101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB3321

 

Introduced , by Rep. Emanuel Chris Welch

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/3-125  from Ch. 108 1/2, par. 3-125
40 ILCS 5/4-118  from Ch. 108 1/2, par. 4-118
30 ILCS 805/8.43 new

    Amends the Downstate Police and Downstate Firefighter Articles of the Illinois Pension Code. Beginning municipal fiscal year 2021, provides that the annual levy and contribution to the fund are equal to (1) the normal cost of the pension fund for the year involved, plus (2) an amount sufficient to bring the total assets of the pension fund up to 100% of the total actuarial liabilities of the pension fund over a 30-year rolling amortization period. Provides that each municipal fiscal year through 2031, the rolling amortization period shall be reduced by one year for each municipal fiscal year after 2021. Provides a 20-year rolling amortization period for municipal fiscal year 2031 and each year thereafter. Provides that in making these determinations, the required minimum employer contribution shall be calculated each year as a level dollar amount over the amortization period and shall be determined under the entry age normal actuarial cost method. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.


LRB101 10776 RPS 55898 b

FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

 

 

A BILL FOR

 

HB3321LRB101 10776 RPS 55898 b

1    AN ACT concerning public employee benefits.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Pension Code is amended by changing
5Sections 3-125 and 4-118 as follows:
 
6    (40 ILCS 5/3-125)  (from Ch. 108 1/2, par. 3-125)
7    Sec. 3-125. Financing.
8    (a) The city council or the board of trustees of the
9municipality shall annually levy a tax upon all the taxable
10property of the municipality at the rate on the dollar which
11will produce an amount which, when added to the deductions from
12the salaries or wages of police officers, and revenues
13available from other sources, will equal a sum sufficient to
14meet the annual requirements of the police pension fund. Until
15municipal fiscal year 2021, the The annual requirements to be
16provided by such tax levy are equal to (1) the normal cost of
17the pension fund for the year involved, plus (2) an amount
18sufficient to bring the total assets of the pension fund up to
1990% of the total actuarial liabilities of the pension fund by
20the end of municipal fiscal year 2040, as annually updated and
21determined by an enrolled actuary employed by the Illinois
22Department of Insurance or by an enrolled actuary retained by
23the pension fund or the municipality. In making these

 

 

HB3321- 2 -LRB101 10776 RPS 55898 b

1determinations, the required minimum employer contribution
2shall be calculated each year as a level percentage of payroll
3over the years remaining up to and including fiscal year 2040
4and shall be determined under the projected unit credit
5actuarial cost method.
6    For municipal fiscal years 2021 through 2030, the annual
7requirements to be provided by such tax levy are equal to (1)
8the normal cost of the pension fund for the year involved, plus
9(2) an amount sufficient to bring the total assets of the
10pension fund up to 100% of the total actuarial liabilities of
11the pension fund over a 30-year rolling amortization period, as
12annually updated and determined by an enrolled actuary employed
13by the Department of Insurance or by an enrolled actuary
14retained by the pension fund or the municipality. However, for
15each municipal fiscal year until municipal fiscal year 2031,
16the rolling amortization period specified in this paragraph
17shall be reduced by one year for each municipal fiscal year
18after 2021. In making these determinations, the required
19minimum employer contribution shall be calculated each year as
20a level dollar amount over the amortization period and shall be
21determined under the entry age normal actuarial cost method.
22    For municipal fiscal year 2031 and each year thereafter,
23the annual requirements to be provided by such tax levy are
24equal to (1) the normal cost of the pension fund for the year
25involved, plus (2) an amount sufficient to bring the total
26assets of the pension fund up to 100% of the total actuarial

 

 

