94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
HB4697

 

Introduced 1/12/2006, by Rep. Roger L. Eddy

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/16-158  from Ch. 108 1/2, par. 16-158
105 ILCS 5/18-8.2   from Ch. 122, par. 18-8.2

    Amends the Downstate Teacher Article of the Illinois Pension Code. Provides that provisions concerning the employer's contribution for salary increases in excess of 6% do not apply to salary increases as a result of the formation of a new school district. Amends the School Code to make a related change.


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FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1     AN ACT concerning education.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Illinois Pension Code is amended by changing
5 Section 16-158 as follows:
 
6     (40 ILCS 5/16-158)   (from Ch. 108 1/2, par. 16-158)
7     Sec. 16-158. Contributions by State and other employing
8 units.
9     (a) The State shall make contributions to the System by
10 means of appropriations from the Common School Fund and other
11 State funds of amounts which, together with other employer
12 contributions, employee contributions, investment income, and
13 other income, will be sufficient to meet the cost of
14 maintaining and administering the System on a 90% funded basis
15 in accordance with actuarial recommendations.
16     The Board shall determine the amount of State contributions
17 required for each fiscal year on the basis of the actuarial
18 tables and other assumptions adopted by the Board and the
19 recommendations of the actuary, using the formula in subsection
20 (b-3).
21     (a-1) Annually, on or before November 15, the Board shall
22 certify to the Governor the amount of the required State
23 contribution for the coming fiscal year. The certification
24 shall include a copy of the actuarial recommendations upon
25 which it is based.
26     On or before May 1, 2004, the Board shall recalculate and
27 recertify to the Governor the amount of the required State
28 contribution to the System for State fiscal year 2005, taking
29 into account the amounts appropriated to and received by the
30 System under subsection (d) of Section 7.2 of the General
31 Obligation Bond Act.
32     On or before July 1, 2005, the Board shall recalculate and

 

 

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1 recertify to the Governor the amount of the required State
2 contribution to the System for State fiscal year 2006, taking
3 into account the changes in required State contributions made
4 by this amendatory Act of the 94th General Assembly.
5     (b) Through State fiscal year 1995, the State contributions
6 shall be paid to the System in accordance with Section 18-7 of
7 the School Code.
8     (b-1) Beginning in State fiscal year 1996, on the 15th day
9 of each month, or as soon thereafter as may be practicable, the
10 Board shall submit vouchers for payment of State contributions
11 to the System, in a total monthly amount of one-twelfth of the
12 required annual State contribution certified under subsection
13 (a-1). From the effective date of this amendatory Act of the
14 93rd General Assembly through June 30, 2004, the Board shall
15 not submit vouchers for the remainder of fiscal year 2004 in
16 excess of the fiscal year 2004 certified contribution amount
17 determined under this Section after taking into consideration
18 the transfer to the System under subsection (a) of Section
19 6z-61 of the State Finance Act. These vouchers shall be paid by
20 the State Comptroller and Treasurer by warrants drawn on the
21 funds appropriated to the System for that fiscal year.
22     If in any month the amount remaining unexpended from all
23 other appropriations to the System for the applicable fiscal
24 year (including the appropriations to the System under Section
25 8.12 of the State Finance Act and Section 1 of the State
26 Pension Funds Continuing Appropriation Act) is less than the
27 amount lawfully vouchered under this subsection, the
28 difference shall be paid from the Common School Fund under the
29 continuing appropriation authority provided in Section 1.1 of
30 the State Pension Funds Continuing Appropriation Act.
31     (b-2) Allocations from the Common School Fund apportioned
32 to school districts not coming under this System shall not be
33 diminished or affected by the provisions of this Article.
34     (b-3) For State fiscal years 2011 through 2045, the minimum
35 contribution to the System to be made by the State for each
36 fiscal year shall be an amount determined by the System to be

 

 

