstate Police Pension Fund.

Members of the Transition Board shall act at all times in a manner appropriate for fiduciaries of the Fund and fiduciaries of the pension funds being consolidated.

The Transition Board's powers and duties include, but are not limited to, the following:

(1) Providing for the establishment of offices, infrastructure, and personnel necessary for the operation of the Downstate Police Pension Fund.

(2) Providing for the preservation and consolidation of membership, beneficiary, financial, and other records relating to the Article 3 pension funds to be merged.

(3) Obtaining all necessary Internal Revenue Service and any other necessary approval or review.

(4) Providing for the final auditing of existing Article 3 pension funds, including a final accounting of their respective assets and liabilities, paid for by the applicable pension fund.

(5) Providing for the custody and transfer of the assets and liabilities of the existing Article 3 pension funds to the Downstate Police Pension Fund, on a schedule to be determined by the Transition Board.

(6) Providing for the long-term investment of the assets of the Downstate Police Pension Fund that are not required for the short-term payment of benefits.

(7) Providing an appropriate system of accounting for the assets and liabilities attributable to the existing Article 3 pension funds and establishing separate reserves and accounts for each municipality participating in the Downstate Police Pension Fund in accordance with this Article. In so doing, the Transition Board shall be guided by the methods and experience of the Illinois Municipal Retirement Fund.

(8) Providing an appropriate system of determining, administering, receiving, and enforcing the required municipal contributions to the Fund. In so doing, the Transition Board shall be guided by the methods and experience of the Illinois Municipal Retirement Fund. The municipal contribution rate shall be determined separately for each municipality on an annual basis in accordance with the requirements of this Article, based on the municipality's separate reserves and accounts within the Fund. The Transition Board shall endeavor to determine the required municipal contributions to the Fund and to notify and provide reasonable guidance to municipalities in a manner that ensures uninterrupted contributions during the transition period.

(9) Ensuring the uninterrupted payment and administration of benefits.

(10) Adopting any rules or procedures necessary for the efficient consolidation of the existing Article 3 pension funds and the efficient operation and administration of the Downstate Police Pension Fund.

(11) Considering the consequences of the consolidation on any QILDROs filed with the pension funds being consolidated and giving appropriate notice and advice to persons who may be affected by those QILDROs concerning the possible effects of consolidation.

(12) Administering the Downstate Police Pension Fund and exercising and performing all of the powers and duties of its Board of Trustees from the time of the Fund's inception until the Board of Trustees under subsection (d) of Section 3-128 has been elected and assumes its duties.

(13) Making recommendations to the Governor and the General Assembly with respect to legislation necessary or useful for the implementation of this consolidation or for the successful operation of the Downstate Police Pension Fund.

(c) The Public Pension Division of the Department of Insurance shall provide all reasonably necessary and available temporary office space, technical and clerical support, and monetary or other assistance at the request of the Transition Board.

For the purpose of implementing the consolidation, the Transition Board may direct the Public Pension Division to accelerate, expand, or enhance its examination under Section 1A-104 of all or specific Article 3 pension funds, or to conduct a particular study or investigation thereof. The expenses of such examinations and investigations, to the extent not paid by the Division, shall be charged to the applicable pension fund.

(d) The Illinois Municipal Retirement Fund is authorized to provide any reasonable managerial, professional, clerical, and other assistance to the Transition Board that is consistent with its fiduciary and other obligations.

The Transition Board is authorized to enter into reasonable contracts or other agreements with the Illinois Municipal Retirement Fund, without public bidding or procurement procedures but not exceeding 3 years in duration, to provide administrative, investment, professional, technical, or other services or facilities for the Downstate Police Pension Fund.

(e) In preparation for the inception of the Downstate Police Pension Fund on January 1, 2020 and during the period of its administration of that Fund, the Transition Board is authorized to expend or obligate the assets of the Fund for any of the reasonable expenses of the Fund, including the payment of benefits and reasonable administrative expenses. As used in this Section, "reasonable administrative expenses" includes, but is not limited to, the cost of hiring personnel and obtaining professional services, the cost of leases or purchases of property or services for the Fund, the cost of insurance, and the cost of indemnifying members of the Transition Board and its employees, advisors, and agents.

(f) In preparation for the inception of the Downstate Police Pension Fund on January 1, 2020, the Transition Board is specifically authorized to retain for the Fund, during the period before its inception, an executive director and an actuary with the powers and duties described in Sections 3-141c and 3-141d.

(g) Members of the Transition Board, other than State officials and employees, may be compensated for their service, and all members may be reimbursed for their reasonable expenses out of any moneys available for that purpose.

(h) Sixty days after the Board of Trustees under subsection (d) of Section 3-128 assumes its duties, the Transition Board is abolished.

(40 ILCS 5/3-101.2 new)

Sec. 3-101.2. Consolidation of pension funds.

(a) On January 1, 2020, all of the individual police pension funds then established under this Article are merged and consolidated into a single pension fund, to be known as the Downstate Police Pension Fund, which shall be established and administered as prescribed in this Article.

In preparation for that consolidation, all pension funds established under this Article, and the municipalities that established them, shall cooperate with the Transition Board.

(b) The Downstate Police Pension Fund shall be the legal successor to each of the pension funds that are consolidated within it, and it may exercise any of the rights and powers and perform any of the duties of those pension funds.

At the time of consolidation, or as otherwise directed by the Transition Board, all assets and liabilities belonging to or arising from the trust of an existing pension fund shall become the assets and liabilities of the Downstate Police Pension Fund.

As and when directed by the Transition Board, the trustees of the pension funds established under Article 3 of this Code shall transfer to the Downstate Police Pension Fund, for management and investment as assets of the Downstate Police Pension Fund, all of their securities and other investments not needed for immediate use.