HB3321- 3 -LRB101 10776 RPS 55898 b

1liabilities of the pension fund over a 20-year rolling
2amortization period, as annually updated and determined by an
3enrolled actuary employed by the Department of Insurance or by
4an enrolled actuary retained by the pension fund or the
5municipality. In making these determinations, the required
6minimum employer contribution shall be calculated each year as
7a level dollar amount over the amortization period and shall be
8determined under the entry age normal actuarial cost method.
9     The tax shall be levied and collected in the same manner
10as the general taxes of the municipality, and in addition to
11all other taxes now or hereafter authorized to be levied upon
12all property within the municipality, and shall be in addition
13to the amount authorized to be levied for general purposes as
14provided by Section 8-3-1 of the Illinois Municipal Code,
15approved May 29, 1961, as amended. The tax shall be forwarded
16directly to the treasurer of the board within 30 business days
17after receipt by the county.
18    (b) For purposes of determining the required employer
19contribution to a pension fund, the value of the pension fund's
20assets shall be equal to the actuarial value of the pension
21fund's assets, which shall be calculated as follows:
22        (1) On March 30, 2011, the actuarial value of a pension
23    fund's assets shall be equal to the market value of the
24    assets as of that date.
25        (2) In determining the actuarial value of the System's
26    assets for fiscal years after March 30, 2011, any actuarial

 

 

HB3321- 4 -LRB101 10776 RPS 55898 b

1    gains or losses from investment return incurred in a fiscal
2    year shall be recognized in equal annual amounts over the
3    5-year period following that fiscal year.
4    (c) If a participating municipality fails to transmit to
5the fund contributions required of it under this Article for
6more than 90 days after the payment of those contributions is
7due, the fund may, after giving notice to the municipality,
8certify to the State Comptroller the amounts of the delinquent
9payments in accordance with any applicable rules of the
10Comptroller, and the Comptroller must, beginning in fiscal year
112016, deduct and remit to the fund the certified amounts or a
12portion of those amounts from the following proportions of
13payments of State funds to the municipality:
14        (1) in fiscal year 2016, one-third of the total amount
15    of any payments of State funds to the municipality;
16        (2) in fiscal year 2017, two-thirds of the total amount
17    of any payments of State funds to the municipality; and
18        (3) in fiscal year 2018 and each fiscal year
19    thereafter, the total amount of any payments of State funds
20    to the municipality.
21    The State Comptroller may not deduct from any payments of
22State funds to the municipality more than the amount of
23delinquent payments certified to the State Comptroller by the
24fund.
25    (d) The police pension fund shall consist of the following
26moneys which shall be set apart by the treasurer of the

 

 

HB3321- 5 -LRB101 10776 RPS 55898 b

1municipality:
2        (1) All moneys derived from the taxes levied hereunder;
3        (2) Contributions by police officers under Section
4    3-125.1;
5        (3) All moneys accumulated by the municipality under
6    any previous legislation establishing a fund for the
7    benefit of disabled or retired police officers;
8        (4) Donations, gifts or other transfers authorized by
9    this Article.
10    (e) The Commission on Government Forecasting and
11Accountability shall conduct a study of all funds established
12under this Article and shall report its findings to the General
13Assembly on or before January 1, 2013. To the fullest extent
14possible, the study shall include, but not be limited to, the
15following:
16        (1) fund balances;
17        (2) historical employer contribution rates for each
18    fund;
19        (3) the actuarial formulas used as a basis for employer
20    contributions, including the actual assumed rate of return
21    for each year, for each fund;
22        (4) available contribution funding sources;
23        (5) the impact of any revenue limitations caused by
24    PTELL and employer home rule or non-home rule status; and
25        (6) existing statutory funding compliance procedures
26    and funding enforcement mechanisms for all municipal

 

 

HB3321- 6 -LRB101 10776 RPS 55898 b

1    pension funds.
2(Source: P.A. 99-8, eff. 7-9-15.)
 
