101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB4000

 

Introduced 1/4/2021, by Sen. Cristina Castro

 

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 805/8.44 new

    Amends the Downstate Police and Downstate Firefighter Articles of the Illinois Pension Code. Provides that the annual employer contribution shall include an 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 2050 (instead of 2040). Makes a conforming change. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.


LRB101 21585 RPS 72513 b

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

 

 

A BILL FOR

 

SB4000LRB101 21585 RPS 72513 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. The
15annual requirements to be provided by such tax levy are equal
16to (1) the normal cost of the pension fund for the year
17involved, plus (2) an amount sufficient to bring the total
18assets of the pension fund up to 90% of the total actuarial
19liabilities of the pension fund by the end of municipal fiscal
20year 2050 2040, as annually updated and determined by an
21enrolled actuary employed by the Illinois Department of
22Insurance or by an enrolled actuary retained by the pension
23fund or the municipality. In making these determinations, the

 

 

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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 2050 2040 and shall
4be determined under the projected unit credit actuarial cost
5method. The tax shall be levied and collected in the same
6manner as the general taxes of the municipality, and in
7addition to all other taxes now or hereafter authorized to be
8levied upon all property within the municipality, and shall be
9in addition to the amount authorized to be levied for general
10purposes as provided by Section 8-3-1 of the Illinois Municipal
11Code, approved May 29, 1961, as amended. The tax shall be
12forwarded directly to the treasurer of the board within 30
13business days after receipt by the county.
14    (b) For purposes of determining the required employer
15contribution to a pension fund, the value of the pension fund's
16assets shall be equal to the actuarial value of the pension
17fund's assets, which shall be calculated as follows:
18        (1) On March 30, 2011, the actuarial value of a pension
19    fund's assets shall be equal to the market value of the
20    assets as of that date.
21        (2) In determining the actuarial value of the System's
22    assets for fiscal years after March 30, 2011, any actuarial
23    gains or losses from investment return incurred in a fiscal
24    year shall be recognized in equal annual amounts over the
25    5-year period following that fiscal year.
26    (c) If a participating municipality fails to transmit to

 

 

SB4000- 3 -LRB101 21585 RPS 72513 b

1the fund contributions required of it under this Article for
2more than 90 days after the payment of those contributions is
3due, the fund may, after giving notice to the municipality,
4certify to the State Comptroller the amounts of the delinquent
5payments in accordance with any applicable rules of the
6Comptroller, and the Comptroller must, beginning in fiscal year
72016, deduct and remit to the fund the certified amounts or a
8portion of those amounts from the following proportions of
9payments of State funds to the municipality:
10        (1) in fiscal year 2016, one-third of the total amount
11    of any payments of State funds to the municipality;
12        (2) in fiscal year 2017, two-thirds of the total amount
13    of any payments of State funds to the municipality; and
14        (3) in fiscal year 2018 and each fiscal year
15    thereafter, the total amount of any payments of State funds
16    to the municipality.
17    The State Comptroller may not deduct from any payments of
18State funds to the municipality more than the amount of
19delinquent payments certified to the State Comptroller by the
20fund.
21    (d) The police pension fund shall consist of the following
22moneys which shall be set apart by the treasurer of the
23municipality:
24        (1) All moneys derived from the taxes levied hereunder;
25        (2) Contributions by police officers under Section
26    3-125.1;

 

 

SB4000- 4 -LRB101 21585 RPS 72513 b

1        (2.5) All moneys received from the Police Officers'
2    Pension Investment Fund as provided in Article 22B of this
3    Code;
4        (3) All moneys accumulated by the municipality under
5    any previous legislation establishing a fund for the
6    benefit of disabled or retired police officers;
7        (4) Donations, gifts or other transfers authorized by
8    this Article.
9    (e) The Commission on Government Forecasting and
10Accountability shall conduct a study of all funds established
11under this Article and shall report its findings to the General
12Assembly on or before January 1, 2013. To the fullest extent
13possible, the study shall include, but not be limited to, the
14following:
15        (1) fund balances;
16        (2) historical employer contribution rates for each
17    fund;
18        (3) the actuarial formulas used as a basis for employer
19    contributions, including the actual assumed rate of return
20    for each year, for each fund;
21        (4) available contribution funding sources;
22        (5) the impact of any revenue limitations caused by
23    PTELL and employer home rule or non-home rule status; and
24        (6) existing statutory funding compliance procedures
25    and funding enforcement mechanisms for all municipal
26    pension funds.

