Bill Text: IL HB4055 | 2017-2018 | 100th General Assembly | Introduced

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Bill Title: Amends the Illinois Pension Code. Restricts participation in the General Assembly Retirement System to persons who became participants before the effective date. Provides separate benefits for persons who, on or after 6 months after the effective date, first become participants or members under Article 15 or 16 or a noncovered participant under Article 14. Requires those retirement systems to establish a defined contribution plan for certain members. For Articles 7, 8, 9, 10, 11, 12, 13, and 17, establishes similar benefits if the governing body of the unit of local government adopts those benefits by resolution or ordinance. Requires the 5 State-funded Retirement Systems to offer certain inactive members the opportunity to elect to receive an accelerated pension benefit payment in lieu of receiving any pension benefit and authorizes the issuance of bonds for those payments. Amends other Acts to make conforming changes. In the 5 State-funded retirement systems and the Chicago Teachers Pension Fund, makes funding changes. In Articles 15 and 16, shifts certain costs to the local employer. Amends the Budget Stabilization Act. Provides for the transfer of certain amounts to the Pension Stabilization Fund. Makes other changes. Effective immediately.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2019-01-08 - Session Sine Die [HB4055 Detail]

Download: Illinois-2017-HB4055-Introduced.html

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100TH GENERAL ASSEMBLY State of Illinois 2017 and 2018 HB4055 Introduced , by Rep. Mark Batinick SYNOPSIS AS INTRODUCED:
See Index
Amends the Illinois Pension Code. Restricts participation in the General Assembly Retirement System to persons who became participants before the effective date. Provides separate benefits for persons who, on or after 6 months after the effective date, first become participants or members under Article 15 or 16 or a noncovered participant under Article 14. Requires those retirement systems to establish a defined contribution plan for certain members. For Articles 7, 8, 9, 10, 11, 12, 13, and 17, establishes similar benefits if the governing body of the unit of local government adopts those benefits by resolution or ordinance. Requires the 5 State-funded Retirement Systems to offer certain inactive members the opportunity to elect to receive an accelerated pension benefit payment in lieu of receiving any pension benefit and authorizes the issuance of bonds for those payments. Amends other Acts to make conforming changes. In the 5 State-funded retirement systems and the Chicago Teachers Pension Fund, makes funding changes. In Articles 15 and 16, shifts certain costs to the local employer. Amends the Budget Stabilization Act. Provides for the transfer of certain amounts to the Pension Stabilization Fund. Makes other changes. Effective immediately.
LRB100 12851 RPS 26572 b
FISCAL NOTE ACT MAY APPLY PENSION IMPACT NOTE ACT MAY APPLY STATE DEBT IMPACT NOTE ACT MAY APPLY
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT MAY APPLY
A BILL FOR
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AN ACT concerning public employee benefits.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The State Employees Group Insurance Act of 1971
is amended by changing Sections 3 and 10 as follows:
(5 ILCS 375/3) (from Ch. 127, par. 523)
Sec. 3. Definitions. Unless the context otherwise
requires, the following words and phrases as used in this Act
shall have the following meanings. The Department may define
these and other words and phrases separately for the purpose of
implementing specific programs providing benefits under this
Act.
(a) "Administrative service organization" means any
person, firm or corporation experienced in the handling of
claims which is fully qualified, financially sound and capable
of meeting the service requirements of a contract of
administration executed with the Department.
(b) "Annuitant" means (1) an employee who retires, or has
retired, on or after January 1, 1966 on an immediate annuity
under the provisions of Articles 2 (including an employee who
meets the criteria for retirement, but in lieu of receiving an
annuity under that Article has elected to receive an
accelerated pension benefit payment under Section 2-154.5 of

HB4055 - 2 - LRB100 12851 RPS 26572 b
that Article), 14 (including an employee who has elected to
receive an alternative retirement cancellation payment under
Section 14-108.5 of the Illinois Pension Code in lieu of an
annuity or who meets the criteria for retirement, but in lieu
of receiving an annuity under that Article has elected to
receive an accelerated pension benefit payment under Section
14-147.5 of that Article), 15 (including an employee who has
retired under the optional retirement program established
under Section 15-158.2 or who meets the criteria for retirement
but in lieu of receiving an annuity under that Article has
elected to receive an accelerated pension benefit payment under
Section 15-185.5 of the Article), paragraphs (2), (3), or (5)
of Section 16-106 (including an employee who meets the criteria
for retirement, but in lieu of receiving an annuity under that
Article has elected to receive an accelerated pension benefit
payment under Section 16-190.5 of the Illinois Pension Code),
or Article 18 (including an employee who meets the criteria for
retirement, but in lieu of receiving an annuity under that
Article, has elected to receive an accelerated pension benefit
payment under Section 18-161.5 of that Article) of the Illinois
Pension Code; (2) any person who was receiving group insurance
coverage under this Act as of March 31, 1978 by reason of his
status as an annuitant, even though the annuity in relation to
which such coverage was provided is a proportional annuity
based on less than the minimum period of service required for a
retirement annuity in the system involved; (3) any person not

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otherwise covered by this Act who has retired as a
participating member under Article 2 of the Illinois Pension
Code but is ineligible for the retirement annuity under Section
2-119 of the Illinois Pension Code; (4) the spouse of any
person who is receiving a retirement annuity under Article 18
of the Illinois Pension Code and who is covered under a group
health insurance program sponsored by a governmental employer
other than the State of Illinois and who has irrevocably
elected to waive his or her coverage under this Act and to have
his or her spouse considered as the "annuitant" under this Act
and not as a "dependent"; or (5) an employee who retires, or
has retired, from a qualified position, as determined according
to rules promulgated by the Director, under a qualified local
government, a qualified rehabilitation facility, a qualified
domestic violence shelter or service, or a qualified child
advocacy center. (For definition of "retired employee", see (p)
post).
(b-5) (Blank).
(b-6) (Blank).
(b-7) (Blank).
(c) "Carrier" means (1) an insurance company, a corporation
organized under the Limited Health Service Organization Act or
the Voluntary Health Services Plan Act, a partnership, or other
nongovernmental organization, which is authorized to do group
life or group health insurance business in Illinois, or (2) the
State of Illinois as a self-insurer.

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(d) "Compensation" means salary or wages payable on a
regular payroll by the State Treasurer on a warrant of the
State Comptroller out of any State, trust or federal fund, or
by the Governor of the State through a disbursing officer of
the State out of a trust or out of federal funds, or by any
Department out of State, trust, federal or other funds held by
the State Treasurer or the Department, to any person for
personal services currently performed, and ordinary or
accidental disability benefits under Articles 2, 14, 15
(including ordinary or accidental disability benefits under
the optional retirement program established under Section
15-158.2), paragraphs (2), (3), or (5) of Section 16-106, or
Article 18 of the Illinois Pension Code, for disability
incurred after January 1, 1966, or benefits payable under the
Workers' Compensation or Occupational Diseases Act or benefits
payable under a sick pay plan established in accordance with
Section 36 of the State Finance Act. "Compensation" also means
salary or wages paid to an employee of any qualified local
government, qualified rehabilitation facility, qualified
domestic violence shelter or service, or qualified child
advocacy center.
(e) "Commission" means the State Employees Group Insurance
Advisory Commission authorized by this Act. Commencing July 1,
1984, "Commission" as used in this Act means the Commission on
Government Forecasting and Accountability as established by
the Legislative Commission Reorganization Act of 1984.

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(f) "Contributory", when referred to as contributory
coverage, shall mean optional coverages or benefits elected by
the member toward the cost of which such member makes
contribution, or which are funded in whole or in part through
the acceptance of a reduction in earnings or the foregoing of
an increase in earnings by an employee, as distinguished from
noncontributory coverage or benefits which are paid entirely by
the State of Illinois without reduction of the member's salary.
(g) "Department" means any department, institution, board,
commission, officer, court or any agency of the State
government receiving appropriations and having power to
certify payrolls to the Comptroller authorizing payments of
salary and wages against such appropriations as are made by the
General Assembly from any State fund, or against trust funds
held by the State Treasurer and includes boards of trustees of
the retirement systems created by Articles 2, 14, 15, 16 and 18
of the Illinois Pension Code. "Department" also includes the
Illinois Comprehensive Health Insurance Board, the Board of
Examiners established under the Illinois Public Accounting
Act, and the Illinois Finance Authority.
(h) "Dependent", when the term is used in the context of
the health and life plan, means a member's spouse and any child
(1) from birth to age 26 including an adopted child, a child
who lives with the member from the time of the filing of a
petition for adoption until entry of an order of adoption, a
stepchild or adjudicated child, or a child who lives with the

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member if such member is a court appointed guardian of the
child or (2) age 19 or over who has a mental or physical
disability from a cause originating prior to the age of 19 (age
26 if enrolled as an adult child dependent). For the health
plan only, the term "dependent" also includes (1) any person
enrolled prior to the effective date of this Section who is
dependent upon the member to the extent that the member may
claim such person as a dependent for income tax deduction
purposes and (2) any person who has received after June 30,
2000 an organ transplant and who is financially dependent upon
the member and eligible to be claimed as a dependent for income
tax purposes. A member requesting to cover any dependent must
provide documentation as requested by the Department of Central
Management Services and file with the Department any and all
forms required by the Department.
(i) "Director" means the Director of the Illinois
Department of Central Management Services.
(j) "Eligibility period" means the period of time a member
has to elect enrollment in programs or to select benefits
without regard to age, sex or health.
(k) "Employee" means and includes each officer or employee
in the service of a department who (1) receives his
compensation for service rendered to the department on a
warrant issued pursuant to a payroll certified by a department
or on a warrant or check issued and drawn by a department upon
a trust, federal or other fund or on a warrant issued pursuant

