94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
SB2590

 

Introduced 1/20/2006, by Sen. James F. Clayborne, Jr.

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/7-172   from Ch. 108 1/2, par. 7-172

    Amends the Illinois Municipal Retirement Fund Article of the Illinois Pension Code. Provides that specified unfunded liabilities of participating municipalities shall be spread over the remainder of the period that is allowable under generally accepted accounting principles, except that the employer may provide for a longer period by adopting a resolution or ordinance specifying a 40-year period and submitting a certified copy of the ordinance or resolution to the fund. Effective immediately.


LRB094 17707 AMC 53006 b

PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB2590 LRB094 17707 AMC 53006 b

1     AN ACT concerning public employee benefits.
 
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 7-172 as follows:
 
6     (40 ILCS 5/7-172)  (from Ch. 108 1/2, par. 7-172)
7     (Text of Section before amendment by P.A. 94-712)
8     Sec. 7-172. Contributions by participating municipalities
9 and participating instrumentalities.
10     (a) Each participating municipality and each participating
11 instrumentality shall make payment to the fund as follows:
12         1. municipality contributions in an amount determined
13     by applying the municipality contribution rate to each
14     payment of earnings paid to each of its participating
15     employees;
16         2. an amount equal to the employee contributions
17     provided by paragraphs (a) and (b) of Section 7-173,
18     whether or not the employee contributions are withheld as
19     permitted by that Section;
20         3. all accounts receivable, together with interest
21     charged thereon, as provided in Section 7-209;
22         4. if it has no participating employees with current
23     earnings, an amount payable which, over a period of 20
24     years beginning with the year following an award of
25     benefit, will amortize, at the effective rate for that
26     year, any negative balance in its municipality reserve
27     resulting from the award. This amount when established will
28     be payable as a separate contribution whether or not it
29     later has participating employees.
30     (b) A separate municipality contribution rate shall be
31 determined for each calendar year for all participating
32 municipalities together with all instrumentalities thereof.

 

 

SB2590 - 2 - LRB094 17707 AMC 53006 b

1 The municipality contribution rate shall be determined for
2 participating instrumentalities as if they were participating
3 municipalities. The municipality contribution rate shall be
4 the sum of the following percentages:
5         1. The percentage of earnings of all the participating
6     employees of all participating municipalities and
7     participating instrumentalities which, if paid over the
8     entire period of their service, will be sufficient when
9     combined with all employee contributions available for the
10     payment of benefits, to provide all annuities for
11     participating employees, and the $3,000 death benefit
12     payable under Sections 7-158 and 7-164, such percentage to
13     be known as the normal cost rate.
14         2. The percentage of earnings of the participating
15     employees of each participating municipality and
16     participating instrumentalities necessary to adjust for
17     the difference between the present value of all benefits,
18     excluding temporary and total and permanent disability and
19     death benefits, to be provided for its participating
20     employees and the sum of its accumulated municipality
21     contributions and the accumulated employee contributions
22     and the present value of expected future employee and
23     municipality contributions pursuant to subparagraph 1 of
24     this paragraph (b). This adjustment shall be spread over
25     the remainder of the period that is allowable under
26     generally accepted accounting principles.
27         3. The percentage of earnings of the participating
28     employees of all municipalities and participating
29     instrumentalities necessary to provide the present value
30     of all temporary and total and permanent disability
31     benefits granted during the most recent year for which
32     information is available.
33         4. The percentage of earnings of the participating
34     employees of all participating municipalities and
35     participating instrumentalities necessary to provide the
36     present value of the net single sum death benefits expected

 

 

