Bill Text: IL HB2903 | 2017-2018 | 100th General Assembly | Introduced


Bill Title: Creates the Pension Buyout Act. Authorizes the Department of Central Management Services to enter into contracts with approved vendors to provide pension buyout payments to eligible persons in the State Universities and Downstate Teachers Articles. Requires the Illinois Finance Authority to issue bonds if the amount appropriated to implement the pension buyout option is less than the amount necessary for the Department to pay the approved vendor the amount required under a contract between the Department and the approved vendor for any fiscal year. Amends the State Universities and Downstate Teachers Articles of the Illinois Pension Code. Provides that an eligible person may relinquish his or her right to receive any benefits from the System in exchange for a lump sum payment made by an approved vendor that is equal to the present value of the retirement annuity. Contains provisions concerning the form of the contract; rulemaking; notice to the system; certification to the Department of the amount of lump sum payments made; and qualified plan status. Establishes optional defined contribution plans. Provides that a person who participates in the pension buyout option or the defined contribution plan shall be entitled to any benefits under the State Employees Group Insurance Act of 1971 that he or she would have otherwise been entitled to. Amends the State Employees Group Insurance Act of 1971, the Department of Central Management Services Law of the Civil Administrative Code of Illinois, the Illinois Procurement Code, and the Illinois Finance Authority Act to make related changes. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced) 2017-03-31 - House Committee Amendment No. 1 Rule 19(a) / Re-referred to Rules Committee [HB2903 Detail]

Download: Illinois-2017-HB2903-Introduced.html


100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB2903

Introduced , by Rep. Mike Fortner

SYNOPSIS AS INTRODUCED:
See Index

Creates the Pension Buyout Act. Authorizes the Department of Central Management Services to enter into contracts with approved vendors to provide pension buyout payments to eligible persons in the State Universities and Downstate Teachers Articles. Requires the Illinois Finance Authority to issue bonds if the amount appropriated to implement the pension buyout option is less than the amount necessary for the Department to pay the approved vendor the amount required under a contract between the Department and the approved vendor for any fiscal year. Amends the State Universities and Downstate Teachers Articles of the Illinois Pension Code. Provides that an eligible person may relinquish his or her right to receive any benefits from the System in exchange for a lump sum payment made by an approved vendor that is equal to the present value of the retirement annuity. Contains provisions concerning the form of the contract; rulemaking; notice to the system; certification to the Department of the amount of lump sum payments made; and qualified plan status. Establishes optional defined contribution plans. Provides that a person who participates in the pension buyout option or the defined contribution plan shall be entitled to any benefits under the State Employees Group Insurance Act of 1971 that he or she would have otherwise been entitled to. Amends the State Employees Group Insurance Act of 1971, the Department of Central Management Services Law of the Civil Administrative Code of Illinois, the Illinois Procurement Code, and the Illinois Finance Authority Act to make related changes. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.
LRB100 07135 RPS 17190 b
FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

A BILL FOR

HB2903LRB100 07135 RPS 17190 b
1 AN ACT concerning public employee benefits.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4 Section 1. Short title. This Act may be cited as the
5Pension Buyout Act.
6 Section 5. Definitions. As used in this Act:
7 "Approved vendor" means a vendor who has entered into a
8contract with the Department to provide lump sum payments to
9eligible persons pursuant to a pension buyout option.
10 "Authority" means the Illinois Finance Authority.
11 "Chief procurement officer" means the chief procurement
12officer appointed under paragraph (4) of subsection (a) of
13Section 10-20 of the Illinois Procurement Code.
14 "Department" means the Department of Central Management
15Services.
16 "Director" means the Director of Central Management
17Services.
18 "Pension buyout option" means a plan under Section 15-185.5
19or 16-190.5 of the Illinois Pension Code.
20 "Retirement system" means a retirement system established
21under Article 15 or 16 of the Illinois Pension Code.
22 Section 10. Pension buyout option administration.

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1 (a) The Department, on behalf of the State, may enter into
2contracts with approved vendors who will provide lump sum
3payments to eligible persons pursuant to a pension buyout
4option. The contract shall be subject to the applicable
5requirements of the Illinois Procurement Code. The Department
6shall only enter into the contract after an open and
7competitive bidding process and the process shall comply with
8the procedures established by the chief procurement officer
9pursuant to Section 45-32 of the Illinois Procurement Code.
10 The contract entered into by the Department shall:
11 (1) not interfere with the ability of each retirement
12 system to include any safeguards or other provisions that
13 the retirement system may require to be included in the
14 standardized form contract approved by the retirement
15 system; and
16 (2) require the approved vendor to provide, at no cost
17 to the eligible person, a minimum amount of certified
18 financial planning services to the eligible person before
19 he or she makes an election pursuant to a pension buyout
20 option.
21 (b) The Department shall establish by rule dates by which
22the Board of Trustees of each retirement system must certify
23the amount of lump sum payments made under the pension buyout
24option for that retirement system. The Department shall
25establish by rule the minimum amount of certified financial
26planning services that the approved vendor must provide to each

HB2903- 3 -LRB100 07135 RPS 17190 b
1eligible person at no cost to the eligible person.
2 (c) If in any fiscal year the amount appropriated for all
3pension buyout options is less than the amount necessary for
4the Department to pay the amount required for that fiscal year
5under a contract between the Department and an approved vendor,
6the Director shall certify to the Authority the additional
7amount required for that fiscal year. The Authority shall issue
8bonds in the amount certified by the Director. The proceeds
9from the bonds issued under this Act shall only be used by the
10Department to pay an approved vendor the amount required for
11that fiscal year.
12 Section 15. Bond authorization. The Authority shall not
13have outstanding at any one time bonds for any of the purposes
14of this Act in an aggregate principal amount exceeding
15$500,000,000, excluding bonds issued to refund outstanding
16bonds.
17 Section 900. The State Employees Group Insurance Act of
181971 is amended by changing Sections 3 and 10 as follows:
19 (5 ILCS 375/3) (from Ch. 127, par. 523)
20 Sec. 3. Definitions. Unless the context otherwise
21requires, the following words and phrases as used in this Act
22shall have the following meanings. The Department may define
23these and other words and phrases separately for the purpose of

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1implementing specific programs providing benefits under this
2Act.
3 (a) "Administrative service organization" means any
4person, firm or corporation experienced in the handling of
5claims which is fully qualified, financially sound and capable
6of meeting the service requirements of a contract of
7administration executed with the Department.
8 (b) "Annuitant" means (1) an employee who retires, or has
9retired, on or after January 1, 1966 on an immediate annuity
10under the provisions of Articles 2, 14 (including an employee
11who has elected to receive an alternative retirement
12cancellation payment under Section 14-108.5 of the Illinois
13Pension Code in lieu of an annuity), 15 (including an employee
14who has retired under the optional retirement program
15established under Section 15-158.2 or who meets the criteria
16for retirement but, in lieu of receiving an annuity under that
17Article, has elected to participate in the pension buyout
18option under Section 15-185.5 of the Illinois Pension Code or
19has retired under the Tier 3 plan established under Section
2015-155.5 of the Illinois Pension Code), paragraphs (2), (3), or
21(5) of Section 16-106 (including an employee who meets the
22criteria for retirement but, in lieu of receiving an annuity
23under that Article, has elected to participate in the pension
24buyout option under Section 16-190.5 of the Illinois Pension
25Code, has retired under the Tier 3 plan established under
26Section 16-205.5 of the Illinois Pension Code, or has retired

HB2903- 5 -LRB100 07135 RPS 17190 b
1under the Tier 4 plan established under Section 16-205.6 of the
2Illinois Pension Code), or Article 18 of the Illinois Pension
3Code; (2) any person who was receiving group insurance coverage
4under this Act as of March 31, 1978 by reason of his status as
5an annuitant, even though the annuity in relation to which such
6coverage was provided is a proportional annuity based on less
7than the minimum period of service required for a retirement
8annuity in the system involved; (3) any person not otherwise
9covered by this Act who has retired as a participating member
10under Article 2 of the Illinois Pension Code but is ineligible
11for the retirement annuity under Section 2-119 of the Illinois
12Pension Code; (4) the spouse of any person who is receiving a
13retirement annuity under Article 18 of the Illinois Pension
14Code and who is covered under a group health insurance program
15sponsored by a governmental employer other than the State of
16Illinois and who has irrevocably elected to waive his or her
17coverage under this Act and to have his or her spouse
18considered as the "annuitant" under this Act and not as a
19"dependent"; or (5) an employee who retires, or has retired,
20from a qualified position, as determined according to rules
21promulgated by the Director, under a qualified local
22government, a qualified rehabilitation facility, a qualified
23domestic violence shelter or service, or a qualified child
24advocacy center. (For definition of "retired employee", see (p)
25post).
26 (b-5) (Blank).

HB2903- 6 -LRB100 07135 RPS 17190 b
1 (b-6) (Blank).
2 (b-7) (Blank).
3 (c) "Carrier" means (1) an insurance company, a corporation
4organized under the Limited Health Service Organization Act or
5the Voluntary Health Services Plan Act, a partnership, or other
6nongovernmental organization, which is authorized to do group
7life or group health insurance business in Illinois, or (2) the
8State of Illinois as a self-insurer.
9 (d) "Compensation" means salary or wages payable on a
10regular payroll by the State Treasurer on a warrant of the
11State Comptroller out of any State, trust or federal fund, or
12by the Governor of the State through a disbursing officer of
13the State out of a trust or out of federal funds, or by any
14Department out of State, trust, federal or other funds held by
15the State Treasurer or the Department, to any person for
16personal services currently performed, and ordinary or
17accidental disability benefits under Articles 2, 14, 15
18(including ordinary or accidental disability benefits under
19the optional retirement program established under Section
2015-158.2), paragraphs (2), (3), or (5) of Section 16-106, or
21Article 18 of the Illinois Pension Code, for disability
22incurred after January 1, 1966, or benefits payable under the
23Workers' Compensation or Occupational Diseases Act or benefits
24payable under a sick pay plan established in accordance with
25Section 36 of the State Finance Act. "Compensation" also means
26salary or wages paid to an employee of any qualified local

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1government, qualified rehabilitation facility, qualified
2domestic violence shelter or service, or qualified child
3advocacy center.
4 (e) "Commission" means the State Employees Group Insurance
5Advisory Commission authorized by this Act. Commencing July 1,
61984, "Commission" as used in this Act means the Commission on
7Government Forecasting and Accountability as established by
8the Legislative Commission Reorganization Act of 1984.
9 (f) "Contributory", when referred to as contributory
10coverage, shall mean optional coverages or benefits elected by
11the member toward the cost of which such member makes
12contribution, or which are funded in whole or in part through
13the acceptance of a reduction in earnings or the foregoing of
14an increase in earnings by an employee, as distinguished from
15noncontributory coverage or benefits which are paid entirely by
16the State of Illinois without reduction of the member's salary.
17 (g) "Department" means any department, institution, board,
18commission, officer, court or any agency of the State
19government receiving appropriations and having power to
20certify payrolls to the Comptroller authorizing payments of
21salary and wages against such appropriations as are made by the
22General Assembly from any State fund, or against trust funds
23held by the State Treasurer and includes boards of trustees of
24the retirement systems created by Articles 2, 14, 15, 16 and 18
25of the Illinois Pension Code. "Department" also includes the
26Illinois Comprehensive Health Insurance Board, the Board of

HB2903- 8 -LRB100 07135 RPS 17190 b
1Examiners established under the Illinois Public Accounting
2Act, and the Illinois Finance Authority.
3 (h) "Dependent", when the term is used in the context of
4the health and life plan, means a member's spouse and any child
5(1) from birth to age 26 including an adopted child, a child
6who lives with the member from the time of the filing of a
7petition for adoption until entry of an order of adoption, a
8stepchild or adjudicated child, or a child who lives with the
9member if such member is a court appointed guardian of the
10child or (2) age 19 or over who has a mental or physical
11disability from a cause originating prior to the age of 19 (age
1226 if enrolled as an adult child dependent). For the health
13plan only, the term "dependent" also includes (1) any person
14enrolled prior to the effective date of this Section who is
15dependent upon the member to the extent that the member may
16claim such person as a dependent for income tax deduction
17purposes and (2) any person who has received after June 30,
182000 an organ transplant and who is financially dependent upon
19the member and eligible to be claimed as a dependent for income
20tax purposes. A member requesting to cover any dependent must
21provide documentation as requested by the Department of Central
22Management Services and file with the Department any and all
23forms required by the Department.
24 (i) "Director" means the Director of the Illinois
25Department of Central Management Services.
26 (j) "Eligibility period" means the period of time a member

HB2903- 9 -LRB100 07135 RPS 17190 b
1has to elect enrollment in programs or to select benefits
2without regard to age, sex or health.
3 (k) "Employee" means and includes each officer or employee
4in the service of a department who (1) receives his
5compensation for service rendered to the department on a
6warrant issued pursuant to a payroll certified by a department
7or on a warrant or check issued and drawn by a department upon
8a trust, federal or other fund or on a warrant issued pursuant
9to a payroll certified by an elected or duly appointed officer
10of the State or who receives payment of the performance of
11personal services on a warrant issued pursuant to a payroll
12certified by a Department and drawn by the Comptroller upon the
13State Treasurer against appropriations made by the General
14Assembly from any fund or against trust funds held by the State
15Treasurer, and (2) is employed full-time or part-time in a
16position normally requiring actual performance of duty during
17not less than 1/2 of a normal work period, as established by
18the Director in cooperation with each department, except that
19persons elected by popular vote will be considered employees
20during the entire term for which they are elected regardless of
21hours devoted to the service of the State, and (3) except that
22"employee" does not include any person who is not eligible by
23reason of such person's employment to participate in one of the
24State retirement systems under Articles 2, 14, 15 (either the
25regular Article 15 system or the optional retirement program
26established under Section 15-158.2) or 18, or under paragraph

HB2903- 10 -LRB100 07135 RPS 17190 b
1(2), (3), or (5) of Section 16-106, of the Illinois Pension
2Code, but such term does include persons who are employed
3during the 6 month qualifying period under Article 14 of the
4Illinois Pension Code. Such term also includes any person who
5(1) after January 1, 1966, is receiving ordinary or accidental
6disability benefits under Articles 2, 14, 15 (including
7ordinary or accidental disability benefits under the optional
8retirement program established under Section 15-158.2),
9paragraphs (2), (3), or (5) of Section 16-106, or Article 18 of
10the Illinois Pension Code, for disability incurred after
11January 1, 1966, (2) receives total permanent or total
12temporary disability under the Workers' Compensation Act or
13Occupational Disease Act as a result of injuries sustained or
14illness contracted in the course of employment with the State
15of Illinois, or (3) is not otherwise covered under this Act and
16has retired as a participating member under Article 2 of the
17Illinois Pension Code but is ineligible for the retirement
18annuity under Section 2-119 of the Illinois Pension Code.
19However, a person who satisfies the criteria of the foregoing
20definition of "employee" except that such person is made
21ineligible to participate in the State Universities Retirement
22System by clause (4) of subsection (a) of Section 15-107 of the
23Illinois Pension Code is also an "employee" for the purposes of
24this Act. "Employee" also includes any person receiving or
25eligible for benefits under a sick pay plan established in
26accordance with Section 36 of the State Finance Act. "Employee"

HB2903- 11 -LRB100 07135 RPS 17190 b
1also includes (i) each officer or employee in the service of a
2qualified local government, including persons appointed as
3trustees of sanitary districts regardless of hours devoted to
4the service of the sanitary district, (ii) each employee in the
5service of a qualified rehabilitation facility, (iii) each
6full-time employee in the service of a qualified domestic
7violence shelter or service, and (iv) each full-time employee
8in the service of a qualified child advocacy center, as
9determined according to rules promulgated by the Director.
10 (l) "Member" means an employee, annuitant, retired
11employee or survivor. In the case of an annuitant or retired
12employee who first becomes an annuitant or retired employee on
13or after the effective date of this amendatory Act of the 97th
14General Assembly, the individual must meet the minimum vesting
15requirements of the applicable retirement system in order to be
16eligible for group insurance benefits under that system. In the
17case of a survivor who first becomes a survivor on or after the
18effective date of this amendatory Act of the 97th General
19Assembly, the deceased employee, annuitant, or retired
20employee upon whom the annuity is based must have been eligible
21to participate in the group insurance system under the
22applicable retirement system in order for the survivor to be
23eligible for group insurance benefits under that system.
24 (m) "Optional coverages or benefits" means those coverages
25or benefits available to the member on his or her voluntary
26election, and at his or her own expense.

