SB2652 93RD GENERAL ASSEMBLY

LRB093 15397 LRD 41000 b

93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004
SB2652

Introduced 2/4/2004, by John J. Cullerton

SYNOPSIS AS INTRODUCED:

40 ILCS 5/17-116	from Ch. 108 1/2, par. 17-116
40 ILCS 5/17-119	from Ch. 108 1/2, par. 17-119
40 ILCS 5/17-121.1 new
40 ILCS 5/17-129	from Ch. 108 1/2, par. 17-129
30 ILCS 805/8.28 new

Amends the Chicago Teacher Article of the Illinois Pension Code. Provides that the service retirement pension for a teacher who retires on or after the effective date of this amendatory Act shall be 2.4% (now 2.2%) of average salary for each year of creditable service. Establishes a minimum retirement pension of $1,500 per month for teachers with at least 20 years of service credit in the Fund. Allows a designated domestic partner to qualify as a surviving spouse for purposes of survivor and death benefits. Provides for a minimum annual contribution from the Chicago Board of Education to the Chicago Teachers' Pension Fund. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.

FISCAL NOTE ACT MAY APPLY

PENSION IMPACT NOTE ACT MAY APPLY

STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

A BILL FOR

AN ACT concerning to 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 Sections 17-116, 17-119, and 17-129 and adding Section 17-121.1 as follows:

(40 ILCS 5/17-116) (from Ch. 108 1/2, par. 17-116)

Sec. 17-116. Service retirement pension.

(a) Each teacher having 20 years of service upon attainment of age 55, or who thereafter attains age 55 shall be entitled to a service retirement pension upon or after attainment of age 55; and each teacher in service on or after July 1, 1971, with 5 or more but less than 20 years of service shall be entitled to receive a service retirement pension upon or after attainment of age 62.

(b) The service retirement pension for a teacher who retires on or after June 25, 1971, at age 60 or over, shall be calculated as follows:

(1) For creditable service earned before July 1, 1998 that has not been augmented under Section 17-119.1: 1.67% for each of the first 10 years of service; 1.90% for each of the next 10 years of service; 2.10% for each year of service in excess of 20 but not exceeding 30; and 2.30% for each year of service in excess of 30, based upon average salary as herein defined.

(2) For creditable service earned on or after July 1, 1998 by a member who has at least 30 years of creditable service on July 1, 1998 and who does not elect to augment service under Section 17-119.1: 2.3% of average salary for each year of creditable service earned on or after July 1, 1998.

(3) For all other creditable service: for persons who retire before the effective date of this amendatory Act of the 93rd General Assembly, 2.2% of average salary for each year of creditable service and, for persons who retire on or after the effective date of this amendatory Act of the 93rd General Assembly, 2.4% of average salary for each year of creditable service.

(c) When computing such service retirement pensions, the following conditions shall apply:

1. Average salary shall consist of the average annual rate of salary for the 4 consecutive years of validated service within the last 10 years of service when such average annual rate was highest. In the determination of average salary for retirement allowance purposes, for members who commenced employment after August 31, 1979, that part of the salary for any year shall be excluded which exceeds the annual full-time salary rate for the preceding year by more than 20%. In the case of a member who commenced employment before August 31, 1979 and who receives salary during any year after September 1, 1983 which exceeds the annual full time salary rate for the preceding year by more than 20%, an Employer and other employers of eligible contributors as defined in Section 17-106 shall pay to the Fund an amount equal to the present value of the additional service retirement pension resulting from such excess salary. The present value of the additional service retirement pension shall be computed by the Board on the basis of actuarial tables adopted by the Board. If a member elects to receive a pension from this Fund provided by Section 20-121, his salary under the State Universities Retirement System and the Teachers' Retirement System of the State of Illinois shall be considered in determining such average salary. Amounts paid after the effective date of this amendatory Act of 1991 for unused vacation time earned after that effective date shall not under any circumstances be included in the calculation of average salary or the annual rate of salary for the purposes of this Article.

2. Proportionate credit shall be given for validated service of less than one year.

3. For retirement at age 60 or over the pension shall be payable at the full rate.

4. For separation from service below age 60 to a minimum age of 55, the pension shall be discounted at the rate of 1/2 of one per cent for each month that the age of the contributor is less than 60, but a teacher may elect to defer the effective date of pension in order to eliminate or reduce this discount. This discount shall not be applicable to any participant who has at least 34 years of service or a retirement pension of at least 74.6% of average salary on the date the retirement annuity begins.