(c) At the time of consolidation or as otherwise directed by the Transition Board, assets not belonging to or arising from the trust that are incidentally owned by a pension fund, and any incidental liabilities of a pension fund not relating to or arising from the trust, shall become the assets and liabilities of the municipality.

Assets not belonging to or arising from the trust that are owned by a municipality and incidentally used by a pension fund, and any associated liabilities, are not affected by the consolidation and shall continue to be managed as assets and liabilities of that municipality.

As necessary or useful to effectuate the consolidation, the board of trustees of a pension fund to be consolidated and the applicable municipality may each, in its discretion, continue or renegotiate any employment or service contract, lease, or other contract to which it is a party that relates to the operation of the consolidated pension fund, and it may take appropriate action to terminate any such contract as necessary to terminate or avoid unnecessary or duplicative personnel, facilities, or services.

(d) Beginning on January 1, 2020, all benefits payable under this Article shall be payable from the Downstate Police Pension Fund.

(e) The consolidation of pension funds under this Article shall not diminish or impair the benefits of any current or former police officer who participated in one of those pension funds, or of any such police officer's surviving spouse, children, or other dependents.

The consolidation of pension funds under this Article does not entitle any person to a recalculation or combination of any benefit or benefits previously granted or to a refund of any contribution previously paid.

The consolidation of pension funds under this Article is not intended to increase the benefits provided under this Article, except insofar as the consolidation of pension funds into a single Fund will allow police officers in active service on or after the consolidation date to have their benefit calculations (and those of their qualifying survivors) include consideration of all of the police officer's service, salary, and credits in the Fund as though arising under that single Fund, rather than as arising under more than one participating municipality or more than one Article 3 pension fund.

(40 ILCS 5/7-199.5 new)

Sec. 7-199.5. To assist in the creation and administration of the Downstate Police Pension Fund. To assist in the creation and administration of the Downstate Police Pension Fund under Article 3 of this Code, including assisting the Downstate Police Pension Fund Transition Board, created under Section 3-101.1 of this Code; and pursuant to any contract or other agreement it may enter into with the Transition Board or the Board of Trustees of the Downstate Police Pension Fund, to provide for the administrative staff of one Fund to provide assistance to or consolidate particular services or operations with that of the other Fund, to the extent consistent with their respective fiduciary and other responsibilities.

Section 15. The Illinois Pension Code is amended by changing Sections 3-101, 3-103, 3-105, 3-108.2, 3-108.3, 3-110, 3-110.7, 3-125, 3-125.1, 3-128, 3-134, 3-135, and 3-141 and by adding Sections 3-102.1, 3-103.9, 3-104, 3-128.1, 3-128.2, 3-140.5, 3-141a, 3-141b, 3-141c, and 3-141d as follows:

(40 ILCS 5/3-102.1 new)

Sec. 3-102.1. Fund. "Fund" or "pension fund": Until January 1, 2020, a police pension fund established by a municipality under this Article.

Beginning January 1, 2020, "Fund" or "pension fund" means the Downstate Police Pension Fund created under this Article to consolidate all of the individual pension funds previously established under this Article; depending on the context, the terms may include one or more of those previously established pension funds.

(40 ILCS 5/3-103) (from Ch. 108 1/2, par. 3-103)

Sec. 3-103. Municipality; participating municipality; governing body.

(a) "Municipality": (1) Any city, village or incorporated town of 5,000 or more but less than 500,000 inhabitants, as determined from the United States Government statistics or a census taken at any time by the city, village or incorporated town and (2) any city, village or incorporated town of less than 5,000 inhabitants which, by referendum held under Section 3-145 adopts this Article.

(b) "Participating municipality" means a municipality, as defined in subsection (a), that both is required (or has elected) to and does in fact participate in the Downstate Police Pension Fund under this Article.

(c) "Governing body" includes the board of town trustees or other persons empowered to draft the tentative budget and appropriation ordinance and the electors of such a township acting at the annual or special meeting of town electors.

(Source: P.A. 83-1440.)

(40 ILCS 5/3-103.9 new)

Sec. 3-103.9. Authorized agent of a participating municipality.

(a) Each participating municipality shall appoint an authorized agent who shall have the powers and duties set forth in this Section. In the absence of such an appointment, the duties of the authorized agent shall devolve upon the clerk or secretary of the municipality.

(b) The authorized agent of the municipality shall have the following powers and duties:

(1) To certify to the Fund whether or not a given person is authorized to participate in the Fund.

(2) To certify to the Fund when a participating employee is on a leave of absence authorized by the municipality.

(3) To request the proper officer to cause employee contributions to be withheld from salary and promptly transmitted to the Fund.

(4) To request the proper officer to cause municipality contributions to be promptly forwarded to the Fund.

(5) To forward promptly to all participating employees any communications for such employees from the Fund or the municipality.

(6) To forward promptly to the Board of the Fund all applications, claims reports, and other communications delivered to the agent by participating employees.

(7) To perform all duties related to the administration of the Fund as requested by the Fund or the governing body of the municipality.

(c) The governing body of each participating municipality may delegate either or both of the following powers to its authorized agent:

(1) To file a petition for nomination of an executive trustee of the Fund.

(2) To cast the ballot for election of an executive trustee of the Fund.

If a governing body does not authorize its agent to perform the powers set forth in this Section, they shall be performed by the governing body itself, unless the governing body by resolution duly certified to the Fund delegates them to some other officer or employee.

(d) The delivery of any communication or document by an employee or a municipality to the authorized agent of the municipality does not constitute delivery to the Fund.