HB2903- 12 -LRB100 07135 RPS 17190 b
1 (n) "Program" means the group life insurance, health
2benefits and other employee benefits designed and contracted
3for by the Director under this Act.
4 (o) "Health plan" means a health benefits program offered
5by the State of Illinois for persons eligible for the plan.
6 (p) "Retired employee" means any person who would be an
7annuitant as that term is defined herein but for the fact that
8such person retired prior to January 1, 1966. Such term also
9includes any person formerly employed by the University of
10Illinois in the Cooperative Extension Service who would be an
11annuitant but for the fact that such person was made ineligible
12to participate in the State Universities Retirement System by
13clause (4) of subsection (a) of Section 15-107 of the Illinois
14Pension Code.
15 (q) "Survivor" means a person receiving an annuity as a
16survivor of an employee or of an annuitant. "Survivor" also
17includes: (1) the surviving dependent of a person who satisfies
18the definition of "employee" except that such person is made
19ineligible to participate in the State Universities Retirement
20System by clause (4) of subsection (a) of Section 15-107 of the
21Illinois Pension Code; (2) the surviving dependent of any
22person formerly employed by the University of Illinois in the
23Cooperative Extension Service who would be an annuitant except
24for the fact that such person was made ineligible to
25participate in the State Universities Retirement System by
26clause (4) of subsection (a) of Section 15-107 of the Illinois

HB2903- 13 -LRB100 07135 RPS 17190 b
1Pension Code; and (3) the surviving dependent of a person who
2was an annuitant under this Act by virtue of receiving an
3alternative retirement cancellation payment under Section
414-108.5 of the Illinois Pension Code.
5 (q-2) "SERS" means the State Employees' Retirement System
6of Illinois, created under Article 14 of the Illinois Pension
7Code.
8 (q-3) "SURS" means the State Universities Retirement
9System, created under Article 15 of the Illinois Pension Code.
10 (q-4) "TRS" means the Teachers' Retirement System of the
11State of Illinois, created under Article 16 of the Illinois
12Pension Code.
13 (q-5) (Blank).
14 (q-6) (Blank).
15 (q-7) (Blank).
16 (r) "Medical services" means the services provided within
17the scope of their licenses by practitioners in all categories
18licensed under the Medical Practice Act of 1987.
19 (s) "Unit of local government" means any county,
20municipality, township, school district (including a
21combination of school districts under the Intergovernmental
22Cooperation Act), special district or other unit, designated as
23a unit of local government by law, which exercises limited
24governmental powers or powers in respect to limited
25governmental subjects, any not-for-profit association with a
26membership that primarily includes townships and township

HB2903- 14 -LRB100 07135 RPS 17190 b
1officials, that has duties that include provision of research
2service, dissemination of information, and other acts for the
3purpose of improving township government, and that is funded
4wholly or partly in accordance with Section 85-15 of the
5Township Code; any not-for-profit corporation or association,
6with a membership consisting primarily of municipalities, that
7operates its own utility system, and provides research,
8training, dissemination of information, or other acts to
9promote cooperation between and among municipalities that
10provide utility services and for the advancement of the goals
11and purposes of its membership; the Southern Illinois
12Collegiate Common Market, which is a consortium of higher
13education institutions in Southern Illinois; the Illinois
14Association of Park Districts; and any hospital provider that
15is owned by a county that has 100 or fewer hospital beds and
16has not already joined the program. "Qualified local
17government" means a unit of local government approved by the
18Director and participating in a program created under
19subsection (i) of Section 10 of this Act.
20 (t) "Qualified rehabilitation facility" means any
21not-for-profit organization that is accredited by the
22Commission on Accreditation of Rehabilitation Facilities or
23certified by the Department of Human Services (as successor to
24the Department of Mental Health and Developmental
25Disabilities) to provide services to persons with disabilities
26and which receives funds from the State of Illinois for

HB2903- 15 -LRB100 07135 RPS 17190 b
1providing those services, approved by the Director and
2participating in a program created under subsection (j) of
3Section 10 of this Act.
4 (u) "Qualified domestic violence shelter or service" means
5any Illinois domestic violence shelter or service and its
6administrative offices funded by the Department of Human
7Services (as successor to the Illinois Department of Public
8Aid), approved by the Director and participating in a program
9created under subsection (k) of Section 10.
10 (v) "TRS benefit recipient" means a person who:
11 (1) is not a "member" as defined in this Section; and
12 (2) is receiving a monthly benefit or retirement
13 annuity under Article 16 of the Illinois Pension Code; and
14 (3) either (i) has at least 8 years of creditable
15 service under Article 16 of the Illinois Pension Code, or
16 (ii) was enrolled in the health insurance program offered
17 under that Article on January 1, 1996, or (iii) is the
18 survivor of a benefit recipient who had at least 8 years of
19 creditable service under Article 16 of the Illinois Pension
20 Code or was enrolled in the health insurance program
21 offered under that Article on the effective date of this
22 amendatory Act of 1995, or (iv) is a recipient or survivor
23 of a recipient of a disability benefit under Article 16 of
24 the Illinois Pension Code.
25 (w) "TRS dependent beneficiary" means a person who:
26 (1) is not a "member" or "dependent" as defined in this

HB2903- 16 -LRB100 07135 RPS 17190 b
1 Section; and
2 (2) is a TRS benefit recipient's: (A) spouse, (B)
3 dependent parent who is receiving at least half of his or
4 her support from the TRS benefit recipient, or (C) natural,
5 step, adjudicated, or adopted child who is (i) under age
6 26, (ii) was, on January 1, 1996, participating as a
7 dependent beneficiary in the health insurance program
8 offered under Article 16 of the Illinois Pension Code, or
9 (iii) age 19 or over who has a mental or physical
10 disability from a cause originating prior to the age of 19
11 (age 26 if enrolled as an adult child).
12 "TRS dependent beneficiary" does not include, as indicated
13under paragraph (2) of this subsection (w), a dependent of the
14survivor of a TRS benefit recipient who first becomes a
15dependent of a survivor of a TRS benefit recipient on or after
16the effective date of this amendatory Act of the 97th General
17Assembly unless that dependent would have been eligible for
18coverage as a dependent of the deceased TRS benefit recipient
19upon whom the survivor benefit is based.
20 (x) "Military leave" refers to individuals in basic
21training for reserves, special/advanced training, annual
22training, emergency call up, activation by the President of the
23United States, or any other training or duty in service to the
24United States Armed Forces.
25 (y) (Blank).
26 (z) "Community college benefit recipient" means a person

HB2903- 17 -LRB100 07135 RPS 17190 b
1who:
2 (1) is not a "member" as defined in this Section; and
3 (2) is receiving a monthly survivor's annuity or
4 retirement annuity under Article 15 of the Illinois Pension
5 Code; and
6 (3) either (i) was a full-time employee of a community
7 college district or an association of community college
8 boards created under the Public Community College Act
9 (other than an employee whose last employer under Article
10 15 of the Illinois Pension Code was a community college
11 district subject to Article VII of the Public Community
12 College Act) and was eligible to participate in a group
13 health benefit plan as an employee during the time of
14 employment with a community college district (other than a
15 community college district subject to Article VII of the
16 Public Community College Act) or an association of
17 community college boards, or (ii) is the survivor of a
18 person described in item (i).
19 (aa) "Community college dependent beneficiary" means a
20person who:
21 (1) is not a "member" or "dependent" as defined in this
22 Section; and
23 (2) is a community college benefit recipient's: (A)
24 spouse, (B) dependent parent who is receiving at least half
25 of his or her support from the community college benefit
26 recipient, or (C) natural, step, adjudicated, or adopted

HB2903- 18 -LRB100 07135 RPS 17190 b
1 child who is (i) under age 26, or (ii) age 19 or over and
2 has a mental or physical disability from a cause
3 originating prior to the age of 19 (age 26 if enrolled as
4 an adult child).
5 "Community college dependent beneficiary" does not
6include, as indicated under paragraph (2) of this subsection
7(aa), a dependent of the survivor of a community college
8benefit recipient who first becomes a dependent of a survivor
9of a community college benefit recipient on or after the
10effective date of this amendatory Act of the 97th General
11Assembly unless that dependent would have been eligible for
12coverage as a dependent of the deceased community college
13benefit recipient upon whom the survivor annuity is based.
14 (bb) "Qualified child advocacy center" means any Illinois
15child advocacy center and its administrative offices funded by
16the Department of Children and Family Services, as defined by
17the Children's Advocacy Center Act (55 ILCS 80/), approved by
18the Director and participating in a program created under
19subsection (n) of Section 10.
20(Source: P.A. 98-488, eff. 8-16-13; 99-143, eff. 7-27-15.)
21 (5 ILCS 375/10) (from Ch. 127, par. 530)
22 Sec. 10. Contributions by the State and members.
23 (a) The State shall pay the cost of basic non-contributory
24group life insurance and, subject to member paid contributions
25set by the Department or required by this Section and except as

HB2903- 19 -LRB100 07135 RPS 17190 b
1provided in this Section, the basic program of group health
2benefits on each eligible member, except a member, not
3otherwise covered by this Act, who has retired as a
4participating member under Article 2 of the Illinois Pension
5Code but is ineligible for the retirement annuity under Section
62-119 of the Illinois Pension Code, and part of each eligible
7member's and retired member's premiums for health insurance
8coverage for enrolled dependents as provided by Section 9. The
9State shall pay the cost of the basic program of group health
10benefits only after benefits are reduced by the amount of
11benefits covered by Medicare for all members and dependents who
12are eligible for benefits under Social Security or the Railroad
13Retirement system or who had sufficient Medicare-covered
14government employment, except that such reduction in benefits
15shall apply only to those members and dependents who (1) first
16become eligible for such Medicare coverage on or after July 1,
171992; or (2) are Medicare-eligible members or dependents of a
18local government unit which began participation in the program
19on or after July 1, 1992; or (3) remain eligible for, but no
20longer receive Medicare coverage which they had been receiving
21on or after July 1, 1992. The Department may determine the
22aggregate level of the State's contribution on the basis of
23actual cost of medical services adjusted for age, sex or
24geographic or other demographic characteristics which affect
25the costs of such programs.
26 The cost of participation in the basic program of group

HB2903- 20 -LRB100 07135 RPS 17190 b
1health benefits for the dependent or survivor of a living or
2deceased retired employee who was formerly employed by the
3University of Illinois in the Cooperative Extension Service and
4would be an annuitant but for the fact that he or she was made
5ineligible to participate in the State Universities Retirement
6System by clause (4) of subsection (a) of Section 15-107 of the
7Illinois Pension Code shall not be greater than the cost of
8participation that would otherwise apply to that dependent or
9survivor if he or she were the dependent or survivor of an
10annuitant under the State Universities Retirement System.
11 (a-1) (Blank).
12 (a-2) (Blank).
13 (a-3) (Blank).
14 (a-4) (Blank).
15 (a-5) (Blank).
16 (a-6) (Blank).
17 (a-7) (Blank).
18 (a-8) Any annuitant, survivor, or retired employee may
19waive or terminate coverage in the program of group health
20benefits. Any such annuitant, survivor, or retired employee who
21has waived or terminated coverage may enroll or re-enroll in
22the program of group health benefits only during the annual
23benefit choice period, as determined by the Director; except
24that in the event of termination of coverage due to nonpayment
25of premiums, the annuitant, survivor, or retired employee may
26not re-enroll in the program.

