Illinois General Assembly - Full Text of SB0436
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Full Text of SB0436  99th General Assembly

SB0436sam001 99TH GENERAL ASSEMBLY

Sen. Steve Stadelman

Filed: 4/16/2015

 

 


 

 


 
09900SB0436sam001LRB099 03096 RPS 33597 a

1
AMENDMENT TO SENATE BILL 436

2    AMENDMENT NO. ______. Amend Senate Bill 436 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Illinois Pension Code is amended by
5changing Section 16-158 as follows:
 
6    (40 ILCS 5/16-158)   (from Ch. 108 1/2, par. 16-158)
7    Sec. 16-158. Contributions by State and other employing
8units.
9    (a) The State shall make contributions to the System by
10means of appropriations from the Common School Fund and other
11State funds of amounts which, together with other employer
12contributions, employee contributions, investment income, and
13other income, will be sufficient to meet the cost of
14maintaining and administering the System on a 100% funded basis
15in accordance with actuarial recommendations by the end of
16State fiscal year 2044.

 

 

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1    The Board shall determine the amount of State contributions
2required for each fiscal year on the basis of the actuarial
3tables and other assumptions adopted by the Board and the
4recommendations of the actuary, using the formula in subsection
5(b-3).
6    (a-1) Annually, on or before November 15 through November
715, 2011, the Board shall certify to the Governor the amount of
8the required State contribution for the coming fiscal year. The
9certification under this subsection (a-1) shall include a copy
10of the actuarial recommendations upon which it is based.
11    On or before May 1, 2004, the Board shall recalculate and
12recertify to the Governor the amount of the required State
13contribution to the System for State fiscal year 2005, taking
14into account the amounts appropriated to and received by the
15System under subsection (d) of Section 7.2 of the General
16Obligation Bond Act.
17    On or before July 1, 2005, the Board shall recalculate and
18recertify to the Governor the amount of the required State
19contribution to the System for State fiscal year 2006, taking
20into account the changes in required State contributions made
21by this amendatory Act of the 94th General Assembly.
22    On or before April 1, 2011, the Board shall recalculate and
23recertify to the Governor the amount of the required State
24contribution to the System for State fiscal year 2011, applying
25the changes made by Public Act 96-889 to the System's assets
26and liabilities as of June 30, 2009 as though Public Act 96-889

 

 

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1was approved on that date.
2    (a-5) On or before November 1 of each year, beginning
3November 1, 2012, the Board shall submit to the State Actuary,
4the Governor, and the General Assembly a proposed certification
5of the amount of the required State contribution to the System
6for the next fiscal year, along with all of the actuarial
7assumptions, calculations, and data upon which that proposed
8certification is based. On or before January 1 of each year,
9beginning January 1, 2013, the State Actuary shall issue a
10preliminary report concerning the proposed certification and
11identifying, if necessary, recommended changes in actuarial
12assumptions that the Board must consider before finalizing its
13certification of the required State contributions.
14    On or before January 15, 2013 and each January 15
15thereafter, the Board shall certify to the Governor and the
16General Assembly the amount of the required State contribution
17for the next fiscal year. The certification shall include a
18copy of the actuarial recommendations upon which it is based
19and shall specifically identify the System's projected State
20normal cost for that fiscal year. The Board's certification
21must note any deviations from the State Actuary's recommended
22changes, the reason or reasons for not following the State
23Actuary's recommended changes, and the fiscal impact of not
24following the State Actuary's recommended changes on the
25required State contribution.
26    (a-10) For purposes of Section (c-5) of Section 20 of the

 

 

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1Budget Stabilization Act, on or before November 1 of each year
2beginning November 1, 2014, the Board shall determine the
3amount of the State contribution to the System that would have
4been required for the next fiscal year if this amendatory Act
5of the 98th General Assembly had not taken effect, using the
6best and most recent available data but based on the law in
7effect on May 31, 2014. The Board shall submit to the State
8Actuary, the Governor, and the General Assembly a proposed
9certification, along with the relevant law, actuarial
10assumptions, calculations, and data upon which that
11certification is based. On or before January 1, 2015 and every
12January 1 thereafter, the State Actuary shall issue a
13preliminary report concerning the proposed certification and
14identifying, if necessary, recommended changes in actuarial
15assumptions that the Board must consider before finalizing its
16certification. On or before January 15, 2015 and every January
171 thereafter, the Board shall certify to the Governor and the
18General Assembly the amount of the State contribution to the
19System that would have been required for the next fiscal year
20if this amendatory Act of the 98th General Assembly had not
21taken effect, using the best and most recent available data but
22based on the law in effect on May 31, 2014. The Board's
23certification must note any deviations from the State Actuary's
24recommended changes, the reason or reasons for not following
25the State Actuary's recommended changes, and the impact of not
26following the State Actuary's recommended changes.