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1 sufficient to bring the total assets of the System up to 90% of
2 the total actuarial liabilities of the System by the end of
3 State fiscal year 2045. In making these determinations, the
4 required State contribution shall be calculated each year as a
5 level percentage of payroll over the years remaining to and
6 including fiscal year 2045 and shall be determined under the
7 projected unit credit actuarial cost method.
8     For State fiscal years 1996 through 2005, the State
9 contribution to the System, as a percentage of the applicable
10 employee payroll, shall be increased in equal annual increments
11 so that by State fiscal year 2011, the State is contributing at
12 the rate required under this Section; except that in the
13 following specified State fiscal years, the State contribution
14 to the System shall not be less than the following indicated
15 percentages of the applicable employee payroll, even if the
16 indicated percentage will produce a State contribution in
17 excess of the amount otherwise required under this subsection
18 and subsection (a), and notwithstanding any contrary
19 certification made under subsection (a-1) before the effective
20 date of this amendatory Act of 1998: 10.02% in FY 1999; 10.77%
21 in FY 2000; 11.47% in FY 2001; 12.16% in FY 2002; 12.86% in FY
22 2003; and 13.56% in FY 2004.
23     Notwithstanding any other provision of this Article, the
24 total required State contribution for State fiscal year 2006 is
25 $534,627,700.
26     Notwithstanding any other provision of this Article, the
27 total required State contribution for State fiscal year 2007 is
28 $738,014,500.
29     For each of State fiscal years 2008 through 2010, the State
30 contribution to the System, as a percentage of the applicable
31 employee payroll, shall be increased in equal annual increments
32 from the required State contribution for State fiscal year
33 2007, so that by State fiscal year 2011, the State is
34 contributing at the rate otherwise required under this Section.
35     Beginning in State fiscal year 2046, the minimum State
36 contribution for each fiscal year shall be the amount needed to

 

 

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1 maintain the total assets of the System at 90% of the total
2 actuarial liabilities of the System.
3     Notwithstanding any other provision of this Section, the
4 required State contribution for State fiscal year 2005 and for
5 fiscal year 2008 and each fiscal year thereafter, as calculated
6 under this Section and certified under subsection (a-1), shall
7 not exceed an amount equal to (i) the amount of the required
8 State contribution that would have been calculated under this
9 Section for that fiscal year if the System had not received any
10 payments under subsection (d) of Section 7.2 of the General
11 Obligation Bond Act, minus (ii) the portion of the State's
12 total debt service payments for that fiscal year on the bonds
13 issued for the purposes of that Section 7.2, as determined and
14 certified by the Comptroller, that is the same as the System's
15 portion of the total moneys distributed under subsection (d) of
16 Section 7.2 of the General Obligation Bond Act. In determining
17 this maximum for State fiscal years 2008 through 2010, however,
18 the amount referred to in item (i) shall be increased, as a
19 percentage of the applicable employee payroll, in equal
20 increments calculated from the sum of the required State
21 contribution for State fiscal year 2007 plus the applicable
22 portion of the State's total debt service payments for fiscal
23 year 2007 on the bonds issued for the purposes of Section 7.2
24 of the General Obligation Bond Act, so that, by State fiscal
25 year 2011, the State is contributing at the rate otherwise
26 required under this Section.
27     (c) Payment of the required State contributions and of all
28 pensions, retirement annuities, death benefits, refunds, and
29 other benefits granted under or assumed by this System, and all
30 expenses in connection with the administration and operation
31 thereof, are obligations of the State.
32     If members are paid from special trust or federal funds
33 which are administered by the employing unit, whether school
34 district or other unit, the employing unit shall pay to the
35 System from such funds the full accruing retirement costs based
36 upon that service, as determined by the System. Employer

 

 