SB2590 - 3 - LRB094 17707 AMC 53006 b

1     to become payable from the reserve established under
2     Section 7-206 during the year for which this rate is fixed.
3         5. The percentage of earnings necessary to meet any
4     deficiency arising in the Terminated Municipality Reserve.
5     (c) A separate municipality contribution rate shall be
6 computed for each participating municipality or participating
7 instrumentality for its sheriff's law enforcement employees.
8     A separate municipality contribution rate shall be
9 computed for the sheriff's law enforcement employees of each
10 forest preserve district that elects to have such employees.
11 For the period from January 1, 1986 to December 31, 1986, such
12 rate shall be the forest preserve district's regular rate plus
13 2%.
14     In the event that the Board determines that there is an
15 actuarial deficiency in the account of any municipality with
16 respect to a person who has elected to participate in the Fund
17 under Section 3-109.1 of this Code, the Board may adjust the
18 municipality's contribution rate so as to make up that
19 deficiency over such reasonable period of time as the Board may
20 determine.
21     (d) The Board may establish a separate municipality
22 contribution rate for all employees who are program
23 participants employed under the federal Comprehensive
24 Employment Training Act by all of the participating
25 municipalities and instrumentalities. The Board may also
26 provide that, in lieu of a separate municipality rate for these
27 employees, a portion of the municipality contributions for such
28 program participants shall be refunded or an extra charge
29 assessed so that the amount of municipality contributions
30 retained or received by the fund for all CETA program
31 participants shall be an amount equal to that which would be
32 provided by the separate municipality contribution rate for all
33 such program participants. Refunds shall be made to prime
34 sponsors of programs upon submission of a claim therefor and
35 extra charges shall be assessed to participating
36 municipalities and instrumentalities. In establishing the

 

 

SB2590 - 4 - LRB094 17707 AMC 53006 b

1 municipality contribution rate as provided in paragraph (b) of
2 this Section, the use of a separate municipality contribution
3 rate for program participants or the refund of a portion of the
4 municipality contributions, as the case may be, may be
5 considered.
6     (e) Computations of municipality contribution rates for
7 the following calendar year shall be made prior to the
8 beginning of each year, from the information available at the
9 time the computations are made, and on the assumption that the
10 employees in each participating municipality or participating
11 instrumentality at such time will continue in service until the
12 end of such calendar year at their respective rates of earnings
13 at such time.
14     (f) Any municipality which is the recipient of State
15 allocations representing that municipality's contributions for
16 retirement annuity purposes on behalf of its employees as
17 provided in Section 12-21.16 of the Illinois Public Aid Code
18 shall pay the allocations so received to the Board for such
19 purpose. Estimates of State allocations to be received during
20 any taxable year shall be considered in the determination of
21 the municipality's tax rate for that year under Section 7-171.
22 If a special tax is levied under Section 7-171, none of the
23 proceeds may be used to reimburse the municipality for the
24 amount of State allocations received and paid to the Board. Any
25 multiple-county or consolidated health department which
26 receives contributions from a county under Section 11.2 of "An
27 Act in relation to establishment and maintenance of county and
28 multiple-county health departments", approved July 9, 1943, as
29 amended, or distributions under Section 3 of the Department of
30 Public Health Act, shall use these only for municipality
31 contributions by the health department.
32     (g) Municipality contributions for the several purposes
33 specified shall, for township treasurers and employees in the
34 offices of the township treasurers who meet the qualifying
35 conditions for coverage hereunder, be allocated among the
36 several school districts and parts of school districts serviced

 

 