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to a payroll certified by an elected or duly appointed officer
of the State or who receives payment of the performance of
personal services on a warrant issued pursuant to a payroll
certified by a Department and drawn by the Comptroller upon the
State Treasurer against appropriations made by the General
Assembly from any fund or against trust funds held by the State
Treasurer, and (2) is employed full-time or part-time in a
position normally requiring actual performance of duty during
not less than 1/2 of a normal work period, as established by
the Director in cooperation with each department, except that
persons elected by popular vote will be considered employees
during the entire term for which they are elected regardless of
hours devoted to the service of the State, and (3) except that
"employee" does not include any person who is not eligible by
reason of such person's employment to participate in one of the
State retirement systems under Articles 2, 14, 15 (either the
regular Article 15 system or the optional retirement program
established under Section 15-158.2) or 18, or under paragraph
(2), (3), or (5) of Section 16-106, of the Illinois Pension
Code, but such term does include persons who are employed
during the 6 month qualifying period under Article 14 of the
Illinois Pension Code. Such term also includes any person who
(1) after January 1, 1966, is receiving ordinary or accidental
disability benefits under Articles 2, 14, 15 (including
ordinary or accidental disability benefits under the optional
retirement program established under Section 15-158.2),

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paragraphs (2), (3), or (5) of Section 16-106, or Article 18 of
the Illinois Pension Code, for disability incurred after
January 1, 1966, (2) receives total permanent or total
temporary disability under the Workers' Compensation Act or
Occupational Disease Act as a result of injuries sustained or
illness contracted in the course of employment with the State
of Illinois, or (3) is not otherwise covered under this Act and
has retired as a participating member under Article 2 of the
Illinois Pension Code but is ineligible for the retirement
annuity under Section 2-119 of the Illinois Pension Code.
However, a person who satisfies the criteria of the foregoing
definition of "employee" except that such person is made
ineligible to participate in the State Universities Retirement
System by clause (4) of subsection (a) of Section 15-107 of the
Illinois Pension Code is also an "employee" for the purposes of
this Act. "Employee" also includes any person receiving or
eligible for benefits under a sick pay plan established in
accordance with Section 36 of the State Finance Act. "Employee"
also includes (i) each officer or employee in the service of a
qualified local government, including persons appointed as
trustees of sanitary districts regardless of hours devoted to
the service of the sanitary district, (ii) each employee in the
service of a qualified rehabilitation facility, (iii) each
full-time employee in the service of a qualified domestic
violence shelter or service, and (iv) each full-time employee
in the service of a qualified child advocacy center, as

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determined according to rules promulgated by the Director.
(l) "Member" means an employee, annuitant, retired
employee or survivor. In the case of an annuitant or retired
employee who first becomes an annuitant or retired employee on
or after the effective date of this amendatory Act of the 97th
General Assembly, the individual must meet the minimum vesting
requirements of the applicable retirement system in order to be
eligible for group insurance benefits under that system. In the
case of a survivor who first becomes a survivor on or after the
effective date of this amendatory Act of the 97th General
Assembly, the deceased employee, annuitant, or retired
employee upon whom the annuity is based must have been eligible
to participate in the group insurance system under the
applicable retirement system in order for the survivor to be
eligible for group insurance benefits under that system.
(m) "Optional coverages or benefits" means those coverages
or benefits available to the member on his or her voluntary
election, and at his or her own expense.
(n) "Program" means the group life insurance, health
benefits and other employee benefits designed and contracted
for by the Director under this Act.
(o) "Health plan" means a health benefits program offered
by the State of Illinois for persons eligible for the plan.
(p) "Retired employee" means any person who would be an
annuitant as that term is defined herein but for the fact that
such person retired prior to January 1, 1966. Such term also

HB4055 - 10 - LRB100 12851 RPS 26572 b
includes any person formerly employed by the University of
Illinois in the Cooperative Extension Service who would be an
annuitant but for the fact that such person was made ineligible
to participate in the State Universities Retirement System by
clause (4) of subsection (a) of Section 15-107 of the Illinois
Pension Code.
(q) "Survivor" means a person receiving an annuity as a
survivor of an employee or of an annuitant. "Survivor" also
includes: (1) the surviving dependent of a person who satisfies
the definition of "employee" except that such person is made
ineligible to participate in the State Universities Retirement
System by clause (4) of subsection (a) of Section 15-107 of the
Illinois Pension Code; (2) the surviving dependent of any
person formerly employed by the University of Illinois in the
Cooperative Extension Service who would be an annuitant except
for the fact that such person was made ineligible to
participate in the State Universities Retirement System by
clause (4) of subsection (a) of Section 15-107 of the Illinois
Pension Code; and (3) the surviving dependent of a person who
was an annuitant under this Act by virtue of receiving an
alternative retirement cancellation payment under Section
14-108.5 of the Illinois Pension Code.
(q-2) "SERS" means the State Employees' Retirement System
of Illinois, created under Article 14 of the Illinois Pension
Code.
(q-3) "SURS" means the State Universities Retirement

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System, created under Article 15 of the Illinois Pension Code.
(q-4) "TRS" means the Teachers' Retirement System of the
State of Illinois, created under Article 16 of the Illinois
Pension Code.
(q-5) (Blank).
(q-6) (Blank).
(q-7) (Blank).
(r) "Medical services" means the services provided within
the scope of their licenses by practitioners in all categories
licensed under the Medical Practice Act of 1987.
(s) "Unit of local government" means any county,
municipality, township, school district (including a
combination of school districts under the Intergovernmental
Cooperation Act), special district or other unit, designated as
a unit of local government by law, which exercises limited
governmental powers or powers in respect to limited
governmental subjects, any not-for-profit association with a
membership that primarily includes townships and township
officials, that has duties that include provision of research
service, dissemination of information, and other acts for the
purpose of improving township government, and that is funded
wholly or partly in accordance with Section 85-15 of the
Township Code; any not-for-profit corporation or association,
with a membership consisting primarily of municipalities, that
operates its own utility system, and provides research,
training, dissemination of information, or other acts to

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promote cooperation between and among municipalities that
provide utility services and for the advancement of the goals
and purposes of its membership; the Southern Illinois
Collegiate Common Market, which is a consortium of higher
education institutions in Southern Illinois; the Illinois
Association of Park Districts; and any hospital provider that
is owned by a county that has 100 or fewer hospital beds and
has not already joined the program. "Qualified local
government" means a unit of local government approved by the
Director and participating in a program created under
subsection (i) of Section 10 of this Act.
(t) "Qualified rehabilitation facility" means any
not-for-profit organization that is accredited by the
Commission on Accreditation of Rehabilitation Facilities or
certified by the Department of Human Services (as successor to
the Department of Mental Health and Developmental
Disabilities) to provide services to persons with disabilities
and which receives funds from the State of Illinois for
providing those services, approved by the Director and
participating in a program created under subsection (j) of
Section 10 of this Act.
(u) "Qualified domestic violence shelter or service" means
any Illinois domestic violence shelter or service and its
administrative offices funded by the Department of Human
Services (as successor to the Illinois Department of Public
Aid), approved by the Director and participating in a program

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created under subsection (k) of Section 10.
(v) "TRS benefit recipient" means a person who:
(1) is not a "member" as defined in this Section; and
(2) is receiving a monthly benefit or retirement
annuity under Article 16 of the Illinois Pension Code; and
(3) either (i) has at least 8 years of creditable
service under Article 16 of the Illinois Pension Code, or
(ii) was enrolled in the health insurance program offered
under that Article on January 1, 1996, or (iii) is the
survivor of a benefit recipient who had at least 8 years of
creditable service under Article 16 of the Illinois Pension
Code or was enrolled in the health insurance program
offered under that Article on the effective date of this
amendatory Act of 1995, or (iv) is a recipient or survivor
of a recipient of a disability benefit under Article 16 of
the Illinois Pension Code.
(w) "TRS dependent beneficiary" means a person who:
(1) is not a "member" or "dependent" as defined in this
Section; and
(2) is a TRS benefit recipient's: (A) spouse, (B)
dependent parent who is receiving at least half of his or
her support from the TRS benefit recipient, or (C) natural,
step, adjudicated, or adopted child who is (i) under age
26, (ii) was, on January 1, 1996, participating as a
dependent beneficiary in the health insurance program
offered under Article 16 of the Illinois Pension Code, or

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(iii) age 19 or over who has a mental or physical
disability from a cause originating prior to the age of 19
(age 26 if enrolled as an adult child).
"TRS dependent beneficiary" does not include, as indicated
under paragraph (2) of this subsection (w), a dependent of the
survivor of a TRS benefit recipient who first becomes a
dependent of a survivor of a TRS benefit recipient on or after
the effective date of this amendatory Act of the 97th General
Assembly unless that dependent would have been eligible for
coverage as a dependent of the deceased TRS benefit recipient
upon whom the survivor benefit is based.
(x) "Military leave" refers to individuals in basic
training for reserves, special/advanced training, annual
training, emergency call up, activation by the President of the
United States, or any other training or duty in service to the
United States Armed Forces.
(y) (Blank).
(z) "Community college benefit recipient" means a person
who:
(1) is not a "member" as defined in this Section; and
(2) is receiving a monthly survivor's annuity or
retirement annuity under Article 15 of the Illinois Pension
Code; and
(3) either (i) was a full-time employee of a community
college district or an association of community college
boards created under the Public Community College Act

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(other than an employee whose last employer under Article
15 of the Illinois Pension Code was a community college
district subject to Article VII of the Public Community
College Act) and was eligible to participate in a group
health benefit plan as an employee during the time of
employment with a community college district (other than a
community college district subject to Article VII of the
Public Community College Act) or an association of
community college boards, or (ii) is the survivor of a
person described in item (i).
(aa) "Community college dependent beneficiary" means a
person who:
(1) is not a "member" or "dependent" as defined in this
Section; and
(2) is a community college benefit recipient's: (A)
spouse, (B) dependent parent who is receiving at least half
of his or her support from the community college benefit
recipient, or (C) natural, step, adjudicated, or adopted
child who is (i) under age 26, or (ii) age 19 or over and
has a mental or physical disability from a cause
originating prior to the age of 19 (age 26 if enrolled as
an adult child).
"Community college dependent beneficiary" does not
include, as indicated under paragraph (2) of this subsection
(aa), a dependent of the survivor of a community college
benefit recipient who first becomes a dependent of a survivor