(40 ILCS 5/3-104 new)

Sec. 3-104. Prescribed rate of interest. "Prescribed rate of interest": The rate of interest to be used for calculation of the rates of municipality contributions and amounts of annuities and benefits as determined by the Board on the basis of the probable effective rate of interest on a long term basis.

(40 ILCS 5/3-105) (from Ch. 108 1/2, par. 3-105)

Sec. 3-105. Board. "Board": Until January 1, 2020, the The board of trustees of the police pension fund of a municipality as established in subsection (a) of Section 3-128.

Beginning January 1, 2020, the Board of Trustees of the Downstate Police Pension Fund created under this Article to consolidate all of the individual pension funds previously established under this Article, as established in subsection (d) of Section 3-128, or until that board is established and has assumed its duties, the Transition Board created under Section 3-101.1; depending on the context, the term may include the former board of trustees of one or more of those previously established pension funds.

(Source: P.A. 83-1440.)

(40 ILCS 5/3-108.2)

Sec. 3-108.2. Participant. "Participant": A police officer or deferred pensioner of the Fund a pension fund, or a beneficiary of the Fund pension fund.

(Source: P.A. 90-507, eff. 8-22-97.)

(40 ILCS 5/3-108.3)

Sec. 3-108.3. Beneficiary. "Beneficiary": A person receiving benefits from the Fund a pension fund, including, but not limited to, retired pensioners, disabled pensioners, their surviving spouses, minor children, disabled children, and dependent parents. If a special needs trust as described in Section 1396p(d)(4) of Title 42 of the United States Code, as amended from time to time, has been established for a disabled adult child, then the special needs trust may stand in lieu of the disabled adult child as a beneficiary for the purposes of this Article.

(Source: P.A. 96-1143, eff. 7-21-10.)

(40 ILCS 5/3-110) (from Ch. 108 1/2, par. 3-110)

Sec. 3-110. Creditable service.

(a) "Creditable service" is the time served by a police officer as a member of a regularly constituted police force of a municipality. In computing creditable service furloughs without pay exceeding 30 days shall not be counted, but all leaves of absence for illness or accident, regardless of length, and all periods of disability retirement for which a police officer has received no disability pension payments under this Article shall be counted.

(a-3) Upon the consolidation of the police pension funds under this Article into the Downstate Police Pension Fund on January 1, 2020, creditable service under any such pension fund shall be deemed to be creditable service in the Downstate Police Pension Fund, subject to the following provisions:

(1) The consolidation of police pension funds into the Downstate Police Pension Fund shall not result in the duplication of any service credit based on the same period of service in this or any other pension fund or retirement system subject to this Code.

(2) If this Section or any other provision of this Article imposes a limit on the amount of creditable service that may be established for a particular activity or purpose and prior to consolidation a police officer has established periods of creditable service for that activity or purpose in more than one former police pension fund under this Article, which periods are within that limitation for each such fund but together exceed that limitation, then upon consolidation all such credit previously established by the police officer shall be preserved under the Fund, but no additional creditable service for that activity or purpose may be established by that police officer in the Fund.

(3) The consolidation of police pension funds into the Downstate Police Pension Fund shall not entitle any person or pension fund to a refund of any contribution or payment previously paid or transferred in order to establish or transfer creditable service under this Article.

(a-5) Up to 3 years of time during which the police officer receives a disability pension under Section 3-114.1, 3-114.2, 3-114.3, or 3-114.6 shall be counted as creditable service, provided that (i) the police officer returns to active service after the disability for a period at least equal to the period for which credit is to be established and (ii) the police officer makes contributions to the Fund fund based on the rates specified in Section 3-125.1 and the salary upon which the disability pension is based. These contributions may be paid at any time prior to the commencement of a retirement pension. The police officer may, but need not, elect to have the contributions deducted from the disability pension or to pay them in installments on a schedule approved by the board. If not deducted from the disability pension, the contributions shall include interest at the rate of 6% per year, compounded annually, from the date for which service credit is being established to the date of payment. If contributions are paid under this subsection (a-5) in excess of those needed to establish the credit, the excess shall be refunded. This subsection (a-5) applies to persons receiving a disability pension under Section 3-114.1, 3-114.2, 3-114.3, or 3-114.6 on the effective date of this amendatory Act of the 91st General Assembly, as well as persons who begin to receive such a disability pension after that date.

(b) Creditable service includes all periods of service in the military, naval or air forces of the United States entered upon while an active police officer of a municipality, provided that upon applying for a permanent pension, and in accordance with the rules of the board, the police officer pays into the Fund fund the amount the officer would have contributed if he or she had been a regular contributor during such period, to the extent that the municipality which the police officer served has not made such contributions in the officer's behalf. The total amount of such creditable service shall not exceed 5 years, except that any police officer who on July 1, 1973 had more than 5 years of such creditable service shall receive the total amount thereof.

(b-5) Creditable service includes all periods of service in the military, naval, or air forces of the United States entered upon before beginning service as an active police officer of a municipality, provided that, in accordance with the rules of the board, the police officer pays into the Fund fund the amount the police officer would have contributed if he or she had been a regular contributor during such period, plus an amount determined by the Board to be equal to the municipality's normal cost of the benefit, plus interest at the actuarially assumed rate calculated from the date the employee last became a police officer under this Article. The total amount of such creditable service shall not exceed 2 years.

