SB1291 99TH GENERAL ASSEMBLY

LRB099 09034 NHT 29221 b

99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
SB1291

Introduced 2/18/2015, by Sen. Melinda Bush

SYNOPSIS AS INTRODUCED:

40 ILCS 5/14-103.10	from Ch. 108 1/2, par. 14-103.10
40 ILCS 5/15-111	from Ch. 108 1/2, par. 15-111
110 ILCS 305/90 new
110 ILCS 520/75 new
110 ILCS 660/5-185 new
110 ILCS 665/10-185 new
110 ILCS 670/15-185 new
110 ILCS 675/20-190 new
110 ILCS 680/25-185 new
110 ILCS 685/30-195 new
110 ILCS 690/35-190 new
110 ILCS 805/3-29.11 new

Amends the State Universities and State Employees Articles of the Illinois Pension Code to specify that severance payments are not included in "earnings" or "compensation" for pension purposes. Amends various Acts relating to the governance of public universities in Illinois and the Public Community College Act. Provides that, with respect to an executive administrator of a university or community college whose final rate of earnings exceeds $200,000, the governing board of the university or community college district may not award a severance payment to that employee that exceeds 30% of his or her final rate of earnings unless the severance payment is reviewed by the Board of Higher Education or the Illinois Community College Board and the respective Board approves the payment by a record vote of a majority of its members. Effective immediately.

FISCAL NOTE ACT MAY APPLY

PENSION IMPACT NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning severance payments.

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 14-103.10 and 15-111 as follows:

(40 ILCS 5/14-103.10) (from Ch. 108 1/2, par. 14-103.10)

Sec. 14-103.10. Compensation.

(a) For periods of service prior to January 1, 1978, the full rate of salary or wages payable to an employee for personal services performed if he worked the full normal working period for his position, subject to the following maximum amounts: (1) prior to July 1, 1951, $400 per month or $4,800 per year; (2) between July 1, 1951 and June 30, 1957 inclusive, $625 per month or $7,500 per year; (3) beginning July 1, 1957, no limitation.

In the case of service of an employee in a position involving part-time employment, compensation shall be determined according to the employees' earnings record.

(b) For periods of service on and after January 1, 1978, all remuneration for personal services performed defined as "wages" under the Social Security Enabling Act, including that part of such remuneration which is in excess of any maximum limitation provided in such Act, and including any benefits received by an employee under a sick pay plan in effect before January 1, 1981, but excluding lump sum salary payments:

(1) for vacation,

(2) for accumulated unused sick leave,

(3) upon discharge or dismissal,

(4) for approved holidays.

(c) For periods of service on or after December 16, 1978, compensation also includes any benefits, other than lump sum salary payments made at termination of employment, which an employee receives or is eligible to receive under a sick pay plan authorized by law.

(d) For periods of service after September 30, 1985, compensation also includes any remuneration for personal services not included as "wages" under the Social Security Enabling Act, which is deducted for purposes of participation in a program established pursuant to Section 125 of the Internal Revenue Code or its successor laws.

(e) For members for which Section 1-160 applies for periods of service on and after January 1, 2011, all remuneration for personal services performed defined as "wages" under the Social Security Enabling Act, excluding remuneration that is in excess of the annual earnings, salary, or wages of a member or participant, as provided in subsection (b-5) of Section 1-160, but including any benefits received by an employee under a sick pay plan in effect before January 1, 1981. Compensation shall exclude lump sum salary payments:

(1) for vacation;

(2) for accumulated unused sick leave;

(3) upon discharge or dismissal; and

(4) for approved holidays.

(f) Notwithstanding the other provisions of this Section, for service on or after July 1, 2013, "compensation" does not include any stipend payable to an employee for service on a board or commission.

Severance payments that are made to facilitate termination of employment, or to induce someone to retire or not to retire, and are not for service actually performed do not constitute "compensation" for the purposes of this Article and shall not be included in determining final average compensation under Section 14-103.12.

(g) Notwithstanding any other provision of this Section, for an employee who first becomes a participant on or after the effective date of this amendatory Act of the 98th General Assembly, "compensation" does not include any payments or reimbursements for travel vouchers submitted more than 30 days after the last day of travel for which the voucher is submitted.

