101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB3669

 

Introduced 2/14/2020, by Sen. Chuck Weaver

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Amends the Downstate Police and Downstate Firefighter Articles of the Illinois Pension Code. Beginning municipal fiscal year 2022, 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 2022. Provides a 20-year rolling amortization period for municipal fiscal year 2032 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, shall be determined under the entry age normal actuarial cost method, and shall be calculated using the most recent public retirement plans mortality table published by the Society of Actuaries. Provides that a municipality may not deviate from the amount of the contribution determined by the enrolled actuary and must use the actuarial rate of return recommended by the enrolled actuary. Provides that if a participating municipality fails to transmit to the fund contributions required of it for more than 90 days after the payment of those contributions is due, the fund shall (instead of may) certify to the State Comptroller the amounts of the delinquent payments, and the Comptroller must deduct and remit to the fund the certified amounts from payments of State funds to the municipality. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.


LRB101 20600 RPS 70237 b

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

 

 

A BILL FOR

 

SB3669LRB101 20600 RPS 70237 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 2022, 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

 

 

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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. The tax shall be levied and collected in
6the same manner as the general taxes of the municipality, and
7in addition to all other taxes now or hereafter authorized to
8be levied upon all property within the municipality, and shall
9be in addition to the amount authorized to be levied for
10general purposes as provided by Section 8-3-1 of the Illinois
11Municipal Code, approved May 29, 1961, as amended. The tax
12shall be forwarded directly to the treasurer of the board
13within 30 business days after receipt by the county.
14    For municipal fiscal years 2022 through 2031, the annual
15requirements to be provided by such tax levy are equal to (1)
16the normal cost of the pension fund for the year involved, plus
17(2) an amount sufficient to bring the total assets of the
18pension fund up to 100% of the total actuarial liabilities of
19the pension fund over a 30-year rolling amortization period, as
20annually updated and determined by an enrolled actuary employed
21by the Department of Insurance or by an enrolled actuary
22retained by the pension fund or the municipality. However, for
23each municipal fiscal year until municipal fiscal year 2032,
24the rolling amortization period specified in this paragraph
25shall be reduced by one year for each municipal fiscal year
26after 2022. In making these determinations, the required

 

 

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1minimum employer contribution shall be calculated each year as
2a level dollar amount over the amortization period, shall be
3determined under the entry age normal actuarial cost method,
4and shall be calculated using the most recent public retirement
5plans mortality table published by the Society of Actuaries. A
6municipality may not deviate from the amount determined in
7accordance with this paragraph by the enrolled actuary and must
8use the actuarial rate of return recommended by the enrolled
9actuary.
10    For municipal fiscal year 2032 and each year thereafter,
11the annual requirements to be provided by such tax levy are
12equal to (1) the normal cost of the pension fund for the year
13involved, plus (2) an amount sufficient to bring the total
14assets of the pension fund up to 100% of the total actuarial
15liabilities of the pension fund over a 20-year rolling
16amortization period, as annually updated and determined by an
17enrolled actuary employed by the Department of Insurance or by
18an enrolled actuary retained by the pension fund or the
19municipality. In making these determinations, the required
20minimum employer contribution shall be calculated each year as
21a level dollar amount over the amortization period, shall be
22determined under the entry age normal actuarial cost method,
23and shall be calculated using the most recent public retirement
24plans mortality table published by the Society of Actuaries. A
25municipality may not deviate from the amount determined in
26accordance with this paragraph by the enrolled actuary and must

 

 