HB2903- 21 -LRB100 07135 RPS 17190 b
1 (a-8.5) Beginning on the effective date of this amendatory
2Act of the 97th General Assembly, the Director of Central
3Management Services shall, on an annual basis, determine the
4amount that the State shall contribute toward the basic program
5of group health benefits on behalf of annuitants (including
6individuals who (i) participated in the General Assembly
7Retirement System, the State Employees' Retirement System of
8Illinois, the State Universities Retirement System, the
9Teachers' Retirement System of the State of Illinois, or the
10Judges Retirement System of Illinois and (ii) qualify as
11annuitants under subsection (b) of Section 3 of this Act),
12survivors (including individuals who (i) receive an annuity as
13a survivor of an individual who participated in the General
14Assembly Retirement System, the State Employees' Retirement
15System of Illinois, the State Universities Retirement System,
16the Teachers' Retirement System of the State of Illinois, or
17the Judges Retirement System of Illinois and (ii) qualify as
18survivors under subsection (q) of Section 3 of this Act), and
19retired employees (as defined in subsection (p) of Section 3 of
20this Act). The remainder of the cost of coverage for each
21annuitant, survivor, or retired employee, as determined by the
22Director of Central Management Services, shall be the
23responsibility of that annuitant, survivor, or retired
24employee.
25 Contributions required of annuitants, survivors, and
26retired employees shall be the same for all retirement systems

HB2903- 22 -LRB100 07135 RPS 17190 b
1and shall also be based on whether an individual has made an
2election under Section 15-135.1 of the Illinois Pension Code.
3Contributions may be based on annuitants', survivors', or
4retired employees' Medicare eligibility, but may not be based
5on Social Security eligibility.
6 (a-9) No later than May 1 of each calendar year, the
7Director of Central Management Services shall certify in
8writing to the Executive Secretary of the State Employees'
9Retirement System of Illinois the amounts of the Medicare
10supplement health care premiums and the amounts of the health
11care premiums for all other retirees who are not Medicare
12eligible.
13 A separate calculation of the premiums based upon the
14actual cost of each health care plan shall be so certified.
15 The Director of Central Management Services shall provide
16to the Executive Secretary of the State Employees' Retirement
17System of Illinois such information, statistics, and other data
18as he or she may require to review the premium amounts
19certified by the Director of Central Management Services.
20 The Department of Central Management Services, or any
21successor agency designated to procure healthcare contracts
22pursuant to this Act, is authorized to establish funds,
23separate accounts provided by any bank or banks as defined by
24the Illinois Banking Act, or separate accounts provided by any
25savings and loan association or associations as defined by the
26Illinois Savings and Loan Act of 1985 to be held by the

HB2903- 23 -LRB100 07135 RPS 17190 b
1Director, outside the State treasury, for the purpose of
2receiving the transfer of moneys from the Local Government
3Health Insurance Reserve Fund. The Department may promulgate
4rules further defining the methodology for the transfers. Any
5interest earned by moneys in the funds or accounts shall inure
6to the Local Government Health Insurance Reserve Fund. The
7transferred moneys, and interest accrued thereon, shall be used
8exclusively for transfers to administrative service
9organizations or their financial institutions for payments of
10claims to claimants and providers under the self-insurance
11health plan. The transferred moneys, and interest accrued
12thereon, shall not be used for any other purpose including, but
13not limited to, reimbursement of administration fees due the
14administrative service organization pursuant to its contract
15or contracts with the Department.
16 (a-10) For purposes of determining State contributions
17under this Section, service credit established under a Tier 3
18plan or Tier 4 plan under Article 15 or 16 of the Illinois
19Pension Code shall be included in determining an employee's
20creditable service for the purposes of this Act.
21 For purposes of determining State contributions under this
22Section, any service credit terminated (i) as part of a pension
23buyout option under Article 15 or 16 of the Illinois Pension
24Code, (ii) as part of a transfer of contributions to a Tier 3
25plan under Article 15 or 16 of the Illinois Pension Code, or
26(iii) as part of a transfer of contributions to a Tier 4 plan

HB2903- 24 -LRB100 07135 RPS 17190 b
1under Article 16 shall be included in determining an employee's
2creditable service for the purposes of this Act; but no such
3service credit shall be counted more than once.
4 (b) State employees who become eligible for this program on
5or after January 1, 1980 in positions normally requiring actual
6performance of duty not less than 1/2 of a normal work period
7but not equal to that of a normal work period, shall be given
8the option of participating in the available program. If the
9employee elects coverage, the State shall contribute on behalf
10of such employee to the cost of the employee's benefit and any
11applicable dependent supplement, that sum which bears the same
12percentage as that percentage of time the employee regularly
13works when compared to normal work period.
14 (c) The basic non-contributory coverage from the basic
15program of group health benefits shall be continued for each
16employee not in pay status or on active service by reason of
17(1) leave of absence due to illness or injury, (2) authorized
18educational leave of absence or sabbatical leave, or (3)
19military leave. This coverage shall continue until expiration
20of authorized leave and return to active service, but not to
21exceed 24 months for leaves under item (1) or (2). This
2224-month limitation and the requirement of returning to active
23service shall not apply to persons receiving ordinary or
24accidental disability benefits or retirement benefits through
25the appropriate State retirement system or benefits under the
26Workers' Compensation or Occupational Disease Act.

HB2903- 25 -LRB100 07135 RPS 17190 b
1 (d) The basic group life insurance coverage shall continue,
2with full State contribution, where such person is (1) absent
3from active service by reason of disability arising from any
4cause other than self-inflicted, (2) on authorized educational
5leave of absence or sabbatical leave, or (3) on military leave.
6 (e) Where the person is in non-pay status for a period in
7excess of 30 days or on leave of absence, other than by reason
8of disability, educational or sabbatical leave, or military
9leave, such person may continue coverage only by making
10personal payment equal to the amount normally contributed by
11the State on such person's behalf. Such payments and coverage
12may be continued: (1) until such time as the person returns to
13a status eligible for coverage at State expense, but not to
14exceed 24 months or (2) until such person's employment or
15annuitant status with the State is terminated (exclusive of any
16additional service imposed pursuant to law).
17 (f) The Department shall establish by rule the extent to
18which other employee benefits will continue for persons in
19non-pay status or who are not in active service.
20 (g) The State shall not pay the cost of the basic
21non-contributory group life insurance, program of health
22benefits and other employee benefits for members who are
23survivors as defined by paragraphs (1) and (2) of subsection
24(q) of Section 3 of this Act. The costs of benefits for these
25survivors shall be paid by the survivors or by the University
26of Illinois Cooperative Extension Service, or any combination

HB2903- 26 -LRB100 07135 RPS 17190 b
1thereof. However, the State shall pay the amount of the
2reduction in the cost of participation, if any, resulting from
3the amendment to subsection (a) made by this amendatory Act of
4the 91st General Assembly.
5 (h) Those persons occupying positions with any department
6as a result of emergency appointments pursuant to Section 8b.8
7of the Personnel Code who are not considered employees under
8this Act shall be given the option of participating in the
9programs of group life insurance, health benefits and other
10employee benefits. Such persons electing coverage may
11participate only by making payment equal to the amount normally
12contributed by the State for similarly situated employees. Such
13amounts shall be determined by the Director. Such payments and
14coverage may be continued until such time as the person becomes
15an employee pursuant to this Act or such person's appointment
16is terminated.
17 (i) Any unit of local government within the State of
18Illinois may apply to the Director to have its employees,
19annuitants, and their dependents provided group health
20coverage under this Act on a non-insured basis. To participate,
21a unit of local government must agree to enroll all of its
22employees, who may select coverage under either the State group
23health benefits plan or a health maintenance organization that
24has contracted with the State to be available as a health care
25provider for employees as defined in this Act. A unit of local
26government must remit the entire cost of providing coverage

HB2903- 27 -LRB100 07135 RPS 17190 b
1under the State group health benefits plan or, for coverage
2under a health maintenance organization, an amount determined
3by the Director based on an analysis of the sex, age,
4geographic location, or other relevant demographic variables
5for its employees, except that the unit of local government
6shall not be required to enroll those of its employees who are
7covered spouses or dependents under this plan or another group
8policy or plan providing health benefits as long as (1) an
9appropriate official from the unit of local government attests
10that each employee not enrolled is a covered spouse or
11dependent under this plan or another group policy or plan, and
12(2) at least 50% of the employees are enrolled and the unit of
13local government remits the entire cost of providing coverage
14to those employees, except that a participating school district
15must have enrolled at least 50% of its full-time employees who
16have not waived coverage under the district's group health plan
17by participating in a component of the district's cafeteria
18plan. A participating school district is not required to enroll
19a full-time employee who has waived coverage under the
20district's health plan, provided that an appropriate official
21from the participating school district attests that the
22full-time employee has waived coverage by participating in a
23component of the district's cafeteria plan. For the purposes of
24this subsection, "participating school district" includes a
25unit of local government whose primary purpose is education as
26defined by the Department's rules.

HB2903- 28 -LRB100 07135 RPS 17190 b
1 Employees of a participating unit of local government who
2are not enrolled due to coverage under another group health
3policy or plan may enroll in the event of a qualifying change
4in status, special enrollment, special circumstance as defined
5by the Director, or during the annual Benefit Choice Period. A
6participating unit of local government may also elect to cover
7its annuitants. Dependent coverage shall be offered on an
8optional basis, with the costs paid by the unit of local
9government, its employees, or some combination of the two as
10determined by the unit of local government. The unit of local
11government shall be responsible for timely collection and
12transmission of dependent premiums.
13 The Director shall annually determine monthly rates of
14payment, subject to the following constraints:
15 (1) In the first year of coverage, the rates shall be
16 equal to the amount normally charged to State employees for
17 elected optional coverages or for enrolled dependents
18 coverages or other contributory coverages, or contributed
19 by the State for basic insurance coverages on behalf of its
20 employees, adjusted for differences between State
21 employees and employees of the local government in age,
22 sex, geographic location or other relevant demographic
23 variables, plus an amount sufficient to pay for the
24 additional administrative costs of providing coverage to
25 employees of the unit of local government and their
26 dependents.

HB2903- 29 -LRB100 07135 RPS 17190 b
1 (2) In subsequent years, a further adjustment shall be
2 made to reflect the actual prior years' claims experience
3 of the employees of the unit of local government.
4 In the case of coverage of local government employees under
5a health maintenance organization, the Director shall annually
6determine for each participating unit of local government the
7maximum monthly amount the unit may contribute toward that
8coverage, based on an analysis of (i) the age, sex, geographic
9location, and other relevant demographic variables of the
10unit's employees and (ii) the cost to cover those employees
11under the State group health benefits plan. The Director may
12similarly determine the maximum monthly amount each unit of
13local government may contribute toward coverage of its
14employees' dependents under a health maintenance organization.
15 Monthly payments by the unit of local government or its
16employees for group health benefits plan or health maintenance
17organization coverage shall be deposited in the Local
18Government Health Insurance Reserve Fund.
19 The Local Government Health Insurance Reserve Fund is
20hereby created as a nonappropriated trust fund to be held
21outside the State Treasury, with the State Treasurer as
22custodian. The Local Government Health Insurance Reserve Fund
23shall be a continuing fund not subject to fiscal year
24limitations. The Local Government Health Insurance Reserve
25Fund is not subject to administrative charges or charge-backs,
26including but not limited to those authorized under Section 8h

HB2903- 30 -LRB100 07135 RPS 17190 b
1of the State Finance Act. All revenues arising from the
2administration of the health benefits program established
3under this Section shall be deposited into the Local Government
4Health Insurance Reserve Fund. Any interest earned on moneys in
5the Local Government Health Insurance Reserve Fund shall be
6deposited into the Fund. All expenditures from this Fund shall
7be used for payments for health care benefits for local
8government and rehabilitation facility employees, annuitants,
9and dependents, and to reimburse the Department or its
10administrative service organization for all expenses incurred
11in the administration of benefits. No other State funds may be
12used for these purposes.
13 A local government employer's participation or desire to
14participate in a program created under this subsection shall
15not limit that employer's duty to bargain with the
16representative of any collective bargaining unit of its
17employees.
18 (j) Any rehabilitation facility within the State of
19Illinois may apply to the Director to have its employees,
20annuitants, and their eligible dependents provided group
21health coverage under this Act on a non-insured basis. To
22participate, a rehabilitation facility must agree to enroll all
23of its employees and remit the entire cost of providing such
24coverage for its employees, except that the rehabilitation
25facility shall not be required to enroll those of its employees
26who are covered spouses or dependents under this plan or

HB2903- 31 -LRB100 07135 RPS 17190 b
1another group policy or plan providing health benefits as long
2as (1) an appropriate official from the rehabilitation facility
3attests that each employee not enrolled is a covered spouse or
4dependent under this plan or another group policy or plan, and
5(2) at least 50% of the employees are enrolled and the
6rehabilitation facility remits the entire cost of providing
7coverage to those employees. Employees of a participating
8rehabilitation facility who are not enrolled due to coverage
9under another group health policy or plan may enroll in the
10event of a qualifying change in status, special enrollment,
11special circumstance as defined by the Director, or during the
12annual Benefit Choice Period. A participating rehabilitation
13facility may also elect to cover its annuitants. Dependent
14coverage shall be offered on an optional basis, with the costs
15paid by the rehabilitation facility, its employees, or some
16combination of the 2 as determined by the rehabilitation
17facility. The rehabilitation facility shall be responsible for
18timely collection and transmission of dependent premiums.
19 The Director shall annually determine quarterly rates of
20payment, subject to the following constraints:
21 (1) In the first year of coverage, the rates shall be
22 equal to the amount normally charged to State employees for
23 elected optional coverages or for enrolled dependents
24 coverages or other contributory coverages on behalf of its
25 employees, adjusted for differences between State
26 employees and employees of the rehabilitation facility in

HB2903- 32 -LRB100 07135 RPS 17190 b
1 age, sex, geographic location or other relevant
2 demographic variables, plus an amount sufficient to pay for
3 the additional administrative costs of providing coverage
4 to employees of the rehabilitation facility and their
5 dependents.
6 (2) In subsequent years, a further adjustment shall be
7 made to reflect the actual prior years' claims experience
8 of the employees of the rehabilitation facility.
9 Monthly payments by the rehabilitation facility or its
10employees for group health benefits shall be deposited in the
11Local Government Health Insurance Reserve Fund.
12 (k) Any domestic violence shelter or service within the
13State of Illinois may apply to the Director to have its
14employees, annuitants, and their dependents provided group
15health coverage under this Act on a non-insured basis. To
16participate, a domestic violence shelter or service must agree
17to enroll all of its employees and pay the entire cost of
18providing such coverage for its employees. The domestic
19violence shelter shall not be required to enroll those of its
20employees who are covered spouses or dependents under this plan
21or another group policy or plan providing health benefits as
22long as (1) an appropriate official from the domestic violence
23shelter attests that each employee not enrolled is a covered
24spouse or dependent under this plan or another group policy or
25plan and (2) at least 50% of the employees are enrolled and the
26domestic violence shelter remits the entire cost of providing

HB2903- 33 -LRB100 07135 RPS 17190 b
1coverage to those employees. Employees of a participating
2domestic violence shelter who are not enrolled due to coverage
3under another group health policy or plan may enroll in the
4event of a qualifying change in status, special enrollment, or
5special circumstance as defined by the Director or during the
6annual Benefit Choice Period. A participating domestic
7violence shelter may also elect to cover its annuitants.
8Dependent coverage shall be offered on an optional basis, with
9employees, or some combination of the 2 as determined by the
10domestic violence shelter or service. The domestic violence
11shelter or service shall be responsible for timely collection
12and transmission of dependent premiums.
13 The Director shall annually determine rates of payment,
14subject to the following constraints:
15 (1) In the first year of coverage, the rates shall be
16 equal to the amount normally charged to State employees for
17 elected optional coverages or for enrolled dependents
18 coverages or other contributory coverages on behalf of its
19 employees, adjusted for differences between State
20 employees and employees of the domestic violence shelter or
21 service in age, sex, geographic location or other relevant
22 demographic variables, plus an amount sufficient to pay for
23 the additional administrative costs of providing coverage
24 to employees of the domestic violence shelter or service
25 and their dependents.
26 (2) In subsequent years, a further adjustment shall be