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1 contributions, based on salary paid to members from federal
2 funds, may be forwarded by the distributing agency of the State
3 of Illinois to the System prior to allocation, in an amount
4 determined in accordance with guidelines established by such
5 agency and the System.
6     (d) Effective July 1, 1986, any employer of a teacher as
7 defined in paragraph (8) of Section 16-106 shall pay the
8 employer's normal cost of benefits based upon the teacher's
9 service, in addition to employee contributions, as determined
10 by the System. Such employer contributions shall be forwarded
11 monthly in accordance with guidelines established by the
12 System.
13     However, with respect to benefits granted under Section
14 16-133.4 or 16-133.5 to a teacher as defined in paragraph (8)
15 of Section 16-106, the employer's contribution shall be 12%
16 (rather than 20%) of the member's highest annual salary rate
17 for each year of creditable service granted, and the employer
18 shall also pay the required employee contribution on behalf of
19 the teacher. For the purposes of Sections 16-133.4 and
20 16-133.5, a teacher as defined in paragraph (8) of Section
21 16-106 who is serving in that capacity while on leave of
22 absence from another employer under this Article shall not be
23 considered an employee of the employer from which the teacher
24 is on leave.
25     (e) Beginning July 1, 1998, every employer of a teacher
26 shall pay to the System an employer contribution computed as
27 follows:
28         (1) Beginning July 1, 1998 through June 30, 1999, the
29     employer contribution shall be equal to 0.3% of each
30     teacher's salary.
31         (2) Beginning July 1, 1999 and thereafter, the employer
32     contribution shall be equal to 0.58% of each teacher's
33     salary.
34 The school district or other employing unit may pay these
35 employer contributions out of any source of funding available
36 for that purpose and shall forward the contributions to the

 

 

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1 System on the schedule established for the payment of member
2 contributions.
3     These employer contributions are intended to offset a
4 portion of the cost to the System of the increases in
5 retirement benefits resulting from this amendatory Act of 1998.
6     Each employer of teachers is entitled to a credit against
7 the contributions required under this subsection (e) with
8 respect to salaries paid to teachers for the period January 1,
9 2002 through June 30, 2003, equal to the amount paid by that
10 employer under subsection (a-5) of Section 6.6 of the State
11 Employees Group Insurance Act of 1971 with respect to salaries
12 paid to teachers for that period.
13     The additional 1% employee contribution required under
14 Section 16-152 by this amendatory Act of 1998 is the
15 responsibility of the teacher and not the teacher's employer,
16 unless the employer agrees, through collective bargaining or
17 otherwise, to make the contribution on behalf of the teacher.
18     If an employer is required by a contract in effect on May
19 1, 1998 between the employer and an employee organization to
20 pay, on behalf of all its full-time employees covered by this
21 Article, all mandatory employee contributions required under
22 this Article, then the employer shall be excused from paying
23 the employer contribution required under this subsection (e)
24 for the balance of the term of that contract. The employer and
25 the employee organization shall jointly certify to the System
26 the existence of the contractual requirement, in such form as
27 the System may prescribe. This exclusion shall cease upon the
28 termination, extension, or renewal of the contract at any time
29 after May 1, 1998.
30     (f) If the amount of a teacher's salary for any school year
31 used to determine final average salary exceeds the amount of
32 his or her salary with the same employer for the previous
33 school year by more than 6%, the teacher's employer shall pay
34 to the System, in addition to all other payments required under
35 this Section and in accordance with guidelines established by
36 the System, the present value of the increase in benefits

 

 

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1 resulting from the portion of the increase in salary that is in
2 excess of 6%. This present value shall be computed by the
3 System on the basis of the actuarial assumptions and tables
4 used in the most recent actuarial valuation of the System that
5 is available at the time of the computation. The employer
6 contributions required under this subsection (f) shall be paid
7 in the form of a lump sum within 30 days after receipt of the
8 bill after the teacher begins receiving benefits under this
9 Article.
10     The provisions of this subsection (f) do not apply to
11 either of the following:
12         (1) Salary salary increases paid to teachers under
13     contracts or collective bargaining agreements entered
14     into, amended, or renewed before the effective date of this
15     amendatory Act of the 94th General Assembly.
16         (2) Salary increases as a result of the formation of a
17     new school district.
18 (Source: P.A. 93-2, eff. 4-7-03; 93-665, eff. 3-5-04; 94-4,
19 eff. 6-1-05.)
 