 

 

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1    (b) Through State fiscal year 1995, the State contributions
2shall be paid to the System in accordance with Section 18-7 of
3the School Code.
4    (b-1) Beginning in State fiscal year 1996, on the 15th day
5of each month, or as soon thereafter as may be practicable, the
6Board shall submit vouchers for payment of State contributions
7to the System, in a total monthly amount of one-twelfth of the
8required annual State contribution certified under subsection
9(a-1). From the effective date of this amendatory Act of the
1093rd General Assembly through June 30, 2004, the Board shall
11not submit vouchers for the remainder of fiscal year 2004 in
12excess of the fiscal year 2004 certified contribution amount
13determined under this Section after taking into consideration
14the transfer to the System under subsection (a) of Section
156z-61 of the State Finance Act. These vouchers shall be paid by
16the State Comptroller and Treasurer by warrants drawn on the
17funds appropriated to the System for that fiscal year.
18    If in any month the amount remaining unexpended from all
19other appropriations to the System for the applicable fiscal
20year (including the appropriations to the System under Section
218.12 of the State Finance Act and Section 1 of the State
22Pension Funds Continuing Appropriation Act) is less than the
23amount lawfully vouchered under this subsection, the
24difference shall be paid from the Common School Fund under the
25continuing appropriation authority provided in Section 1.1 of
26the State Pension Funds Continuing Appropriation Act.

 

 

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1    (b-2) Allocations from the Common School Fund apportioned
2to school districts not coming under this System shall not be
3diminished or affected by the provisions of this Article.
4    (b-3) For State fiscal years 2015 through 2044, the minimum
5contribution to the System to be made by the State for each
6fiscal year shall be an amount determined by the System to be
7equal to the sum of (1) the State's portion of the projected
8normal cost for that fiscal year, plus (2) an amount sufficient
9to bring the total assets of the System up to 100% of the total
10actuarial liabilities of the System by the end of State fiscal
11year 2044. In making these determinations, the required State
12contribution shall be calculated each year as a level
13percentage of payroll over the years remaining to and including
14fiscal year 2044 and shall be determined under the projected
15unit cost method for fiscal year 2015 and under the entry age
16normal actuarial cost method for fiscal years 2016 through
172044.
18    For State fiscal years 2012 through 2014, the minimum
19contribution to the System to be made by the State for each
20fiscal year shall be an amount determined by the System to be
21sufficient to bring the total assets of the System up to 90% of
22the total actuarial liabilities of the System by the end of
23State fiscal year 2045. In making these determinations, the
24required State contribution shall be calculated each year as a
25level percentage of payroll over the years remaining to and
26including fiscal year 2045 and shall be determined under the

 

 

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1projected unit credit actuarial cost method.
2    For State fiscal years 1996 through 2005, the State
3contribution to the System, as a percentage of the applicable
4employee payroll, shall be increased in equal annual increments
5so that by State fiscal year 2011, the State is contributing at
6the rate required under this Section; except that in the
7following specified State fiscal years, the State contribution
8to the System shall not be less than the following indicated
9percentages of the applicable employee payroll, even if the
10indicated percentage will produce a State contribution in
11excess of the amount otherwise required under this subsection
12and subsection (a), and notwithstanding any contrary
13certification made under subsection (a-1) before the effective
14date of this amendatory Act of 1998: 10.02% in FY 1999; 10.77%
15in FY 2000; 11.47% in FY 2001; 12.16% in FY 2002; 12.86% in FY
162003; and 13.56% in FY 2004.
17    Notwithstanding any other provision of this Article, the
18total required State contribution for State fiscal year 2006 is
19$534,627,700.
20    Notwithstanding any other provision of this Article, the
21total required State contribution for State fiscal year 2007 is
22$738,014,500.
23    For each of State fiscal years 2008 through 2009, the State
24contribution to the System, as a percentage of the applicable
25employee payroll, shall be increased in equal annual increments
26from the required State contribution for State fiscal year

 

 