HB2903- 34 -LRB100 07135 RPS 17190 b
1 made to reflect the actual prior years' claims experience
2 of the employees of the domestic violence shelter or
3 service.
4 Monthly payments by the domestic violence shelter or
5service or its employees for group health insurance shall be
6deposited in the Local Government Health Insurance Reserve
7Fund.
8 (l) A public community college or entity organized pursuant
9to the Public Community College Act may apply to the Director
10initially to have only annuitants not covered prior to July 1,
111992 by the district's health plan provided health coverage
12under this Act on a non-insured basis. The community college
13must execute a 2-year contract to participate in the Local
14Government Health Plan. Any annuitant may enroll in the event
15of a qualifying change in status, special enrollment, special
16circumstance as defined by the Director, or during the annual
17Benefit Choice Period.
18 The Director shall annually determine monthly rates of
19payment subject to the following constraints: for those
20community colleges with annuitants only enrolled, first year
21rates shall be equal to the average cost to cover claims for a
22State member adjusted for demographics, Medicare
23participation, and other factors; and in the second year, a
24further adjustment of rates shall be made to reflect the actual
25first year's claims experience of the covered annuitants.
26 (l-5) The provisions of subsection (l) become inoperative

HB2903- 35 -LRB100 07135 RPS 17190 b
1on July 1, 1999.
2 (m) The Director shall adopt any rules deemed necessary for
3implementation of this amendatory Act of 1989 (Public Act
486-978).
5 (n) Any child advocacy center within the State of Illinois
6may apply to the Director to have its employees, annuitants,
7and their dependents provided group health coverage under this
8Act on a non-insured basis. To participate, a child advocacy
9center must agree to enroll all of its employees and pay the
10entire cost of providing coverage for its employees. The child
11advocacy center shall not be required to enroll those of its
12employees who are covered spouses or dependents under this plan
13or another group policy or plan providing health benefits as
14long as (1) an appropriate official from the child advocacy
15center attests that each employee not enrolled is a covered
16spouse or dependent under this plan or another group policy or
17plan and (2) at least 50% of the employees are enrolled and the
18child advocacy center remits the entire cost of providing
19coverage to those employees. Employees of a participating child
20advocacy center who are not enrolled due to coverage under
21another group health policy or plan may enroll in the event of
22a qualifying change in status, special enrollment, or special
23circumstance as defined by the Director or during the annual
24Benefit Choice Period. A participating child advocacy center
25may also elect to cover its annuitants. Dependent coverage
26shall be offered on an optional basis, with the costs paid by

HB2903- 36 -LRB100 07135 RPS 17190 b
1the child advocacy center, its employees, or some combination
2of the 2 as determined by the child advocacy center. The child
3advocacy center shall be responsible for timely collection and
4transmission of dependent premiums.
5 The Director shall annually determine rates of payment,
6subject to the following constraints:
7 (1) In the first year of coverage, the rates shall be
8 equal to the amount normally charged to State employees for
9 elected optional coverages or for enrolled dependents
10 coverages or other contributory coverages on behalf of its
11 employees, adjusted for differences between State
12 employees and employees of the child advocacy center in
13 age, sex, geographic location, or other relevant
14 demographic variables, plus an amount sufficient to pay for
15 the additional administrative costs of providing coverage
16 to employees of the child advocacy center and their
17 dependents.
18 (2) In subsequent years, a further adjustment shall be
19 made to reflect the actual prior years' claims experience
20 of the employees of the child advocacy center.
21 Monthly payments by the child advocacy center or its
22employees for group health insurance shall be deposited into
23the Local Government Health Insurance Reserve Fund.
24(Source: P.A. 97-695, eff. 7-1-12; 98-488, eff. 8-16-13.)
25 Section 905. The Department of Central Management Services

HB2903- 37 -LRB100 07135 RPS 17190 b
1Law of the Civil Administrative Code of Illinois is amended by
2adding Section 405-298 as follows:
3 (20 ILCS 405/405-298 new)
4 Sec. 405-298. Pension buyout option. To enter into
5contracts with approved vendors under the Pension Buyout Act
6and to adopt those rules needed to implement the provisions of
7the Pension Buyout Act.
8 Section 910. The Illinois Finance Authority Act is amended
9by changing Section 801-40 as follows:
10 (20 ILCS 3501/801-40)
11 Sec. 801-40. In addition to the powers otherwise authorized
12by law and in addition to the foregoing general corporate
13powers, the Authority shall also have the following additional
14specific powers to be exercised in furtherance of the purposes
15of this Act.
16 (a) The Authority shall have power (i) to accept grants,
17loans or appropriations from the federal government or the
18State, or any agency or instrumentality thereof, to be used for
19the operating expenses of the Authority, or for any purposes of
20the Authority, including the making of direct loans of such
21funds with respect to projects, and (ii) to enter into any
22agreement with the federal government or the State, or any
23agency or instrumentality thereof, in relationship to such

HB2903- 38 -LRB100 07135 RPS 17190 b
1grants, loans or appropriations.
2 (b) The Authority shall have power to procure and enter
3into contracts for any type of insurance and indemnity
4agreements covering loss or damage to property from any cause,
5including loss of use and occupancy, or covering any other
6insurable risk.
7 (c) The Authority shall have the continuing power to issue
8bonds for its corporate purposes. Bonds may be issued by the
9Authority in one or more series and may provide for the payment
10of any interest deemed necessary on such bonds, of the costs of
11issuance of such bonds, of any premium on any insurance, or of
12the cost of any guarantees, letters of credit or other similar
13documents, may provide for the funding of the reserves deemed
14necessary in connection with such bonds, and may provide for
15the refunding or advance refunding of any bonds or for accounts
16deemed necessary in connection with any purpose of the
17Authority. The bonds may bear interest payable at any time or
18times and at any rate or rates, notwithstanding any other
19provision of law to the contrary, and such rate or rates may be
20established by an index or formula which may be implemented or
21established by persons appointed or retained therefor by the
22Authority, or may bear no interest or may bear interest payable
23at maturity or upon redemption prior to maturity, may bear such
24date or dates, may be payable at such time or times and at such
25place or places, may mature at any time or times not later than
2640 years from the date of issuance, may be sold at public or

HB2903- 39 -LRB100 07135 RPS 17190 b
1private sale at such time or times and at such price or prices,
2may be secured by such pledges, reserves, guarantees, letters
3of credit, insurance contracts or other similar credit support
4or liquidity instruments, may be executed in such manner, may
5be subject to redemption prior to maturity, may provide for the
6registration of the bonds, and may be subject to such other
7terms and conditions all as may be provided by the resolution
8or indenture authorizing the issuance of such bonds. The holder
9or holders of any bonds issued by the Authority may bring suits
10at law or proceedings in equity to compel the performance and
11observance by any person or by the Authority or any of its
12agents or employees of any contract or covenant made with the
13holders of such bonds and to compel such person or the
14Authority and any of its agents or employees to perform any
15duties required to be performed for the benefit of the holders
16of any such bonds by the provision of the resolution
17authorizing their issuance, and to enjoin such person or the
18Authority and any of its agents or employees from taking any
19action in conflict with any such contract or covenant.
20Notwithstanding the form and tenor of any such bonds and in the
21absence of any express recital on the face thereof that it is
22non-negotiable, all such bonds shall be negotiable
23instruments. Pending the preparation and execution of any such
24bonds, temporary bonds may be issued as provided by the
25resolution. The bonds shall be sold by the Authority in such
26manner as it shall determine. The bonds may be secured as

HB2903- 40 -LRB100 07135 RPS 17190 b
1provided in the authorizing resolution by the receipts,
2revenues, income and other available funds of the Authority and
3by any amounts derived by the Authority from the loan agreement
4or lease agreement with respect to the project or projects; and
5bonds may be issued as general obligations of the Authority
6payable from such revenues, funds and obligations of the
7Authority as the bond resolution shall provide, or may be
8issued as limited obligations with a claim for payment solely
9from such revenues, funds and obligations as the bond
10resolution shall provide. The Authority may grant a specific
11pledge or assignment of and lien on or security interest in
12such rights, revenues, income, or amounts and may grant a
13specific pledge or assignment of and lien on or security
14interest in any reserves, funds or accounts established in the
15resolution authorizing the issuance of bonds. Any such pledge,
16assignment, lien or security interest for the benefit of the
17holders of the Authority's bonds shall be valid and binding
18from the time the bonds are issued without any physical
19delivery or further act, and shall be valid and binding as
20against and prior to the claims of all other parties having
21claims against the Authority or any other person irrespective
22of whether the other parties have notice of the pledge,
23assignment, lien or security interest. As evidence of such
24pledge, assignment, lien and security interest, the Authority
25may execute and deliver a mortgage, trust agreement, indenture
26or security agreement or an assignment thereof. A remedy for

HB2903- 41 -LRB100 07135 RPS 17190 b
1any breach or default of the terms of any such agreement by the
2Authority may be by mandamus proceedings in any court of
3competent jurisdiction to compel the performance and
4compliance therewith, but the agreement may prescribe by whom
5or on whose behalf such action may be instituted. It is
6expressly understood that the Authority may, but need not,
7acquire title to any project with respect to which it exercises
8its authority.
9 (c-5) The Authority shall have the power to issue bonds
10under subsection (c) of Section 10 of the Pension Buyout Act
11and to adopt those rules needed to implement the provisions of
12the Pension Buyout Act.
13 (d) With respect to the powers granted by this Act, the
14Authority may adopt rules and regulations prescribing the
15procedures by which persons may apply for assistance under this
16Act. Nothing herein shall be deemed to preclude the Authority,
17prior to the filing of any formal application, from conducting
18preliminary discussions and investigations with respect to the
19subject matter of any prospective application.
20 (e) The Authority shall have power to acquire by purchase,
21lease, gift or otherwise any property or rights therein from
22any person useful for its purposes, whether improved for the
23purposes of any prospective project, or unimproved. The
24Authority may also accept any donation of funds for its
25purposes from any such source. The Authority shall have no
26independent power of condemnation but may acquire any property

HB2903- 42 -LRB100 07135 RPS 17190 b
1or rights therein obtained upon condemnation by any other
2authority, governmental entity or unit of local government with
3such power.
4 (f) The Authority shall have power to develop, construct
5and improve either under its own direction, or through
6collaboration with any approved applicant, or to acquire
7through purchase or otherwise, any project, using for such
8purpose the proceeds derived from the sale of its bonds or from
9governmental loans or grants, and to hold title in the name of
10the Authority to such projects.
11 (g) The Authority shall have power to lease pursuant to a
12lease agreement any project so developed and constructed or
13acquired to the approved tenant on such terms and conditions as
14may be appropriate to further the purposes of this Act and to
15maintain the credit of the Authority. Any such lease may
16provide for either the Authority or the approved tenant to
17assume initially, in whole or in part, the costs of
18maintenance, repair and improvements during the leasehold
19period. In no case, however, shall the total rentals from any
20project during any initial leasehold period or the total loan
21repayments to be made pursuant to any loan agreement, be less
22than an amount necessary to return over such lease or loan
23period (1) all costs incurred in connection with the
24development, construction, acquisition or improvement of the
25project and for repair, maintenance and improvements thereto
26during the period of the lease or loan; provided, however, that

HB2903- 43 -LRB100 07135 RPS 17190 b
1the rentals or loan repayments need not include costs met
2through the use of funds other than those obtained by the
3Authority through the issuance of its bonds or governmental
4loans; (2) a reasonable percentage additive to be agreed upon
5by the Authority and the borrower or tenant to cover a properly
6allocable portion of the Authority's general expenses,
7including, but not limited to, administrative expenses,
8salaries and general insurance, and (3) an amount sufficient to
9pay when due all principal of, interest and premium, if any on,
10any bonds issued by the Authority with respect to the project.
11The portion of total rentals payable under clause (3) of this
12subsection (g) shall be deposited in such special accounts,
13including all sinking funds, acquisition or construction
14funds, debt service and other funds as provided by any
15resolution, mortgage or trust agreement of the Authority
16pursuant to which any bond is issued.
17 (h) The Authority has the power, upon the termination of
18any leasehold period of any project, to sell or lease for a
19further term or terms such project on such terms and conditions
20as the Authority shall deem reasonable and consistent with the
21purposes of the Act. The net proceeds from all such sales and
22the revenues or income from such leases shall be used to
23satisfy any indebtedness of the Authority with respect to such
24project and any balance may be used to pay any expenses of the
25Authority or be used for the further development, construction,
26acquisition or improvement of projects. In the event any

HB2903- 44 -LRB100 07135 RPS 17190 b
1project is vacated by a tenant prior to the termination of the
2initial leasehold period, the Authority shall sell or lease the
3facilities of the project on the most advantageous terms
4available. The net proceeds of any such disposition shall be
5treated in the same manner as the proceeds from sales or the
6revenues or income from leases subsequent to the termination of
7any initial leasehold period.
8 (i) The Authority shall have the power to make loans to
9persons to finance a project, to enter into loan agreements
10with respect thereto, and to accept guarantees from persons of
11its loans or the resultant evidences of obligations of the
12Authority.
13 (j) The Authority may fix, determine, charge and collect
14any premiums, fees, charges, costs and expenses, including,
15without limitation, any application fees, commitment fees,
16program fees, financing charges or publication fees from any
17person in connection with its activities under this Act.
18 (k) In addition to the funds established as provided
19herein, the Authority shall have the power to create and
20establish such reserve funds and accounts as may be necessary
21or desirable to accomplish its purposes under this Act and to
22deposit its available monies into the funds and accounts.
23 (l) At the request of the governing body of any unit of
24local government, the Authority is authorized to market such
25local government's revenue bond offerings by preparing bond
26issues for sale, advertising for sealed bids, receiving bids at

HB2903- 45 -LRB100 07135 RPS 17190 b
1its offices, making the award to the bidder that offers the
2most favorable terms or arranging for negotiated placements or
3underwritings of such securities. The Authority may, at its
4discretion, offer for concurrent sale the revenue bonds of
5several local governments. Sales by the Authority of revenue
6bonds under this Section shall in no way imply State guarantee
7of such debt issue. The Authority may require such financial
8information from participating local governments as it deems
9necessary in order to carry out the purposes of this subsection
10(1).
11 (m) The Authority may make grants to any county to which
12Division 5-37 of the Counties Code is applicable to assist in
13the financing of capital development, construction and
14renovation of new or existing facilities for hospitals and
15health care facilities under that Act. Such grants may only be
16made from funds appropriated for such purposes from the Build
17Illinois Bond Fund.
18 (n) The Authority may establish an urban development action
19grant program for the purpose of assisting municipalities in
20Illinois which are experiencing severe economic distress to
21help stimulate economic development activities needed to aid in
22economic recovery. The Authority shall determine the types of
23activities and projects for which the urban development action
24grants may be used, provided that such projects and activities
25are broadly defined to include all reasonable projects and
26activities the primary objectives of which are the development