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of a community college benefit recipient on or after the
effective date of this amendatory Act of the 97th General
Assembly unless that dependent would have been eligible for
coverage as a dependent of the deceased community college
benefit recipient upon whom the survivor annuity is based.
(bb) "Qualified child advocacy center" means any Illinois
child advocacy center and its administrative offices funded by
the Department of Children and Family Services, as defined by
the Children's Advocacy Center Act (55 ILCS 80/), approved by
the Director and participating in a program created under
subsection (n) of Section 10.
(Source: P.A. 98-488, eff. 8-16-13; 99-143, eff. 7-27-15.)
(5 ILCS 375/10) (from Ch. 127, par. 530)
Sec. 10. Contributions by the State and members.
(a) The State shall pay the cost of basic non-contributory
group life insurance and, subject to member paid contributions
set by the Department or required by this Section and except as
provided in this Section, the basic program of group health
benefits on each eligible member, except a member, not
otherwise covered by this Act, who has retired as a
participating member under Article 2 of the Illinois Pension
Code but is ineligible for the retirement annuity under Section
2-119 of the Illinois Pension Code, and part of each eligible
member's and retired member's premiums for health insurance
coverage for enrolled dependents as provided by Section 9. The

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State shall pay the cost of the basic program of group health
benefits only after benefits are reduced by the amount of
benefits covered by Medicare for all members and dependents who
are eligible for benefits under Social Security or the Railroad
Retirement system or who had sufficient Medicare-covered
government employment, except that such reduction in benefits
shall apply only to those members and dependents who (1) first
become eligible for such Medicare coverage on or after July 1,
1992; or (2) are Medicare-eligible members or dependents of a
local government unit which began participation in the program
on or after July 1, 1992; or (3) remain eligible for, but no
longer receive Medicare coverage which they had been receiving
on or after July 1, 1992. The Department may determine the
aggregate level of the State's contribution on the basis of
actual cost of medical services adjusted for age, sex or
geographic or other demographic characteristics which affect
the costs of such programs.
The cost of participation in the basic program of group
health benefits for the dependent or survivor of a living or
deceased retired employee who was formerly employed by the
University of Illinois in the Cooperative Extension Service and
would be an annuitant but for the fact that he or she was made
ineligible to participate in the State Universities Retirement
System by clause (4) of subsection (a) of Section 15-107 of the
Illinois Pension Code shall not be greater than the cost of
participation that would otherwise apply to that dependent or

HB4055 - 18 - LRB100 12851 RPS 26572 b
survivor if he or she were the dependent or survivor of an
annuitant under the State Universities Retirement System.
(a-1) (Blank).
(a-2) (Blank).
(a-3) (Blank).
(a-4) (Blank).
(a-5) (Blank).
(a-6) (Blank).
(a-7) (Blank).
(a-8) Any annuitant, survivor, or retired employee may
waive or terminate coverage in the program of group health
benefits. Any such annuitant, survivor, or retired employee who
has waived or terminated coverage may enroll or re-enroll in
the program of group health benefits only during the annual
benefit choice period, as determined by the Director; except
that in the event of termination of coverage due to nonpayment
of premiums, the annuitant, survivor, or retired employee may
not re-enroll in the program.
(a-8.5) Beginning on the effective date of this amendatory
Act of the 97th General Assembly, the Director of Central
Management Services shall, on an annual basis, determine the
amount that the State shall contribute toward the basic program
of group health benefits on behalf of annuitants (including
individuals who (i) participated in the General Assembly
Retirement System, the State Employees' Retirement System of
Illinois, the State Universities Retirement System, the

HB4055 - 19 - LRB100 12851 RPS 26572 b
Teachers' Retirement System of the State of Illinois, or the
Judges Retirement System of Illinois and (ii) qualify as
annuitants under subsection (b) of Section 3 of this Act),
survivors (including individuals who (i) receive an annuity as
a survivor of an individual who participated in the General
Assembly Retirement System, the State Employees' Retirement
System of Illinois, the State Universities Retirement System,
the Teachers' Retirement System of the State of Illinois, or
the Judges Retirement System of Illinois and (ii) qualify as
survivors under subsection (q) of Section 3 of this Act), and
retired employees (as defined in subsection (p) of Section 3 of
this Act). The remainder of the cost of coverage for each
annuitant, survivor, or retired employee, as determined by the
Director of Central Management Services, shall be the
responsibility of that annuitant, survivor, or retired
employee.
Contributions required of annuitants, survivors, and
retired employees shall be the same for all retirement systems
and shall also be based on whether an individual has made an
election under Section 15-135.1 of the Illinois Pension Code.
Contributions may be based on annuitants', survivors', or
retired employees' Medicare eligibility, but may not be based
on Social Security eligibility.
(a-9) No later than May 1 of each calendar year, the
Director of Central Management Services shall certify in
writing to the Executive Secretary of the State Employees'

HB4055 - 20 - LRB100 12851 RPS 26572 b
Retirement System of Illinois the amounts of the Medicare
supplement health care premiums and the amounts of the health
care premiums for all other retirees who are not Medicare
eligible.
A separate calculation of the premiums based upon the
actual cost of each health care plan shall be so certified.
The Director of Central Management Services shall provide
to the Executive Secretary of the State Employees' Retirement
System of Illinois such information, statistics, and other data
as he or she may require to review the premium amounts
certified by the Director of Central Management Services.
The Department of Central Management Services, or any
successor agency designated to procure healthcare contracts
pursuant to this Act, is authorized to establish funds,
separate accounts provided by any bank or banks as defined by
the Illinois Banking Act, or separate accounts provided by any
savings and loan association or associations as defined by the
Illinois Savings and Loan Act of 1985 to be held by the
Director, outside the State treasury, for the purpose of
receiving the transfer of moneys from the Local Government
Health Insurance Reserve Fund. The Department may promulgate
rules further defining the methodology for the transfers. Any
interest earned by moneys in the funds or accounts shall inure
to the Local Government Health Insurance Reserve Fund. The
transferred moneys, and interest accrued thereon, shall be used
exclusively for transfers to administrative service

HB4055 - 21 - LRB100 12851 RPS 26572 b
organizations or their financial institutions for payments of
claims to claimants and providers under the self-insurance
health plan. The transferred moneys, and interest accrued
thereon, shall not be used for any other purpose including, but
not limited to, reimbursement of administration fees due the
administrative service organization pursuant to its contract
or contracts with the Department.
(a-10) To the extent that participation, benefits, or
premiums under this Act are based on a person's service credit
under an Article of the Illinois Pension Code, service credit
terminated in exchange for an accelerated pension benefit
payment under Section 2-154.5, 14-147.5, 15-185.5, 16-190.5,
or 18-161.5 of that Code shall be included in determining a
person's service credit for the purposes of this Act.
(b) State employees who become eligible for this program on
or after January 1, 1980 in positions normally requiring actual
performance of duty not less than 1/2 of a normal work period
but not equal to that of a normal work period, shall be given
the option of participating in the available program. If the
employee elects coverage, the State shall contribute on behalf
of such employee to the cost of the employee's benefit and any
applicable dependent supplement, that sum which bears the same
percentage as that percentage of time the employee regularly
works when compared to normal work period.
(c) The basic non-contributory coverage from the basic
program of group health benefits shall be continued for each

HB4055 - 22 - LRB100 12851 RPS 26572 b
employee not in pay status or on active service by reason of
(1) leave of absence due to illness or injury, (2) authorized
educational leave of absence or sabbatical leave, or (3)
military leave. This coverage shall continue until expiration
of authorized leave and return to active service, but not to
exceed 24 months for leaves under item (1) or (2). This
24-month limitation and the requirement of returning to active
service shall not apply to persons receiving ordinary or
accidental disability benefits or retirement benefits through
the appropriate State retirement system or benefits under the
Workers' Compensation or Occupational Disease Act.
(d) The basic group life insurance coverage shall continue,
with full State contribution, where such person is (1) absent
from active service by reason of disability arising from any
cause other than self-inflicted, (2) on authorized educational
leave of absence or sabbatical leave, or (3) on military leave.
(e) Where the person is in non-pay status for a period in
excess of 30 days or on leave of absence, other than by reason
of disability, educational or sabbatical leave, or military
leave, such person may continue coverage only by making
personal payment equal to the amount normally contributed by
the State on such person's behalf. Such payments and coverage
may be continued: (1) until such time as the person returns to
a status eligible for coverage at State expense, but not to
exceed 24 months or (2) until such person's employment or
annuitant status with the State is terminated (exclusive of any

HB4055 - 23 - LRB100 12851 RPS 26572 b
additional service imposed pursuant to law).
(f) The Department shall establish by rule the extent to
which other employee benefits will continue for persons in
non-pay status or who are not in active service.
(g) The State shall not pay the cost of the basic
non-contributory group life insurance, program of health
benefits and other employee benefits for members who are
survivors as defined by paragraphs (1) and (2) of subsection
(q) of Section 3 of this Act. The costs of benefits for these
survivors shall be paid by the survivors or by the University
of Illinois Cooperative Extension Service, or any combination
thereof. However, the State shall pay the amount of the
reduction in the cost of participation, if any, resulting from
the amendment to subsection (a) made by this amendatory Act of
the 91st General Assembly.
(h) Those persons occupying positions with any department
as a result of emergency appointments pursuant to Section 8b.8
of the Personnel Code who are not considered employees under
this Act shall be given the option of participating in the
programs of group life insurance, health benefits and other
employee benefits. Such persons electing coverage may
participate only by making payment equal to the amount normally
contributed by the State for similarly situated employees. Such
amounts shall be determined by the Director. Such payments and
coverage may be continued until such time as the person becomes
an employee pursuant to this Act or such person's appointment

HB4055 - 24 - LRB100 12851 RPS 26572 b
is terminated.
(i) Any unit of local government within the State of
Illinois may apply to the Director to have its employees,
annuitants, and their dependents provided group health
coverage under this Act on a non-insured basis. To participate,
a unit of local government must agree to enroll all of its
employees, who may select coverage under either the State group
health benefits plan or a health maintenance organization that
has contracted with the State to be available as a health care
provider for employees as defined in this Act. A unit of local
government must remit the entire cost of providing coverage
under the State group health benefits plan or, for coverage
under a health maintenance organization, an amount determined
by the Director based on an analysis of the sex, age,
geographic location, or other relevant demographic variables
for its employees, except that the unit of local government
shall not be required to enroll those of its employees who are
covered spouses or dependents under this plan or another group
policy or plan providing health benefits as long as (1) an
appropriate official from the unit of local government attests
that each employee not enrolled is a covered spouse or
dependent under this plan or another group policy or plan, and
(2) at least 50% of the employees are enrolled and the unit of
local government remits the entire cost of providing coverage
to those employees, except that a participating school district
must have enrolled at least 50% of its full-time employees who

