HB3762 99TH GENERAL ASSEMBLY

LRB099 02645 RPS 22651 b

99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB3762

Introduced , by Rep. Thomas Morrison

SYNOPSIS AS INTRODUCED:

40 ILCS 5/3-101	from Ch. 108 1/2, par. 3-101
40 ILCS 5/3-101.5 new
40 ILCS 5/3-150	from Ch. 108 1/2, par. 3-150
40 ILCS 5/4-101	from Ch. 108 1/2, par. 4-101
40 ILCS 5/4-101.5 new
40 ILCS 5/4-142	from Ch. 108 1/2, par. 4-142
40 ILCS 5/7-109	from Ch. 108 1/2, par. 7-109
40 ILCS 5/7-134.5 new
40 ILCS 5/7-210	from Ch. 108 1/2, par. 7-210

Amends the Illinois Pension Code. In the Downstate Firefighter and Downstate Police Articles, provides that a municipality may, by ordinance, assume local control of the municipality's police or firefighter's pension fund, with the power to change the terms of the plan. In the IMRF Article, provides that a municipality may end its participation in IMRF and create its own municipal pension fund; specifies certain conditions and provides for transfer of certain contributions and liabilities from IMRF to the new municipal pension fund.

FISCAL NOTE ACT MAY APPLY

PENSION IMPACT NOTE ACT MAY APPLY

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 3-101, 3-150, 4-101, 4-142, 7-109, and 7-210 and by adding Sections 3-101.5, 4-101.5, and 7-134.5 as follows:

(40 ILCS 5/3-101) (from Ch. 108 1/2, par. 3-101)

Sec. 3-101. Creation of fund. Except as provided in Section 3-101.5, in In each municipality, as defined in Section 3-103, the city council or the board of trustees, as the case may be, shall establish and administer a police pension fund, as prescribed in this Article, for the benefit of its police officers and of their surviving spouses, children, and certain other dependents. The duty of the corporate authorities of a municipality to establish and administer a police pension fund shall be suspended during any period during which the fund is dissolved under Section 3-144.6 of this Code.

(Source: P.A. 97-99, eff. 1-1-12.)

(40 ILCS 5/3-101.5 new)

Sec. 3-101.5. Local control of pension fund.

(a) The corporate authorities of a municipality that has a police pension fund under this Article may, by ordinance, assume control of the police pension fund. Control of the police pension fund shall include responsibility for its liabilities.

(b) After assuming control of the police pension fund, including assumption of responsibility for its liabilities, the municipality may, by ordinance, maintain the police pension fund in accordance with this Article or make any changes to the police pension fund that are consistent with the requirements of this Section and the Constitution and laws of the State of Illinois and the United States, including but not limited to developing and implementing a new or different retirement plan.

(c) Notwithstanding any other provision of this Article, upon the assumption of control of the police pension fund by the municipality in conformance with this Section, including assumption of responsibility for the police pension fund's liabilities, the provisions of this Article, other than this Section, shall cease to apply to the municipality.

(40 ILCS 5/3-150) (from Ch. 108 1/2, par. 3-150)

Sec. 3-150. Applicability of home rule powers. A home rule unit, as defined in Article VII of the 1970 Illinois Constitution or any amendment thereto, shall have no power to change, alter, or amend in any way the provisions of this Article, but it may assume local control of its police pension fund in accordance with Section 3-101.5. A home rule unit which is a municipality, as defined in Section 3-103, shall not provide for, singly or as a part of any plan or program, by any means whatsoever, any type of retirement or annuity benefit to a police officer other than through establishment of a fund as provided in this Article, unless it has assumed local control of its police pension fund under Section 3-101.5.

(Source: P.A. 83-1440.)