HB2903- 46 -LRB100 07135 RPS 17190 b
1of viable urban communities, including decent housing and a
2suitable living environment, and expansion of economic
3opportunity, principally for persons of low and moderate
4incomes. The Authority shall enter into grant agreements from
5monies appropriated for such purposes from the Build Illinois
6Bond Fund. The Authority shall monitor the use of the grants,
7and shall provide for audits of the funds as well as recovery
8by the Authority of any funds determined to have been spent in
9violation of this subsection (n) or any rule or regulation
10promulgated hereunder. The Authority shall provide technical
11assistance with regard to the effective use of the urban
12development action grants. The Authority shall file an annual
13report to the General Assembly concerning the progress of the
14grant program.
15 (o) The Authority may establish a Housing Partnership
16Program whereby the Authority provides zero-interest loans to
17municipalities for the purpose of assisting in the financing of
18projects for the rehabilitation of affordable multi-family
19housing for low and moderate income residents. The Authority
20may provide such loans only upon a municipality's providing
21evidence that it has obtained private funding for the
22rehabilitation project. The Authority shall provide 3 State
23dollars for every 7 dollars obtained by the municipality from
24sources other than the State of Illinois. The loans shall be
25made from monies appropriated for such purpose from the Build
26Illinois Bond Fund. The total amount of loans available under

HB2903- 47 -LRB100 07135 RPS 17190 b
1the Housing Partnership Program shall not exceed $30,000,000.
2State loan monies under this subsection shall be used only for
3the acquisition and rehabilitation of existing buildings
4containing 4 or more dwelling units. The terms of any loan made
5by the municipality under this subsection shall require
6repayment of the loan to the municipality upon any sale or
7other transfer of the project.
8 (p) The Authority may award grants to universities and
9research institutions, research consortiums and other
10not-for-profit entities for the purposes of: remodeling or
11otherwise physically altering existing laboratory or research
12facilities, expansion or physical additions to existing
13laboratory or research facilities, construction of new
14laboratory or research facilities or acquisition of modern
15equipment to support laboratory or research operations
16provided that such grants (i) be used solely in support of
17project and equipment acquisitions which enhance technology
18transfer, and (ii) not constitute more than 60 percent of the
19total project or acquisition cost.
20 (q) Grants may be awarded by the Authority to units of
21local government for the purpose of developing the appropriate
22infrastructure or defraying other costs to the local government
23in support of laboratory or research facilities provided that
24such grants may not exceed 40% of the cost to the unit of local
25government.
26 (r) The Authority may establish a Direct Loan Program to

HB2903- 48 -LRB100 07135 RPS 17190 b
1make loans to individuals, partnerships or corporations for the
2purpose of an industrial project, as defined in Section 801-10
3of this Act. For the purposes of such program and not by way of
4limitation on any other program of the Authority, the Authority
5shall have the power to issue bonds, notes, or other evidences
6of indebtedness including commercial paper for purposes of
7providing a fund of capital from which it may make such loans.
8The Authority shall have the power to use any appropriations
9from the State made especially for the Authority's Direct Loan
10Program for additional capital to make such loans or for the
11purposes of reserve funds or pledged funds which secure the
12Authority's obligations of repayment of any bond, note or other
13form of indebtedness established for the purpose of providing
14capital for which it intends to make such loans under the
15Direct Loan Program. For the purpose of obtaining such capital,
16the Authority may also enter into agreements with financial
17institutions and other persons for the purpose of selling loans
18and developing a secondary market for such loans. Loans made
19under the Direct Loan Program may be in an amount not to exceed
20$300,000 and shall be made for a portion of an industrial
21project which does not exceed 50% of the total project. No loan
22may be made by the Authority unless approved by the affirmative
23vote of at least 8 members of the board. The Authority shall
24establish procedures and publish rules which shall provide for
25the submission, review, and analysis of each direct loan
26application and which shall preserve the ability of each board

HB2903- 49 -LRB100 07135 RPS 17190 b
1member to reach an individual business judgment regarding the
2propriety of making each direct loan. The collective discretion
3of the board to approve or disapprove each loan shall be
4unencumbered. The Authority may establish and collect such fees
5and charges, determine and enforce such terms and conditions,
6and charge such interest rates as it determines to be necessary
7and appropriate to the successful administration of the Direct
8Loan Program. The Authority may require such interests in
9collateral and such guarantees as it determines are necessary
10to project the Authority's interest in the repayment of the
11principal and interest of each loan made under the Direct Loan
12Program.
13 (s) The Authority may guarantee private loans to third
14parties up to a specified dollar amount in order to promote
15economic development in this State.
16 (t) The Authority may adopt rules and regulations as may be
17necessary or advisable to implement the powers conferred by
18this Act.
19 (u) The Authority shall have the power to issue bonds,
20notes or other evidences of indebtedness, which may be used to
21make loans to units of local government which are authorized to
22enter into loan agreements and other documents and to issue
23bonds, notes and other evidences of indebtedness for the
24purpose of financing the protection of storm sewer outfalls,
25the construction of adequate storm sewer outfalls, and the
26provision for flood protection of sanitary sewage treatment

HB2903- 50 -LRB100 07135 RPS 17190 b
1plans, in counties that have established a stormwater
2management planning committee in accordance with Section
35-1062 of the Counties Code. Any such loan shall be made by the
4Authority pursuant to the provisions of Section 820-5 to 820-60
5of this Act. The unit of local government shall pay back to the
6Authority the principal amount of the loan, plus annual
7interest as determined by the Authority. The Authority shall
8have the power, subject to appropriations by the General
9Assembly, to subsidize or buy down a portion of the interest on
10such loans, up to 4% per annum.
11 (v) The Authority may accept security interests as provided
12in Sections 11-3 and 11-3.3 of the Illinois Public Aid Code.
13 (w) Moral Obligation. In the event that the Authority
14determines that monies of the Authority will not be sufficient
15for the payment of the principal of and interest on its bonds
16during the next State fiscal year, the Chairperson, as soon as
17practicable, shall certify to the Governor the amount required
18by the Authority to enable it to pay such principal of and
19interest on the bonds. The Governor shall submit the amount so
20certified to the General Assembly as soon as practicable, but
21no later than the end of the current State fiscal year. This
22subsection shall apply only to any bonds or notes as to which
23the Authority shall have determined, in the resolution
24authorizing the issuance of the bonds or notes, that this
25subsection shall apply. Whenever the Authority makes such a
26determination, that fact shall be plainly stated on the face of

HB2903- 51 -LRB100 07135 RPS 17190 b
1the bonds or notes and that fact shall also be reported to the
2Governor. In the event of a withdrawal of moneys from a reserve
3fund established with respect to any issue or issues of bonds
4of the Authority to pay principal or interest on those bonds,
5the Chairperson of the Authority, as soon as practicable, shall
6certify to the Governor the amount required to restore the
7reserve fund to the level required in the resolution or
8indenture securing those bonds. The Governor shall submit the
9amount so certified to the General Assembly as soon as
10practicable, but no later than the end of the current State
11fiscal year. The Authority shall obtain written approval from
12the Governor for any bonds and notes to be issued under this
13Section. In addition to any other bonds authorized to be issued
14under Sections 825-60, 825-65(e), 830-25 and 845-5, the
15principal amount of Authority bonds outstanding issued under
16this Section 801-40(w) or under 20 ILCS 3850/1-80 or 30 ILCS
17360/2-6(c), which have been assumed by the Authority, shall not
18exceed $150,000,000. This subsection (w) shall in no way be
19applied to any bonds issued by the Authority on behalf of the
20Illinois Power Agency under Section 825-90 of this Act.
21 (x) The Authority may enter into agreements or contracts
22with any person necessary or appropriate to place the payment
23obligations of the Authority under any of its bonds in whole or
24in part on any interest rate basis, cash flow basis, or other
25basis desired by the Authority, including without limitation
26agreements or contracts commonly known as "interest rate swap

HB2903- 52 -LRB100 07135 RPS 17190 b
1agreements", "forward payment conversion agreements", and
2"futures", or agreements or contracts to exchange cash flows or
3a series of payments, or agreements or contracts, including
4without limitation agreements or contracts commonly known as
5"options", "puts", or "calls", to hedge payment, rate spread,
6or similar exposure; provided that any such agreement or
7contract shall not constitute an obligation for borrowed money
8and shall not be taken into account under Section 845-5 of this
9Act or any other debt limit of the Authority or the State of
10Illinois.
11 (y) The Authority shall publish summaries of projects and
12actions approved by the members of the Authority on its
13website. These summaries shall include, but not be limited to,
14information regarding the:
15 (1) project;
16 (2) Board's action or actions;
17 (3) purpose of the project;
18 (4) Authority's program and contribution;
19 (5) volume cap;
20 (6) jobs retained;
21 (7) projected new jobs;
22 (8) construction jobs created;
23 (9) estimated sources and uses of funds;
24 (10) financing summary;
25 (11) project summary;
26 (12) business summary;

HB2903- 53 -LRB100 07135 RPS 17190 b
1 (13) ownership or economic disclosure statement;
2 (14) professional and financial information;
3 (15) service area; and
4 (16) legislative district.
5 The disclosure of information pursuant to this subsection
6shall comply with the Freedom of Information Act.
7(Source: P.A. 95-470, eff. 8-27-07; 95-481, eff. 8-28-07;
895-876, eff. 8-21-08; 96-795, eff. 7-1-10 (see Section 5 of
9P.A. 96-793 for the effective date of changes made by P.A.
1096-795).)
11 Section 915. The Illinois Procurement Code is amended by
12adding Section 45-32 as follows:
13 (30 ILCS 500/45-32 new)
14 Sec. 45-32. Pension buyout option. The chief procurement
15officer appointed pursuant to paragraph (4) of subsection (a)
16of Section 10-20 shall determine for the Department of Central
17Management Services which vendors are approved to provide lump
18sum payments pursuant to a pension buyout option under Article
1915 or 16 of the Illinois Pension Code and the Pension Buyout
20Act. The chief procurement officer appointed pursuant to
21paragraph (4) of subsection (a) of Section 10-20 shall develop
22and distribute to the Department of Central Management Services
23a listing of all procedures for implementing this Section.

HB2903- 54 -LRB100 07135 RPS 17190 b
1 Section 920. The Illinois Pension Code is amended by
2changing Sections 15-108.1, 15-108.2, 15-185, 15-198, 16-158,
316-190, 16-203, 20-121, 20-123, 20-124, and 20-125 and by
4adding Sections 15-108.3, 15-185.5, 15-200.5, 16-106.40,
516-106.41, 16-106.42, 16-106.43, 16-190.5, 16-205.5, and
616-205.6 as follows:
7 (40 ILCS 5/15-108.1)
8 Sec. 15-108.1. Tier 1 member. "Tier 1 member": A
9participant or an annuitant of a retirement annuity under this
10Article, other than a participant in the self-managed plan
11under Section 15-158.2, who first became a participant or
12member before January 1, 2011 under any reciprocal retirement
13system or pension fund established under this Code, other than
14a retirement system or pension fund established under Articles
152, 3, 4, 5, 6, or 18 of this Code. "Tier 1 member" includes a
16person who first became a participant under this System before
17January 1, 2011 and who accepts a refund and is subsequently
18reemployed by an employer on or after January 1, 2011.
19 In the case of a Tier 1 member who elects to participate in
20the Tier 3 plan under Section 15-200.5 of this Code, that Tier
211 member shall be deemed a Tier 1 member only with respect to
22service performed or established before the effective date of
23that election.
24(Source: P.A. 98-92, eff. 7-16-13.)

HB2903- 55 -LRB100 07135 RPS 17190 b
1 (40 ILCS 5/15-108.2)
2 Sec. 15-108.2. Tier 2 member. "Tier 2 member": A person who
3first becomes a participant under this Article on or after
4January 1, 2011, other than a person in the self-managed plan
5established under Section 15-158.2, unless the person is
6otherwise a Tier 1 member. The changes made to this Section by
7this amendatory Act of the 98th General Assembly are a
8correction of existing law and are intended to be retroactive
9to the effective date of Public Act 96-889, notwithstanding the
10provisions of Section 1-103.1 of this Code.
11 In the case of a Tier 2 member who elects to participate in
12the Tier 3 plan under Section 15-200.5 of this Code, that Tier
132 member shall be deemed a Tier 2 member only with respect to
14service performed or established before the effective date of
15that election.
16(Source: P.A. 98-92, eff. 7-16-13; 98-596, eff. 11-19-13.)
17 (40 ILCS 5/15-108.3 new)
18 Sec. 15-108.3. Tier 3 member. "Tier 3 member": A Tier 1 or
19Tier 2 member who elects to participate in the Tier 3 plan
20under Section 15-200.5 of this Code, but only with respect to
21service performed on or after the effective date of that
22election.
23 (40 ILCS 5/15-185) (from Ch. 108 1/2, par. 15-185)
24 Sec. 15-185. Annuities, etc., exempt. The accumulated

HB2903- 56 -LRB100 07135 RPS 17190 b
1employee and employer contributions shall be held in trust for
2each participant and annuitant, and this trust shall be treated
3as a spendthrift trust. Except as provided in this Article, all
4cash, securities and other property of this system, all
5annuities and other benefits payable under this Article and all
6accumulated credits of participants and annuitants in this
7system and the right of any person to receive an annuity or
8other benefit under this Article, or a refund of contributions,
9shall not be subject to judgment, execution, garnishment,
10attachment, or other seizure by process, in bankruptcy or
11otherwise, nor to sale, pledge, mortgage or other alienation,
12and shall not be assignable. However, a person may relinquish
13his or her creditable service under this Article and all rights
14arising from his or her service under this Article in
15accordance with Section 15-185.5. The board, however, may
16deduct from the benefits, refunds and credits payable to the
17participant, annuitant or beneficiary, amounts owed by the
18participant or annuitant to the system. No attempted sale,
19transfer or assignment of any benefit, refund or credit shall
20prevent the right of the board to make the deduction and offset
21authorized in this Section. Any participant or annuitant may
22authorize the board to deduct from disability benefits or
23annuities, premiums due under any group hospital-surgical
24insurance program which is sponsored or approved by any
25employer; however, the deductions from disability benefits may
26not begin prior to 6 months after the disability occurs.