HB4055 - 25 - LRB100 12851 RPS 26572 b
have not waived coverage under the district's group health plan
by participating in a component of the district's cafeteria
plan. A participating school district is not required to enroll
a full-time employee who has waived coverage under the
district's health plan, provided that an appropriate official
from the participating school district attests that the
full-time employee has waived coverage by participating in a
component of the district's cafeteria plan. For the purposes of
this subsection, "participating school district" includes a
unit of local government whose primary purpose is education as
defined by the Department's rules.
Employees of a participating unit of local government who
are not enrolled due to coverage under another group health
policy or plan may enroll in the event of a qualifying change
in status, special enrollment, special circumstance as defined
by the Director, or during the annual Benefit Choice Period. A
participating unit of local government may also elect to cover
its annuitants. Dependent coverage shall be offered on an
optional basis, with the costs paid by the unit of local
government, its employees, or some combination of the two as
determined by the unit of local government. The unit of local
government shall be responsible for timely collection and
transmission of dependent premiums.
The Director shall annually determine monthly rates of
payment, subject to the following constraints:
(1) In the first year of coverage, the rates shall be

HB4055 - 26 - LRB100 12851 RPS 26572 b
equal to the amount normally charged to State employees for
elected optional coverages or for enrolled dependents
coverages or other contributory coverages, or contributed
by the State for basic insurance coverages on behalf of its
employees, adjusted for differences between State
employees and employees of the local government in age,
sex, geographic location or other relevant demographic
variables, plus an amount sufficient to pay for the
additional administrative costs of providing coverage to
employees of the unit of local government and their
dependents.
(2) In subsequent years, a further adjustment shall be
made to reflect the actual prior years' claims experience
of the employees of the unit of local government.
In the case of coverage of local government employees under
a health maintenance organization, the Director shall annually
determine for each participating unit of local government the
maximum monthly amount the unit may contribute toward that
coverage, based on an analysis of (i) the age, sex, geographic
location, and other relevant demographic variables of the
unit's employees and (ii) the cost to cover those employees
under the State group health benefits plan. The Director may
similarly determine the maximum monthly amount each unit of
local government may contribute toward coverage of its
employees' dependents under a health maintenance organization.
Monthly payments by the unit of local government or its

HB4055 - 27 - LRB100 12851 RPS 26572 b
employees for group health benefits plan or health maintenance
organization coverage shall be deposited in the Local
Government Health Insurance Reserve Fund.
The Local Government Health Insurance Reserve Fund is
hereby created as a nonappropriated trust fund to be held
outside the State Treasury, with the State Treasurer as
custodian. The Local Government Health Insurance Reserve Fund
shall be a continuing fund not subject to fiscal year
limitations. The Local Government Health Insurance Reserve
Fund is not subject to administrative charges or charge-backs,
including but not limited to those authorized under Section 8h
of the State Finance Act. All revenues arising from the
administration of the health benefits program established
under this Section shall be deposited into the Local Government
Health Insurance Reserve Fund. Any interest earned on moneys in
the Local Government Health Insurance Reserve Fund shall be
deposited into the Fund. All expenditures from this Fund shall
be used for payments for health care benefits for local
government and rehabilitation facility employees, annuitants,
and dependents, and to reimburse the Department or its
administrative service organization for all expenses incurred
in the administration of benefits. No other State funds may be
used for these purposes.
A local government employer's participation or desire to
participate in a program created under this subsection shall
not limit that employer's duty to bargain with the

HB4055 - 28 - LRB100 12851 RPS 26572 b
representative of any collective bargaining unit of its
employees.
(j) Any rehabilitation facility within the State of
Illinois may apply to the Director to have its employees,
annuitants, and their eligible dependents provided group
health coverage under this Act on a non-insured basis. To
participate, a rehabilitation facility must agree to enroll all
of its employees and remit the entire cost of providing such
coverage for its employees, except that the rehabilitation
facility shall not be required to enroll those of its employees
who are covered spouses or dependents under this plan or
another group policy or plan providing health benefits as long
as (1) an appropriate official from the rehabilitation facility
attests that each employee not enrolled is a covered spouse or
dependent under this plan or another group policy or plan, and
(2) at least 50% of the employees are enrolled and the
rehabilitation facility remits the entire cost of providing
coverage to those employees. Employees of a participating
rehabilitation facility who are not enrolled due to coverage
under another group health policy or plan may enroll in the
event of a qualifying change in status, special enrollment,
special circumstance as defined by the Director, or during the
annual Benefit Choice Period. A participating rehabilitation
facility may also elect to cover its annuitants. Dependent
coverage shall be offered on an optional basis, with the costs
paid by the rehabilitation facility, its employees, or some

HB4055 - 29 - LRB100 12851 RPS 26572 b
combination of the 2 as determined by the rehabilitation
facility. The rehabilitation facility shall be responsible for
timely collection and transmission of dependent premiums.
The Director shall annually determine quarterly rates of
payment, subject to the following constraints:
(1) In the first year of coverage, the rates shall be
equal to the amount normally charged to State employees for
elected optional coverages or for enrolled dependents
coverages or other contributory coverages on behalf of its
employees, adjusted for differences between State
employees and employees of the rehabilitation facility in
age, sex, geographic location or other relevant
demographic variables, plus an amount sufficient to pay for
the additional administrative costs of providing coverage
to employees of the rehabilitation facility and their
dependents.
(2) In subsequent years, a further adjustment shall be
made to reflect the actual prior years' claims experience
of the employees of the rehabilitation facility.
Monthly payments by the rehabilitation facility or its
employees for group health benefits shall be deposited in the
Local Government Health Insurance Reserve Fund.
(k) Any domestic violence shelter or service within the
State of Illinois may apply to the Director to have its
employees, annuitants, and their dependents provided group
health coverage under this Act on a non-insured basis. To

HB4055 - 30 - LRB100 12851 RPS 26572 b
participate, a domestic violence shelter or service must agree
to enroll all of its employees and pay the entire cost of
providing such coverage for its employees. The domestic
violence shelter shall not be required to enroll those of its
employees who are covered spouses or dependents under this plan
or another group policy or plan providing health benefits as
long as (1) an appropriate official from the domestic violence
shelter attests that each employee not enrolled is a covered
spouse or dependent under this plan or another group policy or
plan and (2) at least 50% of the employees are enrolled and the
domestic violence shelter remits the entire cost of providing
coverage to those employees. Employees of a participating
domestic violence shelter who are not enrolled due to coverage
under another group health policy or plan may enroll in the
event of a qualifying change in status, special enrollment, or
special circumstance as defined by the Director or during the
annual Benefit Choice Period. A participating domestic
violence shelter may also elect to cover its annuitants.
Dependent coverage shall be offered on an optional basis, with
employees, or some combination of the 2 as determined by the
domestic violence shelter or service. The domestic violence
shelter or service shall be responsible for timely collection
and transmission of dependent premiums.
The Director shall annually determine rates of payment,
subject to the following constraints:
(1) In the first year of coverage, the rates shall be

HB4055 - 31 - LRB100 12851 RPS 26572 b
equal to the amount normally charged to State employees for
elected optional coverages or for enrolled dependents
coverages or other contributory coverages on behalf of its
employees, adjusted for differences between State
employees and employees of the domestic violence shelter or
service in age, sex, geographic location or other relevant
demographic variables, plus an amount sufficient to pay for
the additional administrative costs of providing coverage
to employees of the domestic violence shelter or service
and their dependents.
(2) In subsequent years, a further adjustment shall be
made to reflect the actual prior years' claims experience
of the employees of the domestic violence shelter or
service.
Monthly payments by the domestic violence shelter or
service or its employees for group health insurance shall be
deposited in the Local Government Health Insurance Reserve
Fund.
(l) A public community college or entity organized pursuant
to the Public Community College Act may apply to the Director
initially to have only annuitants not covered prior to July 1,
1992 by the district's health plan provided health coverage
under this Act on a non-insured basis. The community college
must execute a 2-year contract to participate in the Local
Government Health Plan. Any annuitant may enroll in the event
of a qualifying change in status, special enrollment, special

HB4055 - 32 - LRB100 12851 RPS 26572 b
circumstance as defined by the Director, or during the annual
Benefit Choice Period.
The Director shall annually determine monthly rates of
payment subject to the following constraints: for those
community colleges with annuitants only enrolled, first year
rates shall be equal to the average cost to cover claims for a
State member adjusted for demographics, Medicare
participation, and other factors; and in the second year, a
further adjustment of rates shall be made to reflect the actual
first year's claims experience of the covered annuitants.
(l-5) The provisions of subsection (l) become inoperative
on July 1, 1999.
(m) The Director shall adopt any rules deemed necessary for
implementation of this amendatory Act of 1989 (Public Act
86-978).
(n) Any child advocacy center within the State of Illinois
may apply to the Director to have its employees, annuitants,
and their dependents provided group health coverage under this
Act on a non-insured basis. To participate, a child advocacy
center must agree to enroll all of its employees and pay the
entire cost of providing coverage for its employees. The child
advocacy center shall not be required to enroll those of its
employees who are covered spouses or dependents under this plan
or another group policy or plan providing health benefits as
long as (1) an appropriate official from the child advocacy
center attests that each employee not enrolled is a covered

HB4055 - 33 - LRB100 12851 RPS 26572 b
spouse or dependent under this plan or another group policy or
plan and (2) at least 50% of the employees are enrolled and the
child advocacy center remits the entire cost of providing
coverage to those employees. Employees of a participating child
advocacy center who are not enrolled due to coverage under
another group health policy or plan may enroll in the event of
a qualifying change in status, special enrollment, or special
circumstance as defined by the Director or during the annual
Benefit Choice Period. A participating child advocacy center
may also elect to cover its annuitants. Dependent coverage
shall be offered on an optional basis, with the costs paid by
the child advocacy center, its employees, or some combination
of the 2 as determined by the child advocacy center. The child
advocacy center shall be responsible for timely collection and
transmission of dependent premiums.
The Director shall annually determine rates of payment,
subject to the following constraints:
(1) In the first year of coverage, the rates shall be
equal to the amount normally charged to State employees for
elected optional coverages or for enrolled dependents
coverages or other contributory coverages on behalf of its
employees, adjusted for differences between State
employees and employees of the child advocacy center in
age, sex, geographic location, or other relevant
demographic variables, plus an amount sufficient to pay for
the additional administrative costs of providing coverage