(c) Creditable service also includes service rendered by a police officer while on leave of absence from a police department to serve as an executive of an organization whose membership consists of members of a police department, subject to the following conditions: (i) the police officer is a participant of the Fund a fund established under this Article with at least 10 years of service as a police officer; (ii) the police officer received no credit for such service under any other retirement system, pension fund, or annuity and benefit fund included in this Code; (iii) pursuant to the rules of the board the police officer pays to the Fund fund the amount he or she would have contributed had the officer been an active member of the police department; (iv) the organization pays a contribution equal to the municipality's normal cost for that period of service; and (v) for all leaves of absence under this subsection (c), including those beginning before the effective date of this amendatory Act of the 97th General Assembly, the police officer continues to remain in sworn status, subject to the professional standards of the public employer or those terms established in statute.

(d)(1) Creditable service also includes periods of service originally established in another police pension fund under this Article or in the Fund established under Article 7 of this Code for which (i) the contributions have been transferred under Section 3-110.7 or Section 7-139.9 and (ii) any additional contribution required under paragraph (2) of this subsection has been paid in full in accordance with the requirements of this subsection (d).

(2) If the board of the pension fund to which creditable service and related contributions are transferred under Section 7-139.9 determines that the amount transferred is less than the true cost to the pension fund of allowing that creditable service to be established, then in order to establish that creditable service the police officer must pay to the pension fund, within the payment period specified in paragraph (3) of this subsection, an additional contribution equal to the difference, as determined by the board in accordance with the rules and procedures adopted under paragraph (6) of this subsection. If the board of the pension fund to which creditable service and related contributions are transferred under Section 3-110.7 determines that the amount transferred is less than the true cost to the pension fund of allowing that creditable service to be established, then the police officer may elect (A) to establish that creditable service by paying to the pension fund, within the payment period specified in paragraph (3) of this subsection (d), an additional contribution equal to the difference, as determined by the board in accordance with the rules and procedures adopted under paragraph (6) of this subsection (d) or (B) to have his or her creditable service reduced by an amount equal to the difference between the amount transferred under Section 3-110.7 and the true cost to the pension fund of allowing that creditable service to be established, as determined by the board in accordance with the rules and procedures adopted under paragraph (6) of this subsection (d).

(3) Except as provided in paragraph (4), the additional contribution that is required or elected under paragraph (2) of this subsection (d) must be paid to the board (i) within 5 years from the date of the transfer of contributions under Section 3-110.7 or 7-139.9 and (ii) before the police officer terminates service with the fund. The additional contribution may be paid in a lump sum or in accordance with a schedule of installment payments authorized by the board.

(4) If the police officer dies in service before payment in full has been made and before the expiration of the 5-year payment period, the surviving spouse of the officer may elect to pay the unpaid amount on the officer's behalf within 6 months after the date of death, in which case the creditable service shall be granted as though the deceased police officer had paid the remaining balance on the day before the date of death.

(5) If the additional contribution that is required or elected under paragraph (2) of this subsection (d) is not paid in full within the required time, the creditable service shall not be granted and the police officer (or the officer's surviving spouse or estate) shall be entitled to receive a refund of (i) any partial payment of the additional contribution that has been made by the police officer and (ii) those portions of the amounts transferred under subdivision (a)(1) of Section 3-110.7 or subdivisions (a)(1) and (a)(3) of Section 7-139.9 that represent employee contributions paid by the police officer (but not the accumulated interest on those contributions) and interest paid by the police officer to the prior pension fund in order to reinstate service terminated by acceptance of a refund.

At the time of paying a refund under this item (5), the pension fund shall also repay to the pension fund from which the contributions were transferred under Section 3-110.7 or 7-139.9 the amount originally transferred under subdivision (a)(2) of that Section, plus interest at the rate of 6% per year, compounded annually, from the date of the original transfer to the date of repayment. Amounts repaid to the Article 7 fund under this provision shall be credited to the appropriate municipality.

Transferred credit that is not granted due to failure to pay the additional contribution within the required time is lost; it may not be transferred to another pension fund and may not be reinstated in the pension fund from which it was transferred.

(6) The Public Employee Pension Fund Division of the Department of Insurance shall establish by rule the manner of making the calculation required under paragraph (2) of this subsection, taking into account the appropriate actuarial assumptions; the police officer's service, age, and salary history; the level of funding of the pension fund to which the credits are being transferred; and any other factors that the Division determines to be relevant. The rules may require that all calculations made under paragraph (2) be reported to the Division by the board performing the calculation, together with documentation of the creditable service to be transferred, the amounts of contributions and interest to be transferred, the manner in which the calculation was performed, the numbers relied upon in making the calculation, the results of the calculation, and any other information the Division may deem useful.

(e)(1) Creditable service also includes periods of service originally established in the Fund established under Article 7 of this Code for which the contributions have been transferred under Section 7-139.11.

(2) If the board of the pension fund to which creditable service and related contributions are transferred under Section 7-139.11 determines that the amount transferred is less than the true cost to the pension fund of allowing that creditable service to be established, then the amount of creditable service the police officer may establish under this subsection (e) shall be reduced by an amount equal to the difference, as determined by the board in accordance with the rules and procedures adopted under paragraph (3) of this subsection.

(3) The Public Pension Division of the Department of Financial and Professional Regulation shall establish by rule the manner of making the calculation required under paragraph (2) of this subsection, taking into account the appropriate actuarial assumptions; the police officer's service, age, and salary history; the level of funding of the pension fund to which the credits are being transferred; and any other factors that the Division determines to be relevant. The rules may require that all calculations made under paragraph (2) be reported to the Division by the board performing the calculation, together with documentation of the creditable service to be transferred, the amounts of contributions and interest to be transferred, the manner in which the calculation was performed, the numbers relied upon in making the calculation, the results of the calculation, and any other information the Division may deem useful.