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1use the actuarial rate of return recommended by the enrolled
2actuary.
3    (b) For purposes of determining the required employer
4contribution to a pension fund, the value of the pension fund's
5assets shall be equal to the actuarial value of the pension
6fund's assets, which shall be calculated as follows:
7        (1) On March 30, 2011, the actuarial value of a pension
8    fund's assets shall be equal to the market value of the
9    assets as of that date.
10        (2) In determining the actuarial value of the System's
11    assets for fiscal years after March 30, 2011, any actuarial
12    gains or losses from investment return incurred in a fiscal
13    year shall be recognized in equal annual amounts over the
14    5-year period following that fiscal year.
15    (c) If a participating municipality fails to transmit to
16the fund contributions required of it under this Article for
17more than 90 days after the payment of those contributions is
18due, the fund shall may, after giving notice to the
19municipality, certify to the State Comptroller the amounts of
20the delinquent payments in accordance with any applicable rules
21of the Comptroller, and the Comptroller must, beginning in
22fiscal year 2016, deduct and remit to the fund the certified
23amounts or a portion of those amounts from the following
24proportions of payments of State funds to the municipality:
25        (1) in fiscal year 2016, one-third of the total amount
26    of any payments of State funds to the municipality;

 

 

SB3669- 5 -LRB101 20600 RPS 70237 b

1        (2) in fiscal year 2017, two-thirds of the total amount
2    of any payments of State funds to the municipality; and
3        (3) in fiscal year 2018 and each fiscal year
4    thereafter, the total amount of any payments of State funds
5    to the municipality.
6    The State Comptroller may not deduct from any payments of
7State funds to the municipality more than the amount of
8delinquent payments certified to the State Comptroller by the
9fund.
10    (d) The police pension fund shall consist of the following
11moneys which shall be set apart by the treasurer of the
12municipality:
13        (1) All moneys derived from the taxes levied hereunder;
14        (2) Contributions by police officers under Section
15    3-125.1;
16        (2.5) All moneys received from the Police Officers'
17    Pension Investment Fund as provided in Article 22B of this
18    Code;
19        (3) All moneys accumulated by the municipality under
20    any previous legislation establishing a fund for the
21    benefit of disabled or retired police officers;
22        (4) Donations, gifts or other transfers authorized by
23    this Article.
24    (e) The Commission on Government Forecasting and
25Accountability shall conduct a study of all funds established
26under this Article and shall report its findings to the General

 

 

SB3669- 6 -LRB101 20600 RPS 70237 b

1Assembly on or before January 1, 2013. To the fullest extent
2possible, the study shall include, but not be limited to, the
3following:
4        (1) fund balances;
5        (2) historical employer contribution rates for each
6    fund;
7        (3) the actuarial formulas used as a basis for employer
8    contributions, including the actual assumed rate of return
9    for each year, for each fund;
10        (4) available contribution funding sources;
11        (5) the impact of any revenue limitations caused by
12    PTELL and employer home rule or non-home rule status; and
13        (6) existing statutory funding compliance procedures
14    and funding enforcement mechanisms for all municipal
15    pension funds.
16(Source: P.A. 101-610, eff. 1-1-20.)
 
17    (40 ILCS 5/4-118)  (from Ch. 108 1/2, par. 4-118)
18    Sec. 4-118. Financing.
19    (a) The city council or the board of trustees of the
20municipality shall annually levy a tax upon all the taxable
21property of the municipality at the rate on the dollar which
22will produce an amount which, when added to the deductions from
23the salaries or wages of firefighters and revenues available
24from other sources, will equal a sum sufficient to meet the
25annual actuarial requirements of the pension fund, as

 

 

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1determined by an enrolled actuary employed by the Illinois
2Department of Insurance or by an enrolled actuary retained by
3the pension fund or municipality. For the purposes of this
4Section, until municipal fiscal year 2022, the annual actuarial
5requirements of the pension fund are equal to (1) the normal
6cost of the pension fund, or 17.5% of the salaries and wages to
7be paid to firefighters for the year involved, whichever is
8greater, plus (2) an annual amount sufficient to bring the
9total assets of the pension fund up to 90% of the total
10actuarial liabilities of the pension fund by the end of
11municipal fiscal year 2040, as annually updated and determined
12by an enrolled actuary employed by the Illinois 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 percentage of payroll over the years
17remaining up to and including fiscal year 2040 and shall be
18determined under the projected unit credit actuarial cost
19method. The amount to be applied towards the amortization of
20the unfunded accrued liability in any year shall not be less
21than the annual amount required to amortize the unfunded
22accrued liability, including interest, as a level percentage of
23payroll over the number of years remaining in the 40 year
24amortization period.
25    For the purposes of this Section, for municipal fiscal
26years 2022 through 2031, the annual actuarial requirements of