HB4055 - 34 - LRB100 12851 RPS 26572 b
to employees of the child advocacy center and their
dependents.
(2) In subsequent years, a further adjustment shall be
made to reflect the actual prior years' claims experience
of the employees of the child advocacy center.
Monthly payments by the child advocacy center or its
employees for group health insurance shall be deposited into
the Local Government Health Insurance Reserve Fund.
(Source: P.A. 97-695, eff. 7-1-12; 98-488, eff. 8-16-13.)
Section 10. The Illinois Finance Authority Act is amended
by changing Section 801-40 as follows:
(20 ILCS 3501/801-40)
Sec. 801-40. In addition to the powers otherwise authorized
by law and in addition to the foregoing general corporate
powers, the Authority shall also have the following additional
specific powers to be exercised in furtherance of the purposes
of this Act.
(a) The Authority shall have power (i) to accept grants,
loans or appropriations from the federal government or the
State, or any agency or instrumentality thereof, to be used for
the operating expenses of the Authority, or for any purposes of
the Authority, including the making of direct loans of such
funds with respect to projects, and (ii) to enter into any
agreement with the federal government or the State, or any

HB4055 - 35 - LRB100 12851 RPS 26572 b
agency or instrumentality thereof, in relationship to such
grants, loans or appropriations.
(b) The Authority shall have power to procure and enter
into contracts for any type of insurance and indemnity
agreements covering loss or damage to property from any cause,
including loss of use and occupancy, or covering any other
insurable risk.
(c) The Authority shall have the continuing power to issue
bonds for its corporate purposes. Bonds may be issued by the
Authority in one or more series and may provide for the payment
of any interest deemed necessary on such bonds, of the costs of
issuance of such bonds, of any premium on any insurance, or of
the cost of any guarantees, letters of credit or other similar
documents, may provide for the funding of the reserves deemed
necessary in connection with such bonds, and may provide for
the refunding or advance refunding of any bonds or for accounts
deemed necessary in connection with any purpose of the
Authority. The bonds may bear interest payable at any time or
times and at any rate or rates, notwithstanding any other
provision of law to the contrary, and such rate or rates may be
established by an index or formula which may be implemented or
established by persons appointed or retained therefor by the
Authority, or may bear no interest or may bear interest payable
at maturity or upon redemption prior to maturity, may bear such
date or dates, may be payable at such time or times and at such
place or places, may mature at any time or times not later than

HB4055 - 36 - LRB100 12851 RPS 26572 b
40 years from the date of issuance, may be sold at public or
private sale at such time or times and at such price or prices,
may be secured by such pledges, reserves, guarantees, letters
of credit, insurance contracts or other similar credit support
or liquidity instruments, may be executed in such manner, may
be subject to redemption prior to maturity, may provide for the
registration of the bonds, and may be subject to such other
terms and conditions all as may be provided by the resolution
or indenture authorizing the issuance of such bonds. The holder
or holders of any bonds issued by the Authority may bring suits
at law or proceedings in equity to compel the performance and
observance by any person or by the Authority or any of its
agents or employees of any contract or covenant made with the
holders of such bonds and to compel such person or the
Authority and any of its agents or employees to perform any
duties required to be performed for the benefit of the holders
of any such bonds by the provision of the resolution
authorizing their issuance, and to enjoin such person or the
Authority and any of its agents or employees from taking any
action in conflict with any such contract or covenant.
Notwithstanding the form and tenor of any such bonds and in the
absence of any express recital on the face thereof that it is
non-negotiable, all such bonds shall be negotiable
instruments. Pending the preparation and execution of any such
bonds, temporary bonds may be issued as provided by the
resolution. The bonds shall be sold by the Authority in such

HB4055 - 37 - LRB100 12851 RPS 26572 b
manner as it shall determine. The bonds may be secured as
provided in the authorizing resolution by the receipts,
revenues, income and other available funds of the Authority and
by any amounts derived by the Authority from the loan agreement
or lease agreement with respect to the project or projects; and
bonds may be issued as general obligations of the Authority
payable from such revenues, funds and obligations of the
Authority as the bond resolution shall provide, or may be
issued as limited obligations with a claim for payment solely
from such revenues, funds and obligations as the bond
resolution shall provide. The Authority may grant a specific
pledge or assignment of and lien on or security interest in
such rights, revenues, income, or amounts and may grant a
specific pledge or assignment of and lien on or security
interest in any reserves, funds or accounts established in the
resolution authorizing the issuance of bonds. Any such pledge,
assignment, lien or security interest for the benefit of the
holders of the Authority's bonds shall be valid and binding
from the time the bonds are issued without any physical
delivery or further act, and shall be valid and binding as
against and prior to the claims of all other parties having
claims against the Authority or any other person irrespective
of whether the other parties have notice of the pledge,
assignment, lien or security interest. As evidence of such
pledge, assignment, lien and security interest, the Authority
may execute and deliver a mortgage, trust agreement, indenture

HB4055 - 38 - LRB100 12851 RPS 26572 b
or security agreement or an assignment thereof. A remedy for
any breach or default of the terms of any such agreement by the
Authority may be by mandamus proceedings in any court of
competent jurisdiction to compel the performance and
compliance therewith, but the agreement may prescribe by whom
or on whose behalf such action may be instituted. It is
expressly understood that the Authority may, but need not,
acquire title to any project with respect to which it exercises
its authority.
(c-5) The Authority shall have the power to issue State
Pension Obligation Acceleration Bonds if in any fiscal year the
amount appropriated for all accelerated pension benefit
payments is less than the amount required for those payments.
The proceeds from the State Pension Obligation Acceleration
Bonds issued under this subsection may only be used to pay for
accelerated pension benefit payments for the fiscal year in
which the State Pension Obligation Acceleration Bonds are
issued.
The Authority shall not have outstanding at any one time
State Pension Obligation Acceleration Bonds for any of the
purposes of this subsection in an aggregate principal amount
exceeding $250,000,000, excluding bonds issued to refund
outstanding State Pension Obligation Acceleration Bonds.
(d) With respect to the powers granted by this Act, the
Authority may adopt rules and regulations prescribing the
procedures by which persons may apply for assistance under this

HB4055 - 39 - LRB100 12851 RPS 26572 b
Act. Nothing herein shall be deemed to preclude the Authority,
prior to the filing of any formal application, from conducting
preliminary discussions and investigations with respect to the
subject matter of any prospective application.
(e) The Authority shall have power to acquire by purchase,
lease, gift or otherwise any property or rights therein from
any person useful for its purposes, whether improved for the
purposes of any prospective project, or unimproved. The
Authority may also accept any donation of funds for its
purposes from any such source. The Authority shall have no
independent power of condemnation but may acquire any property
or rights therein obtained upon condemnation by any other
authority, governmental entity or unit of local government with
such power.
(f) The Authority shall have power to develop, construct
and improve either under its own direction, or through
collaboration with any approved applicant, or to acquire
through purchase or otherwise, any project, using for such
purpose the proceeds derived from the sale of its bonds or from
governmental loans or grants, and to hold title in the name of
the Authority to such projects.
(g) The Authority shall have power to lease pursuant to a
lease agreement any project so developed and constructed or
acquired to the approved tenant on such terms and conditions as
may be appropriate to further the purposes of this Act and to
maintain the credit of the Authority. Any such lease may

HB4055 - 40 - LRB100 12851 RPS 26572 b
provide for either the Authority or the approved tenant to
assume initially, in whole or in part, the costs of
maintenance, repair and improvements during the leasehold
period. In no case, however, shall the total rentals from any
project during any initial leasehold period or the total loan
repayments to be made pursuant to any loan agreement, be less
than an amount necessary to return over such lease or loan
period (1) all costs incurred in connection with the
development, construction, acquisition or improvement of the
project and for repair, maintenance and improvements thereto
during the period of the lease or loan; provided, however, that
the rentals or loan repayments need not include costs met
through the use of funds other than those obtained by the
Authority through the issuance of its bonds or governmental
loans; (2) a reasonable percentage additive to be agreed upon
by the Authority and the borrower or tenant to cover a properly
allocable portion of the Authority's general expenses,
including, but not limited to, administrative expenses,
salaries and general insurance, and (3) an amount sufficient to
pay when due all principal of, interest and premium, if any on,
any bonds issued by the Authority with respect to the project.
The portion of total rentals payable under clause (3) of this
subsection (g) shall be deposited in such special accounts,
including all sinking funds, acquisition or construction
funds, debt service and other funds as provided by any
resolution, mortgage or trust agreement of the Authority

HB4055 - 41 - LRB100 12851 RPS 26572 b
pursuant to which any bond is issued.
(h) The Authority has the power, upon the termination of
any leasehold period of any project, to sell or lease for a
further term or terms such project on such terms and conditions
as the Authority shall deem reasonable and consistent with the
purposes of the Act. The net proceeds from all such sales and
the revenues or income from such leases shall be used to
satisfy any indebtedness of the Authority with respect to such
project and any balance may be used to pay any expenses of the
Authority or be used for the further development, construction,
acquisition or improvement of projects. In the event any
project is vacated by a tenant prior to the termination of the
initial leasehold period, the Authority shall sell or lease the
facilities of the project on the most advantageous terms
available. The net proceeds of any such disposition shall be
treated in the same manner as the proceeds from sales or the
revenues or income from leases subsequent to the termination of
any initial leasehold period.
(i) The Authority shall have the power to make loans to
persons to finance a project, to enter into loan agreements
with respect thereto, and to accept guarantees from persons of
its loans or the resultant evidences of obligations of the
Authority.
(j) The Authority may fix, determine, charge and collect
any premiums, fees, charges, costs and expenses, including,
without limitation, any application fees, commitment fees,

HB4055 - 42 - LRB100 12851 RPS 26572 b
program fees, financing charges or publication fees from any
person in connection with its activities under this Act.
(k) In addition to the funds established as provided
herein, the Authority shall have the power to create and
establish such reserve funds and accounts as may be necessary
or desirable to accomplish its purposes under this Act and to
deposit its available monies into the funds and accounts.
(l) At the request of the governing body of any unit of
local government, the Authority is authorized to market such
local government's revenue bond offerings by preparing bond
issues for sale, advertising for sealed bids, receiving bids at
its offices, making the award to the bidder that offers the
most favorable terms or arranging for negotiated placements or
underwritings of such securities. The Authority may, at its
discretion, offer for concurrent sale the revenue bonds of
several local governments. Sales by the Authority of revenue
bonds under this Section shall in no way imply State guarantee
of such debt issue. The Authority may require such financial
information from participating local governments as it deems
necessary in order to carry out the purposes of this subsection
(1).
(m) The Authority may make grants to any county to which
Division 5-37 of the Counties Code is applicable to assist in
the financing of capital development, construction and
renovation of new or existing facilities for hospitals and
health care facilities under that Act. Such grants may only be