(4) Until January 1, 2010, a police officer who transferred service from the Fund established under Article 7 of this Code under the provisions of Public Act 94-356 may establish additional credit, but only for the amount of the service credit reduction in that transfer, as calculated under paragraph (3) of this subsection (e). This credit may be established upon payment by the police officer of an amount to be determined by the board, equal to (1) the amount that would have been contributed as employee and employer contributions had all of the service been as an employee under this Article, plus interest thereon at the rate of 6% per year, compounded annually from the date of service to the date of transfer, less (2) the total amount transferred from the Article 7 Fund, plus (3) interest on the difference at the rate of 6% per year, compounded annually, from the date of the transfer to the date of payment. The additional service credit is allowed under this amendatory Act of the 95th General Assembly notwithstanding the provisions of Article 7 terminating all transferred credits on the date of transfer.

(Source: P.A. 96-297, eff. 8-11-09; 96-1260, eff. 7-23-10; 97-651, eff. 1-5-12.)

(40 ILCS 5/3-110.7)

Sec. 3-110.7. Transfer between Article 3 funds.

(a) Until January 1, 2020 (the consolidation date), an An active member of a pension fund established under this Article may apply for transfer to that fund of his or her creditable service and related contributions accumulated in any other police pension fund established under this Article, except that a police officer may not transfer creditable service under this Section from a pension fund unless (i) the police officer actively served in the police department under that fund for at least 2 years, (ii) the police officer actively served in the police department under that fund for less than 2 years but was laid off or otherwise involuntarily terminated for a reason other than the fault of the officer, or (iii) the police officer was not in service in the police department under that fund on or after the effective date of this Section. Upon receiving the application, that other pension fund shall transfer to the pension fund in which the applicant currently participates an amount equal to:

(1) the amounts actually contributed by or on behalf of the applicant to the fund as employee contributions (including any interest paid by the applicant in order to reinstate service), plus interest on those amounts at the rate of 6% per year, compounded annually, from the date of contribution to the date of transfer; plus

(2) an amount representing employer contributions, equal to the total amount determined under subdivision (1).

Participation in that other pension fund shall terminate on the date of transfer.

(b) An active member of the Fund a pension fund established under this Article may reinstate in the Fund service in any other pension fund established under this Article that was terminated by receipt of a refund, by paying to the Fund that other pension fund the amount of the refund plus interest thereon at the rate of 6% per year, compounded annually, from the date of refund to the date of payment.

(Source: P.A. 90-460, eff. 8-17-97.)

(40 ILCS 5/3-125) (from Ch. 108 1/2, par. 3-125)

Sec. 3-125. Financing; tax.

(a) The governing body city council or the board of trustees of a participating the municipality shall annually levy a tax upon all the taxable property of the municipality at the rate on the dollar which will produce an amount which, when added to the deductions from the salaries or wages of police officers, and revenues available from other sources, will equal a sum sufficient to meet the annual requirements of the account of the participating municipality police pension fund. The annual requirements to be provided by such tax levy are equal to (1) the normal cost of benefits attributable to the participating municipality and its police officers, as determined by an enrolled actuary employed by the Fund, the pension fund for the year involved, plus (2) an amount sufficient to bring the total assets of the account of the participating municipality pension fund up to 90% of the total actuarial liabilities of the account of the participating municipality pension fund by the end of municipal fiscal year 2040, as annually updated and determined by an enrolled actuary employed by the Fund Illinois Department of Insurance or by an enrolled actuary retained by the pension fund or the municipality. In making these determinations, the required minimum employer contribution shall be calculated each year as a level percentage of payroll over the years remaining up to and including fiscal year 2040 and shall be determined under the projected unit credit actuarial cost method. The tax shall be levied and collected in the same manner as the general taxes of the municipality, and in addition to all other taxes now or hereafter authorized to be levied upon all property within the municipality, and shall be in addition to the amount authorized to be levied for general purposes as provided by Section 8-3-1 of the Illinois Municipal Code, approved May 29, 1961, as amended. The tax shall be forwarded directly to the treasurer of the board within 30 business days after receipt by the county.

(b) For purposes of determining the required employer contribution to the Fund a pension fund, the value of the pension fund's assets shall be equal to the actuarial value of the pension fund's assets, which shall be calculated as follows:

(1) (Blank). On March 30, 2011, the actuarial value of a pension fund's assets shall be equal to the market value of the assets as of that date.

(2) In determining the actuarial value of the System's assets of the account of the participating municipality for fiscal years after March 30, 2011, any actuarial gains or losses from investment return incurred in a fiscal year shall be recognized in equal annual amounts over the 5-year period following that fiscal year.

(c) If a participating municipality fails to transmit to the Fund fund contributions required of it under this Article for more than 90 days after the payment of those contributions is due, the Fund fund may, after giving notice to the municipality, certify to the State Comptroller the amounts of the delinquent payments in accordance with any applicable rules of the Comptroller, and the Comptroller must, beginning in fiscal year 2016, deduct and remit to the Fund, for credit to the account of the participating municipality, fund the certified amounts or a portion of those amounts from the following proportions of payments of State funds to the municipality:

(1) in fiscal year 2016, one-third of the total amount of any payments of State funds to the municipality;

(2) in fiscal year 2017, two-thirds of the total amount of any payments of State funds to the municipality; and

(3) in fiscal year 2018 and each fiscal year thereafter, the total amount of any payments of State funds to the municipality.

The State Comptroller may not deduct from any payments of State funds to the municipality more than the amount of delinquent payments certified to the State Comptroller by the Fund fund.

(d) (Blank). The police pension fund shall consist of the following moneys which shall be set apart by the treasurer of the municipality:

(1) All moneys derived from the taxes levied hereunder;

(2) Contributions by police officers under Section 3-125.1;

(3) All moneys accumulated by the municipality under any previous legislation establishing a fund for the benefit of disabled or retired police officers;

(4) Donations, gifts or other transfers authorized by this Article.