(h) Notwithstanding any other provision of this Code, the annual compensation of a Tier 1 member for the purposes of this Code shall not exceed, for periods of service on or after the effective date of this amendatory Act of the 98th General Assembly, the greater of (i) the annual limitation determined from time to time under subsection (b-5) of Section 1-160 of this Code, (ii) the annualized compensation of the Tier 1 member as of that effective date, or (iii) the annualized compensation of the Tier 1 member immediately preceding the expiration, renewal, or amendment of an employment contract or collective bargaining agreement in effect on that effective date.

(Source: P.A. 98-449, eff. 8-16-13; 98-599, eff. 6-1-14.)

(40 ILCS 5/15-111) (from Ch. 108 1/2, par. 15-111)

Sec. 15-111. Earnings.

(a) "Earnings": An amount paid for personal services equal to the sum of the basic compensation plus extra compensation for summer teaching, overtime or other extra service. For periods for which an employee receives service credit under subsection (c) of Section 15-113.1 or Section 15-113.2, earnings are equal to the basic compensation on which contributions are paid by the employee during such periods. Compensation for employment which is irregular, intermittent and temporary shall not be considered earnings, unless the participant is also receiving earnings from the employer as an employee under Section 15-107.

With respect to transition pay paid by the University of Illinois to a person who was a participating employee employed in the fire department of the University of Illinois's Champaign-Urbana campus immediately prior to the elimination of that fire department:

(1) "Earnings" includes transition pay paid to the employee on or after the effective date of this amendatory Act of the 91st General Assembly.

(2) "Earnings" includes transition pay paid to the employee before the effective date of this amendatory Act of the 91st General Assembly only if (i) employee contributions under Section 15-157 have been withheld from that transition pay or (ii) the employee pays to the System before January 1, 2001 an amount representing employee contributions under Section 15-157 on that transition pay. Employee contributions under item (ii) may be paid in a lump sum, by withholding from additional transition pay accruing before January 1, 2001, or in any other manner approved by the System. Upon payment of the employee contributions on transition pay, the corresponding employer contributions become an obligation of the State.

(a-5) Payments made to facilitate termination of employment or to induce someone to retire, or not to retire, are not for services rendered but are made in conjunction with an employee's termination of employment or retirement and are not "earnings". These payments are also not includable in the final rate of earnings under Section 15-112.

(b) For a Tier 2 member, the annual earnings shall not exceed $106,800; however, that amount shall annually thereafter be increased by the lesser of (i) 3% of that amount, including all previous adjustments, or (ii) one half the annual unadjusted percentage increase (but not less than zero) in the consumer price index-u for the 12 months ending with the September preceding each November 1, including all previous adjustments.

For the purposes of this Section, "consumer price index u" means the index published by the Bureau of Labor Statistics of the United States Department of Labor that measures the average change in prices of goods and services purchased by all urban consumers, United States city average, all items, 1982-84 = 100. The new amount resulting from each annual adjustment shall be determined by the Public Pension Division of the Department of Insurance and made available to the boards of the retirement systems and pension funds by November 1 of each year.

(c) Notwithstanding any other provision of this Code, the annual earnings of a Tier 1 member for the purposes of this Code shall not exceed, for periods of service on or after the effective date of this amendatory Act of the 98th General Assembly, the greater of (i) the annual limitation determined from time to time under subsection (b-5) of Section 1-160 of this Code, (ii) the annualized rate of earnings of the Tier 1 member as of that effective date, or (iii) the annualized rate of earnings of the Tier 1 member immediately preceding the expiration, renewal, or amendment of an employment contract or collective bargaining agreement in effect on that effective date.

(Source: P.A. 98-92, eff. 7-16-13; 98-599, eff. 6-1-14.)

Section 10. The University of Illinois Act is amended by adding Section 90 as follows:

(110 ILCS 305/90 new)

Sec. 90. Severance payment limitation.

(a) In this Section:

"Final rate of earnings" has the meaning ascribed to that term under subsection (a) of Section 15-112 of the Illinois Pension Code.

"Severance payment" means a payment that is made to facilitate termination of employment or to induce someone to retire or not to retire, is not for services rendered, is made in conjunction with an employee's termination of employment or retirement, and is not earnings.

(b) With respect to any executive administrator of the University whose final rate of earnings exceeds $200,000, the Board of Trustees may not award a severance payment to that employee that exceeds 30% of his or her final rate of earnings, except as provided in subsection (c) of this Section.

(c) Any severance payment that exceeds the limitation provided in subsection (b) of this Section must be reviewed by the Board of Higher Education. The severance payment may not be awarded unless the Board of Higher Education approves the payment by a record vote of a majority of the members of the Board of Higher Education.