HB4055 - 43 - LRB100 12851 RPS 26572 b
made from funds appropriated for such purposes from the Build
Illinois Bond Fund.
(n) The Authority may establish an urban development action
grant program for the purpose of assisting municipalities in
Illinois which are experiencing severe economic distress to
help stimulate economic development activities needed to aid in
economic recovery. The Authority shall determine the types of
activities and projects for which the urban development action
grants may be used, provided that such projects and activities
are broadly defined to include all reasonable projects and
activities the primary objectives of which are the development
of viable urban communities, including decent housing and a
suitable living environment, and expansion of economic
opportunity, principally for persons of low and moderate
incomes. The Authority shall enter into grant agreements from
monies appropriated for such purposes from the Build Illinois
Bond Fund. The Authority shall monitor the use of the grants,
and shall provide for audits of the funds as well as recovery
by the Authority of any funds determined to have been spent in
violation of this subsection (n) or any rule or regulation
promulgated hereunder. The Authority shall provide technical
assistance with regard to the effective use of the urban
development action grants. The Authority shall file an annual
report to the General Assembly concerning the progress of the
grant program.
(o) The Authority may establish a Housing Partnership

HB4055 - 44 - LRB100 12851 RPS 26572 b
Program whereby the Authority provides zero-interest loans to
municipalities for the purpose of assisting in the financing of
projects for the rehabilitation of affordable multi-family
housing for low and moderate income residents. The Authority
may provide such loans only upon a municipality's providing
evidence that it has obtained private funding for the
rehabilitation project. The Authority shall provide 3 State
dollars for every 7 dollars obtained by the municipality from
sources other than the State of Illinois. The loans shall be
made from monies appropriated for such purpose from the Build
Illinois Bond Fund. The total amount of loans available under
the Housing Partnership Program shall not exceed $30,000,000.
State loan monies under this subsection shall be used only for
the acquisition and rehabilitation of existing buildings
containing 4 or more dwelling units. The terms of any loan made
by the municipality under this subsection shall require
repayment of the loan to the municipality upon any sale or
other transfer of the project.
(p) The Authority may award grants to universities and
research institutions, research consortiums and other
not-for-profit entities for the purposes of: remodeling or
otherwise physically altering existing laboratory or research
facilities, expansion or physical additions to existing
laboratory or research facilities, construction of new
laboratory or research facilities or acquisition of modern
equipment to support laboratory or research operations

HB4055 - 45 - LRB100 12851 RPS 26572 b
provided that such grants (i) be used solely in support of
project and equipment acquisitions which enhance technology
transfer, and (ii) not constitute more than 60 percent of the
total project or acquisition cost.
(q) Grants may be awarded by the Authority to units of
local government for the purpose of developing the appropriate
infrastructure or defraying other costs to the local government
in support of laboratory or research facilities provided that
such grants may not exceed 40% of the cost to the unit of local
government.
(r) The Authority may establish a Direct Loan Program to
make loans to individuals, partnerships or corporations for the
purpose of an industrial project, as defined in Section 801-10
of this Act. For the purposes of such program and not by way of
limitation on any other program of the Authority, the Authority
shall have the power to issue bonds, notes, or other evidences
of indebtedness including commercial paper for purposes of
providing a fund of capital from which it may make such loans.
The Authority shall have the power to use any appropriations
from the State made especially for the Authority's Direct Loan
Program for additional capital to make such loans or for the
purposes of reserve funds or pledged funds which secure the
Authority's obligations of repayment of any bond, note or other
form of indebtedness established for the purpose of providing
capital for which it intends to make such loans under the
Direct Loan Program. For the purpose of obtaining such capital,

HB4055 - 46 - LRB100 12851 RPS 26572 b
the Authority may also enter into agreements with financial
institutions and other persons for the purpose of selling loans
and developing a secondary market for such loans. Loans made
under the Direct Loan Program may be in an amount not to exceed
$300,000 and shall be made for a portion of an industrial
project which does not exceed 50% of the total project. No loan
may be made by the Authority unless approved by the affirmative
vote of at least 8 members of the board. The Authority shall
establish procedures and publish rules which shall provide for
the submission, review, and analysis of each direct loan
application and which shall preserve the ability of each board
member to reach an individual business judgment regarding the
propriety of making each direct loan. The collective discretion
of the board to approve or disapprove each loan shall be
unencumbered. The Authority may establish and collect such fees
and charges, determine and enforce such terms and conditions,
and charge such interest rates as it determines to be necessary
and appropriate to the successful administration of the Direct
Loan Program. The Authority may require such interests in
collateral and such guarantees as it determines are necessary
to project the Authority's interest in the repayment of the
principal and interest of each loan made under the Direct Loan
Program.
(s) The Authority may guarantee private loans to third
parties up to a specified dollar amount in order to promote
economic development in this State.

HB4055 - 47 - LRB100 12851 RPS 26572 b
(t) The Authority may adopt rules and regulations as may be
necessary or advisable to implement the powers conferred by
this Act.
(u) The Authority shall have the power to issue bonds,
notes or other evidences of indebtedness, which may be used to
make loans to units of local government which are authorized to
enter into loan agreements and other documents and to issue
bonds, notes and other evidences of indebtedness for the
purpose of financing the protection of storm sewer outfalls,
the construction of adequate storm sewer outfalls, and the
provision for flood protection of sanitary sewage treatment
plans, in counties that have established a stormwater
management planning committee in accordance with Section
5-1062 of the Counties Code. Any such loan shall be made by the
Authority pursuant to the provisions of Section 820-5 to 820-60
of this Act. The unit of local government shall pay back to the
Authority the principal amount of the loan, plus annual
interest as determined by the Authority. The Authority shall
have the power, subject to appropriations by the General
Assembly, to subsidize or buy down a portion of the interest on
such loans, up to 4% per annum.
(v) The Authority may accept security interests as provided
in Sections 11-3 and 11-3.3 of the Illinois Public Aid Code.
(w) Moral Obligation. In the event that the Authority
determines that monies of the Authority will not be sufficient
for the payment of the principal of and interest on its bonds

HB4055 - 48 - LRB100 12851 RPS 26572 b
during the next State fiscal year, the Chairperson, as soon as
practicable, shall certify to the Governor the amount required
by the Authority to enable it to pay such principal of and
interest on the bonds. The Governor shall submit the amount so
certified to the General Assembly as soon as practicable, but
no later than the end of the current State fiscal year. This
subsection shall apply only to any bonds or notes as to which
the Authority shall have determined, in the resolution
authorizing the issuance of the bonds or notes, that this
subsection shall apply. Whenever the Authority makes such a
determination, that fact shall be plainly stated on the face of
the bonds or notes and that fact shall also be reported to the
Governor. In the event of a withdrawal of moneys from a reserve
fund established with respect to any issue or issues of bonds
of the Authority to pay principal or interest on those bonds,
the Chairperson of the Authority, as soon as practicable, shall
certify to the Governor the amount required to restore the
reserve fund to the level required in the resolution or
indenture securing those bonds. The Governor shall submit the
amount so certified to the General Assembly as soon as
practicable, but no later than the end of the current State
fiscal year. The Authority shall obtain written approval from
the Governor for any bonds and notes to be issued under this
Section. In addition to any other bonds authorized to be issued
under Sections 825-60, 825-65(e), 830-25 and 845-5, the
principal amount of Authority bonds outstanding issued under

HB4055 - 49 - LRB100 12851 RPS 26572 b
this Section 801-40(w) or under 20 ILCS 3850/1-80 or 30 ILCS
360/2-6(c), which have been assumed by the Authority, shall not
exceed $150,000,000. This subsection (w) shall in no way be
applied to any bonds issued by the Authority on behalf of the
Illinois Power Agency under Section 825-90 of this Act.
(x) The Authority may enter into agreements or contracts
with any person necessary or appropriate to place the payment
obligations of the Authority under any of its bonds in whole or
in part on any interest rate basis, cash flow basis, or other
basis desired by the Authority, including without limitation
agreements or contracts commonly known as "interest rate swap
agreements", "forward payment conversion agreements", and
"futures", or agreements or contracts to exchange cash flows or
a series of payments, or agreements or contracts, including
without limitation agreements or contracts commonly known as
"options", "puts", or "calls", to hedge payment, rate spread,
or similar exposure; provided that any such agreement or
contract shall not constitute an obligation for borrowed money
and shall not be taken into account under Section 845-5 of this
Act or any other debt limit of the Authority or the State of
Illinois.
(y) The Authority shall publish summaries of projects and
actions approved by the members of the Authority on its
website. These summaries shall include, but not be limited to,
information regarding the:
(1) project;

HB4055 - 50 - LRB100 12851 RPS 26572 b
(2) Board's action or actions;
(3) purpose of the project;
(4) Authority's program and contribution;
(5) volume cap;
(6) jobs retained;
(7) projected new jobs;
(8) construction jobs created;
(9) estimated sources and uses of funds;
(10) financing summary;
(11) project summary;
(12) business summary;
(13) ownership or economic disclosure statement;
(14) professional and financial information;
(15) service area; and
(16) legislative district.
The disclosure of information pursuant to this subsection
shall comply with the Freedom of Information Act.
(Source: P.A. 95-470, eff. 8-27-07; 95-481, eff. 8-28-07;
95-876, eff. 8-21-08; 96-795, eff. 7-1-10 (see Section 5 of
P.A. 96-793 for the effective date of changes made by P.A.
96-795).)
Section 15. The State Finance Act is amended by adding
Section 5.878 as follows:
(30 ILCS 105/5.878 new)