(e) (Blank). The Commission on Government Forecasting and Accountability shall conduct a study of all funds established under this Article and shall report its findings to the General Assembly on or before January 1, 2013. To the fullest extent possible, the study shall include, but not be limited to, the following:

(1) fund balances;

(2) historical employer contribution rates for each fund;

(3) the actuarial formulas used as a basis for employer contributions, including the actual assumed rate of return for each year, for each fund;

(4) available contribution funding sources;

(5) the impact of any revenue limitations caused by PTELL and employer home rule or non-home rule status; and

(6) existing statutory funding compliance procedures and funding enforcement mechanisms for all municipal pension funds.

(Source: P.A. 99-8, eff. 7-9-15.)

(40 ILCS 5/3-125.1) (from Ch. 108 1/2, par. 3-125.1)

Sec. 3-125.1. Contributions by police officers. Each police officer shall contribute to the Fund pension fund the following percentages of salary for the periods stated: Beginning July 1, 1909 and prior to July 23, 1943, 1% (except that prior to July 1, 1921 not more than one dollar per month shall be deducted, and except that beginning July 1, 1921 and prior to July 1, 1927 not more than $2 per month shall be deducted); beginning July 23, 1943 and prior to July 20, 1949, 3%; beginning July 20, 1949 and prior to July 17, 1959, 5%; beginning July 17, 1959 and prior to July 1, 1971, 7%; beginning July 1, 1971 and prior to July 1, 1975, 7 1/2%; beginning July 1, 1975 and prior to January 1, 1987, 8 1/2%; beginning January 1, 1987 and prior to January 1, 2001, 9%; and beginning January 1, 2001, 9.91%. Such sums shall be paid or deducted monthly. Contribution to the self-managed plan shall be no less than 10% of salary.

"Salary" means the annual salary, including longevity, attached to the police officer's rank, as established by the municipality's appropriation ordinance, including any compensation for overtime which is included in the salary so established, but excluding any "overtime pay", "holiday pay", "bonus pay", "merit pay", or any other cash benefit not included in the salary so established.

(Source: P.A. 91-939, eff. 2-1-01.)

(40 ILCS 5/3-128) (from Ch. 108 1/2, par. 3-128)

Sec. 3-128. Board created.

(a) This subsection (a) applies until January 1, 2020. A board of 5 members shall constitute a board of trustees to administer the pension fund and to designate the beneficiaries thereof. The board shall be known as the "Board of Trustees of the Police Pension Fund" of the municipality.

Two members of the board shall be appointed by the mayor or president of the board of trustees of the municipality involved. The 3rd and 4th members of the board shall be elected from the active participants of the pension fund by such active participants. The 5th member shall be elected by and from the beneficiaries.

One of the members appointed by the mayor or president of the board of trustees shall serve for one year beginning on the 2nd Tuesday in May after the municipality comes under this Article. The other appointed member shall serve for 2 years beginning on the same date. Their successors shall serve for 2 years each or until their successors are appointed and qualified.

(b) The members of the boards of trustees serving on December 31, 2019 may continue to exercise the powers of that office until March 1, 2020 for the sole purpose of assisting in the consolidation of their respective pension funds, but subject to the supervision and requirements of the Transition Board.

(c) Beginning January 1, 2020, and until the board established under subsection (d) has been elected and assumes its duties, the Transition Board established under Section 3-101.1 shall operate as the Board of Trustees of the Fund.

(d) Beginning January 1, 2021, or as soon thereafter as it is able to assume its duties, the Board of Trustees of the Downstate Police Pension Fund shall consist of 11 members. The Board shall consist of representatives of various groups as follows:

(1) One trustee, appointed by the Governor, who shall serve as the chairman and may vote only in the event of a tie.

(2) Five trustees shall each be a mayor, chief elected officer, chief executive officer, chief finance officer, or other officer, executive, or department head of a participating municipality, and each such trustee shall be designated as an executive trustee.

(3) Three trustees shall each be a police officer participating in the Fund, and each such trustee shall be designated as a police officer trustee. No person shall be eligible to become a police officer trustee who does not have at least 8 years of creditable service in the Fund.

(4) Two trustees shall be retired police officers of the Fund, who shall be designated the annuitant trustees. No person shall be eligible to become an annuitant trustee who does not have at least 8 years of creditable service in the Fund. For the purposes of this Section and Section 3-128.2, a police officer receiving a disability pension shall be considered a retired police officer.

Beginning January 1, 2020, elections for executive trustees shall be conducted in accordance with Section 3-128.1 and elections for police officer and annuitant trustees shall be conducted in accordance with Section 3-128.2.

(e) The executive trustees shall elect one executive trustee to serve as vice-chairman. The police officer trustees and annuitant trustees shall elect one police officer trustee or annuitant trustee to serve as vice-chairman.

(f) An executive or police officer trustee shall be disqualified immediately upon any change in status which removes the trustee from the required employment or office within the group he or she represents. The annuitant trustee shall be disqualified upon termination or suspension of his or her retirement or disability pension.

The Board shall fill any vacancy by appointment of a person with the appropriate employment status for the period until the next election of trustees, or, if the remaining term is less than 2 years, for the remainder of the term, and until a successor has been elected and has qualified.

(g) The Board shall elect annually from its members a president and secretary.

The election for board members shall be held biennially on the 3rd Monday in April, at such place or places in the municipality and under the Australian ballot system and such other regulations as shall be prescribed by the appointed members of the board.