3    (40 ILCS 5/4-118)  (from Ch. 108 1/2, par. 4-118)
4    Sec. 4-118. Financing.
5    (a) The city council or the board of trustees of the
6municipality shall annually levy a tax upon all the taxable
7property of the municipality at the rate on the dollar which
8will produce an amount which, when added to the deductions from
9the salaries or wages of firefighters and revenues available
10from other sources, will equal a sum sufficient to meet the
11annual actuarial requirements of the pension fund, as
12determined by an enrolled actuary employed by the Illinois
13Department of Insurance or by an enrolled actuary retained by
14the pension fund or municipality. For the purposes of this
15Section, until municipal fiscal year 2021, the annual actuarial
16requirements of the pension fund are equal to (1) the normal
17cost of the pension fund, or 17.5% of the salaries and wages to
18be paid to firefighters for the year involved, whichever is
19greater, plus (2) an annual amount sufficient to bring the
20total assets of the pension fund up to 90% of the total
21actuarial liabilities of the pension fund by the end of
22municipal fiscal year 2040, as annually updated and determined
23by an enrolled actuary employed by the Illinois Department of
24Insurance or by an enrolled actuary retained by the pension
25fund or the municipality. In making these determinations, the

 

 

HB3321- 7 -LRB101 10776 RPS 55898 b

1required minimum employer contribution shall be calculated
2each year as a level percentage of payroll over the years
3remaining up to and including fiscal year 2040 and shall be
4determined under the projected unit credit actuarial cost
5method. The amount to be applied towards the amortization of
6the unfunded accrued liability in any year shall not be less
7than the annual amount required to amortize the unfunded
8accrued liability, including interest, as a level percentage of
9payroll over the number of years remaining in the 40 year
10amortization period.
11    For the purposes of this Section, for municipal fiscal
12years 2021 through 2030, the annual actuarial requirements of
13the pension fund are equal to (1) the normal cost of the
14pension fund, or 17.5% of the salaries and wages to be paid to
15firefighters for the year involved, whichever is greater, plus
16(2) an amount sufficient to bring the total assets of the
17pension fund up to 100% of the total actuarial liabilities of
18the pension fund over a 30-year rolling amortization period, as
19annually updated and determined by an enrolled actuary employed
20by the Department of Insurance or by an enrolled actuary
21retained by the pension fund or the municipality. However, for
22each municipal fiscal year until municipal fiscal year 2031,
23the rolling amortization period specified in this paragraph
24shall be reduced by one year for each municipal fiscal year
25after 2021. In making these determinations, the required
26minimum employer contribution shall be calculated each year as

 

 

HB3321- 8 -LRB101 10776 RPS 55898 b

1a level dollar amount over the amortization period and shall be
2determined under the entry age normal actuarial cost method.
3    For the purposes of this Section, beginning municipal
4fiscal year 2031 and each municipal fiscal year thereafter, the
5annual actuarial requirements of the pension fund are equal to
6(1) the normal cost of the pension fund, or 17.5% of the
7salaries and wages to be paid to firefighters for the year
8involved, whichever is greater, plus (2) an amount sufficient
9to bring the total assets of the pension fund up to 100% of the
10total actuarial liabilities of the pension fund over a 20-year
11rolling amortization period, as annually updated and
12determined by an enrolled actuary employed by the Department of
13Insurance or by an enrolled actuary retained by the pension
14fund or the municipality. In making these determinations, the
15required minimum employer contribution shall be calculated
16each year as a level dollar amount over the amortization period
17and shall be determined under the entry age normal actuarial
18cost method.
19    (a-5) For purposes of determining the required employer
20contribution to a pension fund, the value of the pension fund's
21assets shall be equal to the actuarial value of the pension
22fund's assets, which shall be calculated as follows:
23        (1) On March 30, 2011, the actuarial value of a pension
24    fund's assets shall be equal to the market value of the
25    assets as of that date.
26        (2) In determining the actuarial value of the pension

 

 

HB3321- 9 -LRB101 10776 RPS 55898 b

1    fund's assets for fiscal years after March 30, 2011, any
2    actuarial gains or losses from investment return incurred
3    in a fiscal year shall be recognized in equal annual
4    amounts over the 5-year period following that fiscal year.
5    (b) The tax shall be levied and collected in the same
6manner as the general taxes of the municipality, and shall be
7in addition to all other taxes now or hereafter authorized to
8be levied upon all property within the municipality, and in
9addition to the amount authorized to be levied for general
10purposes, under Section 8-3-1 of the Illinois Municipal Code or
11under Section 14 of the Fire Protection District Act. The tax
12shall be forwarded directly to the treasurer of the board
13within 30 business days of receipt by the county (or, in the
14case of amounts added to the tax levy under subsection (f),
15used by the municipality to pay the employer contributions
16required under subsection (b-1) of Section 15-155 of this
17Code).
18    (b-5) If a participating municipality fails to transmit to
19the fund contributions required of it under this Article for
20more than 90 days after the payment of those contributions is
21due, the fund may, after giving notice to the municipality,
22certify to the State Comptroller the amounts of the delinquent
23payments in accordance with any applicable rules of the
24Comptroller, and the Comptroller must, beginning in fiscal year
252016, deduct and remit to the fund the certified amounts or a
26portion of those amounts from the following proportions of