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12007, so that by State fiscal year 2011, the State is
2contributing at the rate otherwise required under this Section.
3    Notwithstanding any other provision of this Article, the
4total required State contribution for State fiscal year 2010 is
5$2,089,268,000 and shall be made from the proceeds of bonds
6sold in fiscal year 2010 pursuant to Section 7.2 of the General
7Obligation Bond Act, less (i) the pro rata share of bond sale
8expenses determined by the System's share of total bond
9proceeds, (ii) any amounts received from the Common School Fund
10in fiscal year 2010, and (iii) any reduction in bond proceeds
11due to the issuance of discounted bonds, if applicable.
12    Notwithstanding any other provision of this Article, the
13total required State contribution for State fiscal year 2011 is
14the amount recertified by the System on or before April 1, 2011
15pursuant to subsection (a-1) of this Section and shall be made
16from the proceeds of bonds sold in fiscal year 2011 pursuant to
17Section 7.2 of the General Obligation Bond Act, less (i) the
18pro rata share of bond sale expenses determined by the System's
19share of total bond proceeds, (ii) any amounts received from
20the Common School Fund in fiscal year 2011, and (iii) any
21reduction in bond proceeds due to the issuance of discounted
22bonds, if applicable. This amount shall include, in addition to
23the amount certified by the System, an amount necessary to meet
24employer contributions required by the State as an employer
25under paragraph (e) of this Section, which may also be used by
26the System for contributions required by paragraph (a) of

 

 

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1Section 16-127.
2    Beginning in State fiscal year 2045, the minimum State
3contribution for each fiscal year shall be the amount needed to
4maintain the total assets of the System at 100% of the total
5actuarial liabilities of the System.
6    Amounts received by the System pursuant to Section 25 of
7the Budget Stabilization Act or Section 8.12 of the State
8Finance Act in any fiscal year do not reduce and do not
9constitute payment of any portion of the minimum State
10contribution required under this Article in that fiscal year.
11Such amounts shall not reduce, and shall not be included in the
12calculation of, the required State contributions under this
13Article in any future year until the System has reached a
14funding ratio of at least 100%. A reference in this Article to
15the "required State contribution" or any substantially similar
16term does not include or apply to any amounts payable to the
17System under Section 25 of the Budget Stabilization Act.
18    Notwithstanding any other provision of this Section, the
19required State contribution for State fiscal year 2005 and for
20fiscal year 2008 and each fiscal year thereafter through State
21fiscal year 2014, as calculated under this Section and
22certified under subsection (a-1), shall not exceed an amount
23equal to (i) the amount of the required State contribution that
24would have been calculated under this Section for that fiscal
25year if the System had not received any payments under
26subsection (d) of Section 7.2 of the General Obligation Bond

 

 

09900SB0436sam001- 10 -LRB099 03096 RPS 33597 a

1Act, minus (ii) the portion of the State's total debt service
2payments for that fiscal year on the bonds issued in fiscal
3year 2003 for the purposes of that Section 7.2, as determined
4and certified by the Comptroller, that is the same as the
5System's portion of the total moneys distributed under
6subsection (d) of Section 7.2 of the General Obligation Bond
7Act. In determining this maximum for State fiscal years 2008
8through 2010, however, the amount referred to in item (i) shall
9be increased, as a percentage of the applicable employee
10payroll, in equal increments calculated from the sum of the
11required State contribution for State fiscal year 2007 plus the
12applicable portion of the State's total debt service payments
13for fiscal year 2007 on the bonds issued in fiscal year 2003
14for the purposes of Section 7.2 of the General Obligation Bond
15Act, so that, by State fiscal year 2011, the State is
16contributing at the rate otherwise required under this Section.
17    (c) Payment of the required State contributions and of all
18pensions, retirement annuities, death benefits, refunds, and
19other benefits granted under or assumed by this System, and all
20expenses in connection with the administration and operation
21thereof, are obligations of the State.
22    If members are paid from special trust or federal funds
23which are administered by the employing unit, whether school
24district or other unit, the employing unit shall pay to the
25System from such funds the full accruing retirement costs based
26upon that service, which, beginning July 1, 2015 2014, shall be

 

 

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1at a rate, expressed as a percentage of salary, equal to the
2total employer's minimum contribution to the System to be made
3by the State for that fiscal year, including both normal cost
4and unfunded liability components, expressed as a percentage of
5payroll, as determined by the System under subsection (b-3) of
6this Section. Employer contributions, based on salary paid to
7members from federal funds, may be forwarded by the
8distributing agency of the State of Illinois to the System
9prior to allocation, in an amount determined in accordance with
10guidelines established by such agency and the System. Any
11contribution for fiscal year 2015 collected as a result of the
12change made by this amendatory Act of the 98th General Assembly
13shall be considered a State contribution under subsection (b-3)
14of this Section.
15    (d) Effective July 1, 1986, any employer of a teacher as
16defined in paragraph (8) of Section 16-106 shall pay the
17employer's normal cost of benefits based upon the teacher's
18service, in addition to employee contributions, as determined
19by the System. Such employer contributions shall be forwarded
20monthly in accordance with guidelines established by the
21System.
22    However, with respect to benefits granted under Section
2316-133.4 or 16-133.5 to a teacher as defined in paragraph (8)
24of Section 16-106, the employer's contribution shall be 12%
25(rather than 20%) of the member's highest annual salary rate
26for each year of creditable service granted, and the employer

