103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB2899

 

Introduced 1/26/2024, by Sen. Michael W. Halpin

 

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 805/8.48 new

    Amends the Downstate Police and Downstate Firefighter Articles of the Illinois Pension Code. Provides that, if a pension fund's total assets are at least 60% of the total actuarial liabilities of the pension fund, the city council or board of trustees of that municipality may elect an annual employer contribution that includes 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 or an earlier fiscal year, but no earlier than municipal fiscal year 2040. Provides that the election is irrevocable and must be made by ordinance or resolution no later than January 1, 2027. Makes conforming changes. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.


LRB103 37260 RPS 67380 b

STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT
MAY APPLY

 

 

A BILL FOR

 

SB2899LRB103 37260 RPS 67380 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
5changing Sections 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
12from the 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 2040, as annually updated and determined by an enrolled
21actuary employed by the Illinois Department of Insurance or by
22an enrolled actuary retained by the pension fund or the
23municipality. In making these determinations, the required

 

 

SB2899- 2 -LRB103 37260 RPS 67380 b

1minimum employer contribution shall be calculated each year as
2a level percentage of payroll over the years remaining up to
3and including fiscal year 2040 and shall be determined under
4the projected unit credit actuarial cost method. The tax shall
5be levied and collected in the same manner as the general taxes
6of the municipality, and in addition to all other taxes now or
7hereafter authorized to be levied upon all property within the
8municipality, and shall be in addition to the amount
9authorized to be levied for general purposes as provided by
10Section 8-3-1 of the Illinois Municipal Code, approved May 29,
111961, as amended. The tax shall be forwarded directly to the
12treasurer of the board within 30 business days after receipt
13by the county.
14    (a-5) Notwithstanding subsection (a), if the police
15pension fund's total assets are at least 60% of the total
16actuarial liabilities of the police pension fund, then the
17city council or board of trustees of that municipality may
18elect to annually levy a tax upon all taxable property of the
19municipality in accordance with this subsection. That election
20is irrevocable and must be made by ordinance or resolution no
21later than January 1, 2027. If the city council or board of
22trustees of a municipality makes that election, then the city
23council or the board of trustees of the municipality shall
24annually levy a tax upon all the taxable property of the
25municipality at the rate on the dollar that will produce an
26amount that, when added to the deductions from the salaries or

 

 

SB2899- 3 -LRB103 37260 RPS 67380 b

1wages of police officers, and revenues available from other
2sources, will equal a sum sufficient to meet the annual
3requirements of the police pension fund. The annual
4requirements to be provided by such tax levy are equal to (1)
5the normal cost of the pension fund for the year involved, plus
6(2) an amount sufficient to bring the total assets of the
7pension fund up to 90% of the total actuarial liabilities of
8the pension fund by the end of municipal fiscal year 2050 or an
9earlier municipal fiscal year elected by the city council or
10board of trustees of the municipality, but no earlier than
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 2050 or the earlier
18fiscal year and shall be determined under the projected unit
19credit actuarial cost method. The tax shall be levied and
20collected in the same manner as the general taxes of the
21municipality, and in addition to all other taxes now or
22hereafter authorized to be levied upon all property within the
23municipality, and shall be in addition to the amount
24authorized to be levied for general purposes as provided by
25Section 8-3-1 of the Illinois Municipal Code. The tax shall be
26forwarded directly to the treasurer of the board within 30

 

 

SB2899- 4 -LRB103 37260 RPS 67380 b

1business days after receipt by the county.
2    (b) For purposes of determining the required employer
3contribution to a pension fund, the value of the pension
4fund's assets shall be equal to the actuarial value of the
5pension fund's assets, which shall be calculated as follows:
6        (1) On March 30, 2011, the actuarial value of a
7    pension fund's assets shall be equal to the market value
8    of the assets as of that date.
9        (2) In determining the actuarial value of the System's
10    assets for fiscal years after March 30, 2011, any
11    actuarial gains or losses from investment return incurred
12    in a fiscal year shall be recognized in equal annual
13    amounts over the 5-year period following that fiscal year.
14    (c) If a participating municipality fails to transmit to
15the fund contributions required of it under this Article for
16more than 90 days after the payment of those contributions is
17due, the fund may, after giving notice to the municipality,
18certify to the State Comptroller the amounts of the delinquent
19payments in accordance with any applicable rules of the
20Comptroller, and the Comptroller must, beginning in fiscal
21year 2016, deduct and remit to the fund the certified amounts
22or a portion of those amounts from the following proportions
23of payments of State funds to the municipality:
24        (1) in fiscal year 2016, one-third of the total amount
25    of any payments of State funds to the municipality;
26        (2) in fiscal year 2017, two-thirds of the total

 

 