Section 15. The Southern Illinois University Management Act is amended by adding Section 75 as follows:

(110 ILCS 520/75 new)

Sec. 75. Severance payment limitation.

(a) In this Section:

"Final rate of earnings" has the meaning ascribed to that term under subsection (a) of Section 15-112 of the Illinois Pension Code.

"Severance payment" means a payment that is made to facilitate termination of employment or to induce someone to retire or not to retire, is not for services rendered, is made in conjunction with an employee's termination of employment or retirement, and is not earnings.

(b) With respect to any executive administrator of the University whose final rate of earnings exceeds $200,000, the Board may not award a severance payment to that employee that exceeds 30% of his or her final rate of earnings, except as provided in subsection (c) of this Section.

(c) Any severance payment that exceeds the limitation provided in subsection (b) of this Section must be reviewed by the Board of Higher Education. The severance payment may not be awarded unless the Board of Higher Education approves the payment by a record vote of a majority of the members of the Board of Higher Education.

Section 20. The Chicago State University Law is amended by adding Section 5-185 as follows:

(110 ILCS 660/5-185 new)

Sec. 5-185. Severance payment limitation.

(a) In this Section:

"Final rate of earnings" has the meaning ascribed to that term under subsection (a) of Section 15-112 of the Illinois Pension Code.

"Severance payment" means a payment that is made to facilitate termination of employment or to induce someone to retire or not to retire, is not for services rendered, is made in conjunction with an employee's termination of employment or retirement, and is not earnings.

(b) With respect to any executive administrator of the University whose final rate of earnings exceeds $200,000, the Board may not award a severance payment to that employee that exceeds 30% of his or her final rate of earnings, except as provided in subsection (c) of this Section.

(c) Any severance payment that exceeds the limitation provided in subsection (b) of this Section must be reviewed by the Board of Higher Education. The severance payment may not be awarded unless the Board of Higher Education approves the payment by a record vote of a majority of the members of the Board of Higher Education.

Section 25. The Eastern Illinois University Law is amended by adding Section 10-185 as follows:

(110 ILCS 665/10-185 new)

Sec. 10-185. Severance payment limitation.

(a) In this Section:

"Final rate of earnings" has the meaning ascribed to that term under subsection (a) of Section 15-112 of the Illinois Pension Code.

"Severance payment" means a payment that is made to facilitate termination of employment or to induce someone to retire or not to retire, is not for services rendered, is made in conjunction with an employee's termination of employment or retirement, and is not earnings.

(b) With respect to any executive administrator of the University whose final rate of earnings exceeds $200,000, the Board may not award a severance payment to that employee that exceeds 30% of his or her final rate of earnings, except as provided in subsection (c) of this Section.

(c) Any severance payment that exceeds the limitation provided in subsection (b) of this Section must be reviewed by the Board of Higher Education. The severance payment may not be awarded unless the Board of Higher Education approves the payment by a record vote of a majority of the members of the Board of Higher Education.

Section 30. The Governors State University Law is amended by adding Section 15-185 as follows:

(110 ILCS 670/15-185 new)

Sec. 15-185. Severance payment limitation.

(a) In this Section:

"Final rate of earnings" has the meaning ascribed to that term under subsection (a) of Section 15-112 of the Illinois Pension Code.

"Severance payment" means a payment that is made to facilitate termination of employment or to induce someone to retire or not to retire, is not for services rendered, is made in conjunction with an employee's termination of employment or retirement, and is not earnings.

(b) With respect to any executive administrator of the University whose final rate of earnings exceeds $200,000, the Board may not award a severance payment to that employee that exceeds 30% of his or her final rate of earnings, except as provided in subsection (c) of this Section.

(c) Any severance payment that exceeds the limitation provided in subsection (b) of this Section must be reviewed by the Board of Higher Education. The severance payment may not be awarded unless the Board of Higher Education approves the payment by a record vote of a majority of the members of the Board of Higher Education.

Section 35. The Illinois State University Law is amended by adding Section 20-190 as follows:

(110 ILCS 675/20-190 new)

Sec. 20-190. Severance payment limitation.

(a) In this Section:

"Final rate of earnings" has the meaning ascribed to that term under subsection (a) of Section 15-112 of the Illinois Pension Code.

"Severance payment" means a payment that is made to facilitate termination of employment or to induce someone to retire or not to retire, is not for services rendered, is made in conjunction with an employee's termination of employment or retirement, and is not earnings.