 

 

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1shall also pay the required employee contribution on behalf of
2the teacher. For the purposes of Sections 16-133.4 and
316-133.5, a teacher as defined in paragraph (8) of Section
416-106 who is serving in that capacity while on leave of
5absence from another employer under this Article shall not be
6considered an employee of the employer from which the teacher
7is on leave.
8    (e) Beginning July 1, 1998, every employer of a teacher
9shall pay to the System an employer contribution computed as
10follows:
11        (1) Beginning July 1, 1998 through June 30, 1999, the
12    employer contribution shall be equal to 0.3% of each
13    teacher's salary.
14        (2) Beginning July 1, 1999 and thereafter, the employer
15    contribution shall be equal to 0.58% of each teacher's
16    salary.
17The school district or other employing unit may pay these
18employer contributions out of any source of funding available
19for that purpose and shall forward the contributions to the
20System on the schedule established for the payment of member
21contributions.
22    These employer contributions are intended to offset a
23portion of the cost to the System of the increases in
24retirement benefits resulting from this amendatory Act of 1998.
25    Each employer of teachers is entitled to a credit against
26the contributions required under this subsection (e) with

 

 

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1respect to salaries paid to teachers for the period January 1,
22002 through June 30, 2003, equal to the amount paid by that
3employer under subsection (a-5) of Section 6.6 of the State
4Employees Group Insurance Act of 1971 with respect to salaries
5paid to teachers for that period.
6    The additional 1% employee contribution required under
7Section 16-152 by this amendatory Act of 1998 is the
8responsibility of the teacher and not the teacher's employer,
9unless the employer agrees, through collective bargaining or
10otherwise, to make the contribution on behalf of the teacher.
11    If an employer is required by a contract in effect on May
121, 1998 between the employer and an employee organization to
13pay, on behalf of all its full-time employees covered by this
14Article, all mandatory employee contributions required under
15this Article, then the employer shall be excused from paying
16the employer contribution required under this subsection (e)
17for the balance of the term of that contract. The employer and
18the employee organization shall jointly certify to the System
19the existence of the contractual requirement, in such form as
20the System may prescribe. This exclusion shall cease upon the
21termination, extension, or renewal of the contract at any time
22after May 1, 1998.
23    (f) If the amount of a teacher's salary for any school year
24used to determine final average salary exceeds the member's
25annual full-time salary rate with the same employer for the
26previous school year by more than 6%, the teacher's employer

 

 

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1shall pay to the System, in addition to all other payments
2required under this Section and in accordance with guidelines
3established by the System, the present value of the increase in
4benefits resulting from the portion of the increase in salary
5that is in excess of 6%. This present value shall be computed
6by the System on the basis of the actuarial assumptions and
7tables used in the most recent actuarial valuation of the
8System that is available at the time of the computation. If a
9teacher's salary for the 2005-2006 school year is used to
10determine final average salary under this subsection (f), then
11the changes made to this subsection (f) by Public Act 94-1057
12shall apply in calculating whether the increase in his or her
13salary is in excess of 6%. For the purposes of this Section,
14change in employment under Section 10-21.12 of the School Code
15on or after June 1, 2005 shall constitute a change in employer.
16The System may require the employer to provide any pertinent
17information or documentation. The changes made to this
18subsection (f) by this amendatory Act of the 94th General
19Assembly apply without regard to whether the teacher was in
20service on or after its effective date.
21    Whenever it determines that a payment is or may be required
22under this subsection, the System shall calculate the amount of
23the payment and bill the employer for that amount. The bill
24shall specify the calculations used to determine the amount
25due. If the employer disputes the amount of the bill, it may,
26within 30 days after receipt of the bill, apply to the System

 

 

