Personnel and Pensions Committee

Filed: 1/8/2009

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 1383

2     AMENDMENT NO. ______. Amend Senate Bill 1383 by replacing
3 everything after the enacting clause with the following:
 
4     "Section 5. The Illinois Pension Code is amended by
5 changing Section 22-101B as follows:
 
6     (40 ILCS 5/22-101B)
7     Sec. 22-101B. Health Care Benefits.
8     (a) The Chicago Transit Authority (hereinafter referred to
9 in this Section as the "Authority") shall take all actions
10 lawfully available to it to separate the funding of health care
11 benefits for retirees and their dependents and survivors from
12 the funding for its retirement system. The Authority shall
13 endeavor to achieve this separation as soon as possible, and in
14 any event no later than July 1, 2009.
15     (b) Effective 90 days after the effective date of this
16 amendatory Act of the 95th General Assembly, a Retiree Health

 

 

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1 Care Trust is established for the purpose of providing health
2 care benefits to eligible retirees and their dependents and
3 survivors in accordance with the terms and conditions set forth
4 in this Section 22-101B. The Retiree Health Care Trust shall be
5 solely responsible for providing health care benefits to
6 eligible retirees and their dependents and survivors upon the
7 exhaustion of the account established by the Retirement Plan
8 for Chicago Transit Authority Employees pursuant to Section
9 401(h) of the Internal Revenue Code, but no earlier than
10 January 1, 2009 and no later than July 1, 2009 by no later than
11 July 1, 2009, but no earlier than January 1, 2009.
12         (1) The Board of Trustees shall consist of 7 members
13     appointed as follows: (i) 3 trustees shall be appointed by
14     the Chicago Transit Board; (ii) one trustee shall be
15     appointed by an organization representing the highest
16     number of Chicago Transit Authority participants; (iii)
17     one trustee shall be appointed by an organization
18     representing the second-highest number of Chicago Transit
19     Authority participants; (iv) one trustee shall be
20     appointed by the recognized coalition representatives of
21     participants who are not represented by an organization
22     with the highest or second-highest number of Chicago
23     Transit Authority participants; and (v) one trustee shall
24     be selected by the Regional Transportation Authority Board
25     of Directors, and the trustee shall be a professional
26     fiduciary who has experience in the area of collectively

 

 

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1     bargained retiree health plans. Trustees shall serve until
2     a successor has been appointed and qualified, or until
3     resignation, death, incapacity, or disqualification.
4         Any person appointed as a trustee of the board shall
5     qualify by taking an oath of office that he or she will
6     diligently and honestly administer the affairs of the
7     system, and will not knowingly violate or willfully permit
8     the violation of any of the provisions of law applicable to
9     the Plan, including Sections 1-109, 1-109.1, 1-109.2,
10     1-110, 1-111, 1-114, and 1-115 of Article 1 of the Illinois
11     Pension Code.
12         Each trustee shall cast individual votes, and a
13     majority vote shall be final and binding upon all
14     interested parties, provided that the Board of Trustees may
15     require a supermajority vote with respect to the investment
16     of the assets of the Retiree Health Care Trust, and may set
17     forth that requirement in the trust agreement or by-laws of
18     the Board of Trustees. Each trustee shall have the rights,
19     privileges, authority and obligations as are usual and
20     customary for such fiduciaries.
21         (2) The Board of Trustees shall establish and
22     administer a health care benefit program for eligible
23     retirees and their dependents and survivors. Any The health
24     care benefit program established by the Board of Trustees
25     for eligible retirees and their dependents and survivors
26     effective on or after July 1, 2009 shall not contain any

 

 

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1     plan which provides for more than 90% coverage for
2     in-network services or 70% coverage for out-of-network
3     services after any deductible has been paid, except that
4     coverage through a health maintenance organization ("HMO")
5     may be provided at 100%.
6         (3) The Retiree Health Care Trust shall be administered
7     by the Board of Trustees according to the following
8     requirements:
9             (i) The Board of Trustees may cause amounts on
10         deposit in the Retiree Health Care Trust to be invested
11         in those investments that are permitted investments
12         for the investment of moneys held under any one or more
13         of the pension or retirement systems of the State, any
14         unit of local government or school district, or any
15         agency or instrumentality thereof. The Board, by a vote
16         of at least two-thirds of the trustees, may transfer
17         investment management to the Illinois State Board of
18         Investment, which is hereby authorized to manage these
19         investments when so requested by the Board of Trustees.
20             (ii) The Board of Trustees shall establish and
21         maintain an appropriate funding reserve level which
22         shall not be less than the amount of incurred and
23         unreported claims plus 12 months of expected claims and
24         administrative expenses.
25             (iii) The Board of Trustees shall make an annual
26         assessment of the funding levels of the Retiree Health