The active pension fund participants shall be entitled to vote only for the active participant members of the board. All beneficiaries of legal age may vote only for the member chosen from among the beneficiaries. No person shall be entitled to cast more than one ballot at such election. The term of elected members shall be 2 years, beginning on the 2nd Tuesday of the first May after the election.

Upon the death, resignation or inability to act of any elected board member, his or her successor shall be elected for the unexpired term at a special election, to be called by the board and conducted in the same manner as the regular biennial election.

(h) Members of the board shall neither receive nor have any right to receive any salary from the Fund pension fund for services performed as trustees in that office, but shall be reimbursed for any reasonable expenses incurred in attending meetings of the Board and in performing duties on behalf of the Fund and for the amount of any earnings withheld by any employing municipality because of attendance at any Board meeting.

(i) Except for the chairman, who may vote only in the event of a tie, each trustee shall be entitled to one vote on any and all actions before the Board. At least 6 concurring votes shall be necessary for every decision or action by the Board at any of its meetings. No decision or action shall become effective unless presented and so approved at a regular or duly called special meeting of the Board.

(Source: P.A. 83-1440.)

(40 ILCS 5/3-128.1 new)

Sec. 3-128.1. Election of executive trustees.

(a) Beginning January 1, 2020, the election of executive trustees shall be conducted in accordance with this Section.

(b) During the period beginning on August 1 and ending on September 15 of each year, the Board shall accept nominations of candidates for election as executive trustees for terms beginning on the next January 1, and for vacancies to be filled by election.

All nominations for the position of executive trustee shall be by petition, signed by a representative of the governing body of at least 5 participating municipalities.

(c) The election shall be by ballot and may be conducted in person, by mail, or electronically, pursuant to the rules and procedures established by the Board.

All candidates properly nominated in petitions received by the Board shall be placed in alphabetical order upon the proper ballot. In the initial election, there shall be one election for the 5 executive trusteeships, and the 5 candidates getting the highest number of votes shall be declared elected.

(d) The governing body of each participating municipality participating in the Fund shall have one vote at any election in which an executive trustee is to be elected, and may cast that vote for any candidate on the executive trustee ballot.

A vote may be cast for a person not on the ballot by writing in his or her name.

In case of a tie vote, the candidate employed by the municipality having the greatest number of participating police officers at the time of the election shall be declared elected.

(e) The election shall be completed by December 1 of the year. The results shall be entered in the minutes of the meeting of the Board following the tally of votes.

(f) Each executive trustee so elected shall hold office for a term of 4 years and until his or her successor has been duly elected and qualified. However, for the initial executive trustees, 2 of the initial executive trustees shall serve for a term of one year, one initial executive trustee shall serve for a term of 2 years, one initial executive trustee shall serve for a term of 3 years, and one initial executive trustee shall serve for a term of 4 years. The terms of the initial executive trustees shall be determined by lot at the first meeting of the Board.

(40 ILCS 5/3-128.2 new)

Sec. 3-128.2. Election of police officer and annuitant trustees.

(a) Beginning January 1, 2020, the election of police officer and annuitant trustees shall be conducted in accordance with this Section. The annuitant trustees shall be elected in an election separate from the election for police officer trustees.

(b) During the period beginning on August 1 and ending on September 15 of each applicable year, the Board shall accept nominations of candidates for election as police officer or annuitant trustees for terms beginning on the next January 1, and for vacancies to be filled by election.

All nominations for the position of police officer trustee shall be by petition, signed by at least 50 active police officers participating in the Fund. All nominations for the position of annuitant trustee shall be by petition, signed by at least 25 annuitants of the Fund.

(c) The election shall be by ballot and may be conducted in person, by mail, or electronically, pursuant to the rules and procedures established by the Board.

All candidates properly nominated in petitions received by the Board shall be placed in alphabetical order on the proper ballot. In the initial election, there shall be one election for the 3 police officer trusteeships, and the 3 candidates getting the highest number of votes shall be declared elected. In the initial election there shall be one election for the 2 annuitant trusteeships, and the 2 candidates receiving the highest number of votes shall be declared elected.

(d) No person shall cast more than one vote for each candidate for whom he or she is eligible to vote. In elections for board members to be chosen from the active police officers, all active police officers and no others may vote. In elections for board members to be chosen from retired police officers, all retired police officers and no others may vote.

In case of a tie vote, the candidate currently (or in the case of an annuitant trustee, formerly) employed by the municipality having the greatest number of participating police officers at the time of the election shall be declared elected.

(e) The election shall be completed by December 1 of the year. The result shall be entered in the minutes of the meeting of the Board following the tally of votes.

(f) Each trustee so elected shall hold office for a term of 4 years and until his or her successor has been duly elected and qualified, except that the initial police officer trustees shall serve for terms of one, 2, or 3 years, as determined by lot at the first meeting of the Board. The initial annuitant trustees shall serve terms of 3 or 4 years, as determined by lot at the first meeting of the Board.

(40 ILCS 5/3-134) (from Ch. 108 1/2, par. 3-134)

Sec. 3-134. To submit annual list of Fund fund payments. To submit annually to the governing body of each participating municipality city council or board of trustees at the close of the municipality's fiscal year, a list of persons entitled to payments from the Fund that are chargeable to the account of the participating municipality fund, stating the amount of payments, and their purpose, as ordered by the Board board. It shall also include items of income accrued to the account of the participating municipality fund during the fiscal year. The list shall be signed by the secretary and president of the Board board, and attested under oath. A resolution or order for the payment of money shall not be valid unless approved by a majority of the Board board members, and signed by the president and secretary of the Board board.

(Source: P.A. 83-1440.)