 

 

HB3321- 10 -LRB101 10776 RPS 55898 b

1payments of State funds to the municipality:
2        (1) in fiscal year 2016, one-third of the total amount
3    of any payments of State funds to the municipality;
4        (2) in fiscal year 2017, two-thirds of the total amount
5    of any payments of State funds to the municipality; and
6        (3) in fiscal year 2018 and each fiscal year
7    thereafter, the total amount of any payments of State funds
8    to the municipality.
9    The State Comptroller may not deduct from any payments of
10State funds to the municipality more than the amount of
11delinquent payments certified to the State Comptroller by the
12fund.
13    (c) The board shall make available to the membership and
14the general public for inspection and copying at reasonable
15times the most recent Actuarial Valuation Balance Sheet and Tax
16Levy Requirement issued to the fund by the Department of
17Insurance.
18    (d) The firefighters' pension fund shall consist of the
19following moneys which shall be set apart by the treasurer of
20the municipality: (1) all moneys derived from the taxes levied
21hereunder; (2) contributions by firefighters as provided under
22Section 4-118.1; (3) all rewards in money, fees, gifts, and
23emoluments that may be paid or given for or on account of
24extraordinary service by the fire department or any member
25thereof, except when allowed to be retained by competitive
26awards; and (4) any money, real estate or personal property

 

 

HB3321- 11 -LRB101 10776 RPS 55898 b

1received by the board.
2    (e) For the purposes of this Section, "enrolled actuary"
3means an actuary: (1) who is a member of the Society of
4Actuaries or the American Academy of Actuaries; and (2) who is
5enrolled under Subtitle C of Title III of the Employee
6Retirement Income Security Act of 1974, or who has been engaged
7in providing actuarial services to one or more public
8retirement systems for a period of at least 3 years as of July
91, 1983.
10    (f) The corporate authorities of a municipality that
11employs a person who is described in subdivision (d) of Section
124-106 may add to the tax levy otherwise provided for in this
13Section an amount equal to the projected cost of the employer
14contributions required to be paid by the municipality to the
15State Universities Retirement System under subsection (b-1) of
16Section 15-155 of this Code.
17    (g) The Commission on Government Forecasting and
18Accountability shall conduct a study of all funds established
19under this Article and shall report its findings to the General
20Assembly on or before January 1, 2013. To the fullest extent
21possible, the study shall include, but not be limited to, the
22following:
23        (1) fund balances;
24        (2) historical employer contribution rates for each
25    fund;
26        (3) the actuarial formulas used as a basis for employer

 

 

HB3321- 12 -LRB101 10776 RPS 55898 b

1    contributions, including the actual assumed rate of return
2    for each year, for each fund;
3        (4) available contribution funding sources;
4        (5) the impact of any revenue limitations caused by
5    PTELL and employer home rule or non-home rule status; and
6        (6) existing statutory funding compliance procedures
7    and funding enforcement mechanisms for all municipal
8    pension funds.
9(Source: P.A. 99-8, eff. 7-9-15.)
 
10    Section 90. The State Mandates Act is amended by adding
11Section 8.43 as follows:
 
12    (30 ILCS 805/8.43 new)
13    Sec. 8.43. Exempt mandate. Notwithstanding Sections 6 and 8
14of this Act, no reimbursement by the State is required for the
15implementation of any mandate created by this amendatory Act of
16the 101st General Assembly.
 
17    Section 99. Effective date. This Act takes effect upon
18becoming law.