SB0037eng 101ST GENERAL ASSEMBLY

SB0037 Engrossed LRB101 02871 RPS 47879 b

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 Illinois Pension Code is amended by changing Section 4-118 as follows:

(40 ILCS 5/4-118) (from Ch. 108 1/2, par. 4-118)

Sec. 4-118. Financing.

(a) The city council or the board of trustees of 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 firefighters and revenues available from other sources, will equal a sum sufficient to meet the annual actuarial requirements of the pension fund, as determined by an enrolled actuary employed by the Illinois Department of Insurance or by an enrolled actuary retained by the pension fund or municipality. For the purposes of this Section, the annual actuarial requirements of the pension fund are equal to (1) the normal cost of the pension fund, or 17.5% of the salaries and wages to be paid to firefighters for the year involved, whichever is greater, plus (2) an annual amount sufficient to bring the total assets of the pension fund up to 90% of the total actuarial liabilities of the pension fund by the end of municipal fiscal year 2040, as annually updated and determined by an enrolled actuary employed by the 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 amount to be applied towards the amortization of the unfunded accrued liability in any year shall not be less than the annual amount required to amortize the unfunded accrued liability, including interest, as a level percentage of payroll over the number of years remaining in the 40 year amortization period.

(a-2) A unit of local government that has established a pension fund under this Article and who employs a full-time firefighter, as defined in Section 4-106, shall be deemed a primary employer with respect to that full-time firefighter. Any unit of local government of 5,000 or more inhabitants that employs a firefighter while that firefighter continues to earn service credits as a participant in a primary employer's pension fund under this Article shall be deemed a secondary employer and such employees shall be deemed to be secondary employee firefighters. Primary and secondary employers shall have the following duties to ensure that the primary employer's pension fund under this Article is compensated for additional liabilities and risks to which firefighters are exposed when performing work as firefighters for secondary employers:

(1) A secondary employer shall annually prepare a report accounting for all wages and salaries paid to the secondary employee firefighters it employs for each fiscal year in which such firefighters are employed and transmit a certified copy of that report to the primary employer and the secondary employee firefighter no later than 30 days after the end of any fiscal year in which wages were paid to the secondary employee firefighters.

(2) The secondary employer, concurrent with the certification of its report, shall contribute an amount equal to 17.5% of the total wages and salaries paid to the secondary employee firefighter to the primary employer's pension fund for deposit to the credit of the pension fund.

(3) The secondary employer shall deduct an amount equal to 9.455% of the salaries and wages paid to the secondary employee and, concurrent with the certification of its report, shall pay the deducted amount to the primary employer's pension fund for deposit to the credit of the pension fund. This contribution shall be in addition to the contribution required under paragraph (2) of this subsection.

(4) The primary employer and the pension fund of that primary employer shall have standing to enforce the pension funding obligations of the secondary employer and secondary employee firefighters established under this subsection in accordance with the provisions of subsection (b-10) of this Section.

The contributions required under paragraphs (2) and (3) of this subsection apply beginning on the first day of the primary employer's pension fund's first fiscal year beginning on or after the effective date of this amendatory Act of the 101st General Assembly.

The contributions required under paragraphs (2) and (3) of this subsection are for the purposes of compensating the primary employer's pension fund for additional liabilities and risks to which firefighters are exposed when performing work as firefighters for secondary employers.

Nothing in this Section shall be construed to allow a secondary employee to qualify for benefits or creditable service for employment as firefighters for secondary employers.

(a-5) For purposes of determining the required employer contribution to 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) 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 pension fund's assets 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.

(b) The tax shall be levied and collected in the same manner as the general taxes of the municipality, and shall be in addition to all other taxes now or hereafter authorized to be levied upon all property within the municipality, and in addition to the amount authorized to be levied for general purposes, under Section 8-3-1 of the Illinois Municipal Code or under Section 14 of the Fire Protection District Act. The tax shall be forwarded directly to the treasurer of the board within 30 business days of receipt by the county (or, in the case of amounts added to the tax levy under subsection (f), used by the municipality to pay the employer contributions required under subsection (b-1) of Section 15-155 of this Code).

(b-5) If a participating municipality fails to transmit to the fund contributions required of it under this Article for more than 90 days after the payment of those contributions is due, the 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 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.

(b-10) If a unit of local government fails to transmit to the fund contributions required of it under subsection (a-2) of this Section for more than 90 days after the payment of those contributions is due, the fund may, after giving notice to the unit of local government, 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 2020, deduct and remit to the fund the certified amounts or a portion of those amounts from payments of State funds to the unit of local government. The State Comptroller may not deduct from any payments of State funds to the unit of local government more than the amount of delinquent payments certified to the State Comptroller by the fund.

(c) The board shall make available to the membership and the general public for inspection and copying at reasonable times the most recent Actuarial Valuation Balance Sheet and Tax Levy Requirement issued to the fund by the Department of Insurance.

(d) The firefighters' 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 firefighters as provided under Section 4-118.1; (3) all rewards in money, fees, gifts, and emoluments that may be paid or given for or on account of extraordinary service by the fire department or any member thereof, except when allowed to be retained by competitive awards; and (4) any money, real estate or personal property received by the board.

(e) For the purposes of this Section, "enrolled actuary" means an actuary: (1) who is a member of the Society of Actuaries or the American Academy of Actuaries; and (2) who is enrolled under Subtitle C of Title III of the Employee Retirement Income Security Act of 1974, or who has been engaged in providing actuarial services to one or more public retirement systems for a period of at least 3 years as of July 1, 1983.

(f) The corporate authorities of a municipality that employs a person who is described in subdivision (d) of Section 4-106 may add to the tax levy otherwise provided for in this Section an amount equal to the projected cost of the employer contributions required to be paid by the municipality to the State Universities Retirement System under subsection (b-1) of Section 15-155 of this Code.

(g) 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.)

Section 90. The State Mandates Act is amended by adding Section 8.43 as follows:

(30 ILCS 805/8.43 new)

Sec. 8.43. 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 101st General Assembly.

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