5. No additional pension shall be granted for service exceeding 45 years. Beginning June 26, 1971 no pension shall exceed the greater of $1,500 per month or 75% of average salary as herein defined.

6. Service retirement pensions shall begin on the effective date of resignation, retirement, the day following the close of the payroll period for which service credit was validated, or the time the person resigning or retiring attains age 55, or on a date elected by the teacher, whichever shall be latest.

7. A member who is eligible to receive a retirement pension of at least 74.6% of average salary and will attain age 55 on or before December 31 during the year which commences on July 1 shall be deemed to attain age 55 on the preceding June 1.

8. A member retiring after the effective date of this amendatory Act of 1998 shall receive a pension equal to 75% of average salary if the member is qualified to receive a retirement pension equal to at least 74.6% of average salary under this Article or as proportional annuities under Article 20 of this Code.

(d) Notwithstanding the other provisions of this Section, the minimum retirement pension payable to a person with at least 20 years of service credit under this Article who begins receiving a retirement pension (other than a reversionary pension) on or after January 1, 2005 shall be $1,500 per month.

(Source: P.A. 90-566, eff. 1-2-98; 90-582, eff. 5-27-98.)

(40 ILCS 5/17-119) (from Ch. 108 1/2, par. 17-119)

Sec. 17-119. Automatic annual increase in pension.

(a) Each teacher retiring on or after September 1, 1959, is entitled to the annual increase in pension, defined herein, while he is receiving a pension from the Fund.

1. The term "base pension" means a service retirement or disability retirement pension in the amount fixed and payable at the date of retirement of a teacher.

2. The annual increase in pension shall be at the rate of 1 1/2% of base pension. This increase shall first occur in January of the year next following the first anniversary of retirement. At such time the Fund shall pay the pro rata part of the increase for the period from the first anniversary date to the date of the first increase in pension. Beginning January 1, 1972, the rate of annual increase in pension shall be 2% of the base pension. Beginning January 1, 1979, the rate of annual increase in pension shall be 3% of the base pension. Beginning January 1, 1990, all automatic annual increases payable under this Section shall be calculated as a percentage of the total pension payable at the time of the increase, including all increases previously granted under this Article, notwithstanding Section 17-157.

3. An increase in pension shall be granted only if the retired teacher is age 60 or over. If the teacher attains age 60 after retirement, the increase in pension shall begin in January of the year following the 61st birthday. At such time the Fund also shall pay the pro rata part of the increase from the 61st birthday to the date of first increase in pension.

(b) In addition to other increases which may be provided by this Section, on January 1, 1981 any teacher who was receiving a retirement pension on or before January 1, 1971 shall have his retirement pension then being paid increased $1 per month for each year of creditable service. On January 1, 1982, any teacher whose retirement pension began on or before January 1, 1977, shall have his retirement pension then being paid increased $1 per month for each year of creditable service.

(c) On January 1, 1987, any teacher whose retirement pension began on or before January 1, 1977, shall have the monthly retirement pension increased by an amount equal to 8¢ per year of creditable service times the number of years that have elapsed since the retirement pension began.

(d) On January 1, 2005, every pensioner with at least 20 years of service credit under this Article who is receiving a retirement pension (other than a reversionary pension) of less than $1,500 per month shall have the retirement pension increased to $1,500 on that date, notwithstanding Section 17-157. The increase under this subsection shall be included in the calculation of the increases granted on that date or thereafter under subsection (a) of this Section.

(Source: P.A. 90-566, eff. 1-2-98.)

(40 ILCS 5/17-121.1 new)

Sec. 17-121.1. Domestic partner eligibility.

(a) Beginning July 1, 2004, an unmarried teacher may designate a domestic partner by filing a written designation with the Fund in the manner prescribed by the Fund. The Fund may require reasonable evidence that the person designated meets the qualifications set forth in subsection (c). Such a designation is revocable at any time, but may not be made or changed more than once in any 24-month period. The marriage of a teacher automatically revokes any designation of a domestic partner previously made by that teacher.