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1in writing for a recalculation. The application must specify in
2detail the grounds of the dispute and, if the employer asserts
3that the calculation is subject to subsection (g) or (h) of
4this Section, must include an affidavit setting forth and
5attesting to all facts within the employer's knowledge that are
6pertinent to the applicability of that subsection. Upon
7receiving a timely application for recalculation, the System
8shall review the application and, if appropriate, recalculate
9the amount due.
10    The employer contributions required under this subsection
11(f) may be paid in the form of a lump sum within 90 days after
12receipt of the bill. If the employer contributions are not paid
13within 90 days after receipt of the bill, then interest will be
14charged at a rate equal to the System's annual actuarially
15assumed rate of return on investment compounded annually from
16the 91st day after receipt of the bill. Payments must be
17concluded within 3 years after the employer's receipt of the
18bill.
19    (g) This subsection (g) applies only to payments made or
20salary increases given on or after June 1, 2005 but before July
211, 2011. The changes made by Public Act 94-1057 shall not
22require the System to refund any payments received before July
2331, 2006 (the effective date of Public Act 94-1057).
24    When assessing payment for any amount due under subsection
25(f), the System shall exclude salary increases paid to teachers
26under contracts or collective bargaining agreements entered

 

 

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1into, amended, or renewed before June 1, 2005.
2    When assessing payment for any amount due under subsection
3(f), the System shall exclude salary increases paid to a
4teacher at a time when the teacher is 10 or more years from
5retirement eligibility under Section 16-132 or 16-133.2.
6    When assessing payment for any amount due under subsection
7(f), the System shall exclude salary increases resulting from
8overload work, including summer school, when the school
9district has certified to the System, and the System has
10approved the certification, that (i) the overload work is for
11the sole purpose of classroom instruction in excess of the
12standard number of classes for a full-time teacher in a school
13district during a school year and (ii) the salary increases are
14equal to or less than the rate of pay for classroom instruction
15computed on the teacher's current salary and work schedule.
16    When assessing payment for any amount due under subsection
17(f), the System shall exclude a salary increase resulting from
18a promotion (i) for which the employee is required to hold a
19certificate or supervisory endorsement issued by the State
20Teacher Certification Board that is a different certification
21or supervisory endorsement than is required for the teacher's
22previous position and (ii) to a position that has existed and
23been filled by a member for no less than one complete academic
24year and the salary increase from the promotion is an increase
25that results in an amount no greater than the lesser of the
26average salary paid for other similar positions in the district

 

 

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1requiring the same certification or the amount stipulated in
2the collective bargaining agreement for a similar position
3requiring the same certification.
4    When assessing payment for any amount due under subsection
5(f), the System shall exclude any payment to the teacher from
6the State of Illinois or the State Board of Education over
7which the employer does not have discretion, notwithstanding
8that the payment is included in the computation of final
9average salary.
10    (h) When assessing payment for any amount due under
11subsection (f), the System shall exclude any salary increase
12described in subsection (g) of this Section given on or after
13July 1, 2011 but before July 1, 2014 under a contract or
14collective bargaining agreement entered into, amended, or
15renewed on or after June 1, 2005 but before July 1, 2011.
16Notwithstanding any other provision of this Section, any
17payments made or salary increases given after June 30, 2014
18shall be used in assessing payment for any amount due under
19subsection (f) of this Section.
20    (i) The System shall prepare a report and file copies of
21the report with the Governor and the General Assembly by
22January 1, 2007 that contains all of the following information:
23        (1) The number of recalculations required by the
24    changes made to this Section by Public Act 94-1057 for each
25    employer.
26        (2) The dollar amount by which each employer's

 

 

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1    contribution to the System was changed due to
2    recalculations required by Public Act 94-1057.
3        (3) The total amount the System received from each
4    employer as a result of the changes made to this Section by
5    Public Act 94-4.
6        (4) The increase in the required State contribution
7    resulting from the changes made to this Section by Public
8    Act 94-1057.
9    (j) For purposes of determining the required State
10contribution to the System, the value of the System's assets
11shall be equal to the actuarial value of the System's assets,
12which shall be calculated as follows:
13    As of June 30, 2008, the actuarial value of the System's
14assets shall be equal to the market value of the assets as of
15that date. In determining the actuarial value of the System's
16assets for fiscal years after June 30, 2008, any actuarial
17gains or losses from investment return incurred in a fiscal
18year shall be recognized in equal annual amounts over the
195-year period following that fiscal year.
20    (k) For purposes of determining the required State
21contribution to the system for a particular year, the actuarial
22value of assets shall be assumed to earn a rate of return equal
23to the system's actuarially assumed rate of return.
24(Source: P.A. 97-694, eff. 6-18-12; 97-813, eff. 7-13-12;
2598-599, eff. 6-1-14; 98-674, eff. 6-30-14.)
 

 

 

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1    Section 99. Effective date. This Act takes effect upon
2becoming law.".