SB2590 - 5 - LRB094 17707 AMC 53006 b

1 by such treasurers and employees in the proportion which the
2 amount of school funds of each district or part of a district
3 handled by the treasurer bears to the total amount of all
4 school funds handled by the treasurer.
5     From the funds subject to allocation among districts and
6 parts of districts pursuant to the School Code, the trustees
7 shall withhold the proportionate share of the liability for
8 municipality contributions imposed upon such districts by this
9 Section, in respect to such township treasurers and employees
10 and remit the same to the Board.
11     The municipality contribution rate for an educational
12 service center shall initially be the same rate for each year
13 as the regional office of education or school district which
14 serves as its administrative agent. When actuarial data become
15 available, a separate rate shall be established as provided in
16 subparagraph (i) of this Section.
17     The municipality contribution rate for a public agency,
18 other than a vocational education cooperative, formed under the
19 Intergovernmental Cooperation Act shall initially be the
20 average rate for the municipalities which are parties to the
21 intergovernmental agreement. When actuarial data become
22 available, a separate rate shall be established as provided in
23 subparagraph (i) of this Section.
24     (h) Each participating municipality and participating
25 instrumentality shall make the contributions in the amounts
26 provided in this Section in the manner prescribed from time to
27 time by the Board and all such contributions shall be
28 obligations of the respective participating municipalities and
29 participating instrumentalities to this fund. The failure to
30 deduct any employee contributions shall not relieve the
31 participating municipality or participating instrumentality of
32 its obligation to this fund. Delinquent payments of
33 contributions due under this Section may, with interest, be
34 recovered by civil action against the participating
35 municipalities or participating instrumentalities.
36 Municipality contributions, other than the amount necessary

 

 

SB2590 - 6 - LRB094 17707 AMC 53006 b

1 for employee contributions and Social Security contributions,
2 for periods of service by employees from whose earnings no
3 deductions were made for employee contributions to the fund,
4 may be charged to the municipality reserve for the municipality
5 or participating instrumentality.
6     (i) Contributions by participating instrumentalities shall
7 be determined as provided herein except that the percentage
8 derived under subparagraph 2 of paragraph (b) of this Section,
9 and the amount payable under subparagraph 5 of paragraph (a) of
10 this Section, shall be based on an amortization period of 10
11 years.
12     (k) The percentage of contributions by participating
13 municipalities under subparagraph 2 of paragraph (b) of this
14 Section shall be spread over the remainder of the period that
15 is allowable under generally accepted accounting principles,
16 except that the employer may provide for a longer period by
17 adopting a resolution or ordinance specifying a 40-year period
18 and submitting a certified copy of the ordinance or resolution
19 to the Fund.
20 (Source: P.A. 92-424, eff. 8-17-01.)
 
21     (Text of Section after amendment by P.A. 94-712)
22     Sec. 7-172. Contributions by participating municipalities
23 and participating instrumentalities.
24     (a) Each participating municipality and each participating
25 instrumentality shall make payment to the fund as follows:
26         1. municipality contributions in an amount determined
27     by applying the municipality contribution rate to each
28     payment of earnings paid to each of its participating
29     employees;
30         2. an amount equal to the employee contributions
31     provided by paragraphs (a) and (b) of Section 7-173,
32     whether or not the employee contributions are withheld as
33     permitted by that Section;
34         3. all accounts receivable, together with interest
35     charged thereon, as provided in Section 7-209;

 

 

SB2590 - 7 - LRB094 17707 AMC 53006 b

1         4. if it has no participating employees with current
2     earnings, an amount payable which, over a period of 20
3     years beginning with the year following an award of
4     benefit, will amortize, at the effective rate for that
5     year, any negative balance in its municipality reserve
6     resulting from the award. This amount when established will
7     be payable as a separate contribution whether or not it
8     later has participating employees.
9     (b) A separate municipality contribution rate shall be
10 determined for each calendar year for all participating
11 municipalities together with all instrumentalities thereof.
12 The municipality contribution rate shall be determined for
13 participating instrumentalities as if they were participating
14 municipalities. The municipality contribution rate shall be
15 the sum of the following percentages:
16         1. The percentage of earnings of all the participating
17     employees of all participating municipalities and
18     participating instrumentalities which, if paid over the
19     entire period of their service, will be sufficient when
20     combined with all employee contributions available for the
21     payment of benefits, to provide all annuities for
22     participating employees, and the $3,000 death benefit
23     payable under Sections 7-158 and 7-164, such percentage to
24     be known as the normal cost rate.
25         2. The percentage of earnings of the participating
26     employees of each participating municipality and
27     participating instrumentalities necessary to adjust for
28     the difference between the present value of all benefits,
29     excluding temporary and total and permanent disability and
30     death benefits, to be provided for its participating
31     employees and the sum of its accumulated municipality
32     contributions and the accumulated employee contributions
33     and the present value of expected future employee and
34     municipality contributions pursuant to subparagraph 1 of
35     this paragraph (b). This adjustment shall be spread over
36     the remainder of the period that is allowable under