HB2903- 57 -LRB100 07135 RPS 17190 b
1 A person receiving an annuity or benefit under this Article
2may also authorize withholding from that annuity or benefit for
3the purposes enumerated in and in accordance with the
4provisions of the State Salary and Annuity Withholding Act.
5 This Section is not intended to, and does not, affect the
6calculation of any benefit under this Article or dictate how or
7to what extent employee or employer contributions are to be
8taken into account in calculating benefits. This amendatory Act
9of the 91st General Assembly is a clarification of existing law
10and applies to every participant and annuitant without regard
11to whether status as an employee terminates before the
12effective date of this amendatory Act.
13 Public Act 86-273 is a clarification of existing law and
14shall be applicable to every participant and annuitant without
15regard to whether status as an employee terminates before the
16effective date of that Act.
17(Source: P.A. 90-65, eff. 7-7-97; 90-448, eff. 8-16-97; 90-511,
18eff. 8-22-97; 90-655, eff. 7-30-98; 91-887, eff. 7-6-00.)
19 (40 ILCS 5/15-185.5 new)
20 Sec. 15-185.5. Pension buyout option.
21 (a) As used in this Section:
22 "Approved vendor" means a vendor that has entered into
23 a contract with the Department of Central Management
24 Services to provide lump sum payments under this Section.
25 "Eligible person" means a person who (i) has accrued

HB2903- 58 -LRB100 07135 RPS 17190 b
1 sufficient service credit to be eligible to receive a
2 retirement annuity under this Article; (ii) has not
3 received a retirement annuity under this Article; (iii) has
4 terminated service; (iv) is not subject to a QILDRO under
5 this Article; (v) is not a participant in the self-managed
6 plan or the Tier 3 plan; and (vi) has received at least the
7 minimum amount of certified financial planning services,
8 in accordance with rules adopted by the Department of
9 Central Management Services, provided by the approved
10 vendor.
11 "Pension buyout option" means a plan that authorizes an
12 eligible person to relinquish all service credit, rights,
13 and benefits under this Article (and this Code to the
14 extent that the provisions of this Code relate to benefits
15 under this Article), including, but not limited to, a
16 survivor's annuity, a retirement annuity, and a refund of
17 contributions, in exchange for a lump sum payment equal to
18 the present value of the retirement annuity as calculated
19 by the System using the actuarial tables and other
20 assumptions adopted by the Board.
21 "Standardized form contract" means the contract
22 approved by the System in accordance with subsection (c).
23 (b) In the event that the Department of Central Management
24Services enters into a contract with an approved vendor and
25implements a pension buyout option:
26 (1) An eligible person may make the election authorized

HB2903- 59 -LRB100 07135 RPS 17190 b
1 under this Section at any time after he or she has
2 terminated service. However, a person who has elected to
3 proceed under the Retirement Systems Reciprocal Act is not
4 eligible to elect the pension buyout option under this
5 Section.
6 (2) An eligible person who wishes to participate in the
7 pension buyout option may request that the System determine
8 the dollar amount that the eligible person would receive
9 under the pension buyout option.
10 (3) After the System determines the dollar amount that
11 the eligible person would receive under the pension buyout
12 option, an eligible person who wishes to participate in the
13 pension buyout option shall do so by (i) notifying the
14 approved vendor and the System and (ii) executing the
15 standardized form contract with the approved vendor. As
16 soon as practical after the execution of the standardized
17 form contract, the approved vendor shall notify the System
18 that the eligible person executed the standardized form
19 contract. The System shall adopt rules concerning the
20 notice requirements.
21 (4) On the first day of the month following the
22 execution of the standardized form contract between the
23 approved vendor and the eligible person, the eligible
24 person shall have no rights or benefits under this Article
25 and this Code (to the extent that the provisions of this
26 Code relate to the eligible person's rights under this

HB2903- 60 -LRB100 07135 RPS 17190 b
1 Article) and shall be deemed to have no service credit
2 established under this Article. However, an eligible
3 person who receives a pension buyout payment under this
4 Section shall be deemed to be an annuitant for the purposes
5 of the State Employees Group Insurance Act of 1971 and
6 shall be entitled to any benefits under the State Employees
7 Group Insurance Act of 1971 that he or she would have
8 otherwise been entitled to.
9 (c) The System shall approve a standardized form contract.
10The System may by rule specify provisions that must be included
11in the standardized form contract.
12 (d) Any reduction in the System's liability arising from
13the pension buyout option shall not be included in the
14calculation or certification of required State contributions
15sooner than the next certification following the exercise of
16the pension buyout option. The calculation of required State
17contributions under this Article shall not include any
18reduction in the System's liability due to any anticipated
19pension buyout under this Section that has not yet been made.
20 (e) In accordance with rules adopted by the Department of
21Central Management Services, the Board shall certify to the
22Department of Central Management Services the amount of lump
23sum payments made under this Section by an approved vendor.
24 (f) The Board shall adopt rules necessary to implement this
25Section.
26 (g) No provision of this Section shall be interpreted in a

HB2903- 61 -LRB100 07135 RPS 17190 b
1way that would cause the applicable System to cease to be a
2qualified plan under the Internal Revenue Code of 1986.
3 (40 ILCS 5/15-198)
4 (Text of Section WITHOUT the changes made by P.A. 98-599,
5which has been held unconstitutional)
6 Sec. 15-198. Application and expiration of new benefit
7increases.
8 (a) As used in this Section, "new benefit increase" means
9an increase in the amount of any benefit provided under this
10Article, or an expansion of the conditions of eligibility for
11any benefit under this Article, that results from an amendment
12to this Code that takes effect after the effective date of this
13amendatory Act of the 94th General Assembly. "New benefit
14increase", however, does not include any benefit increase
15resulting from the changes made by this amendatory Act of the
16100th General Assembly.
17 (b) Notwithstanding any other provision of this Code or any
18subsequent amendment to this Code, every new benefit increase
19is subject to this Section and shall be deemed to be granted
20only in conformance with and contingent upon compliance with
21the provisions of this Section.
22 (c) The Public Act enacting a new benefit increase must
23identify and provide for payment to the System of additional
24funding at least sufficient to fund the resulting annual
25increase in cost to the System as it accrues.

HB2903- 62 -LRB100 07135 RPS 17190 b
1 Every new benefit increase is contingent upon the General
2Assembly providing the additional funding required under this
3subsection. The Commission on Government Forecasting and
4Accountability shall analyze whether adequate additional
5funding has been provided for the new benefit increase and
6shall report its analysis to the Public Pension Division of the
7Department of Financial and Professional Regulation. A new
8benefit increase created by a Public Act that does not include
9the additional funding required under this subsection is null
10and void. If the Public Pension Division determines that the
11additional funding provided for a new benefit increase under
12this subsection is or has become inadequate, it may so certify
13to the Governor and the State Comptroller and, in the absence
14of corrective action by the General Assembly, the new benefit
15increase shall expire at the end of the fiscal year in which
16the certification is made.
17 (d) Every new benefit increase shall expire 5 years after
18its effective date or on such earlier date as may be specified
19in the language enacting the new benefit increase or provided
20under subsection (c). This does not prevent the General
21Assembly from extending or re-creating a new benefit increase
22by law.
23 (e) Except as otherwise provided in the language creating
24the new benefit increase, a new benefit increase that expires
25under this Section continues to apply to persons who applied
26and qualified for the affected benefit while the new benefit

HB2903- 63 -LRB100 07135 RPS 17190 b
1increase was in effect and to the affected beneficiaries and
2alternate payees of such persons, but does not apply to any
3other person, including without limitation a person who
4continues in service after the expiration date and did not
5apply and qualify for the affected benefit while the new
6benefit increase was in effect.
7(Source: P.A. 94-4, eff. 6-1-05.)
8 (40 ILCS 5/15-200.5 new)
9 Sec. 15-200.5. Tier 3 plan.
10 (a) By July 1, 2018, the System shall prepare and implement
11a Tier 3 plan. The Tier 3 plan developed under this Section
12shall be a plan that aggregates employee contributions and
13employer contributions, if the employer elects to contribute,
14in individual participant accounts which, after meeting any
15other requirements, are used for payouts after retirement in
16accordance with this Section and any other applicable laws.
17 (a-5) As used in this Section, "defined benefit plan" means
18the traditional benefit package or the portable benefit package
19available under this Article to Tier 1 or Tier 2 members who
20have not made the election authorized under this Section and do
21not participate in the self-managed plan under Section
2215-158.2.
23 (b) Under the Tier 3 plan, an active Tier 1 or Tier 2
24member of this System may elect, in writing, to cease accruing
25benefits in the defined benefit plan and begin accruing

HB2903- 64 -LRB100 07135 RPS 17190 b
1benefits for future service in the Tier 3 plan. An active Tier
21 or Tier 2 member who elects to cease accruing benefits in his
3or her defined benefit plan shall be prohibited from purchasing
4service credit on or after the date of his or her election. A
5Tier 1 or Tier 2 member who elects to participate in the Tier 3
6plan shall not receive interest accruals to his or her Rule 2
7benefit on or after the date of his or her election. The
8election to participate in the Tier 3 plan is voluntary and
9irrevocable.
10 (1) Service credit under the Tier 3 plan may be used
11 for determining retirement eligibility under the defined
12 benefit plan.
13 (2) The System shall make a good faith effort to
14 contact all active Tier 1 and Tier 2 members who are
15 eligible to participate in the Tier 3 plan. The System
16 shall mail information describing the option to join the
17 Tier 3 plan to each of these employees to his or her last
18 known address on file with the System. If the employee is
19 not responsive to other means of contact, it is sufficient
20 for the System to publish the details of the option on its
21 website.
22 (3) Upon request for further information describing
23 the option, the System shall provide employees with
24 information from the System before exercising the option to
25 join the plan, including information on the impact to their
26 benefits and service. The individual consultation shall

HB2903- 65 -LRB100 07135 RPS 17190 b
1 include projections of the member's defined benefits at
2 retirement or earlier termination of service and the value
3 of the member's account at retirement or earlier
4 termination of service. The System shall not provide advice
5 or counseling with respect to whether the employee should
6 exercise the option. The System shall inform Tier 1 and
7 Tier 2 members who are eligible to participate in the Tier
8 3 plan that they may also wish to obtain information and
9 counsel relating to their option from any other available
10 source, including but not limited to labor organizations,
11 private counsel, and financial advisors.
12 (c) The Tier 3 plan developed and implemented by the System
13shall comply with the following requirements:
14 (1) A participant in the Tier 3 plan shall pay employee
15 contributions at a rate determined by the participant, but
16 not less than 3% of earnings and not more than a percentage
17 of earnings determined by the Board in accordance with the
18 requirements of State and federal law.
19 (2) An employer is not required to make employer
20 contributions to the Tier 3 plan, but if the employer
21 elects to contribute, then those contributions shall be
22 paid into the individual account of each participant in the
23 Tier 3 plan that is employed by the employer at a rate,
24 expressed as a percentage of earnings, equal to the rate of
25 the individual employee's contributions.
26 (3) The Tier 3 plan shall require 5 years of

HB2903- 66 -LRB100 07135 RPS 17190 b
1 participation in the Tier 3 plan before vesting in employer
2 contributions. If the participant fails to vest in them,
3 the employer contributions, and the earnings thereon,
4 shall be forfeited.
5 (5) The Tier 3 plan shall provide a variety of options
6 for investments. These options shall include investments
7 in a fund created by the System and managed in accordance
8 with legal and fiduciary standards, as well as investment
9 options otherwise available.
10 (6) The Tier 3 plan shall provide a variety of options
11 for payouts to participants in the Tier 3 plan who are no
12 longer active in the System and their survivors.
13 (7) To the extent authorized under federal law and as
14 authorized by the System, the plan shall allow former
15 participants in the plan to transfer or roll over employee
16 and vested State contributions, and the earnings thereon,
17 from the Tier 3 plan into other qualified retirement plans.
18 (8) The System shall reduce the employee contributions
19 credited to the member's Tier 3 plan account by an amount
20 determined by the System to cover the cost of offering
21 these benefits and any applicable administrative fees.
22 (b-5) A Tier 1 or Tier 2 member who elects to participate
23in the Tier 3 plan may irrevocably elect to terminate all
24participation in the defined benefit plan. Upon that election,
25the System shall transfer to the member's individual account an
26amount equal to the amount of contribution refund that the

HB2903- 67 -LRB100 07135 RPS 17190 b
1member would be eligible to receive if the member terminated
2employment on that date and elected a refund of contributions,
3including regular interest for the respective years. The System
4shall make the transfer as a tax free transfer in accordance
5with Internal Revenue Service guidelines, for purposes of
6funding the amount credited to the member's individual account.
7 (c) In no event shall the System, its staff, its authorized
8representatives, or the Board be liable for any information
9given to an employee under this Section. The System may
10coordinate with the Illinois Department of Central Management
11Services and other retirement systems administering a Tier 3
12plan in accordance with this amendatory Act of the 100th
13General Assembly to provide information concerning the impact
14of the Tier 3 plan set forth in this Section.
15 (d) Notwithstanding any other provision of this Section, no
16person shall begin participating in the Tier 3 plan until it
17has attained qualified plan status and received all necessary
18approvals from the U.S. Internal Revenue Service.
19 (e) The System shall report on its progress under this
20Section, including the available details of the Tier 3 plan and
21the System's plans for informing eligible Tier 1 and Tier 2
22members about the plan, to the Governor and the General
23Assembly on or before January 15, 2018.
24 (40 ILCS 5/16-106.40 new)
25 Sec. 16-106.40. Tier 1 member. "Tier 1 member": A member

HB2903- 68 -LRB100 07135 RPS 17190 b
1under this Article who first became a member or participant
2before January 1, 2011 under any reciprocal retirement system
3or pension fund established under this Code other than a
4retirement system or pension fund established under Article 2,
53, 4, 5, 6, or 18 of this Code.
6 In the case of a Tier 1 member who elects to participate in
7the Tier 3 plan under Section 16-205.5 of this Code or the Tier
84 plan under Section 16-205.6 of this Code, that Tier 1 member
9shall be deemed a Tier 1 member only with respect to service
10performed or established before the effective date of that
11election.
12 (40 ILCS 5/16-106.41 new)
13 Sec. 16-106.41. Tier 2 member. "Tier 2 member": A member of
14the System who first becomes a member under this Article on or
15after January 1, 2011 and who is not a Tier 1 member.
16 In the case of a Tier 2 member who elects to participate in
17the Tier 3 plan under Section 16-205.5 of this Code or the Tier
184 plan under Section 16-205.6 of this Code, the Tier 2 member
19shall be deemed a Tier 2 member only with respect to service
20performed or established before the effective date of that
21election.
22 (40 ILCS 5/16-106.42 new)
23 Sec. 16-106.42. Tier 3 member. "Tier 3 member": A Tier 1 or
24Tier 2 member who elects to participate in the Tier 3 plan

HB2903- 69 -LRB100 07135 RPS 17190 b
1under Section 16-205.5 of this Code, but only with respect to
2service performed on or after the effective date of that
3election.
4 (40 ILCS 5/16-106.43 new)
5 Sec. 16-106.43. Tier 4 member. "Tier 4 member": A Tier 1 or
6Tier 2 member who elects to participate in the Tier 4 plan
7under Section 16-205.6 of this Code, but only with respect to
8service performed on or after the effective date of that
9election.
10 (40 ILCS 5/16-190) (from Ch. 108 1/2, par. 16-190)
11 Sec. 16-190. Annuities, etc., - exempt. The right of a
12person to a retirement annuity or other benefit, to the return
13of contributions, the retirement annuity or other benefit
14itself, any optional benefit, any other right accrued or
15accruing to any person under the provisions of this Article,
16and the moneys in the fund created by this Article, shall be
17subject neither to attachment, garnishment, execution, or
18other seizure by process, nor to sale, pledge, mortgage or
19other alienation, and shall not be assignable except as in this
20Article provided. However, a person may relinquish his or her
21creditable service under this Article and all rights arising
22from his or her service under this Article in accordance with
23Section 16-190.5. A person receiving an annuity or benefit may
24authorize withholding from such annuity or benefit for the