 

 

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1the pension fund are equal to (1) the normal cost of the
2pension fund, or 17.5% of the salaries and wages to be paid to
3firefighters for the year involved, whichever is greater, plus
4(2) an amount sufficient to bring the total assets of the
5pension fund up to 100% of the total actuarial liabilities of
6the pension fund over a 30-year rolling amortization period, as
7annually updated and determined by an enrolled actuary employed
8by the Department of Insurance or by an enrolled actuary
9retained by the pension fund or the municipality. However, for
10each municipal fiscal year until municipal fiscal year 2032,
11the rolling amortization period specified in this paragraph
12shall be reduced by one year for each municipal fiscal year
13after 2022. In making these determinations, the required
14minimum employer contribution shall be calculated each year as
15a level dollar amount over the amortization period, shall be
16determined under the entry age normal actuarial cost method,
17and shall be calculated using the most recent public retirement
18plans mortality table published by the Society of Actuaries. A
19municipality may not deviate from the amount determined in
20accordance with this paragraph by the enrolled actuary and must
21use the actuarial rate of return recommended by the enrolled
22actuary.
23    For the purposes of this Section, beginning municipal
24fiscal year 2032 and each municipal fiscal year thereafter, the
25annual actuarial requirements of the pension fund are equal to
26(1) the normal cost of the pension fund, or 17.5% of the

 

 

SB3669- 9 -LRB101 20600 RPS 70237 b

1salaries and wages to be paid to firefighters for the year
2involved, whichever is greater, plus (2) an amount sufficient
3to bring the total assets of the pension fund up to 100% of the
4total actuarial liabilities of the pension fund over a 20-year
5rolling amortization period, as annually updated and
6determined by an enrolled actuary employed by the Department of
7Insurance or by an enrolled actuary retained by the pension
8fund or the municipality. In making these determinations, the
9required minimum employer contribution shall be calculated
10each year as a level dollar amount over the amortization
11period, shall be determined under the entry age normal
12actuarial cost method, and shall be calculated using the most
13recent public retirement plans mortality table published by the
14Society of Actuaries. A municipality may not deviate from the
15amount determined in accordance with this paragraph by the
16enrolled actuary and must use the actuarial rate of return
17recommended by the enrolled actuary.
18    (a-2) A municipality that has established a pension fund
19under this Article and who employs a full-time firefighter, as
20defined in Section 4-106, shall be deemed a primary employer
21with respect to that full-time firefighter. Any municipality of
225,000 or more inhabitants that employs or enrolls a firefighter
23while that firefighter continues to earn service credit as a
24participant in a primary employer's pension fund under this
25Article shall be deemed a secondary employer and such employees
26shall be deemed to be secondary employee firefighters. To

 

 