SB2899- 5 -LRB103 37260 RPS 67380 b

1    amount of any payments of State funds to the municipality;
2    and
3        (3) in fiscal year 2018 and each fiscal year
4    thereafter, the total amount of any payments of State
5    funds 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
14    hereunder;
15        (2) Contributions by police officers under Section
16    3-125.1;
17        (2.5) All moneys received from the Police Officers'
18    Pension Investment Fund as provided in Article 22B of this
19    Code;
20        (3) All moneys accumulated by the municipality under
21    any previous legislation establishing a fund for the
22    benefit of disabled or retired police officers;
23        (4) Donations, gifts or other transfers authorized by
24    this Article.
25    (e) The Commission on Government Forecasting and
26Accountability shall conduct a study of all funds established

 

 

SB2899- 6 -LRB103 37260 RPS 67380 b

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

 

 

SB2899- 7 -LRB103 37260 RPS 67380 b

1meet the annual actuarial requirements of the pension fund, as
2determined by an enrolled actuary employed by the Illinois
3Department of Insurance or by an enrolled actuary retained by
4the pension fund or municipality. For the purposes of this
5Section, except for a pension fund to which subsection (a-1)
6applies, the annual actuarial requirements of the pension fund
7are equal to (1) the normal cost of the pension fund, or 17.5%
8of the salaries and wages to be paid to firefighters for the
9year involved, whichever is greater, plus (2) an annual amount
10sufficient to bring the total assets of the pension fund up to
1190% of the total actuarial liabilities of the pension fund by
12the end of municipal fiscal year 2040, as annually updated and
13determined by an enrolled actuary employed by the Illinois
14Department of Insurance or by an enrolled actuary retained by
15the pension fund or the municipality. In making these
16determinations, the required minimum employer contribution
17shall be calculated each year as a level percentage of payroll
18over the years remaining up to and including fiscal year 2040
19and shall be determined under the projected unit credit
20actuarial cost method. The amount to be applied towards the
21amortization of the unfunded accrued liability in any year
22shall not be less than the annual amount required to amortize
23the unfunded accrued liability, including interest, as a level
24percentage of payroll over the number of years remaining in
25the 40-year amortization period.
26    (a-1) Notwithstanding subsection (a), if the pension

 

 

SB2899- 8 -LRB103 37260 RPS 67380 b

1fund's total assets are at least 60% of the total actuarial
2liabilities of the pension fund, then the city council or
3board of trustees of that municipality may elect to annually
4levy a tax upon all taxable property of the municipality in
5accordance with this subsection. That election is irrevocable
6and must be made by ordinance or resolution no later than
7January 1, 2027. If the city council or board of trustees of a
8municipality makes that election, then the city council or the
9board of trustees of the municipality shall annually levy a
10tax upon all the taxable property of the municipality at the
11rate on the dollar that will produce an amount that, when added
12to the deductions from the salaries or wages of firefighters
13and revenues available from other sources, will equal a sum
14sufficient to meet the annual actuarial requirements of the
15pension fund, as determined by an enrolled actuary employed by
16the Illinois Department of Insurance or by an enrolled actuary
17retained by the pension fund or municipality. For the purposes
18of this Section the annual actuarial requirements of the
19pension fund are equal to (1) the normal cost of the pension
20fund, or 17.5% of the salaries and wages to be paid to
21firefighters for the year involved, whichever is greater, plus
22(2) an annual amount sufficient to bring the total assets of
23the pension fund up to 90% of the total actuarial liabilities
24of the pension fund by the end of municipal fiscal year 2050 or
25an earlier municipal fiscal year elected by the city council
26or board of trustees of the municipality, but no earlier than

 

 

SB2899- 9 -LRB103 37260 RPS 67380 b

1municipal fiscal year 2040, as annually updated and determined
2by an enrolled actuary employed by the Illinois Department of
3Insurance or by an enrolled actuary retained by the pension
4fund or the municipality. In making these determinations, the
5required minimum employer contribution shall be calculated
6each year as a level percentage of payroll over the years
7remaining up to and including fiscal year 2050 or the earlier
8fiscal year and shall be determined under the projected unit
9credit actuarial cost method. The amount to be applied towards
10the amortization of the unfunded accrued liability in any year
11shall not be less than the annual amount required to amortize
12the unfunded accrued liability, including interest, as a level
13percentage of payroll over the number of years remaining in
14the 40-year amortization period.
15    (a-2) A municipality that has established a pension fund
16under this Article and that employs a full-time firefighter,
17as defined in Section 4-106, shall be deemed a primary
18employer with respect to that full-time firefighter. Any
19municipality of 5,000 or more inhabitants that employs or
20enrolls a firefighter while that firefighter continues to earn
21service credit as a participant in a primary employer's
22pension fund under this Article shall be deemed a secondary
23employer and such employees shall be deemed to be secondary
24employee firefighters. To ensure that the primary employer's
25pension fund under this Article is aware of additional
26liabilities and risks to which firefighters are exposed when