(40 ILCS 5/4-101) (from Ch. 108 1/2, par. 4-101)

Sec. 4-101. Creation of fund. Except as provided in Section 4-101.5, in In each municipality as defined in Section 4-103, the city council or the board of trustees, as the case may be, shall establish and administer a firefighters' pension fund as prescribed in this Article, for the benefit of its firefighters and of their surviving spouses, children and certain other dependents. The duty of the corporate authorities of a municipality to establish and administer a firefighters' pension fund shall be suspended during any period during which the fund is dissolved under subsection (c) of Section 4-106.1 of this Code.

(Source: P.A. 97-99, eff. 1-1-12.)

(40 ILCS 5/4-101.5 new)

Sec. 4-101.5. Local control of pension fund.

(a) The corporate authorities of a municipality that has a firefighters' pension fund under this Article may, by ordinance, assume control of the firefighters' pension fund. Control of the firefighters' pension fund shall include responsibility for its liabilities.

(b) After assuming control of the firefighters' pension fund, including assumption of responsibility for its liabilities, the municipality may, by ordinance, maintain the firefighters' pension fund in accordance with this Article or make any changes to the firefighters' pension fund that are consistent with the requirements of this Section and the Constitution and laws of the State of Illinois and the United States, including but not limited to developing and implementing a new or different retirement plan.

(c) Notwithstanding any other provision of this Article, upon the assumption of control of the firefighters' pension fund by the municipality in conformance with this Section, including assumption of responsibility for the firefighters' pension fund's liabilities, the provisions of this Article, other than this Section, shall cease to apply to the municipality.

(40 ILCS 5/4-142) (from Ch. 108 1/2, par. 4-142)

Sec. 4-142. Applicability of home rule powers. A home rule unit, as defined in Article VII of the 1970 Illinois Constitution or any amendment thereto, shall have no power to change, alter, or amend in any way the provisions of this Article, but it may assume local control of its firefighters' pension fund in accordance with Section 4-101.5. A home rule unit which is a municipality, as defined in Section 4-103, shall not provide for, singly or as a part of any plan or program, by any means whatsoever, any type of retirement or annuity benefit to a firefighter other than through establishment of a fund as provided in this Article as now or hereafter amended, unless it has assumed local control of its firefighters' pension fund under Section 3-101.5.

(Source: P.A. 83-1440.)

(40 ILCS 5/7-109) (from Ch. 108 1/2, par. 7-109)

Sec. 7-109. Employee.

(1) "Employee" means any person who:

(a) 1. Receives earnings as payment for the performance of personal services or official duties out of the general fund of a municipality, or out of any special fund or funds controlled by a municipality, or by an instrumentality thereof, or a participating instrumentality, including, in counties, the fees or earnings of any county fee office; and

2. Under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee with a municipality, or any instrumentality thereof, or a participating instrumentality, including aldermen, county supervisors and other persons (excepting those employed as independent contractors) who are paid compensation, fees, allowances or other emolument for official duties, and, in counties, the several county fee offices.

(b) Serves as a township treasurer appointed under the School Code, as heretofore or hereafter amended, and who receives for such services regular compensation as distinguished from per diem compensation, and any regular employee in the office of any township treasurer whether or not his earnings are paid from the income of the permanent township fund or from funds subject to distribution to the several school districts and parts of school districts as provided in the School Code, or from both such sources; or is the chief executive officer, chief educational officer, chief fiscal officer, or other employee of a Financial Oversight Panel established pursuant to Article 1H of the School Code, other than a superintendent or certified school business official, except that such person shall not be treated as an employee under this Section if that person has negotiated with the Financial Oversight Panel, in conjunction with the school district, a contractual agreement for exclusion from this Section.

(c) Holds an elective office in a municipality, instrumentality thereof or participating instrumentality.

(2) "Employee" does not include persons who:

(a) Are eligible for inclusion under any of the following laws:

1. "An Act in relation to an Illinois State Teachers' Pension and Retirement Fund", approved May 27, 1915, as amended;

2. Articles 15 and 16 of this Code.

However, such persons shall be included as employees to the extent of earnings that are not eligible for inclusion under the foregoing laws for services not of an instructional nature of any kind.

