99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
SB0450

 

Introduced 1/28/2015, by Sen. John J. Cullerton

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/15-155  from Ch. 108 1/2, par. 15-155

    Amends the State Universities Article of the Illinois Pension Code. Makes technical changes in a Section concerning employer contributions.


LRB099 03106 RPS 23114 b

PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB0450LRB099 03106 RPS 23114 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 changing
5Section 15-155 as follows:
 
6    (40 ILCS 5/15-155)  (from Ch. 108 1/2, par. 15-155)
7    Sec. 15-155. Employer contributions.
8    (a) The The State of Illinois shall make contributions by
9appropriations of amounts which, together with the other
10employer contributions from trust, federal, and other funds,
11employee contributions, income from investments, and other
12income of this System, will be sufficient to meet the cost of
13maintaining and administering the System on a 100% funded basis
14in accordance with actuarial recommendations by the end of
15State fiscal year 2044.
16    The Board shall determine the amount of State contributions
17required for each fiscal year on the basis of the actuarial
18tables and other assumptions adopted by the Board and the
19recommendations of the actuary, using the formula in subsection
20(a-1).
21    (a-1) For State fiscal years 2015 through 2044, the minimum
22contribution to the System to be made by the State for each
23fiscal year shall be an amount determined by the System to be

 

 

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1equal to the sum of (1) the State's portion of the projected
2normal cost for that fiscal year, plus (2) an amount sufficient
3to bring the total assets of the System up to 100% of the total
4actuarial liabilities of the System by the end of the State
5fiscal year 2044. In making these determinations, the required
6State contribution shall be calculated each year as a level
7percentage of payroll over the years remaining to and including
8fiscal year 2044 and shall be determined under the projected
9unit cost method for fiscal year 2015 and under the entry age
10normal actuarial cost method for fiscal years 2016 through
112044.
12    For State fiscal years 2012 through 2014, the minimum
13contribution to the System to be made by the State for each
14fiscal year shall be an amount determined by the System to be
15sufficient to bring the total assets of the System up to 90% of
16the total actuarial liabilities of the System by the end of
17State fiscal year 2045. In making these determinations, the
18required State contribution shall be calculated each year as a
19level percentage of payroll over the years remaining to and
20including fiscal year 2045 and shall be determined under the
21projected unit credit actuarial cost method.
22    For State fiscal years 1996 through 2005, the State
23contribution to the System, as a percentage of the applicable
24employee payroll, shall be increased in equal annual increments
25so that by State fiscal year 2011, the State is contributing at
26the rate required under this Section.

 

 

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1    Notwithstanding any other provision of this Article, the
2total required State contribution for State fiscal year 2006 is
3$166,641,900.
4    Notwithstanding any other provision of this Article, the
5total required State contribution for State fiscal year 2007 is
6$252,064,100.
7    For each of State fiscal years 2008 through 2009, the State
8contribution to the System, as a percentage of the applicable
9employee payroll, shall be increased in equal annual increments
10from the required State contribution for State fiscal year
112007, so that by State fiscal year 2011, the State is
12contributing at the rate otherwise required under this Section.
13    Notwithstanding any other provision of this Article, the
14total required State contribution for State fiscal year 2010 is
15$702,514,000 and shall be made from the State Pensions Fund and
16proceeds of bonds sold in fiscal year 2010 pursuant to Section
177.2 of the General Obligation Bond Act, less (i) the pro rata
18share of bond sale expenses determined by the System's share of
19total bond proceeds, (ii) any amounts received from the General
20Revenue Fund in fiscal year 2010, (iii) any reduction in bond
21proceeds due to the issuance of discounted bonds, if
22applicable.
23    Notwithstanding any other provision of this Article, the
24total required State contribution for State fiscal year 2011 is
25the amount recertified by the System on or before April 1, 2011
26pursuant to Section 15-165 and shall be made from the State

 

 