 

 

SB2899- 10 -LRB103 37260 RPS 67380 b

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

 

 

SB2899- 11 -LRB103 37260 RPS 67380 b

1    (b) The tax shall be levied and collected in the same
2manner as the general taxes of the municipality, and shall be
3in addition to all other taxes now or hereafter authorized to
4be levied upon all property within the municipality, and in
5addition to the amount authorized to be levied for general
6purposes, under Section 8-3-1 of the Illinois Municipal Code
7or under Section 14 of the Fire Protection District Act. The
8tax shall be forwarded directly to the treasurer of the board
9within 30 business days of receipt by the county (or, in the
10case of amounts added to the tax levy under subsection (f),
11used by the municipality to pay the employer contributions
12required under subsection (b-1) of Section 15-155 of this
13Code).
14    (b-5) If a participating municipality fails to transmit to
15the fund contributions required of it under this Article for
16more than 90 days after the payment of those contributions is
17due, the fund may, after giving notice to the municipality,
18certify to the State Comptroller the amounts of the delinquent
19payments in accordance with any applicable rules of the
20Comptroller, and the Comptroller must, beginning in fiscal
21year 2016, deduct and remit to the fund the certified amounts
22or a portion of those amounts from the following proportions
23of payments of State funds to the municipality:
24        (1) in fiscal year 2016, one-third of the total amount
25    of any payments of State funds to the municipality;
26        (2) in fiscal year 2017, two-thirds of the total

 

 

SB2899- 12 -LRB103 37260 RPS 67380 b

1    amount of any payments of State funds to the municipality;
2    and
3        (3) in fiscal year 2018 and each fiscal year
4    thereafter, the total amount of any payments of State
5    funds 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    (c) The board shall make available to the membership and
11the general public for inspection and copying at reasonable
12times the most recent Actuarial Valuation Balance Sheet and
13Tax Levy Requirement issued to the fund by the Department of
14Insurance.
15    (d) The firefighters' pension fund shall consist of the
16following moneys which shall be set apart by the treasurer of
17the municipality: (1) all moneys derived from the taxes levied
18hereunder; (2) contributions by firefighters as provided under
19Section 4-118.1; (2.5) all moneys received from the
20Firefighters' Pension Investment Fund as provided in Article
2122C of this Code; (3) all rewards in money, fees, gifts, and
22emoluments that may be paid or given for or on account of
23extraordinary service by the fire department or any member
24thereof, except when allowed to be retained by competitive
25awards; and (4) any money, real estate or personal property
26received by the board.

 

 

SB2899- 13 -LRB103 37260 RPS 67380 b

1    (e) For the purposes of this Section, "enrolled actuary"
2means an actuary: (1) who is a member of the Society of
3Actuaries or the American Academy of Actuaries; and (2) who is
4enrolled under Subtitle C of Title III of the Employee
5Retirement Income Security Act of 1974, or who has been
6engaged in providing actuarial services to one or more public
7retirement systems for a period of at least 3 years as of July
81, 1983.
9    (f) The corporate authorities of a municipality that
10employs a person who is described in subdivision (d) of
11Section 4-106 may add to the tax levy otherwise provided for in
12this Section an amount equal to the projected cost of the
13employer contributions required to be paid by the municipality
14to the State Universities Retirement System under subsection
15(b-1) of Section 15-155 of this Code.
16    (g) The Commission on Government Forecasting and
17Accountability shall conduct a study of all funds established
18under this Article and shall report its findings to the
19General Assembly on or before January 1, 2013. To the fullest
20extent possible, the study shall include, but not be limited
21to, the following:
22        (1) fund balances;
23        (2) historical employer contribution rates for each
24    fund;
25        (3) the actuarial formulas used as a basis for
26    employer contributions, including the actual assumed rate

 

 

SB2899- 14 -LRB103 37260 RPS 67380 b

1    of return for each year, for each fund;
2        (4) available contribution funding sources;
3        (5) the impact of any revenue limitations caused by
4    PTELL and employer home rule or non-home rule status; and
5        (6) existing statutory funding compliance procedures
6    and funding enforcement mechanisms for all municipal
7    pension funds.
8(Source: P.A. 101-522, eff. 8-23-19; 101-610, eff. 1-1-20;
9102-59, eff. 7-9-21; 102-558, eff. 8-20-21.)
 
10    Section 90. The State Mandates Act is amended by adding
11Section 8.48 as follows:
 
12    (30 ILCS 805/8.48 new)
13    Sec. 8.48. Exempt mandate. Notwithstanding Sections 6 and
148 of this Act, no reimbursement by the State is required for
15the implementation of any mandate created by this amendatory
16Act of the 103rd General Assembly.
 
17    Section 99. Effective date. This Act takes effect upon
18becoming law.