HB4055 - 51 - LRB100 12851 RPS 26572 b
Sec. 5.878. The State Pension Obligation Acceleration Bond
Fund.
Section 20. The Budget Stabilization Act is amended by
changing Section 20 as follows:
(30 ILCS 122/20)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 20. Pension Stabilization Fund.
(a) The Pension Stabilization Fund is hereby created as a
special fund in the State treasury. Moneys in the fund shall be
used for the sole purpose of making payments to the designated
retirement systems as provided in Section 25.
(b) For each fiscal year through State fiscal year 2020,
when the General Assembly's appropriations and transfers or
diversions as required by law from general funds do not exceed
99% of the estimated general funds revenues pursuant to
subsection (a) of Section 10, the Comptroller shall transfer
from the General Revenue Fund as provided by this Section a
total amount equal to 0.5% of the estimated general funds
revenues to the Pension Stabilization Fund.
(c) For each fiscal year through State fiscal year 2020,
when the General Assembly's appropriations and transfers or
diversions as required by law from general funds do not exceed
98% of the estimated general funds revenues pursuant to

HB4055 - 52 - LRB100 12851 RPS 26572 b
subsection (b) of Section 10, the Comptroller shall transfer
from the General Revenue Fund as provided by this Section a
total amount equal to 1.0% of the estimated general funds
revenues to the Pension Stabilization Fund.
(c-5) In addition to any other amounts required to be
transferred under this Section, in State fiscal year 2021 and
each fiscal year thereafter through State fiscal year 2045, or
when each of the designated retirement systems, as defined in
Section 25, has achieved 100% funding, whichever occurs first,
the State Comptroller shall order transferred and the State
Treasurer shall transfer from the General Revenue Fund to the
Pension Stabilization Fund an amount equal to (1) the sum of
the amounts certified by the designated retirement systems
under subsection (a-10) of Section 14-135.08, subsection
(a-10) of Section 15-165, and subsection (a-10) of Section
16-158 of this Code for that fiscal year minus (2) the sum of
the required State contributions certified by the retirement
systems under subsection (a-5) of Section 14-135.08,
subsection (a-5) of Section 15-165, and subsection (a-5) of
Section 16-158 of this Code for that fiscal year. The
transferred amount is intended to represent the annual savings
to the State resulting from the enactment of Section 1-161 and
Section 14-155.2, the enactment of subsection (a-2) of Section
15-155 and subsection (b-4) of Section 16-158, and the changes
made to Section 1-160 by this amendatory Act of the 100th
General Assembly.

HB4055 - 53 - LRB100 12851 RPS 26572 b
(d) The Comptroller shall transfer 1/12 of the total amount
to be transferred each fiscal year under this Section into the
Pension Stabilization Fund on the first day of each month of
that fiscal year or as soon thereafter as possible; except that
the final transfer of the fiscal year shall be made as soon as
practical after the August 31 following the end of the fiscal
year.
Until State fiscal year 2021, before Before the final
transfer for a fiscal year is made, the Comptroller shall
reconcile the estimated general funds revenues used in
calculating the other transfers under this Section for that
fiscal year with the actual general funds revenues for that
fiscal year. The final transfer for the fiscal year shall be
adjusted so that the total amount transferred under this
Section for that fiscal year is equal to the percentage
specified in subsection (b) or (c) of this Section, whichever
is applicable, of the actual general funds revenues for that
fiscal year. The actual general funds revenues for the fiscal
year shall be calculated in a manner consistent with subsection
(c) of Section 10 of this Act.
(Source: P.A. 94-839, eff. 6-6-06.)
Section 25. The General Obligation Bond Act is amended by
changing Sections 2, 2.5, 9, 11, 12, and 13 and by adding
Section 7.6 as follows:

HB4055 - 54 - LRB100 12851 RPS 26572 b
(30 ILCS 330/2) (from Ch. 127, par. 652)
Sec. 2. Authorization for Bonds. The State of Illinois is
authorized to issue, sell and provide for the retirement of
General Obligation Bonds of the State of Illinois for the
categories and specific purposes expressed in Sections 2
through 8 of this Act, in the total amount of $50,167,925,743
$49,917,925,743.
The bonds authorized in this Section 2 and in Section 16 of
this Act are herein called "Bonds".
Of the total amount of Bonds authorized in this Act, up to
$2,200,000,000 in aggregate original principal amount may be
issued and sold in accordance with the Baccalaureate Savings
Act in the form of General Obligation College Savings Bonds.
Of the total amount of Bonds authorized in this Act, up to
$300,000,000 in aggregate original principal amount may be
issued and sold in accordance with the Retirement Savings Act
in the form of General Obligation Retirement Savings Bonds.
Of the total amount of Bonds authorized in this Act, the
additional $10,000,000,000 authorized by Public Act 93-2, the
$3,466,000,000 authorized by Public Act 96-43, and the
$4,096,348,300 authorized by Public Act 96-1497 shall be used
solely as provided in Section 7.2.
Of the total amount of Bonds authorized in this Act, the
additional $250,000,000 authorized by this amendatory Act of
the 100th General Assembly shall be used solely as provided in
Section 7.6.

HB4055 - 55 - LRB100 12851 RPS 26572 b
The issuance and sale of Bonds pursuant to the General
Obligation Bond Act is an economical and efficient method of
financing the long-term capital needs of the State. This Act
will permit the issuance of a multi-purpose General Obligation
Bond with uniform terms and features. This will not only lower
the cost of registration but also reduce the overall cost of
issuing debt by improving the marketability of Illinois General
Obligation Bonds.
(Source: P.A. 97-333, eff. 8-12-11; 97-771, eff. 7-10-12;
97-813, eff. 7-13-12; 98-94, eff. 7-17-13; 98-463, eff.
8-16-13; 98-781, eff. 7-22-14.)
(30 ILCS 330/2.5)
Sec. 2.5. Limitation on issuance of Bonds.
(a) Except as provided in subsection (b), no Bonds may be
issued if, after the issuance, in the next State fiscal year
after the issuance of the Bonds, the amount of debt service
(including principal, whether payable at maturity or pursuant
to mandatory sinking fund installments, and interest) on all
then-outstanding Bonds, other than (i) Bonds authorized by this
amendatory Act of the 100th General Assembly, (ii) Bonds
authorized by Public Act 96-43, and (iii) other than Bonds
authorized by Public Act 96-1497, would exceed 7% of the
aggregate appropriations from the general funds (which consist
of the General Revenue Fund, the Common School Fund, the
General Revenue Common School Special Account Fund, and the

HB4055 - 56 - LRB100 12851 RPS 26572 b
Education Assistance Fund) and the Road Fund for the fiscal
year immediately prior to the fiscal year of the issuance.
(b) If the Comptroller and Treasurer each consent in
writing, Bonds may be issued even if the issuance does not
comply with subsection (a). In addition, $2,000,000,000 in
Bonds for the purposes set forth in Sections 3, 4, 5, 6, and 7,
and $2,000,000,000 in Refunding Bonds under Section 16, may be
issued during State fiscal year 2017 without complying with
subsection (a).
(Source: P.A. 99-523, eff. 6-30-16.)
(30 ILCS 330/7.6 new)
Sec. 7.6. State Pension Obligation Acceleration Bonds.
(a) As used in this Act, "State Pension Obligation
Acceleration Bonds" means Bonds authorized by this amendatory
Act of the 100th General Assembly and used for the purposes set
forth in subsection (c-5) of Section 801-40 of the Illinois
Finance Authority Act.
(b) State Pension Obligation Acceleration Bonds in the
amount of $250,000,000 are hereby authorized to be used for the
purposes set forth in subsection (c-5) of Section 801-40 of the
Illinois Finance Authority Act.
(c) The proceeds of State Pension Obligation Acceleration
Bonds authorized in subsection (b) of this Section, less the
amounts authorized in the Bond Sale Order to be directly paid
out for bond sale expenses under Section 8, shall be deposited

HB4055 - 57 - LRB100 12851 RPS 26572 b
directly into the State Pension Obligation Acceleration Bond
Fund, and the Comptroller and the Treasurer shall, as soon as
practical, make payments as contemplated by subsection (c-5) of
Section 801-40 of the Illinois Finance Authority Act.
(d) There is created the State Pension Obligation
Acceleration Bond Fund as a special fund in the State Treasury.
Funds deposited in the State Pension Obligation Acceleration
Bond Fund may only be used for the purposes set forth in
subsection (c-5) of Section 801-40 of the Illinois Finance
Authority Act or for the payment of principal and interest due
on State Pension Obligation Acceleration Bonds.
(30 ILCS 330/9) (from Ch. 127, par. 659)
Sec. 9. Conditions for Issuance and Sale of Bonds -
Requirements for Bonds.
(a) Except as otherwise provided in this subsection and
subsection (h), Bonds shall be issued and sold from time to
time, in one or more series, in such amounts and at such prices
as may be directed by the Governor, upon recommendation by the
Director of the Governor's Office of Management and Budget.
Bonds shall be in such form (either coupon, registered or book
entry), in such denominations, payable within 25 years from
their date, subject to such terms of redemption with or without
premium, bear interest payable at such times and at such fixed
or variable rate or rates, and be dated as shall be fixed and
determined by the Director of the Governor's Office of

HB4055 - 58 - LRB100 12851 RPS 26572 b
Management and Budget in the order authorizing the issuance and
sale of any series of Bonds, which order shall be approved by
the Governor and is herein called a "Bond Sale Order"; provided
however, that interest payable at fixed or variable rates shall
not exceed that permitted in the Bond Authorization Act, as now
or hereafter amended. Bonds shall be payable at such place or
places, within or without the State of Illinois, and may be
made registrable as to either principal or as to both principal
and interest, as shall be specified in the Bond Sale Order.
Bonds may be callable or subject to purchase and retirement or
tender and remarketing as fixed and determined in the Bond Sale
Order. Bonds, other than Bonds issued under Section 3 of this
Act for the costs associated with the purchase and
implementation of information technology, (i) except for
refunding Bonds satisfying the requirements of Section 16 of
this Act and sold during fiscal year 2009, 2010, 2011, or 2017
must be issued with principal or mandatory redemption amounts
in equal amounts, with the first maturity issued occurring
within the fiscal year in which the Bonds are issued or within
the next succeeding fiscal year and (ii) must mature or be
subject to mandatory redemption each fiscal year thereafter up
to 25 years, except for refunding Bonds satisfying the
requirements of Section 16 of this Act and sold during fiscal
year 2009, 2010, or 2011 which must mature or be subject to
mandatory redemption each fiscal year thereafter up to 16
years. Bonds issued under Section 3 of this Act for the costs