 

 

SB2590 - 8 - LRB094 17707 AMC 53006 b

1     generally accepted accounting principles.
2         3. The percentage of earnings of the participating
3     employees of all municipalities and participating
4     instrumentalities necessary to provide the present value
5     of all temporary and total and permanent disability
6     benefits granted during the most recent year for which
7     information is available.
8         4. The percentage of earnings of the participating
9     employees of all participating municipalities and
10     participating instrumentalities necessary to provide the
11     present value of the net single sum death benefits expected
12     to become payable from the reserve established under
13     Section 7-206 during the year for which this rate is fixed.
14         5. The percentage of earnings necessary to meet any
15     deficiency arising in the Terminated Municipality Reserve.
16     (c) A separate municipality contribution rate shall be
17 computed for each participating municipality or participating
18 instrumentality for its sheriff's law enforcement employees.
19     A separate municipality contribution rate shall be
20 computed for the sheriff's law enforcement employees of each
21 forest preserve district that elects to have such employees.
22 For the period from January 1, 1986 to December 31, 1986, such
23 rate shall be the forest preserve district's regular rate plus
24 2%.
25     In the event that the Board determines that there is an
26 actuarial deficiency in the account of any municipality with
27 respect to a person who has elected to participate in the Fund
28 under Section 3-109.1 of this Code, the Board may adjust the
29 municipality's contribution rate so as to make up that
30 deficiency over such reasonable period of time as the Board may
31 determine.
32     (d) The Board may establish a separate municipality
33 contribution rate for all employees who are program
34 participants employed under the federal Comprehensive
35 Employment Training Act by all of the participating
36 municipalities and instrumentalities. The Board may also

 

 

SB2590 - 9 - LRB094 17707 AMC 53006 b

1 provide that, in lieu of a separate municipality rate for these
2 employees, a portion of the municipality contributions for such
3 program participants shall be refunded or an extra charge
4 assessed so that the amount of municipality contributions
5 retained or received by the fund for all CETA program
6 participants shall be an amount equal to that which would be
7 provided by the separate municipality contribution rate for all
8 such program participants. Refunds shall be made to prime
9 sponsors of programs upon submission of a claim therefor and
10 extra charges shall be assessed to participating
11 municipalities and instrumentalities. In establishing the
12 municipality contribution rate as provided in paragraph (b) of
13 this Section, the use of a separate municipality contribution
14 rate for program participants or the refund of a portion of the
15 municipality contributions, as the case may be, may be
16 considered.
17     (e) Computations of municipality contribution rates for
18 the following calendar year shall be made prior to the
19 beginning of each year, from the information available at the
20 time the computations are made, and on the assumption that the
21 employees in each participating municipality or participating
22 instrumentality at such time will continue in service until the
23 end of such calendar year at their respective rates of earnings
24 at such time.
25     (f) Any municipality which is the recipient of State
26 allocations representing that municipality's contributions for
27 retirement annuity purposes on behalf of its employees as
28 provided in Section 12-21.16 of the Illinois Public Aid Code
29 shall pay the allocations so received to the Board for such
30 purpose. Estimates of State allocations to be received during
31 any taxable year shall be considered in the determination of
32 the municipality's tax rate for that year under Section 7-171.
33 If a special tax is levied under Section 7-171, none of the
34 proceeds may be used to reimburse the municipality for the
35 amount of State allocations received and paid to the Board. Any
36 multiple-county or consolidated health department which

 

 