(40 ILCS 5/3-135) (from Ch. 108 1/2, par. 3-135)

Sec. 3-135. To invest funds. To determine the limitations on the amounts of cash to be invested in order to maintain such cash balances as may be deemed advisable to meet current annuity, benefit, and expense requirements, and to invest the remaining available cash in securities, in accordance with the prudent person investment rule and the other provisions of this Article. Beginning on the consolidation date, the Article 1 and 1A restrictions on the investment of Article 3 Funds no longer apply, except to the extent that they do not also apply to Article 7 of this Code. Beginning January 1, 1998, the board shall invest funds in accordance with Sections 1-113.1 through 1-113.10 of this Code.

(Source: P.A. 90-507, eff. 8-22-97.)

(40 ILCS 5/3-140.5 new)

Sec. 3-140.5. Custodian. The Board shall appoint one or more custodians to receive and hold the assets of the Fund on such terms as the Board may agree.

(40 ILCS 5/3-141) (from Ch. 108 1/2, par. 3-141)

Sec. 3-141. Annual report by treasurer. On the 2nd Tuesday in May annually through 2020, the treasurer of the municipality and all other officials of the municipality who had the custody of any pension funds herein provided, shall make a sworn statement to the pension board, and to the mayor and council or president and board of trustees of the municipality, of all moneys received and paid out by them on account of the pension fund during the year, and of the amount of funds then on hand and owing to the pension fund. The final report required under this subsection shall be due in May of 2020 and shall include the period up to and including the consolidation of the municipality's pension fund into the Downstate Police Pension Fund. All surplus then remaining with any official other than the treasurer shall be paid to the treasurer of the municipality or as directed by the Board. Upon demand of the Board pension board, any official shall furnish a statement relative to the official method of collection or handling of the pension funds. All books and records of that official shall be produced at any time by him for examination and inspection by the Board board.

(Source: P.A. 83-1440.)

(40 ILCS 5/3-141a new)

Sec. 3-141a. Deposit and disposition of funds; custodian.

(a) All money received by the Board shall immediately be deposited with the custodian for the account of the Fund. All payments from the accounts of the Fund shall be made by the custodian only, and only by a check or draft signed by the president of the board or the executive director, as the board may direct. Such checks and drafts shall be drawn only upon proper authorization by the board as properly recorded in the official minute books of the meetings of the Board.

(b) The assets of the Pension Fund shall be invested as one fund, and no particular person or municipality shall have any right in any specific security or in any item of cash other than an undivided interest in the whole.

(c) If a participating municipality terminates participation because it fails to meet the requirements of Section 3-103, it shall pay to the Fund the amount equal to any net debit balance in its municipality account and any account receivable. Its successors, assigns, and transferees of its assets shall be obligated to make this payment to the extent of the value of assets transferred to them. The Fund shall pay an amount equal to any net credit balance to the participating municipality, its successors or assigns. Any remaining net debit or credit balance not collectible or payable shall be transferred to a terminated municipality reserve account. The Fund shall pay to each police officer of the participating municipality an amount equal to his or her credits in the employee reserves. The employees shall have no further rights to any benefits from the Fund, except that annuities awarded prior to the date of termination shall continue to be paid.

(40 ILCS 5/3-141b new)

Sec. 3-141b. Authorizations.

(a) Each participating municipality shall:

(1) deduct all normal and additional contributions from each payment of earnings payable to each participating employee who is entitled to any earnings from the municipality, and remit all normal and additional contributions immediately to the Board; and

(2) pay to the Board contributions required by this Article.

(b) Each participating employee shall, by virtue of the payment of contributions to this Fund, receive a vested interest in the annuities and benefits provided in this Article and in consideration of such vested interest shall be deemed to have agreed and authorized the deduction from earnings of all contributions payable to this Fund in accordance with this Article.

(c) Payment of earnings less the amounts of contributions provided in this Article shall be a full and complete discharge of all claims for payment for services rendered by any employee during the period covered by any such payment.

(40 ILCS 5/3-141c new)

Sec. 3-141c. Executive director. The executive director shall be in charge of the general administration of the Fund and shall have such special powers and duties as may be properly delegated or assigned by the Board from time to time. Such general administrative duties shall include: the computation of the amounts of annuities, benefits, prior service credits, and contributions required for reinstatement of credits for Board consideration; the processing of approved benefit claims and expenses of administration for payment; the placing of any and all matters before the Board which require action or are in the interest of the Board or the Fund; the preparation and maintenance of necessary and proper records for administrative and actuarial purposes; the conduct of any necessary or desirable communications in the course of operations of the Fund; and the carrying out of any actions of the Board which are so delegated.

(40 ILCS 5/3-141d new)

Sec. 3-141d. Actuary.

(a) The actuary shall be the technical advisor of the Board. In addition to general advice, the actuary shall specifically be responsible for and shall make a general investigation, at least once every 3 years, of the experience of the participating municipalities as to mortality, disability, retirement, separation, marital status of employees, marriage of surviving spouses, interest, and employee earnings rates, and to make recommendations as a result of any such investigation as to:

(1) the actuarial tables to be used for computing annuities and benefits and for determining the premiums for disability and death benefit purposes;

(2) the tables to be used in any regular actuarial valuations; and

(3) the prescribed rate of interest.

(b) The actuary shall make the computations of municipality obligations, contribution rates including annual valuations of the liabilities and reserves for present and prospective annuities and benefits, and certify to the correctness thereof.

(c) The actuary shall advise the Board on any matters of an actuarial nature affecting the Fund.

Section 90. The State Mandates Act is amended by adding Section 8.42 as follows:

(30 ILCS 805/8.42 new)

Sec. 8.42. 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 the 100th General Assembly.

Section 95. 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 99. Effective date. This Act takes effect upon becoming law, except that Sections 5 and 15 take effect January 1, 2020.