20     Section 10. The School Code is amended by changing Section
21 18-8.2 as follows:
 
22     (105 ILCS 5/18-8.2)  (from Ch. 122, par. 18-8.2)
23     Sec. 18-8.2. Supplementary State aid for new and for
24 certain annexing districts.
25     (a) After the formation of a new district, a computation
26 shall be made to determine the difference between the salaries
27 effective in each of the previously existing districts on June
28 30, prior to the creation of the new district. For the first 4
29 years after the formation of the new district or if the new
30 district was formed after October 31, 1982 and prior to the
31 effective date of this amendatory Act of 1985, for the 3 years
32 immediately following such effective date, a supplementary
33 State aid reimbursement shall be paid to the new district equal
34 to the difference between the sum of the salaries earned by

 

 

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1 each of the certificated members of the new district while
2 employed in one of the previously existing districts during the
3 year immediately preceding the formation of the new district
4 and the sum of the salaries those certificated members would
5 have been paid during the year immediately prior to the
6 formation of the new district if placed on the salary schedule
7 of the previously existing district with the highest salary
8 schedule. In accordance with subsection (f) of Section 16-158
9 of the Illinois Pension Code, a salary increase that is
10 eligible for supplementary State aid under this subsection (a)
11 is exempt from the provisions of subsection (f) of Section
12 16-158 of the Illinois Pension Code.
13     (b) After the territory of one or more school districts is
14 annexed by one or more other school districts, or after the
15 division (pursuant to petition under Section 11A-2) of a unit
16 school district or districts into 2 or more parts which all are
17 included in 2 or more other community unit districts resulting
18 upon that division, a computation shall be made to determine
19 the difference between the salaries effective in each such
20 annexed or divided district and in the annexing or resulting
21 district or districts as they each were constituted on June 30
22 preceding the date when the change of boundaries attributable
23 to such annexation or division became effective for all
24 purposes as determined under Section 7-9, 7A-8 or 11A-10. For
25 the first 4 years after any such annexation or division, a
26 supplementary State aid reimbursement shall be paid to each
27 annexing or resulting district as constituted after the
28 annexation or division equal to the difference between the sum
29 of the salaries earned by each of the certificated members of
30 such annexing or resulting district as constituted after the
31 annexation or division while employed in an annexed or annexing
32 district, or in a divided or resulting district, during the
33 year immediately preceding the annexation or division, and the
34 sum of the salaries those certificated members would have been
35 paid during such immediately preceding year if placed on the
36 salary schedule of whichever of such annexing or annexed

 

 

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1 districts, or resulting or divided districts, had the highest
2 salary schedule during such immediately preceding year.
3     (c) Such supplementary State aid reimbursement shall be
4 treated as separate from all other payments made pursuant to
5 Section 18-8 or 18-8.05. In the case of the formation of a new
6 district, reimbursement shall begin during the first year of
7 operation of the new district; and in the case of an annexation
8 of the territory of one or more school districts by one or more
9 other school districts, or the division (pursuant to petition
10 under Section 11A-2) of a unit school district or districts
11 into 2 or more parts which all are included in 2 or more other
12 community unit districts resulting upon that division,
13 reimbursement shall begin during the first year when the change
14 in boundaries attributable to such annexation or division
15 becomes effective for all purposes as determined pursuant to
16 Section 7-9, 7A-8 or 11A-10. Each year any such new, annexing
17 or resulting district, as the case may be, is entitled to
18 receive reimbursement, the number of eligible certified
19 members who are employed on October 1 in any such district
20 shall be certified to the State Board of Education on
21 prescribed forms by October 15 and payment shall be made on or
22 before November 15 of that year.
23     (d) If a unit school district annexes all the territory of
24 another unit school district effective for all purposes
25 pursuant to Section 7-9 on July 1, 1988, and if part of the
26 annexed territory is detached within 90 days after July 1,
27 1988, then the detachment shall be disregarded in computing the
28 supplementary State aid reimbursements under this Section for
29 the entire 3 year period and the supplementary State aid
30 reimbursements shall not be diminished because of the
31 detachment.
32     (e) The changes made by this amendatory Act of 1989 are
33 intended to be retroactive and applicable to any annexation
34 taking effect after August 1, 1987.
35 (Source: P.A. 90-548, eff. 1-1-98.)