HB2903- 70 -LRB100 07135 RPS 17190 b
1purposes enumerated in the "State Salary and Annuity
2Withholding Act", approved August 21, 1961, as now or hereafter
3amended. The moneys in the fund are exempt from any state or
4municipal tax.
5(Source: P.A. 83-1440.)
6 (40 ILCS 5/16-190.5 new)
7 Sec. 16-190.5. Pension buyout option.
8 (a) As used in this Section:
9 "Approved vendor" means a vendor that has entered into
10 a contract with the Department of Central Management
11 Services to provide lump sum payments under this Section.
12 "Eligible person" means a person who (i) has accrued
13 sufficient service credit to be eligible to receive a
14 retirement annuity under this Article; (ii) has not
15 received a retirement annuity under this Article; (iii) has
16 terminated service; (iv) is not subject to a QILDRO under
17 this Article; (v) is not a participant in the Tier 3 plan
18 or Tier 4 plan; and (vi) has received at least the minimum
19 amount of certified financial planning services, in
20 accordance with rules adopted by the Department of Central
21 Management Services, provided by the approved vendor.
22 "Pension buyout option" means a plan that authorizes an
23 eligible person to relinquish all service credit, rights,
24 and benefits under this Article (and this Code to the
25 extent that the provisions of this Code relate to benefits

HB2903- 71 -LRB100 07135 RPS 17190 b
1 under this Article), including, but not limited to, a
2 survivor's annuity, a retirement annuity, and a refund of
3 contributions, in exchange for a lump sum payment equal to
4 the present value of the retirement annuity as calculated
5 by the System using the actuarial tables and other
6 assumptions adopted by the Board.
7 "Standardized form contract" means the contract
8 approved by the System in accordance with subsection (c).
9 (b) In the event that the Department of Central Management
10Services enters into a contract with an approved vendor and
11implements a pension buyout option:
12 (1) An eligible person may make the election authorized
13 under this Section at any time after he or she has elected
14 to retire and has terminated service. However, a person who
15 has elected to proceed under the Retirement Systems
16 Reciprocal Act is not eligible to elect the pension buyout
17 option under this Section.
18 (2) An eligible person who wishes to participate in the
19 pension buyout option may request that the System determine
20 the dollar amount that the eligible person would receive
21 under the pension buyout option.
22 (3) After the System determines the dollar amount that
23 the eligible person would receive under the pension buyout
24 option, an eligible person who wishes to participate in the
25 pension buyout option shall do so by (i) notifying the
26 approved vendor and the System and (ii) executing the

HB2903- 72 -LRB100 07135 RPS 17190 b
1 standardized form contract with the approved vendor. As
2 soon as practical after the execution of the standardized
3 form contract, the approved vendor shall notify the System
4 that the eligible person executed the standardized form
5 contract. The System shall adopt rules concerning the
6 notice requirements.
7 (4) On the first day of the month following the
8 execution of the standardized form contract between the
9 approved vendor and the eligible person, the eligible
10 person shall have no rights or benefits under this Article
11 and this Code (to the extent that the provisions of this
12 Code relate to the eligible person's rights under this
13 Article) and shall be deemed to have no service credit
14 established under this Article. However, an eligible
15 person who receives a pension buyout payment under this
16 Section shall be deemed to be an annuitant for the purposes
17 of the State Employees Group Insurance Act of 1971 and
18 shall be entitled to any benefits under the State Employees
19 Group Insurance Act of 1971 that he or she would have
20 otherwise been entitled to.
21 (c) The System shall approve a standardized form contract.
22The System may by rule specify provisions that must be included
23in the standardized form contract.
24 (d) Any reduction in the System's liability arising from
25the pension buyout option shall not be included in the
26calculation or certification of required State contributions

HB2903- 73 -LRB100 07135 RPS 17190 b
1sooner than the next certification following the exercise of
2the pension buyout option. The calculation of required State
3contributions under this Article shall not include any
4reduction in the System's liability due to any anticipated
5pension buyout under this Section that has not yet been made.
6 (e) In accordance with rules adopted by the Department of
7Central Management Services, the Board shall certify to the
8Department of Central Management Services the amount of lump
9sum payments made under this Section by an approved vendor.
10 (f) The Board shall adopt rules necessary to implement this
11Section.
12 (g) No provision of this Section shall be interpreted in a
13way that would cause the System to cease to be a qualified plan
14under the Internal Revenue Code of 1986.
15 (40 ILCS 5/16-203)
16 (Text of Section WITHOUT the changes made by P.A. 98-599,
17which has been held unconstitutional)
18 Sec. 16-203. Application and expiration of new benefit
19increases.
20 (a) As used in this Section, "new benefit increase" means
21an increase in the amount of any benefit provided under this
22Article, or an expansion of the conditions of eligibility for
23any benefit under this Article, that results from an amendment
24to this Code that takes effect after June 1, 2005 (the
25effective date of Public Act 94-4). "New benefit increase",

HB2903- 74 -LRB100 07135 RPS 17190 b
1however, does not include any benefit increase resulting from
2the changes made to this Article by Public Act 95-910 or this
3amendatory Act of the 100th General Assembly this amendatory
4Act of the 95th General Assembly.
5 (b) Notwithstanding any other provision of this Code or any
6subsequent amendment to this Code, every new benefit increase
7is subject to this Section and shall be deemed to be granted
8only in conformance with and contingent upon compliance with
9the provisions of this Section.
10 (c) The Public Act enacting a new benefit increase must
11identify and provide for payment to the System of additional
12funding at least sufficient to fund the resulting annual
13increase in cost to the System as it accrues.
14 Every new benefit increase is contingent upon the General
15Assembly providing the additional funding required under this
16subsection. The Commission on Government Forecasting and
17Accountability shall analyze whether adequate additional
18funding has been provided for the new benefit increase and
19shall report its analysis to the Public Pension Division of the
20Department of Financial and Professional Regulation. A new
21benefit increase created by a Public Act that does not include
22the additional funding required under this subsection is null
23and void. If the Public Pension Division determines that the
24additional funding provided for a new benefit increase under
25this subsection is or has become inadequate, it may so certify
26to the Governor and the State Comptroller and, in the absence

HB2903- 75 -LRB100 07135 RPS 17190 b
1of corrective action by the General Assembly, the new benefit
2increase shall expire at the end of the fiscal year in which
3the certification is made.
4 (d) Every new benefit increase shall expire 5 years after
5its effective date or on such earlier date as may be specified
6in the language enacting the new benefit increase or provided
7under subsection (c). This does not prevent the General
8Assembly from extending or re-creating a new benefit increase
9by law.
10 (e) Except as otherwise provided in the language creating
11the new benefit increase, a new benefit increase that expires
12under this Section continues to apply to persons who applied
13and qualified for the affected benefit while the new benefit
14increase was in effect and to the affected beneficiaries and
15alternate payees of such persons, but does not apply to any
16other person, including without limitation a person who
17continues in service after the expiration date and did not
18apply and qualify for the affected benefit while the new
19benefit increase was in effect.
20(Source: P.A. 94-4, eff. 6-1-05; 95-910, eff. 8-26-08.)
21 (40 ILCS 5/16-205.5 new)
22 Sec. 16-205.5. Tier 3 plan.
23 (a) By July 1, 2018, the System shall prepare and implement
24a Tier 3 plan. The Tier 3 plan developed under this Section
25shall be a plan that aggregates employee contributions and

HB2903- 76 -LRB100 07135 RPS 17190 b
1employer contributions, if the employer elects to contribute,
2in individual participant accounts which, after meeting any
3other requirements, are used for payouts after retirement in
4accordance with this Section and any other applicable laws.
5 (a-5) As used in this Section, "defined benefit plan" means
6the retirement plan available under this Article to Tier 1 or
7Tier 2 members who have not made the election authorized under
8this Section or Section 16-205.6.
9 (b) Under the Tier 3 plan, an active Tier 1 or Tier 2
10member of this System may elect, in writing, to cease accruing
11benefits in the defined benefit plan and begin accruing
12benefits for future service in the Tier 3 plan. An active Tier
131 or Tier 2 member who elects to cease accruing benefits in his
14or her defined benefit plan shall be prohibited from purchasing
15service credit on or after the date of his or her election. A
16Tier 1 or Tier 2 member making the irrevocable election
17provided under this subsection shall not receive interest
18accruals to his or her benefit under paragraph (A) of
19subsection (a) of Section 16-133 of this Code on or after the
20date of his or her election. The election to participate in the
21Tier 3 plan is voluntary and irrevocable.
22 (1) Service credit under the Tier 3 plan may be used
23 for determining retirement eligibility under the defined
24 benefit plan.
25 (2) The System shall make a good faith effort to
26 contact all active Tier 1 and Tier 2 members who are

HB2903- 77 -LRB100 07135 RPS 17190 b
1 eligible to participate in the Tier 3 plan. The System
2 shall mail information describing the option to join the
3 Tier 3 plan to each of these employees to his or her last
4 known address on file with the System. If the employee is
5 not responsive to other means of contact, it is sufficient
6 for the System to publish the details of the option on its
7 website.
8 (3) Upon request for further information describing
9 the option, the System shall provide employees with
10 information from the System before exercising the option to
11 join the plan, including information on the impact to their
12 benefits and service. The individual consultation shall
13 include projections of the member's defined benefits at
14 retirement or earlier termination of service and the value
15 of the member's account at retirement or earlier
16 termination of service. The System shall not provide advice
17 or counseling with respect to whether the employee should
18 exercise the option. The System shall inform Tier 1 and
19 Tier 2 members who are eligible to participate in the Tier
20 3 plan that they may also wish to obtain information and
21 counsel relating to their option from any other available
22 source, including but not limited to labor organizations,
23 private counsel, and financial advisors.
24 (c) The Tier 3 plan developed and implemented by the System
25shall comply with the following requirements:
26 (1) A participant in the Tier 3 plan shall pay employee

HB2903- 78 -LRB100 07135 RPS 17190 b
1 contributions at a rate determined by the participant, but
2 not less than 3% of salary and not more than a percentage
3 of salary determined by the Board in accordance with the
4 requirements of State and federal law.
5 (2) An employer is not required to make employer
6 contributions to the Tier 3 plan, but if the employer
7 elects to contribute, then those contributions shall be
8 paid into the individual account of each participant in the
9 Tier 3 plan that is employed by the employer at a rate,
10 expressed as a percentage of salary, equal to the rate of
11 the individual employee's contributions.
12 (3) The Tier 3 plan shall require 5 years of
13 participation in the Tier 3 plan before vesting in employer
14 contributions. If the participant fails to vest in them,
15 the employer contributions, and the earnings thereon,
16 shall be forfeited.
17 (4) The Tier 3 plan shall provide a variety of options
18 for investments. These options shall include investments
19 in a fund created by the System and managed in accordance
20 with legal and fiduciary standards, as well as investment
21 options otherwise available.
22 (5) The Tier 3 plan shall provide a variety of options
23 for payouts to participants in the Tier 3 plan who are no
24 longer active in the System and their survivors.
25 (6) To the extent authorized under federal law and as
26 authorized by the System, the plan shall allow former

HB2903- 79 -LRB100 07135 RPS 17190 b
1 participants in the plan to transfer or roll over employee
2 and vested State contributions, and the earnings thereon,
3 from the Tier 3 plan into other qualified retirement plans.
4 (7) The System shall reduce the employee contributions
5 credited to the member's Tier 3 plan account by an amount
6 determined by the System to cover the cost of offering
7 these benefits and any applicable administrative fees.
8 (b-5) A Tier 1 or Tier 2 member who elects to participate
9in the Tier 3 plan may irrevocably elect to terminate all
10participation in the defined benefit plan. Upon that election,
11the System shall transfer to the member's individual account an
12amount equal to the amount of contribution refund that the
13member would be eligible to receive if the member terminated
14employment on that date and elected a refund of contributions,
15including regular interest for the respective years. The System
16shall make the transfer as a tax free transfer in accordance
17with Internal Revenue Service guidelines, for purposes of
18funding the amount credited to the member's individual account.
19 (c) In no event shall the System, its staff, its authorized
20representatives, or the Board be liable for any information
21given to an employee under this Section. The System may
22coordinate with the Illinois Department of Central Management
23Services and other retirement systems administering a Tier 3
24plan in accordance with this amendatory Act of the 100th
25General Assembly to provide information concerning the impact
26of the Tier 3 plan set forth in this Section.

HB2903- 80 -LRB100 07135 RPS 17190 b
1 (d) Notwithstanding any other provision of this Section, no
2person shall begin participating in the Tier 3 plan until it
3has attained qualified plan status and received all necessary
4approvals from the U.S. Internal Revenue Service.
5 (e) The System shall report on its progress under this
6Section, including the available details of the Tier 3 plan and
7the System's plans for informing eligible Tier 1 and Tier 2
8members about the plan, to the Governor and the General
9Assembly on or before January 15, 2018.
10 (40 ILCS 5/16-205.6 new)
11 Sec. 16-205.6. Tier 4 plan.
12 (a) By July 1, 2018, the System shall prepare and implement
13a Tier 4 plan. The Tier 4 plan developed under this Section
14shall be a plan that aggregates employee and State
15contributions in individual participant accounts which, after
16meeting any other requirements, are used for payouts after
17retirement in accordance with this Section and any other
18applicable laws.
19 (a-5) As used in this Section, "defined benefit plan" means
20the retirement plan available under this Article to Tier 1 or
21Tier 2 members who have not made the election authorized under
22this Section or Section 16-205.5.
23 (b) Under the Tier 4 plan, an active Tier 1 or Tier 2
24member of this System may elect, in writing, to cease accruing
25benefits in the defined benefit plan and begin accruing

HB2903- 81 -LRB100 07135 RPS 17190 b
1benefits for future service in the Tier 4 plan. An active Tier
21 or Tier 2 member who elects to cease accruing benefits in his
3or her defined benefit plan shall be prohibited from purchasing
4service credit on or after the date of his or her election. A
5Tier 1 or Tier 2 member making the irrevocable election
6provided under this subsection shall not receive interest
7accruals to his or her benefit under paragraph (A) of
8subsection (a) of Section 16-133 of this Code on or after the
9date of his or her election. The election to participate in the
10Tier 4 plan is voluntary and irrevocable.
11 (1) Service credit under the Tier 4 plan may be used
12 for determining retirement eligibility under the defined
13 benefit plan.
14 (2) The System shall make a good faith effort to
15 contact all active Tier 1 and Tier 2 members who are
16 eligible to participate in the Tier 4 plan. The System
17 shall mail information describing the option to join the
18 Tier 4 plan to each of these employees to his or her last
19 known address on file with the System. If the employee is
20 not responsive to other means of contact, it is sufficient
21 for the System to publish the details of the option on its
22 website.
23 (3) Upon request for further information describing
24 the option, the System shall provide employees with
25 information from the System before exercising the option to
26 join the plan, including information on the impact to their