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1Pensions Fund and proceeds of bonds sold in fiscal year 2011
2pursuant to Section 7.2 of the General Obligation Bond Act,
3less (i) the pro rata share of bond sale expenses determined by
4the System's share of total bond proceeds, (ii) any amounts
5received from the General Revenue Fund in fiscal year 2011, and
6(iii) any reduction in bond proceeds due to the issuance of
7discounted bonds, if applicable.
8    Beginning in State fiscal year 2045, the minimum
9contribution for each fiscal year shall be the amount needed to
10maintain the total assets of the System at 100% of the total
11liabilities of the System.
12    Amounts received by the System pursuant to Section 25 of
13the Budget Stabilization Act or Section 8.12 of the State
14Finance Act in any fiscal year do not reduce and do not
15constitute payment of any portion of the minimum State
16contribution required under this Article in that fiscal year.
17Such amounts shall not reduce, and shall not be included in the
18calculation of, the required State contributions under this
19Article in any future year until the System has reached a
20funding ratio of at least 100%. A reference in this Article to
21the "required State contribution" or any substantially similar
22term does not include or apply to any amounts payable to the
23System under Section 25 of the Budget Stabilization Act.
24    Notwithstanding any other provision of this Section, the
25required State contribution for State fiscal year 2005 and for
26fiscal year 2008 and each fiscal year thereafter through State

 

 

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1fiscal year 2014, as calculated under this Section and
2certified under Section 15-165, shall not exceed an amount
3equal to (i) the amount of the required State contribution that
4would have been calculated under this Section for that fiscal
5year if the System had not received any payments under
6subsection (d) of Section 7.2 of the General Obligation Bond
7Act, minus (ii) the portion of the State's total debt service
8payments for that fiscal year on the bonds issued in fiscal
9year 2003 for the purposes of that Section 7.2, as determined
10and certified by the Comptroller, that is the same as the
11System's portion of the total moneys distributed under
12subsection (d) of Section 7.2 of the General Obligation Bond
13Act. In determining this maximum for State fiscal years 2008
14through 2010, however, the amount referred to in item (i) shall
15be increased, as a percentage of the applicable employee
16payroll, in equal increments calculated from the sum of the
17required State contribution for State fiscal year 2007 plus the
18applicable portion of the State's total debt service payments
19for fiscal year 2007 on the bonds issued in fiscal year 2003
20for the purposes of Section 7.2 of the General Obligation Bond
21Act, so that, by State fiscal year 2011, the State is
22contributing at the rate otherwise required under this Section.
23    (b) If an employee is paid from trust or federal funds, the
24employer shall pay to the Board contributions from those funds
25which are sufficient to cover the accruing normal costs on
26behalf of the employee. However, universities having employees

 

 

SB0450- 6 -LRB099 03106 RPS 23114 b

1who are compensated out of local auxiliary funds, income funds,
2or service enterprise funds are not required to pay such
3contributions on behalf of those employees. The local auxiliary
4funds, income funds, and service enterprise funds of
5universities shall not be considered trust funds for the
6purpose of this Article, but funds of alumni associations,
7foundations, and athletic associations which are affiliated
8with the universities included as employers under this Article
9and other employers which do not receive State appropriations
10are considered to be trust funds for the purpose of this
11Article.
12    (b-1) The City of Urbana and the City of Champaign shall
13each make employer contributions to this System for their
14respective firefighter employees who participate in this
15System pursuant to subsection (h) of Section 15-107. The rate
16of contributions to be made by those municipalities shall be
17determined annually by the Board on the basis of the actuarial
18assumptions adopted by the Board and the recommendations of the
19actuary, and shall be expressed as a percentage of salary for
20each such employee. The Board shall certify the rate to the
21affected municipalities as soon as may be practical. The
22employer contributions required under this subsection shall be
23remitted by the municipality to the System at the same time and
24in the same manner as employee contributions.
25    (c) Through State fiscal year 1995: The total employer
26contribution shall be apportioned among the various funds of

 

 

