HB5643 95TH GENERAL ASSEMBLY

LRB095 15660 AMC 41665 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
HB5643

Introduced , by Rep. Frank J. Mautino

SYNOPSIS AS INTRODUCED:

40 ILCS 5/16-106	from Ch. 108 1/2, par. 16-106
40 ILCS 5/16-133.2	from Ch. 108 1/2, par. 16-133.2
40 ILCS 5/16-136.4	from Ch. 108 1/2, par. 16-136.4
40 ILCS 5/16-158.1	from Ch. 108 1/2, par. 16-158.1
40 ILCS 5/16-165	from Ch. 108 1/2, par. 16-165
40 ILCS 5/16-203.1 new
30 ILCS 805/8.32 new

Amends the Downstate Teacher Article of the Illinois Pension Code. Makes changes in the definition of "teacher". In provisions concerning early retirement without discount, provides that certain employer contributions shall be payable to the System within 30 days after receipt of the bill. Increases the single-sum retirement benefit from 1.67% of the member's final average salary for each year of creditable service to 2.2% of the member's final average salary for each year of creditable service. Provides that the System may charge interest at a rate equal to the System's annual actuarially assumed rate of return on investment compounded annually from the 91st day after a school district receives a bill for contributions required of it under the Article or contributions required of teachers. In provisions concerning vacancies on the Board of Trustees, provides that if the Board's secretary determines there is inadequate time to hold a special election so as to allow the newly elected trustee to participate in at least one regularly scheduled Board meeting, then no special election shall be held and the vacancy shall remain until the next regular election. Amends the State Mandates Act to require implementation without reimbursement. Includes new benefit increase language. Effective immediately.

FISCAL NOTE ACT MAY APPLY

PENSION IMPACT NOTE ACT MAY APPLY

STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

A BILL FOR

AN ACT concerning public employee benefits.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Pension Code is amended by changing Sections 16-106, 16-133.2, 16-136.4, 16-158.1, and 16-165 and by adding Section 16-203.1 as follows:

(40 ILCS 5/16-106) (from Ch. 108 1/2, par. 16-106)

Sec. 16-106. Teacher. "Teacher": The following individuals, provided that, for employment prior to July 1, 1990, they are employed on a full-time basis, or if not full-time, on a permanent and continuous basis in a position in which services are expected to be rendered for at least one school term:

(1) Any educational, administrative, professional or other staff employed in the public common schools included within this system in a position requiring certification under the law governing the certification of teachers;

(2) Any educational, administrative, professional or other staff employed in any facility of the Department of Children and Family Services or the Department of Human Services, in a position requiring certification under the law governing the certification of teachers, and any person who (i) works in such a position for the Department of Corrections, (ii) was a member of this System on May 31, 1987, and (iii) did not elect to become a member of the State Employees' Retirement System pursuant to Section 14-108.2 of this Code; except that "teacher" does not include any person who (A) becomes a security employee of the Department of Human Services, as defined in Section 14-110, after June 28, 2001 (the effective date of Public Act 92-14), or (B) becomes a member of the State Employees' Retirement System pursuant to Section 14-108.2c of this Code;

(3) Any regional superintendent of schools, assistant regional superintendent of schools, State Superintendent of Education; any person employed by the State Board of Education as an executive; any executive of the boards engaged in the service of public common school education in school districts covered under this system of which the State Superintendent of Education is an ex-officio member;

(4) Any employee of a school board association operating in compliance with Article 23 of the School Code who is certificated under the law governing the certification of teachers;

(5) Any person employed by the retirement system who:

(i) was an employee of and a participant in the system on August 17, 2001 (the effective date of Public Act 92-416), or

(ii) becomes an employee of the system on or after August 17, 2001;

(6) Any educational, administrative, professional or other staff employed by and under the supervision and control of a regional superintendent of schools, provided such employment position requires the person to be certificated under the law governing the certification of teachers and is in an educational program serving 2 or more districts in accordance with a joint agreement authorized by the School Code or by federal legislation;

(7) Any educational, administrative, professional or other staff employed in an educational program serving 2 or more school districts in accordance with a joint agreement authorized by the School Code or by federal legislation and in a position requiring certification under the laws governing the certification of teachers;

(8) Any officer or employee of a statewide teacher organization or officer of a national teacher organization who is certified under the law governing certification of teachers, provided: (i) the individual had previously established creditable service under this Article, (ii) the individual files with the system an irrevocable election to become a member, and (iii) the individual does not receive credit for such service under any other Article of this Code;

(9) Any educational, administrative, professional, or other staff employed in a charter school operating in compliance with the Charter Schools Law who is certificated under the law governing the certification of teachers.