SB2590 - 10 - LRB094 17707 AMC 53006 b

1 receives contributions from a county under Section 11.2 of "An
2 Act in relation to establishment and maintenance of county and
3 multiple-county health departments", approved July 9, 1943, as
4 amended, or distributions under Section 3 of the Department of
5 Public Health Act, shall use these only for municipality
6 contributions by the health department.
7     (g) Municipality contributions for the several purposes
8 specified shall, for township treasurers and employees in the
9 offices of the township treasurers who meet the qualifying
10 conditions for coverage hereunder, be allocated among the
11 several school districts and parts of school districts serviced
12 by such treasurers and employees in the proportion which the
13 amount of school funds of each district or part of a district
14 handled by the treasurer bears to the total amount of all
15 school funds handled by the treasurer.
16     From the funds subject to allocation among districts and
17 parts of districts pursuant to the School Code, the trustees
18 shall withhold the proportionate share of the liability for
19 municipality contributions imposed upon such districts by this
20 Section, in respect to such township treasurers and employees
21 and remit the same to the Board.
22     The municipality contribution rate for an educational
23 service center shall initially be the same rate for each year
24 as the regional office of education or school district which
25 serves as its administrative agent. When actuarial data become
26 available, a separate rate shall be established as provided in
27 subparagraph (i) of this Section.
28     The municipality contribution rate for a public agency,
29 other than a vocational education cooperative, formed under the
30 Intergovernmental Cooperation Act shall initially be the
31 average rate for the municipalities which are parties to the
32 intergovernmental agreement. When actuarial data become
33 available, a separate rate shall be established as provided in
34 subparagraph (i) of this Section.
35     (h) Each participating municipality and participating
36 instrumentality shall make the contributions in the amounts

 

 

SB2590 - 11 - LRB094 17707 AMC 53006 b

1 provided in this Section in the manner prescribed from time to
2 time by the Board and all such contributions shall be
3 obligations of the respective participating municipalities and
4 participating instrumentalities to this fund. The failure to
5 deduct any employee contributions shall not relieve the
6 participating municipality or participating instrumentality of
7 its obligation to this fund. Delinquent payments of
8 contributions due under this Section may, with interest, be
9 recovered by civil action against the participating
10 municipalities or participating instrumentalities.
11 Municipality contributions, other than the amount necessary
12 for employee contributions and Social Security contributions,
13 for periods of service by employees from whose earnings no
14 deductions were made for employee contributions to the fund,
15 may be charged to the municipality reserve for the municipality
16 or participating instrumentality.
17     (i) Contributions by participating instrumentalities shall
18 be determined as provided herein except that the percentage
19 derived under subparagraph 2 of paragraph (b) of this Section,
20 and the amount payable under subparagraph 5 of paragraph (a) of
21 this Section, shall be based on an amortization period of 10
22 years.
23     (j) Notwithstanding the other provisions of this Section,
24 the additional unfunded liability accruing as a result of this
25 amendatory Act of the 94th General Assembly shall be amortized
26 over a period of 30 years beginning on January 1 of the second
27 calendar year following the calendar year in which this
28 amendatory Act takes effect, except that the employer may
29 provide for a longer amortization period by adopting a
30 resolution or ordinance specifying a 35-year or 40-year period
31 and submitting a certified copy of the ordinance or resolution
32 to the fund no later than June 1 of the calendar year following
33 the calendar year in which this amendatory Act takes effect.
34     (k) The percentage of contributions by participating
35 municipalities under subparagraph 2 of paragraph (b) of this
36 Section shall be spread over the remainder of the period that

 

 

SB2590 - 12 - LRB094 17707 AMC 53006 b

1 is allowable under generally accepted accounting principles,
2 except that the employer may provide for a longer period by
3 adopting a resolution or ordinance specifying a 40-year period
4 and submitting a certified copy of the ordinance or resolution
5 to the fund.
6 (Source: P.A. 94-712, eff. 6-1-06.)
 
7     Section 95. No acceleration or delay. Where this Act makes
8 changes in a statute that is represented in this Act by text
9 that is not yet or no longer in effect (for example, a Section
10 represented by multiple versions), the use of that text does
11 not accelerate or delay the taking effect of (i) the changes
12 made by this Act or (ii) provisions derived from any other
13 Public Act.
 
14     Section 99. Effective date. This Act takes effect upon
15 becoming law.