 

 

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1         Care Trust and shall submit a report to the Auditor
2         General at least 90 days prior to the end of the fiscal
3         year. The report shall provide the following:
4                 (A) the actuarial present value of projected
5             benefits expected to be paid to current and future
6             retirees and their dependents and survivors;
7                 (B) the actuarial present value of projected
8             contributions and trust income plus assets;
9                 (C) the reserve required by subsection
10             (b)(3)(ii); and
11                 (D) an assessment of whether the actuarial
12             present value of projected benefits expected to be
13             paid to current and future retirees and their
14             dependents and survivors exceeds or is less than
15             the actuarial present value of projected
16             contributions and trust income plus assets in
17             excess of the reserve required by subsection
18             (b)(3)(ii).
19             If the actuarial present value of projected
20         benefits expected to be paid to current and future
21         retirees and their dependents and survivors exceeds
22         the actuarial present value of projected contributions
23         and trust income plus assets in excess of the reserve
24         required by subsection (b)(3)(ii), then the report
25         shall provide a plan, to be implemented over a period
26         of not more than 10 years from each valuation date,

 

 

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1         which would make the actuarial present value of
2         projected contributions and trust income plus assets
3         equal to or exceed the actuarial present value of
4         projected benefits expected to be paid to current and
5         future retirees and their dependents and survivors.
6         The plan may consist of increases in employee, retiree,
7         dependent, or survivor contribution levels, decreases
8         in benefit levels, or other plan changes or any
9         combination thereof both, which is projected to cure
10         the shortfall over a period of not more than 10 years.
11         If the actuarial present value of projected benefits
12         expected to be paid to current and future retirees and
13         their dependents and survivors is less than the
14         actuarial present value of projected contributions and
15         trust income plus assets in excess of the reserve
16         required by subsection (b)(3)(ii), then the report may
17         provide a plan of decreases in employee, retiree,
18         dependent, or survivor contribution levels, increases
19         in benefit levels, or other plan changes, or any
20         combination thereof both, to the extent of the surplus.
21             (iv) The Auditor General shall review the report
22         and plan provided in subsection (b)(3)(iii) and issue a
23         determination within 90 days after receiving the
24         report and plan, with a copy of such determination
25         provided to the General Assembly and the Regional
26         Transportation Authority, as follows:

 

 

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1                 (A) In the event of a projected shortfall, if
2             the Auditor General determines that the
3             assumptions stated in the report are not
4             unreasonable in the aggregate and that the plan of
5             increases in employee, retiree, dependent, or
6             survivor contribution levels, decreases in benefit
7             levels, or other plan changes, or any combination
8             thereof, to be implemented over a period of not
9             more than 10 years from each valuation date both,
10             is reasonably projected to make the actuarial
11             present value of projected contributions and trust
12             income plus assets equal to or in excess of the
13             actuarial present value of projected benefits
14             expected to be paid to current and future retirees
15             and their dependents and survivors cure the
16             shortfall over a period of not more than 10 years,
17             then the Board of Trustees shall implement the
18             plan. If the Auditor General determines that the
19             assumptions stated in the report are unreasonable
20             in the aggregate, or that the plan of increases in
21             employee, retiree, dependent, or survivor
22             contribution levels, decreases in benefit levels,
23             or other plan changes to be implemented over a
24             period of not more than 10 years from each
25             valuation date both, is not reasonably projected
26             to make the actuarial present value of projected

 

 

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1             contributions and trust income plus assets equal
2             to or in excess of the actuarial present value of
3             projected benefits expected to be paid to current
4             and future retirees and their dependents and
5             survivors cure the shortfall over a period of not
6             more than 10 years, then the Board of Trustees
7             shall not implement the plan, the Auditor General
8             shall explain the basis for such determination to
9             the Board of Trustees, and the Auditor General may
10             make recommendations as to an alternative report
11             and plan.
12                 (B) In the event of a projected surplus, if the
13             Auditor General determines that the assumptions
14             stated in the report are not unreasonable in the
15             aggregate and that the plan of decreases in
16             employee, retiree, dependent, or survivor
17             contribution levels, increases in benefit levels,
18             or both, is not unreasonable in the aggregate, then
19             the Board of Trustees shall implement the plan. If
20             the Auditor General determines that the
21             assumptions stated in the report are unreasonable
22             in the aggregate, or that the plan of decreases in
23             employee, retiree, dependent, or survivor
24             contribution levels, increases in benefit levels,
25             or both, is unreasonable in the aggregate, then the
26             Board of Trustees shall not implement the plan, the