(10) Any person employed, on the effective date of this amendatory Act of the 94th General Assembly, by the Macon-Piatt Regional Office of Education in a birth-through-age-three pilot program receiving funds under Section 2-389 of the School Code who is required by the Macon-Piatt Regional Office of Education to hold a teaching certificate, provided that the Macon-Piatt Regional Office of Education makes an election, within 6 months after the effective date of this amendatory Act of the 94th General Assembly, to have the person participate in the system. Any service established prior to the effective date of this amendatory Act of the 94th General Assembly for service as an employee of the Macon-Piatt Regional Office of Education in a birth-through-age-three pilot program receiving funds under Section 2-389 of the School Code shall be considered service as a teacher if employee and employer contributions have been received by the system and the system has not refunded those contributions.

An annuitant receiving a retirement annuity under this Article or under Article 17 of this Code who is employed by a board of education or other employer as permitted under Section 16-118 or 16-150.1 is not a "teacher" for purposes of this Article. A person who has received a single-sum retirement benefit under Section 16-136.4 of this Article is not a "teacher" for purposes of this Article.

A person who is a teacher as described in item (8) of this Section may establish service credit for similar employment prior to becoming certified as a teacher if he or she (i) is certified as a teacher on or before the effective date of this amendatory Act of the 94th General Assembly, (ii) applies in writing to the system within 6 months after the effective date of this amendatory Act of the 94th General Assembly, and (iii) pays to the system contributions equal to the normal costs calculated from the date of first full-time employment as described in item (8) to the date of payment, compounded annually at the rate of 8.5% per year for periods before the effective date of this amendatory Act of the 94th General Assembly and for subsequent periods at a rate equal to the System's actuarially assumed rate of return on investments. However, credit shall not be granted under this paragraph for any such prior employment for which the applicant received credit under any other provision of this Code.

(Source: P.A. 93-320, eff. 7-23-03; 94-1111, eff. 2-27-07.)

(40 ILCS 5/16-133.2) (from Ch. 108 1/2, par. 16-133.2)

Sec. 16-133.2. Early retirement without discount.

(a) A member retiring after June 1, 1980 and on or before June 30, 2005 (or as provided in subsection (b) of this Section), and applying for a retirement annuity within 6 months of the last day of teaching for which retirement contributions were required, may elect at the time of application for a retirement annuity, to make a one time member contribution to the System and thereby avoid the reduction in the retirement annuity for retirement before age 60 specified in paragraph (B) of Section 16-133. The exercise of the election shall also obligate the last employer to make a one time non-refundable contribution to the System. Substitute teachers wishing to exercise this election must teach 85 or more days in one school term with one employer, who shall be deemed the last employer for purposes of this Section. The last day of teaching with that employer must be within 6 months of the date of application for retirement. All substitute teaching credit applied toward the required 85 days must be earned after June 30, 1990.

The one time member and employer contributions shall be a percentage of the retiring member's highest annual salary rate used in the determination of the average salary for retirement annuity purposes. However, when determining the one-time member and employer contributions, that part of a member's salary with the same employer which exceeds the annual salary rate for the preceding year by more than 20% shall be excluded. The member contribution shall be at the rate of 7% for the lesser of the following 2 periods: (1) for each year that the member is less than age 60; or (2) for each year that the member's creditable service is less than 35 years. If a member is at least age 55 and has at least 34 years of creditable service, no member or employer contribution for the early retirement option shall be required. The employer contribution shall be at the rate of 20% for each year the member is under age 60.

Upon receipt of the application and election, the System shall determine the one time employee and employer contributions required. The member contribution shall be credited to the individual account of the member and the employer contribution shall be credited to the Benefit Trust Reserve. The provisions of this subsection (a) providing for the avoidance of the reduction in retirement annuity shall not be applicable until the member's contribution, if any, has been received by the System; however, the date such contributions are received shall not be considered in determining the effective date of retirement.

The number of members working for a single employer who may retire under this subsection or subsection (b) in any year may be limited at the option of the employer to a specified percentage of those eligible, not less than 30%, with the right to participate to be allocated among those applying on the basis of seniority in the service of the employer.

(b) The provisions of subsection (a) of this Section shall remain in effect for a member retiring after June 30, 2005 and on or before July 1, 2007, provided that the member satisfies both of the following requirements:

(1) the member notified his or her employer of intent to retire under this Article on or before the effective date of this amendatory Act of the 94th General Assembly under the terms of a contract or collective bargaining agreement entered into, amended, or renewed with the employer on or before the effective date of this amendatory Act of the 94th General Assembly; and

(2) the effective date of the member's retirement is on or before July 1, 2007.

The member's employer must give evidence of the member's notification by providing to the System:

(i) a copy of the member's notification to the employer or the record of that notification;

(ii) an affidavit signed by the member and the employer, verifying the notification; and

(iii) any additional documentation that the System may require.