HB2903- 82 -LRB100 07135 RPS 17190 b
1 benefits and service. The individual consultation shall
2 include projections of the member's defined benefits at
3 retirement or earlier termination of service and the value
4 of the member's account at retirement or earlier
5 termination of service. The System shall not provide advice
6 or counseling with respect to whether the employee should
7 exercise the option. The System shall inform Tier 1 and
8 Tier 2 members who are eligible to participate in the Tier
9 4 plan that they may also wish to obtain information and
10 counsel relating to their option from any other available
11 source, including but not limited to labor organizations,
12 private counsel, and financial advisors.
13 (c) The Tier 4 plan developed and implemented by the System
14shall comply with the following requirements:
15 (1) A participant in the Tier 4 plan shall pay employee
16 contributions at a rate of 8% of salary.
17 (2) State contributions shall be paid into the accounts
18 of all participants in the Tier 4 plan at a rate of 8% of
19 salary.
20 (3) The Tier 4 plan shall require 5 years of
21 participation in the Tier 4 plan before vesting in State
22 contributions. If the participant fails to vest in them,
23 the State contributions, and the earnings thereon, shall be
24 forfeited.
25 (4) The Tier 4 plan shall provide for participants in
26 the plan to be eligible for the defined disability benefits

HB2903- 83 -LRB100 07135 RPS 17190 b
1 available to other participants under this Article. The
2 System shall reduce the State contributions credited to the
3 member's Tier 4 plan account by an amount determined by the
4 System to cover the cost of offering such benefits.
5 (5) The Tier 4 plan shall provide a variety of options
6 for investments. These options shall include investments
7 in a fund created by the System and managed in accordance
8 with legal and fiduciary standards, as well as investment
9 options otherwise available.
10 (6) The Tier 4 plan shall provide a variety of options
11 for payouts to participants in the Tier 4 plan who are no
12 longer active in the System and their survivors.
13 (7) To the extent authorized under federal law and as
14 authorized by the System, the plan shall allow former
15 participants in the plan to transfer or roll over employee
16 and vested State contributions, and the earnings thereon,
17 from the Tier 4 plan into other qualified retirement plans.
18 (8) The System shall reduce the employee contributions
19 credited to the member's Tier 4 plan account by an amount,
20 not exceeding 1% of the member's salary, determined by the
21 System to cover the cost of offering these benefits and any
22 applicable administrative fees.
23 (b-5) A Tier 1 or Tier 2 member who elects to participate
24in the Tier 4 plan may irrevocably elect to terminate all
25participation in the defined benefit plan. Upon that election,
26the System shall transfer to the member's individual account an

HB2903- 84 -LRB100 07135 RPS 17190 b
1amount equal to the amount of contribution refund that the
2member would be eligible to receive if the member terminated
3employment on that date and elected a refund of contributions,
4including regular interest for the respective years. The System
5shall make the transfer as a tax free transfer in accordance
6with Internal Revenue Service guidelines, for purposes of
7funding the amount credited to the member's individual account.
8 (c) In no event shall the System, its staff, its authorized
9representatives, or the Board be liable for any information
10given to an employee under this Section. The System may
11coordinate with the Illinois Department of Central Management
12Services and other retirement systems administering a Tier 4
13plan in accordance with this amendatory Act of the 100th
14General Assembly to provide information concerning the impact
15of the Tier 4 plan set forth in this Section.
16 (d) Notwithstanding any other provision of this Section, no
17person shall begin participating in the Tier 4 plan until it
18has attained qualified plan status and received all necessary
19approvals from the U.S. Internal Revenue Service.
20 (e) The System shall report on its progress under this
21Section, including the available details of the Tier 4 plan and
22the System's plans for informing eligible Tier 1 and Tier 2
23members about the plan, to the Governor and the General
24Assembly on or before January 15, 2018.
25 (40 ILCS 5/20-121) (from Ch. 108 1/2, par. 20-121)

HB2903- 85 -LRB100 07135 RPS 17190 b
1 (Text of Section WITHOUT the changes made by P.A. 98-599,
2which has been held unconstitutional)
3 Sec. 20-121. Calculation of proportional retirement
4annuities.
5 (a) Upon retirement of the employee, a proportional
6retirement annuity shall be computed by each participating
7system in which pension credit has been established on the
8basis of pension credits under each system. The computation
9shall be in accordance with the formula or method prescribed by
10each participating system which is in effect at the date of the
11employee's latest withdrawal from service covered by any of the
12systems in which he has pension credits which he elects to have
13considered under this Article. However, the amount of any
14retirement annuity payable under the self-managed plan
15established under Section 15-158.2 of this Code depends solely
16on the value of the participant's vested account balances and
17is not subject to any proportional adjustment under this
18Section.
19 (a-5) For persons who participate in a Tier 3 plan
20established under Article 15 or 16 of this Code to whom the
21provisions of this Article apply, the pension credits
22established under the Tier 3 plan may be considered in
23determining eligibility for or the amount of the defined
24benefit retirement annuity that is payable by any other
25participating system.
26 (a-10) For persons who participate in a Tier 4 plan

HB2903- 86 -LRB100 07135 RPS 17190 b
1established under Article 16 of this Code to whom the
2provisions of this Article apply, the pension credits
3established under the Tier 4 plan may be considered in
4determining eligibility for or the amount of the defined
5benefit retirement annuity that is payable by any other
6participating system.
7 (b) Combined pension credit under all retirement systems
8subject to this Article shall be considered in determining
9whether the minimum qualification has been met and the formula
10or method of computation which shall be applied, except as may
11be otherwise provided with respect to vesting in State or
12employer contributions in a Tier 3 or Tier 4 plan. If a system
13has a step-rate formula for calculation of the retirement
14annuity, pension credits covering previous service which have
15been established under another system shall be considered in
16determining which range or ranges of the step-rate formula are
17to be applicable to the employee.
18 (c) Interest on pension credit shall continue to accumulate
19in accordance with the provisions of the law governing the
20retirement system in which the same has been established during
21the time an employee is in the service of another employer, on
22the assumption such employee, for interest purposes for pension
23credit, is continuing in the service covered by such retirement
24system.
25(Source: P.A. 91-887, eff. 7-6-00.)

HB2903- 87 -LRB100 07135 RPS 17190 b
1 (40 ILCS 5/20-123) (from Ch. 108 1/2, par. 20-123)
2 (Text of Section WITHOUT the changes made by P.A. 98-599,
3which has been held unconstitutional)
4 Sec. 20-123. Survivor's annuity. The provisions governing
5a retirement annuity shall be applicable to a survivor's
6annuity. Appropriate credits shall be established for
7survivor's annuity purposes in those participating systems
8which provide survivor's annuities, according to the same
9conditions and subject to the same limitations and restrictions
10herein prescribed for a retirement annuity. If a participating
11system has no survivor's annuity benefit, or if the survivor's
12annuity benefit under that system is waived, pension credit
13established in that system shall not be considered in
14determining eligibility for or the amount of the survivor's
15annuity which may be payable by any other participating system.
16 For persons who participate in the self-managed plan
17established under Section 15-158.2 or the portable benefit
18package established under Section 15-136.4, pension credit
19established under Article 15 may be considered in determining
20eligibility for or the amount of the survivor's annuity that is
21payable by any other participating system, but pension credit
22established in any other system shall not result in any right
23to a survivor's annuity under the Article 15 system.
24 For persons who participate in a Tier 3 plan established
25under Article 15 or 16 of this Code to whom the provisions of
26this Article apply, the pension credits established under the

HB2903- 88 -LRB100 07135 RPS 17190 b
1Tier 3 plan may be considered in determining eligibility for or
2the amount of the defined benefit survivor's annuity that is
3payable by any other participating system, but pension credits
4established in any other system shall not result in any right
5to or increase in the value of a survivor's annuity under the
6Tier 3 plan, which depends solely on the options chosen and the
7value of the participant's vested account balances and is not
8subject to any proportional adjustment under this Section.
9 For persons who participate in a Tier 4 plan established
10under Article 16 of this Code to whom the provisions of this
11Article apply, the pension credits established under the Tier 4
12plan may be considered in determining eligibility for or the
13amount of the defined benefit survivor's annuity that is
14payable by any other participating system, but pension credits
15established in any other system shall not result in any right
16to or increase in the value of a survivor's annuity under the
17Tier 4 plan, which depends solely on the options chosen and the
18value of the participant's vested account balances and is not
19subject to any proportional adjustment under this Section.
20(Source: P.A. 91-887, eff. 7-6-00.)
21 (40 ILCS 5/20-124) (from Ch. 108 1/2, par. 20-124)
22 (Text of Section WITHOUT the changes made by P.A. 98-599,
23which has been held unconstitutional)
24 Sec. 20-124. Maximum benefits.
25 (a) In no event shall the combined retirement or survivors

HB2903- 89 -LRB100 07135 RPS 17190 b
1annuities exceed the highest annuity which would have been
2payable by any participating system in which the employee has
3pension credits, if all of his pension credits had been
4validated in that system.
5 If the combined annuities should exceed the highest maximum
6as determined in accordance with this Section, the respective
7annuities shall be reduced proportionately according to the
8ratio which the amount of each proportional annuity bears to
9the aggregate of all such annuities.
10 (b) In the case of a participant in the self-managed plan
11established under Section 15-158.2 of this Code to whom the
12provisions of this Article apply:
13 (i) For purposes of calculating the combined
14 retirement annuity and the proportionate reduction, if
15 any, in a retirement annuity other than one payable under
16 the self-managed plan, the amount of the Article 15
17 retirement annuity shall be deemed to be the highest
18 annuity to which the annuitant would have been entitled if
19 he or she had participated in the traditional benefit
20 package as defined in Section 15-103.1 rather than the
21 self-managed plan.
22 (ii) For purposes of calculating the combined
23 survivor's annuity and the proportionate reduction, if
24 any, in a survivor's annuity other than one payable under
25 the self-managed plan, the amount of the Article 15
26 survivor's annuity shall be deemed to be the highest

HB2903- 90 -LRB100 07135 RPS 17190 b
1 survivor's annuity to which the survivor would have been
2 entitled if the deceased employee had participated in the
3 traditional benefit package as defined in Section 15-103.1
4 rather than the self-managed plan.
5 (iii) Benefits payable under the self-managed plan are
6 not subject to proportionate reduction under this Section.
7 (c) In the case of a participant in a Tier 3 plan
8established under Article 15 or 16 of this Code to whom the
9provisions of this Article apply:
10 (i) For purposes of calculating the combined
11 retirement annuity and the proportionate reduction, if
12 any, in a defined benefit retirement annuity, any benefit
13 payable under the Tier 3 plan shall not be considered.
14 (ii) For purposes of calculating the combined
15 survivor's annuity and the proportionate reduction, if
16 any, in a defined benefit survivor's annuity, any benefit
17 payable under the Tier 3 plan shall not be considered.
18 (iii) Benefits payable under a Tier 3 plan established
19 under Article 15 or 16 of this Code are not subject to
20 proportionate reduction under this Section.
21 (d) In the case of a participant in a Tier 4 plan
22established under Article 16 of this Code to whom the
23provisions of this Article apply:
24 (i) For purposes of calculating the combined
25 retirement annuity and the proportionate reduction, if
26 any, in a defined benefit retirement annuity, any benefit

HB2903- 91 -LRB100 07135 RPS 17190 b
1 payable under the Tier 4 plan shall not be considered.
2 (ii) For purposes of calculating the combined
3 survivor's annuity and the proportionate reduction, if
4 any, in a defined benefit survivor's annuity, any benefit
5 payable under the Tier 4 plan shall not be considered.
6 (iii) Benefits payable under a Tier 4 plan established
7 under Article 16 of this Code are not subject to
8 proportionate reduction under this Section.
9(Source: P.A. 91-887, eff. 7-6-00.)
10 (40 ILCS 5/20-125) (from Ch. 108 1/2, par. 20-125)
11 (Text of Section WITHOUT the changes made by P.A. 98-599,
12which has been held unconstitutional)
13 Sec. 20-125. Return to employment - suspension of benefits.
14If a retired employee returns to employment which is covered by
15a system from which he is receiving a proportional annuity
16under this Article, his proportional annuity from all
17participating systems shall be suspended during the period of
18re-employment, except that this suspension does not apply to
19any distributions payable under the self-managed plan
20established under Section 15-158.2 of this Code, under a Tier 3
21plan established under Article 15 or 16 of this Code, or under
22a Tier 4 plan established under Article 16 of this Code.
23 The provisions of the Article under which such employment
24would be covered shall govern the determination of whether the
25employee has returned to employment, and if applicable the

HB2903- 92 -LRB100 07135 RPS 17190 b
1exemption of temporary employment or employment not exceeding a
2specified duration or frequency, for all participating systems
3from which the retired employee is receiving a proportional
4annuity under this Article, notwithstanding any contrary
5provisions in the other Articles governing such systems.
6(Source: P.A. 91-887, eff. 7-6-00.)
7 Section 990. The State Mandates Act is amended by adding
8Section 8.41 as follows:
9 (30 ILCS 805/8.41 new)
10 Sec. 8.41. Exempt mandate. Notwithstanding Sections 6 and 8
11of this Act, no reimbursement by the State is required for the
12implementation of any mandate created by this amendatory Act of
13the 100th General Assembly.
14 Section 999. Effective date. This Act takes effect upon
15becoming law.

HB2903- 93 -LRB100 07135 RPS 17190 b
1 INDEX
2 Statutes amended in order of appearance
3 New Act
4 5 ILCS 375/3from Ch. 127, par. 523
5 5 ILCS 375/10from Ch. 127, par. 530
6 20 ILCS 405/405-298 new
7 20 ILCS 3501/801-40
8 30 ILCS 500/45-32 new
9 40 ILCS 5/15-108.1
10 40 ILCS 5/15-108.2
11 40 ILCS 5/15-108.3 new
12 40 ILCS 5/15-185from Ch. 108 1/2, par. 15-185
13 40 ILCS 5/15-185.5 new
14 40 ILCS 5/15-198
15 40 ILCS 5/15-200.5 new
16 40 ILCS 5/16-106.40 new
17 40 ILCS 5/16-106.41 new
18 40 ILCS 5/16-106.42 new
19 40 ILCS 5/16-106.43 new
20 40 ILCS 5/16-190from Ch. 108 1/2, par. 16-190
21 40 ILCS 5/16-190.5 new
22 40 ILCS 5/16-203
23 40 ILCS 5/16-205.5 new
24 40 ILCS 5/16-205.6 new
25 40 ILCS 5/20-121from Ch. 108 1/2, par. 20-121

HB2903- 94 -LRB100 07135 RPS 17190 b