SB3669- 10 -LRB101 20600 RPS 70237 b

1ensure that the primary employer's pension fund under this
2Article is aware of additional liabilities and risks to which
3firefighters are exposed when performing work as firefighters
4for secondary employers, a secondary employer shall annually
5prepare a report accounting for all hours worked by and wages
6and salaries paid to the secondary employee firefighters it
7receives services from or employs for each fiscal year in which
8such firefighters are employed and transmit a certified copy of
9that report to the primary employer's pension fund and the
10secondary employee firefighter no later than 30 days after the
11end of any fiscal year in which wages were paid to the
12secondary employee firefighters.
13    Nothing in this Section shall be construed to allow a
14secondary employee to qualify for benefits or creditable
15service for employment as a firefighter for a secondary
16employer.
17    (a-5) For purposes of determining the required employer
18contribution to a pension fund, the value of the pension fund's
19assets shall be equal to the actuarial value of the pension
20fund's assets, which shall be calculated as follows:
21        (1) On March 30, 2011, the actuarial value of a pension
22    fund's assets shall be equal to the market value of the
23    assets as of that date.
24        (2) In determining the actuarial value of the pension
25    fund's assets for fiscal years after March 30, 2011, any
26    actuarial gains or losses from investment return incurred

 

 

SB3669- 11 -LRB101 20600 RPS 70237 b

1    in a fiscal year shall be recognized in equal annual
2    amounts over the 5-year period following that fiscal year.
3    (b) The tax shall be levied and collected in the same
4manner as the general taxes of the municipality, and shall be
5in addition to all other taxes now or hereafter authorized to
6be levied upon all property within the municipality, and in
7addition to the amount authorized to be levied for general
8purposes, under Section 8-3-1 of the Illinois Municipal Code or
9under Section 14 of the Fire Protection District Act. The tax
10shall be forwarded directly to the treasurer of the board
11within 30 business days of receipt by the county (or, in the
12case of amounts added to the tax levy under subsection (f),
13used by the municipality to pay the employer contributions
14required under subsection (b-1) of Section 15-155 of this
15Code).
16    (b-5) If a participating municipality fails to transmit to
17the fund contributions required of it under this Article for
18more than 90 days after the payment of those contributions is
19due, the fund shall may, after giving notice to the
20municipality, certify to the State Comptroller the amounts of
21the delinquent payments in accordance with any applicable rules
22of the Comptroller, and the Comptroller must, beginning in
23fiscal year 2016, deduct and remit to the fund the certified
24amounts or a portion of those amounts from the following
25proportions of payments of State funds to the municipality:
26        (1) in fiscal year 2016, one-third of the total amount

 

 

SB3669- 12 -LRB101 20600 RPS 70237 b

1    of any payments of State funds to the municipality;
2        (2) in fiscal year 2017, two-thirds of the total amount
3    of any payments of State funds to the municipality; and
4        (3) in fiscal year 2018 and each fiscal year
5    thereafter, the total amount of any payments of State funds
6    to the municipality.
7    The State Comptroller may not deduct from any payments of
8State funds to the municipality more than the amount of
9delinquent payments certified to the State Comptroller by the
10fund.
11    (c) The board shall make available to the membership and
12the general public for inspection and copying at reasonable
13times the most recent Actuarial Valuation Balance Sheet and Tax
14Levy Requirement issued to the fund by the Department of
15Insurance.
16    (d) The firefighters' pension fund shall consist of the
17following moneys which shall be set apart by the treasurer of
18the municipality: (1) all moneys derived from the taxes levied
19hereunder; (2) contributions by firefighters as provided under
20Section 4-118.1; (2.5) all moneys received from the
21Firefighters' Pension Investment Fund as provided in Article
2222C of this Code; (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

 

 

SB3669- 13 -LRB101 20600 RPS 70237 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

 

 

SB3669- 14 -LRB101 20600 RPS 70237 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. 101-522, eff. 8-23-19; 101-610, eff. 1-1-20.)
 
10    Section 90. The State Mandates Act is amended by adding
11Section 8.44 as follows:
 
12    (30 ILCS 805/8.44 new)
13    Sec. 8.44. 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.

 

 

SB3669- 15 -LRB101 20600 RPS 70237 b

1 INDEX
2 Statutes amended in order of appearance
3    40 ILCS 5/3-125from Ch. 108 1/2, par. 3-125
4    40 ILCS 5/4-118from Ch. 108 1/2, par. 4-118
5    30 ILCS 805/8.44 new