(c) Except as otherwise provided in subsection (b), and subject to the provisions of Section 16-176, a member retiring on or after July 1, 2005, and applying for a retirement annuity within 6 months of the last day of teaching for which retirement contributions were required, may elect at the time of application for a retirement annuity, to make a one-time member contribution to the System and thereby avoid the reduction in the retirement annuity for retirement before age 60 specified in paragraph (B) of Section 16-133. The exercise of the election shall also obligate the last employer to make a one-time nonrefundable contribution to the System. Substitute teachers wishing to exercise this election must teach 85 or more days in one school term with one employer, who shall be deemed the last employer for purposes of this Section. The last day of teaching with that employer must be within 6 months of the date of application for retirement. All substitute teaching credit applied toward the required 85 days must be earned after June 30, 1990.

The one-time member and employer contributions shall be a percentage of the retiring member's highest annual salary rate used in the determination of the average salary for retirement annuity purposes. However, when determining the one-time member and employer contributions, that part of a member's salary with the same employer which exceeds the annual salary rate for the preceding year by more than 20% shall be excluded. The member contribution shall be at the rate of 11.5% for the lesser of the following 2 periods: (1) for each year that the member is less than age 60; or (2) for each year that the member's creditable service is less than 35 years. The employer contribution shall be at the rate of 23.5% for each year the member is under age 60 and shall be payable to the System within 30 days after receipt of the bill. These employer payments shall be subject to Section 16-158.1 of this Code..

Upon receipt of the application and election, the System shall determine the one-time employee and employer contributions required. The member contribution shall be credited to the individual account of the member and the employer contribution shall be credited to the Benefit Trust Reserve. The avoidance of the reduction in retirement annuity provided under this subsection (c) is not applicable until the member's contribution, if any, has been received by the System; however, the date that contribution is received shall not be considered in determining the effective date of retirement.

The number of members working for a single employer who may retire under this subsection (c) in any year may be limited at the option of the employer to a specified percentage of those eligible, not less than 10%, with the right to participate to be allocated among those applying on the basis of seniority in the service of the employer.

(Source: P.A. 93-469, eff. 8-8-03; 94-4, eff. 6-1-05.)

(40 ILCS 5/16-136.4) (from Ch. 108 1/2, par. 16-136.4)

Sec. 16-136.4. Single-sum retirement benefit.

(a) A member who has less than 5 years of creditable service shall be entitled, upon written application to the board, to receive a retirement benefit payable in a single sum upon or after the member's attainment of age 65. However, the benefit shall not be paid while the member is employed as a teacher in the schools included under this Article or Article 17, unless the System is required by federal law to make payment due to the member's age.

(b) The retirement benefit shall consist of a single sum that is the actuarial equivalent of a life annuity consisting of 2.2% 1.67% of the member's final average salary for each year of creditable service. In determining the amount of the benefit, a fractional year shall be granted proportional credit.

For the purposes of this Section, final average salary shall be the average salary of the member's highest 4 consecutive years of service as determined under rules of the board. For a member with less than 4 consecutive years of service, final average salary shall be the average salary during the member's entire period of service. In the determination of final average salary for members other than elected officials and their appointees when such appointees are allowed by statute, that part of a member's salary which exceeds the member's annual full-time salary rate with the same employer for the preceding year by more than 20% shall be excluded. The exclusion shall not apply in any year in which the member's creditable earnings are less than 50% of the preceding year's mean salary for downstate teachers as determined by the survey of school district salaries provided in Section 2-3.103 of the School Code.

(c) The retirement benefit determined under this Section shall be available to all members who render teaching service after July 1, 1947 for which member contributions are required.

(d) Upon acceptance of the retirement benefit, all of the member's accrued rights and credits in the System are forfeited. Receipt of a single-sum retirement benefit under this Section does not make a person an "annuitant" for the purposes of this Article, nor a "benefit recipient" for the purposes of Sections 16-153.1 through 16-153.4.

(Source: P.A. 91-887, eff. 7-6-00.)

(40 ILCS 5/16-158.1) (from Ch. 108 1/2, par. 16-158.1)

Sec. 16-158.1. Actions to enforce payments by school districts and other employing units. Any school district or other employing unit failing to transmit to the System contributions required of it under this Article or contributions required of teachers, for more than 90 days after such contributions are due is subject to the following: after giving notice to the district or other unit, the System may certify to the State Comptroller or the Regional Superintendent of Schools the amounts of such delinquent payments and the State Comptroller or the Regional Superintendent of Schools shall deduct the amounts so certified or any part thereof from any State funds to be remitted to the school district or other employing unit involved and shall pay the amount so deducted to the System. If State funds from which such deductions may be made are not available, the System may proceed against the school district or other employing unit to recover the amounts of such delinquent payments in the appropriate circuit court and the System may charge interest at a rate equal to the System's annual actuarially assumed rate of return on investment compounded annually from the 91st day after the school district receives the bill.