SB0450- 7 -LRB099 03106 RPS 23114 b

1the State and other employers, whether trust, federal, or other
2funds, in accordance with actuarial procedures approved by the
3Board. State of Illinois contributions for employers receiving
4State appropriations for personal services shall be payable
5from appropriations made to the employers or to the System. The
6contributions for Class I community colleges covering earnings
7other than those paid from trust and federal funds, shall be
8payable solely from appropriations to the Illinois Community
9College Board or the System for employer contributions.
10    (d) Beginning in State fiscal year 1996, the required State
11contributions to the System shall be appropriated directly to
12the System and shall be payable through vouchers issued in
13accordance with subsection (c) of Section 15-165, except as
14provided in subsection (g).
15    (e) The State Comptroller shall draw warrants payable to
16the System upon proper certification by the System or by the
17employer in accordance with the appropriation laws and this
18Code.
19    (f) Normal costs under this Section means liability for
20pensions and other benefits which accrues to the System because
21of the credits earned for service rendered by the participants
22during the fiscal year and expenses of administering the
23System, but shall not include the principal of or any
24redemption premium or interest on any bonds issued by the Board
25or any expenses incurred or deposits required in connection
26therewith.

 

 

SB0450- 8 -LRB099 03106 RPS 23114 b

1    (g) If the amount of a participant's earnings for any
2academic year used to determine the final rate of earnings,
3determined on a full-time equivalent basis, exceeds the amount
4of his or her earnings with the same employer for the previous
5academic year, determined on a full-time equivalent basis, by
6more than 6%, the participant's employer shall pay to the
7System, in addition to all other payments required under this
8Section and in accordance with guidelines established by the
9System, the present value of the increase in benefits resulting
10from the portion of the increase in earnings that is in excess
11of 6%. This present value shall be computed by the System on
12the basis of the actuarial assumptions and tables used in the
13most recent actuarial valuation of the System that is available
14at the time of the computation. The System may require the
15employer to provide any pertinent information or
16documentation.
17    Whenever it determines that a payment is or may be required
18under this subsection (g), the System shall calculate the
19amount of the payment and bill the employer for that amount.
20The bill shall specify the calculations used to determine the
21amount due. If the employer disputes the amount of the bill, it
22may, within 30 days after receipt of the bill, apply to the
23System in writing for a recalculation. The application must
24specify in detail the grounds of the dispute and, if the
25employer asserts that the calculation is subject to subsection
26(h) or (i) of this Section, must include an affidavit setting

 

 

SB0450- 9 -LRB099 03106 RPS 23114 b

1forth and attesting to all facts within the employer's
2knowledge that are pertinent to the applicability of subsection
3(h) or (i). Upon receiving a timely application for
4recalculation, the System shall review the application and, if
5appropriate, recalculate the amount due.
6    The employer contributions required under this subsection
7(g) may be paid in the form of a lump sum within 90 days after
8receipt of the bill. If the employer contributions are not paid
9within 90 days after receipt of the bill, then interest will be
10charged at a rate equal to the System's annual actuarially
11assumed rate of return on investment compounded annually from
12the 91st day after receipt of the bill. Payments must be
13concluded within 3 years after the employer's receipt of the
14bill.
15    (h) This subsection (h) applies only to payments made or
16salary increases given on or after June 1, 2005 but before July
171, 2011. The changes made by Public Act 94-1057 shall not
18require the System to refund any payments received before July
1931, 2006 (the effective date of Public Act 94-1057).
20    When assessing payment for any amount due under subsection
21(g), the System shall exclude earnings increases paid to
22participants under contracts or collective bargaining
23agreements entered into, amended, or renewed before June 1,
242005.
25    When assessing payment for any amount due under subsection
26(g), the System shall exclude earnings increases paid to a

 

 