However, any member of the armed forces who is employed as a teacher of subjects in the Reserve Officers Training Corps of any school and who is not certified under the law governing the certification of teachers shall be included as an employee.

(b) Are designated by the governing body of a municipality in which a pension fund is required by law to be established for policemen or firemen, respectively, as performing police or fire protection duties, except that when such persons are the heads of the police or fire department and are not eligible to be included within any such pension fund, they shall be included within this Article; provided, that such persons shall not be excluded to the extent of concurrent service and earnings not designated as being for police or fire protection duties. However, (i) any head of a police department who was a participant under this Article immediately before October 1, 1977 and did not elect, under Section 3-109 of this Act, to participate in a police pension fund shall be an "employee", and (ii) any chief of police who elects to participate in this Fund under Section 3-109.1 of this Code, regardless of whether such person continues to be employed as chief of police or is employed in some other rank or capacity within the police department, shall be an employee under this Article for so long as such person is employed to perform police duties by a participating municipality and has not lawfully rescinded that election.

(c) Are contributors to or eligible to contribute to a Taft-Hartley pension plan and to which the participating municipality is required to contribute as the person's employer based on earnings from the municipality. Nothing in this paragraph shall affect service credit or creditable service for any period of service prior to the effective date of this amendatory Act of the 98th General Assembly, and this paragraph shall not apply to individuals who are participating in the Fund prior to the effective date of this amendatory Act of the 98th General Assembly.

(d) Become an employee of any of the following participating instrumentalities on or after the effective date of this amendatory Act of the 98th General Assembly: the Illinois Municipal League; the Illinois Association of Park Districts; the Illinois Supervisors, County Commissioners and Superintendents of Highways Association; an association, or not-for-profit corporation, membership in which is authorized under Section 85-15 of the Township Code; the United Counties Council; or the Will County Governmental League.

(e) Are employees of a former participating municipality that has terminated participation in this Fund and established its own municipal pension fund in accordance with Section 7-134.5.

(3) All persons, including, without limitation, public defenders and probation officers, who receive earnings from general or special funds of a county for performance of personal services or official duties within the territorial limits of the county, are employees of the county (unless excluded by subsection (2) of this Section) notwithstanding that they may be appointed by and are subject to the direction of a person or persons other than a county board or a county officer. It is hereby established that an employer-employee relationship under the usual common law rules exists between such employees and the county paying their salaries by reason of the fact that the county boards fix their rates of compensation, appropriate funds for payment of their earnings and otherwise exercise control over them. This finding and this amendatory Act shall apply to all such employees from the date of appointment whether such date is prior to or after the effective date of this amendatory Act and is intended to clarify existing law pertaining to their status as participating employees in the Fund.

(Source: P.A. 97-429, eff. 8-16-11; 97-609, eff. 8-26-11; 97-813, eff. 7-13-12; 98-599, eff. 6-1-14; 98-712, eff. 7-16-14.)

(40 ILCS 5/7-134.5 new)

Sec. 7-134.5. Termination of participation; creation of new municipal pension fund.

(a) The corporate authorities of a participating municipality under this Article may, by ordinance, terminate its participation in this Fund and establish its own municipal pension fund. The ordinance must explicitly include:

(1) a provision accepting the terms of subsection (d-10) of Section 7-210 of this Code;

(2) a provision assuming responsibility for any liabilities arising out of the termination of the municipality's participation in IMRF and the creation of the new municipal pension fund; and

(3) a provision detailing the effect of the ordinance on the Social Security status of the affected employees.

(b) The retirement plan of the new municipal pension fund may take any form that the corporate authorities may specify by ordinance, so long as it is consistent with the requirements of this Section, the Constitution and laws of the State of Illinois and the United States, and any applicable contracts or collective bargaining agreements.

(c) Upon termination of participation in IMRF, the provisions of this Article, other than this Section and subsection (d-10) of Section 7-210, shall cease to apply to the municipality.