The System may provide for an audit of the records of a school district or other employing unit as may be required to establish the amounts of required contributions. The school district or other employing unit shall make its records available to the System for the purpose of such audit. The cost of such audit shall be added to the amount of the delinquent payments and shall be recovered by the System from the school district or other employing unit at the same time and in the same manner as the delinquent payments are recovered.

(Source: P.A. 90-448, eff. 8-16-97.)

(40 ILCS 5/16-165) (from Ch. 108 1/2, par. 16-165)

Sec. 16-165. Board; elected members; vacancies.

(a) In each odd-numbered year, there shall be elected 2 teachers who shall hold office for a term of 4 years beginning July 15 next following their election, in the manner provided under this Section. An elected teacher member of the board who ceases to be a teacher as defined in Section 16-106 may continue to serve on the board for the remainder of the term to which he or she was elected.

(b) One elected annuitant trustee shall first be elected in 1987, and in every fourth year thereafter, for a term of 4 years beginning July 15 next following his or her election.

(c) The elected annuitant position created by this amendatory Act of the 91st General Assembly shall be filled as soon as possible in the manner provided for vacancies, for an initial term ending July 15, 2001. One elected annuitant trustee shall be elected in 2001, and in every fourth year thereafter, for a term of 4 years beginning July 15 next following his or her election.

(d) Elections shall be held on May 1, unless May 1 falls on a Saturday or Sunday, in which event the election shall be conducted on the following Monday. Candidates shall be nominated by petitions in writing, signed by not less than 500 teachers or annuitants, as the case may be, with their addresses shown opposite their names. The petitions shall be filed with the board's Secretary not less than 90 nor more than 120 days prior to May 1. The Secretary shall determine their validity not less than 75 days before the election.

(e) If, for either teacher or annuitant members, the number of qualified nominees exceeds the number of available positions, the system shall prepare an appropriate ballot with the names of the candidates in alphabetical order and shall mail one copy thereof, at least 10 days prior to the election day, to each teacher or annuitant of this system as of the latest date practicable, at the latest known address, together with a return envelope addressed to the board and also a smaller envelope marked "For Ballot Only", and a slip for signature. Each voter, upon marking his ballot with a cross mark in the square before the name of the person voted for, shall place the ballot in the envelope marked "For Ballot Only", seal the envelope, write on the slip provided therefor his signature and address, enclose both the slip and sealed envelope containing the marked ballot in the return envelope addressed to the board, and mail it. Whether a person is eligible to vote for the teacher nominees or the annuitant nominees shall be determined from system payroll records as of March 1.

Upon receipt of the return envelopes, the system shall open them and set aside unopened the envelopes marked "For Ballot Only". On election day ballots shall be publicly opened and counted by the trustees or canvassers appointed therefor. Each vote cast for a candidate represents one vote only. No ballot arriving after 10 o'clock a.m. on election day shall be counted. The 2 teacher candidates and the annuitant candidate receiving the highest number of votes shall be elected. The board shall declare the results of the election, keep a record thereof, and notify the candidates of the results thereof within 30 days after the election.

If, for either class of members, there are only as many qualified nominees as there are positions available, the balloting as described in this Section shall not be conducted for those nominees, and the board shall declare them duly elected.

(f) A vacancy occurring in the elective membership of the board shall be filled for the unexpired term by a person qualified for the vacant position, selected by the remaining elected members of the board, if there are no more than 6 months remaining on the term. For a term with more than 6 months remaining, the Director of the Teachers' Retirement System of the State of Illinois shall institute an election in accordance with this Act to fill the unexpired term; however, if the Board's secretary determines there is inadequate time to hold a special election so as to allow the newly elected trustee to participate in at least one regularly scheduled Board meeting, then no special election shall be held and the vacancy shall remain until the next regular election.

(Source: P.A. 94-423, eff. 8-2-05; 94-710, eff. 12-5-05; 95-331, eff. 8-21-07.)

(40 ILCS 5/16-203.1 new)

Sec. 16-203.1. New benefit increases. The General Assembly finds and declares that the amendment to Section 16-136.4 made by this amendatory Act of the 95th General Assembly that increases the retirement benefit of a member constitutes a new benefit increase within the meaning of Section 16-203. The additional funding required under Section 16-203 for this new benefit increase was provided for by the increase in employee and employer contributions for this purpose under Public Act 90-582.

Section 90. The State Mandates Act is amended by adding Section 8.32 as follows:

(30 ILCS 805/8.32 new)

Sec. 8.32. Exempt mandate. Notwithstanding Sections 6 and 8 of this Act, no reimbursement by the State is required for the implementation of any mandate created by this amendatory Act of the 95th General Assembly.

Section 99. Effective date. This Act takes effect upon becoming law.