 

 

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1             Auditor General shall explain the basis for such
2             determination to the Board of Trustees, and the
3             Auditor General may make recommendations as to an
4             alternative report and plan.
5                 (C) The Board of Trustees shall submit an
6             alternative report and plan within 45 days after
7             receiving a rejection determination by the Auditor
8             General. A determination by the Auditor General on
9             any alternative report and plan submitted by the
10             Board of Trustees shall be made within 90 days
11             after receiving the alternative report and plan,
12             and shall be accepted or rejected according to the
13             requirements of this subsection (b)(3)(iv). The
14             Board of Trustees shall continue to submit
15             alternative reports and plans to the Auditor
16             General, as necessary, until a favorable
17             determination is made by the Auditor General.
18         (4) For any retiree who first retires effective on or
19     after January 18, 2008, to be eligible for retiree health
20     care benefits upon retirement, the retiree must be at least
21     55 years of age, retire with 10 or more years of continuous
22     service and satisfy the preconditions established by
23     Public Act 95-708 in addition to any rules or regulations
24     promulgated by the Board of Trustees. Notwithstanding the
25     foregoing, any retiree hired on or before September 5, 2001
26     who retires retired prior to the effective date of this

 

 

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1     amendatory Act with 25 years or more of continuous service,
2     or who retires within 90 days after the effective date of
3     this amendatory Act or by January 1, 2009, whichever is
4     later, with 25 years or more of continuous service, shall
5     be eligible for retiree health care benefits upon
6     retirement in accordance with any rules or regulations
7     adopted by the Board of Trustees. This paragraph (4) shall
8     not apply to a disability allowance.
9         (5) Effective January 1, 2009, the aggregate amount of
10     retiree, dependent and survivor contributions to the cost
11     of their health care benefits shall not exceed more than
12     45% of the total cost of such benefits. The Board of
13     Trustees shall have the discretion to provide different
14     contribution levels for retirees, dependents and survivors
15     based on their years of service, level of coverage or
16     Medicare eligibility, provided that the total contribution
17     from all retirees, dependents, and survivors shall be not
18     more than 45% of the total cost of such benefits. The term
19     "total cost of such benefits" for purposes of this
20     subsection shall be the total amount expended by the
21     retiree health benefit program in the prior plan year, as
22     calculated and certified in writing by the Retiree Health
23     Care Trust's enrolled actuary to be appointed and paid for
24     by the Board of Trustees.
25         (6) Effective January 18, 2008, all employees of the
26     Authority shall contribute to the Retiree Health Care Trust

 

 

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1     in an amount not less than 3% of compensation. The Board of
2     Trustees may adopt rules and regulations providing for the
3     refund of the total contributions made by employees who are
4     not eligible for retiree health care benefits or who elect
5     to waive retiree health care benefits.
6         (7) No earlier than January 1, 2009 and no later than
7     July 1, 2009 as the Retiree Health Care Trust becomes
8     solely responsible for providing health care benefits to
9     eligible retirees and their dependents and survivors in
10     accordance with subsection (b) of this Section 22-101B, the
11     Authority shall not have any obligation to provide health
12     care to current or future retirees and their dependents or
13     survivors. Employees, retirees, dependents, and survivors
14     who are required to make contributions to the Retiree
15     Health Care Trust shall make contributions at the level set
16     by the Board of Trustees pursuant to the requirements of
17     this Section 22-101B.
18 (Source: P.A. 95-708, eff. 1-18-08; 95-906, eff. 8-26-08.)
 
19     Section 90. The State Mandates Act is amended by adding
20 Section 8.32 as follows:
 
21     (30 ILCS 805/8.32 new)
22     Sec. 8.32. Exempt mandate. Notwithstanding Sections 6 and 8
23 of this Act, no reimbursement by the State is required for the
24 implementation of any mandate created by this amendatory Act of

 

 

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1 the 95th General Assembly.
 
2     Section 99. Effective date. This Act takes effect upon
3 becoming law.".