(b) The designated domestic partner of a teacher shall be eligible to receive survivor and death benefits under this Article in the same manner and subject to the same conditions as a surviving spouse. For the purposes of determining eligibility for those benefits, the date of designation of a domestic partner shall be deemed the equivalent of the date of marriage, and the revocation or change of a designation shall be deemed the equivalent of termination of the marriage. References in this Article and other applicable Articles of this Code to a surviving spouse shall be deemed to include a surviving designated domestic partner.

(c) "Domestic partner" means an individual of the same gender as an unmarried teacher who (1) is involved with the teacher in a long-term relationship of indefinite duration; (2) has resided together with the teacher at the same address for at least 12 months; (3) is not related to the teacher by blood to a degree of closeness that would prohibit legal marriage in the state in which they legally reside; (4) is not married to any other person; and (5) has an exclusive mutual commitment to the teacher in which they agree to be jointly responsible for each other's common welfare and to share financial obligations.

(40 ILCS 5/17-129) (from Ch. 108 1/2, par. 17-129)

Sec. 17-129. Employer contributions; deficiency in Fund.

(a) If in any fiscal year of the Board of Education ending prior to 1997 the total amounts paid to the Fund from the Board of Education (other than under this subsection, and other than amounts used for making or "picking up" contributions on behalf of teachers) and from the State do not equal the total contributions made by or on behalf of the teachers for such year, or if the total income of the Fund in any such fiscal year of the Board of Education from all sources is less than the total such expenditures by the Fund for such year, the Board of Education shall, in the next succeeding year, in addition to any other payment to the Fund set apart and appropriate from moneys from its tax levy for educational purposes, a sum sufficient to remove such deficiency or deficiencies, and promptly pay such sum into the Fund in order to restore any of the reserves of the Fund that may have been so temporarily applied. Any amounts received by the Fund after December 4, 1997 from State appropriations, including under Section 17-127, shall be a credit against and shall fully satisfy any obligation that may have arisen, or be claimed to have arisen, under this subsection (a) as a result of any deficiency or deficiencies in the fiscal year of the Board of Education ending in calendar year 1997.

(b) (i) For fiscal years 2011 through 2045, the minimum contribution to the Fund to be made by the Board of Education in each fiscal year shall be an amount determined by the Fund to be sufficient to bring the total assets of the Fund up to 90% of the total actuarial liabilities of the Fund by the end of fiscal year 2045. In making these determinations, the required Board of Education contribution shall be calculated each year as a level percentage of the applicable employee payrolls over the years remaining to and including fiscal year 2045 and shall be determined under the projected unit credit actuarial cost method.

(ii) For fiscal years 1999 through 2010, the Board of Education's contribution to the Fund, as a percentage of the applicable employee payroll, shall be increased in equal annual increments so that by fiscal year 2011, the Board of Education is contributing at the rate required under this subsection.

(iii) Beginning in fiscal year 2046, the minimum Board of Education contribution for each fiscal year shall be the amount needed to maintain the total assets of the Fund at 90% of the total actuarial liabilities of the Fund.

(iv) Notwithstanding any provision of law to the contrary, for the Fund's 2005-2006 fiscal year and each the provisions of paragraphs (i), (ii), and (iii) of this subsection (b), for any fiscal year thereafter, the contribution to the Fund from the Board of Education shall be not less than the amount of member contributions during the fiscal year 2 years prior to the fiscal year for which the contribution is required not be required to be in excess of the amount calculated as needed to maintain the assets (or cause the assets to be) at the 90% level by the end of the fiscal year.

(v) Any contribution by the State to or for the benefit of the Fund, including, without limitation, as referred to under Section 17-127, shall be a credit against any contribution required to be made by the Board of Education under this subsection (b).

(c) The Board shall determine the amount of Board of Education contributions required for each fiscal year on the basis of the actuarial tables and other assumptions adopted by the Board and the recommendations of the actuary, in order to meet the minimum contribution requirements of subsections (a) and (b). Annually, on or before February 28, the Board shall certify to the Board of Education the amount of the required Board of Education contribution for the coming fiscal year. The certification shall include a copy of the actuarial recommendations upon which it is based.

(Source: P.A. 89-15, eff. 5-30-95; 90-548, eff. 12-4-97; 90-566, eff. 1-2-98; 90-655, eff. 7-30-98.)

Section 90. The State Mandates Act is amended by adding Section 8.28 as follows:

(30 ILCS 805/8.28 new)

Sec. 8.28. 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 93rd General Assembly.

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