(b) With respect to any executive administrator of the University whose final rate of earnings exceeds $200,000, the Board may not award a severance payment to that employee that exceeds 30% of his or her final rate of earnings, except as provided in subsection (c) of this Section.

(c) Any severance payment that exceeds the limitation provided in subsection (b) of this Section must be reviewed by the Board of Higher Education. The severance payment may not be awarded unless the Board of Higher Education approves the payment by a record vote of a majority of the members of the Board of Higher Education.

Section 40. The Northeastern Illinois University Law is amended by adding Section 25-185 as follows:

(110 ILCS 680/25-185 new)

Sec. 25-185. Severance payment limitation.

(a) In this Section:

"Final rate of earnings" has the meaning ascribed to that term under subsection (a) of Section 15-112 of the Illinois Pension Code.

"Severance payment" means a payment that is made to facilitate termination of employment or to induce someone to retire or not to retire, is not for services rendered, is made in conjunction with an employee's termination of employment or retirement, and is not earnings.

(b) With respect to any executive administrator of the University whose final rate of earnings exceeds $200,000, the Board may not award a severance payment to that employee that exceeds 30% of his or her final rate of earnings, except as provided in subsection (c) of this Section.

(c) Any severance payment that exceeds the limitation provided in subsection (b) of this Section must be reviewed by the Board of Higher Education. The severance payment may not be awarded unless the Board of Higher Education approves the payment by a record vote of a majority of the members of the Board of Higher Education.

Section 45. The Northern Illinois University Law is amended by adding Section 30-195 as follows:

(110 ILCS 685/30-195 new)

Sec. 30-195. Severance payment limitation.

(a) In this Section:

"Final rate of earnings" has the meaning ascribed to that term under subsection (a) of Section 15-112 of the Illinois Pension Code.

"Severance payment" means a payment that is made to facilitate termination of employment or to induce someone to retire or not to retire, is not for services rendered, is made in conjunction with an employee's termination of employment or retirement, and is not earnings.

(b) With respect to any executive administrator of the University whose final rate of earnings exceeds $200,000, the Board may not award a severance payment to that employee that exceeds 30% of his or her final rate of earnings, except as provided in subsection (c) of this Section.

(c) Any severance payment that exceeds the limitation provided in subsection (b) of this Section must be reviewed by the Board of Higher Education. The severance payment may not be awarded unless the Board of Higher Education approves the payment by a record vote of a majority of the members of the Board of Higher Education.

Section 50. The Western Illinois University Law is amended by adding Section 35-190 as follows:

(110 ILCS 690/35-190 new)

Sec. 35-190. Severance payment limitation.

(a) In this Section:

"Final rate of earnings" has the meaning ascribed to that term under subsection (a) of Section 15-112 of the Illinois Pension Code.

"Severance payment" means a payment that is made to facilitate termination of employment or to induce someone to retire or not to retire, is not for services rendered, is made in conjunction with an employee's termination of employment or retirement, and is not earnings.

(b) With respect to any executive administrator of the University whose final rate of earnings exceeds $200,000, the Board may not award a severance payment to that employee that exceeds 30% of his or her final rate of earnings, except as provided in subsection (c) of this Section.

(c) Any severance payment that exceeds the limitation provided in subsection (b) of this Section must be reviewed by the Board of Higher Education. The severance payment may not be awarded unless the Board of Higher Education approves the payment by a record vote of a majority of the members of the Board of Higher Education.

Section 55. The Public Community College Act is amended by adding Section 3-29.11 as follows:

(110 ILCS 805/3-29.11 new)

Sec. 3-29.11. Severance payment limitation.

(a) In this Section:

"Final rate of earnings" has the meaning ascribed to that term under subsection (a) of Section 15-112 of the Illinois Pension Code.

"Severance payment" means a payment that is made to facilitate termination of employment or to induce someone to retire or not to retire, is not for services rendered, is made in conjunction with an employee's termination of employment or retirement, and is not earnings.

(b) With respect to an executive administrator of a community college whose final rate of earnings exceeds $200,000, the board may not award a severance payment to that employee that exceeds 30% of his or her final rate of earnings, except as provided in subsection (c) of this Section.

(c) Any severance payment that exceeds the limitation provided in subsection (b) of this Section must be reviewed by the State Board. The severance payment may not be awarded unless the State Board approves the payment by a record vote of a majority of the members of the State Board.

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