 

 

SB4000- 5 -LRB101 21585 RPS 72513 b

1(Source: P.A. 101-610, eff. 1-1-20.)
 
2    (40 ILCS 5/4-118)  (from Ch. 108 1/2, par. 4-118)
3    Sec. 4-118. Financing.
4    (a) The city council or the board of trustees of the
5municipality shall annually levy a tax upon all the taxable
6property of the municipality at the rate on the dollar which
7will produce an amount which, when added to the deductions from
8the salaries or wages of firefighters and revenues available
9from other sources, will equal a sum sufficient to meet the
10annual actuarial requirements of the pension fund, as
11determined by an enrolled actuary employed by the Illinois
12Department of Insurance or by an enrolled actuary retained by
13the pension fund or municipality. For the purposes of this
14Section, the annual actuarial requirements of the pension fund
15are equal to (1) the normal cost of the pension fund, or 17.5%
16of the salaries and wages to be paid to firefighters for the
17year involved, whichever is greater, plus (2) an annual 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 2050 2040, as annually updated
21and determined 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
24determinations, the required minimum employer contribution
25shall be calculated each year as a level percentage of payroll

 

 

SB4000- 6 -LRB101 21585 RPS 72513 b

1over the years remaining up to and including fiscal year 2050
22040 and shall be determined under the projected unit credit
3actuarial cost method. The amount to be applied towards the
4amortization of the unfunded accrued liability in any year
5shall not be less than the annual amount required to amortize
6the unfunded accrued liability, including interest, as a level
7percentage of payroll over the number of years remaining in the
840 year amortization period.
9    (a-2) A municipality that has established a pension fund
10under this Article and who employs a full-time firefighter, as
11defined in Section 4-106, shall be deemed a primary employer
12with respect to that full-time firefighter. Any municipality of
135,000 or more inhabitants that employs or enrolls a firefighter
14while that firefighter continues to earn service credit as a
15participant in a primary employer's pension fund under this
16Article shall be deemed a secondary employer and such employees
17shall be deemed to be secondary employee firefighters. To
18ensure that the primary employer's pension fund under this
19Article is aware of additional liabilities and risks to which
20firefighters are exposed when performing work as firefighters
21for secondary employers, a secondary employer shall annually
22prepare a report accounting for all hours worked by and wages
23and salaries paid to the secondary employee firefighters it
24receives services from or employs for each fiscal year in which
25such firefighters are employed and transmit a certified copy of
26that report to the primary employer's pension fund and the

 

 

SB4000- 7 -LRB101 21585 RPS 72513 b

1secondary employee firefighter no later than 30 days after the
2end of any fiscal year in which wages were paid to the
3secondary employee firefighters.
4    Nothing in this Section shall be construed to allow a
5secondary employee to qualify for benefits or creditable
6service for employment as a firefighter for a secondary
7employer.
8    (a-5) For purposes of determining the required employer
9contribution to a pension fund, the value of the pension fund's
10assets shall be equal to the actuarial value of the pension
11fund's assets, which shall be calculated as follows:
12        (1) On March 30, 2011, the actuarial value of a pension
13    fund's assets shall be equal to the market value of the
14    assets as of that date.
15        (2) In determining the actuarial value of the pension
16    fund's assets for fiscal years after March 30, 2011, any
17    actuarial gains or losses from investment return incurred
18    in a fiscal year shall be recognized in equal annual
19    amounts over the 5-year period following that fiscal year.
20    (b) The tax shall be levied and collected in the same
21manner as the general taxes of the municipality, and shall be
22in addition to all other taxes now or hereafter authorized to
23be levied upon all property within the municipality, and in
24addition to the amount authorized to be levied for general
25purposes, under Section 8-3-1 of the Illinois Municipal Code or
26under Section 14 of the Fire Protection District Act. The tax

 

 