SB0450- 10 -LRB099 03106 RPS 23114 b

1participant at a time when the participant is 10 or more years
2from retirement eligibility under Section 15-135.
3    When assessing payment for any amount due under subsection
4(g), the System shall exclude earnings increases resulting from
5overload work, including a contract for summer teaching, or
6overtime when the employer has certified to the System, and the
7System has approved the certification, that: (i) in the case of
8overloads (A) the overload work is for the sole purpose of
9academic instruction in excess of the standard number of
10instruction hours for a full-time employee occurring during the
11academic year that the overload is paid and (B) the earnings
12increases are equal to or less than the rate of pay for
13academic instruction computed using the participant's current
14salary rate and work schedule; and (ii) in the case of
15overtime, the overtime was necessary for the educational
16mission.
17    When assessing payment for any amount due under subsection
18(g), the System shall exclude any earnings increase resulting
19from (i) a promotion for which the employee moves from one
20classification to a higher classification under the State
21Universities Civil Service System, (ii) a promotion in academic
22rank for a tenured or tenure-track faculty position, or (iii) a
23promotion that the Illinois Community College Board has
24recommended in accordance with subsection (k) of this Section.
25These earnings increases shall be excluded only if the
26promotion is to a position that has existed and been filled by

 

 

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1a member for no less than one complete academic year and the
2earnings increase as a result of the promotion is an increase
3that results in an amount no greater than the average salary
4paid for other similar positions.
5    (i) When assessing payment for any amount due under
6subsection (g), the System shall exclude any salary increase
7described in subsection (h) of this Section given on or after
8July 1, 2011 but before July 1, 2014 under a contract or
9collective bargaining agreement entered into, amended, or
10renewed on or after June 1, 2005 but before July 1, 2011.
11Notwithstanding any other provision of this Section, any
12payments made or salary increases given after June 30, 2014
13shall be used in assessing payment for any amount due under
14subsection (g) of this Section.
15    (j) The System shall prepare a report and file copies of
16the report with the Governor and the General Assembly by
17January 1, 2007 that contains all of the following information:
18        (1) The number of recalculations required by the
19    changes made to this Section by Public Act 94-1057 for each
20    employer.
21        (2) The dollar amount by which each employer's
22    contribution to the System was changed due to
23    recalculations required by Public Act 94-1057.
24        (3) The total amount the System received from each
25    employer as a result of the changes made to this Section by
26    Public Act 94-4.

 

 

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1        (4) The increase in the required State contribution
2    resulting from the changes made to this Section by Public
3    Act 94-1057.
4    (k) The Illinois Community College Board shall adopt rules
5for recommending lists of promotional positions submitted to
6the Board by community colleges and for reviewing the
7promotional lists on an annual basis. When recommending
8promotional lists, the Board shall consider the similarity of
9the positions submitted to those positions recognized for State
10universities by the State Universities Civil Service System.
11The Illinois Community College Board shall file a copy of its
12findings with the System. The System shall consider the
13findings of the Illinois Community College Board when making
14determinations under this Section. The System shall not exclude
15any earnings increases resulting from a promotion when the
16promotion was not submitted by a community college. Nothing in
17this subsection (k) shall require any community college to
18submit any information to the Community College Board.
19    (l) For purposes of determining the required State
20contribution to the System, the value of the System's assets
21shall be equal to the actuarial value of the System's assets,
22which shall be calculated as follows:
23    As of June 30, 2008, the actuarial value of the System's
24assets shall be equal to the market value of the assets as of
25that date. In determining the actuarial value of the System's
26assets for fiscal years after June 30, 2008, any actuarial

 

 

SB0450- 13 -LRB099 03106 RPS 23114 b

1gains or losses from investment return incurred in a fiscal
2year shall be recognized in equal annual amounts over the
35-year period following that fiscal year.
4    (m) For purposes of determining the required State
5contribution to the system for a particular year, the actuarial
6value of assets shall be assumed to earn a rate of return equal
7to the system's actuarially assumed rate of return.
8(Source: P.A. 97-813, eff. 7-13-12; 98-92, eff. 7-16-13;
998-463, eff. 8-16-13; 98-599, eff. 6-1-14.)