(40 ILCS 5/7-210) (from Ch. 108 1/2, par. 7-210)

Sec. 7-210. Funds.

(a) All money received by the board shall immediately be deposited with the State Treasurer for the account of the fund, or in the case of funds received under Section 7-199.1, in a separate account maintained for that purpose. All disbursements of funds held by the State Treasurer shall be made only upon warrants of the State Comptroller drawn upon the Treasurer as custodian of this fund upon vouchers signed by the person or persons designated for such purpose by resolution of the board. The Comptroller is authorized to draw such warrants upon vouchers so signed, including warrants payable to the Fund for deposit in a revolving account authorized by Section 7-195.1. The Treasurer shall accept all warrants so signed and shall be released from liability for all payments made thereon. Vouchers shall be drawn only upon proper authorization by the board as properly recorded in the official minute books of the meetings of the board.

(b) All securities of the fund when received shall be deposited with the State Treasurer who shall provide adequate safe deposit facilities for their preservation and have custody of them.

(c) The assets of the fund shall be invested as one fund, and no particular person, municipality, or instrumentality thereof or participating instrumentality shall have any right in any specific security or in any item of cash other than an undivided interest in the whole.

(d) Except as provided in subsection (d-5), whenever any employees of a municipality or participating instrumentality have been or shall be excluded from participation in this fund by virtue of the application of paragraph b of Section 7-109 (2), the board shall issue a voucher authorizing the Comptroller to draw his warrant upon the Treasurer as custodian of this fund in an amount equal to the accumulated contributions of such employees. Such warrant shall be drawn in favor of the appropriate fund of the retirement fund in which such employees have or shall become participants. Such transfer shall terminate any further rights of such employees under this fund.

(d-5) Upon creation of a newly established Article 3 police pension fund by referendum under Section 3-145 or by census under Section 3-105, the following amounts shall be transferred from this Fund to the new police pension fund, within 30 days after an application therefor is received from the new pension fund:

(1) the amounts actually contributed to this Fund as employee contributions by or on behalf of the police officers transferring to the new pension fund for their service as police officers of the municipality that is establishing the new pension fund, plus interest on those amounts at the rate of 6% per year, compounded annually, from the date of contribution to the date of transfer to the new pension fund, and

(2) an amount representing employer contributions, equal to the total amount determined under item (1). This transfer terminates any further rights of such police officers in this Fund arising out of their service as police officers of the municipality that is establishing the new pension fund.

(d-10) Upon termination of a municipality's participation in this Fund and creation of a new municipal pension fund under Section 7-134.5, the following amounts shall be transferred from this Fund to the new pension fund, within 90 days after an application therefor is received from the new pension fund:

(1) the amounts actually contributed to this Fund as employee contributions by or on behalf of the employees transferring to the new pension fund for their service as employees of the municipality that is establishing the new pension fund, plus interest on those amounts at the rate of 6% per year, compounded annually, from the date of contribution to the date of transfer to the new pension fund, and

(2) an amount representing employer contributions, equal to the total amount determined under item (1). This transfer terminates any further rights of such employees in this Fund arising out of their service as employees of the municipality that is establishing the new pension fund.

(e) If a participating instrumentality terminates participation because it fails to meet the requirements of Section 7-108, it shall pay to the fund the amount equal to any net debit balance in its municipality reserve account and account receivable. Its successors, and assigns and transferees of its assets shall be obligated to make this payment to the extent of the value of assets transferred to them. The fund shall pay an amount equal to any net credit balance to the participating instrumentality, its successors or assigns. Any remaining net debit or credit balance not collectible or payable shall be transferred to the terminated municipality reserve account. The fund shall pay to each employee of the participating instrumentality an amount equal to his credits in the employee reserves. The employees shall have no further rights to any benefits from the fund, except that annuities awarded prior to the date of termination shall continue to be paid.

(Source: P.A. 98-729, eff. 7-26-14.)