SB4000- 8 -LRB101 21585 RPS 72513 b

1shall be forwarded directly to the treasurer of the board
2within 30 business days of receipt by the county (or, in the
3case of amounts added to the tax levy under subsection (f),
4used by the municipality to pay the employer contributions
5required under subsection (b-1) of Section 15-155 of this
6Code).
7    (b-5) If a participating municipality fails to transmit to
8the fund contributions required of it under this Article for
9more than 90 days after the payment of those contributions is
10due, the fund may, after giving notice to the municipality,
11certify to the State Comptroller the amounts of the delinquent
12payments in accordance with any applicable rules of the
13Comptroller, and the Comptroller must, beginning in fiscal year
142016, deduct and remit to the fund the certified amounts or a
15portion of those amounts from the following proportions of
16payments of State funds to the municipality:
17        (1) in fiscal year 2016, one-third of the total amount
18    of any payments of State funds to the municipality;
19        (2) in fiscal year 2017, two-thirds of the total amount
20    of any payments of State funds to the municipality; and
21        (3) in fiscal year 2018 and each fiscal year
22    thereafter, the total amount of any payments of State funds
23    to the municipality.
24    The State Comptroller may not deduct from any payments of
25State funds to the municipality more than the amount of
26delinquent payments certified to the State Comptroller by the

 

 

SB4000- 9 -LRB101 21585 RPS 72513 b

1fund.
2    (c) The board shall make available to the membership and
3the general public for inspection and copying at reasonable
4times the most recent Actuarial Valuation Balance Sheet and Tax
5Levy Requirement issued to the fund by the Department of
6Insurance.
7    (d) The firefighters' pension fund shall consist of the
8following moneys which shall be set apart by the treasurer of
9the municipality: (1) all moneys derived from the taxes levied
10hereunder; (2) contributions by firefighters as provided under
11Section 4-118.1; (2.5) all moneys received from the
12Firefighters' Pension Investment Fund as provided in Article
1322C of this Code; (3) all rewards in money, fees, gifts, and
14emoluments that may be paid or given for or on account of
15extraordinary service by the fire department or any member
16thereof, except when allowed to be retained by competitive
17awards; and (4) any money, real estate or personal property
18received by the board.
19    (e) For the purposes of this Section, "enrolled actuary"
20means an actuary: (1) who is a member of the Society of
21Actuaries or the American Academy of Actuaries; and (2) who is
22enrolled under Subtitle C of Title III of the Employee
23Retirement Income Security Act of 1974, or who has been engaged
24in providing actuarial services to one or more public
25retirement systems for a period of at least 3 years as of July
261, 1983.

 

 

SB4000- 10 -LRB101 21585 RPS 72513 b

1    (f) The corporate authorities of a municipality that
2employs a person who is described in subdivision (d) of Section
34-106 may add to the tax levy otherwise provided for in this
4Section an amount equal to the projected cost of the employer
5contributions required to be paid by the municipality to the
6State Universities Retirement System under subsection (b-1) of
7Section 15-155 of this Code.
8    (g) The Commission on Government Forecasting and
9Accountability shall conduct a study of all funds established
10under this Article and shall report its findings to the General
11Assembly on or before January 1, 2013. To the fullest extent
12possible, the study shall include, but not be limited to, the
13following:
14        (1) fund balances;
15        (2) historical employer contribution rates for each
16    fund;
17        (3) the actuarial formulas used as a basis for employer
18    contributions, including the actual assumed rate of return
19    for each year, for each fund;
20        (4) available contribution funding sources;
21        (5) the impact of any revenue limitations caused by
22    PTELL and employer home rule or non-home rule status; and
23        (6) existing statutory funding compliance procedures
24    and funding enforcement mechanisms for all municipal
25    pension funds.
26(Source: P.A. 101-522, eff. 8-23-19; 101-610, eff. 1-1-20.)
 

 

 

SB4000- 11 -LRB101 21585 RPS 72513 b

1    Section 90. The State Mandates Act is amended by adding
2Section 8.44 as follows:
 
3    (30 ILCS 805/8.44 new)
4    Sec. 8.44. Exempt mandate. Notwithstanding Sections 6 and 8
5of this Act, no reimbursement by the State is required for the
6implementation of any mandate created by this amendatory Act of
7the 101st General Assembly.
 
8    Section 99. Effective date. This Act takes effect upon
9becoming law.