HB4055 - 59 - LRB100 12851 RPS 26572 b
associated with the purchase and implementation of information
technology must be issued with principal or mandatory
redemption amounts in equal amounts, with the first maturity
issued occurring with the fiscal year in which the respective
bonds are issued or with the next succeeding fiscal year, with
the respective bonds issued maturing or subject to mandatory
redemption each fiscal year thereafter up to 10 years.
Notwithstanding any provision of this Act to the contrary, the
Bonds authorized by Public Act 96-43 shall be payable within 5
years from their date and must be issued with principal or
mandatory redemption amounts in equal amounts, with payment of
principal or mandatory redemption beginning in the first fiscal
year following the fiscal year in which the Bonds are issued.
Notwithstanding any provision of this Act to the contrary,
the Bonds authorized by Public Act 96-1497 shall be payable
within 8 years from their date and shall be issued with payment
of maturing principal or scheduled mandatory redemptions in
accordance with the following schedule, except the following
amounts shall be prorated if less than the total additional
amount of Bonds authorized by Public Act 96-1497 are issued:
Fiscal Year After Issuance Amount
1-2 $0
3 $110,712,120
4 $332,136,360
5 $664,272,720
6-8 $996,409,080

HB4055 - 60 - LRB100 12851 RPS 26572 b
In the case of any series of Bonds bearing interest at a
variable interest rate ("Variable Rate Bonds"), in lieu of
determining the rate or rates at which such series of Variable
Rate Bonds shall bear interest and the price or prices at which
such Variable Rate Bonds shall be initially sold or remarketed
(in the event of purchase and subsequent resale), the Bond Sale
Order may provide that such interest rates and prices may vary
from time to time depending on criteria established in such
Bond Sale Order, which criteria may include, without
limitation, references to indices or variations in interest
rates as may, in the judgment of a remarketing agent, be
necessary to cause Variable Rate Bonds of such series to be
remarketable from time to time at a price equal to their
principal amount, and may provide for appointment of a bank,
trust company, investment bank, or other financial institution
to serve as remarketing agent in that connection. The Bond Sale
Order may provide that alternative interest rates or provisions
for establishing alternative interest rates, different
security or claim priorities, or different call or amortization
provisions will apply during such times as Variable Rate Bonds
of any series are held by a person providing credit or
liquidity enhancement arrangements for such Bonds as
authorized in subsection (b) of this Section. The Bond Sale
Order may also provide for such variable interest rates to be
established pursuant to a process generally known as an auction
rate process and may provide for appointment of one or more

HB4055 - 61 - LRB100 12851 RPS 26572 b
financial institutions to serve as auction agents and
broker-dealers in connection with the establishment of such
interest rates and the sale and remarketing of such Bonds.
(b) In connection with the issuance of any series of Bonds,
the State may enter into arrangements to provide additional
security and liquidity for such Bonds, including, without
limitation, bond or interest rate insurance or letters of
credit, lines of credit, bond purchase contracts, or other
arrangements whereby funds are made available to retire or
purchase Bonds, thereby assuring the ability of owners of the
Bonds to sell or redeem their Bonds. The State may enter into
contracts and may agree to pay fees to persons providing such
arrangements, but only under circumstances where the Director
of the Governor's Office of Management and Budget certifies
that he or she reasonably expects the total interest paid or to
be paid on the Bonds, together with the fees for the
arrangements (being treated as if interest), would not, taken
together, cause the Bonds to bear interest, calculated to their
stated maturity, at a rate in excess of the rate that the Bonds
would bear in the absence of such arrangements.
The State may, with respect to Bonds issued or anticipated
to be issued, participate in and enter into arrangements with
respect to interest rate protection or exchange agreements,
guarantees, or financial futures contracts for the purpose of
limiting, reducing, or managing interest rate exposure. The
authority granted under this paragraph, however, shall not

HB4055 - 62 - LRB100 12851 RPS 26572 b
increase the principal amount of Bonds authorized to be issued
by law. The arrangements may be executed and delivered by the
Director of the Governor's Office of Management and Budget on
behalf of the State. Net payments for such arrangements shall
constitute interest on the Bonds and shall be paid from the
General Obligation Bond Retirement and Interest Fund. The
Director of the Governor's Office of Management and Budget
shall at least annually certify to the Governor and the State
Comptroller his or her estimate of the amounts of such net
payments to be included in the calculation of interest required
to be paid by the State.
(c) Prior to the issuance of any Variable Rate Bonds
pursuant to subsection (a), the Director of the Governor's
Office of Management and Budget shall adopt an interest rate
risk management policy providing that the amount of the State's
variable rate exposure with respect to Bonds shall not exceed
20%. This policy shall remain in effect while any Bonds are
outstanding and the issuance of Bonds shall be subject to the
terms of such policy. The terms of this policy may be amended
from time to time by the Director of the Governor's Office of
Management and Budget but in no event shall any amendment cause
the permitted level of the State's variable rate exposure with
respect to Bonds to exceed 20%.
(d) "Build America Bonds" in this Section means Bonds
authorized by Section 54AA of the Internal Revenue Code of
1986, as amended ("Internal Revenue Code"), and bonds issued

HB4055 - 63 - LRB100 12851 RPS 26572 b
from time to time to refund or continue to refund "Build
America Bonds".
(e) Notwithstanding any other provision of this Section,
Qualified School Construction Bonds shall be issued and sold
from time to time, in one or more series, in such amounts and
at such prices as may be directed by the Governor, upon
recommendation by the Director of the Governor's Office of
Management and Budget. Qualified School Construction Bonds
shall be in such form (either coupon, registered or book
entry), in such denominations, payable within 25 years from
their date, subject to such terms of redemption with or without
premium, and if the Qualified School Construction Bonds are
issued with a supplemental coupon, bear interest payable at
such times and at such fixed or variable rate or rates, and be
dated as shall be fixed and determined by the Director of the
Governor's Office of Management and Budget in the order
authorizing the issuance and sale of any series of Qualified
School Construction Bonds, which order shall be approved by the
Governor and is herein called a "Bond Sale Order"; except that
interest payable at fixed or variable rates, if any, shall not
exceed that permitted in the Bond Authorization Act, as now or
hereafter amended. Qualified School Construction Bonds shall
be payable at such place or places, within or without the State
of Illinois, and may be made registrable as to either principal
or as to both principal and interest, as shall be specified in
the Bond Sale Order. Qualified School Construction Bonds may be

HB4055 - 64 - LRB100 12851 RPS 26572 b
callable or subject to purchase and retirement or tender and
remarketing as fixed and determined in the Bond Sale Order.
Qualified School Construction Bonds must be issued with
principal or mandatory redemption amounts or sinking fund
payments into the General Obligation Bond Retirement and
Interest Fund (or subaccount therefor) in equal amounts, with
the first maturity issued, mandatory redemption payment or
sinking fund payment occurring within the fiscal year in which
the Qualified School Construction Bonds are issued or within
the next succeeding fiscal year, with Qualified School
Construction Bonds issued maturing or subject to mandatory
redemption or with sinking fund payments thereof deposited each
fiscal year thereafter up to 25 years. Sinking fund payments
set forth in this subsection shall be permitted only to the
extent authorized in Section 54F of the Internal Revenue Code
or as otherwise determined by the Director of the Governor's
Office of Management and Budget. "Qualified School
Construction Bonds" in this subsection means Bonds authorized
by Section 54F of the Internal Revenue Code and for bonds
issued from time to time to refund or continue to refund such
"Qualified School Construction Bonds".
(f) Beginning with the next issuance by the Governor's
Office of Management and Budget to the Procurement Policy Board
of a request for quotation for the purpose of formulating a new
pool of qualified underwriting banks list, all entities
responding to such a request for quotation for inclusion on

HB4055 - 65 - LRB100 12851 RPS 26572 b
that list shall provide a written report to the Governor's
Office of Management and Budget and the Illinois Comptroller.
The written report submitted to the Comptroller shall (i) be
published on the Comptroller's Internet website and (ii) be
used by the Governor's Office of Management and Budget for the
purposes of scoring such a request for quotation. The written
report, at a minimum, shall:
(1) disclose whether, within the past 3 months,
pursuant to its credit default swap market-making
activities, the firm has entered into any State of Illinois
credit default swaps ("CDS");
(2) include, in the event of State of Illinois CDS
activity, disclosure of the firm's cumulative notional
volume of State of Illinois CDS trades and the firm's
outstanding gross and net notional amount of State of
Illinois CDS, as of the end of the current 3-month period;
(3) indicate, pursuant to the firm's proprietary
trading activities, disclosure of whether the firm, within
the past 3 months, has entered into any proprietary trades
for its own account in State of Illinois CDS;
(4) include, in the event of State of Illinois
proprietary trades, disclosure of the firm's outstanding
gross and net notional amount of proprietary State of
Illinois CDS and whether the net position is short or long
credit protection, as of the end of the current 3-month
period;

HB4055 - 66 - LRB100 12851 RPS 26572 b
(5) list all time periods during the past 3 months
during which the firm held net long or net short State of
Illinois CDS proprietary credit protection positions, the
amount of such positions, and whether those positions were
net long or net short credit protection positions; and
(6) indicate whether, within the previous 3 months, the
firm released any publicly available research or marketing
reports that reference State of Illinois CDS and include
those research or marketing reports as attachments.
(g) All entities included on a Governor's Office of
Management and Budget's pool of qualified underwriting banks
list shall, as soon as possible after March 18, 2011 (the
effective date of Public Act 96-1554), but not later than
January 21, 2011, and on a quarterly fiscal basis thereafter,
provide a written report to the Governor's Office of Management
and Budget and the Illinois Comptroller. The written reports
submitted to the Comptroller shall be published on the
Comptroller's Internet website. The written reports, at a
minimum, shall:
(1) disclose whether, within the past 3 months,
pursuant to its credit default swap market-making
activities, the firm has entered into any State of Illinois
credit default swaps ("CDS");
(2) include, in the event of State of Illinois CDS
activity, disclosure of the firm's cumulative notional
volume of State of Illinois CDS trades and the firm's

HB4055 - 67 - LRB100 12851 RPS 26572 b
outstanding gross and net notional amount of State of
Illinois CDS, as of the end of the current 3-month period;
(3) indicate, pursuant to the firm's proprietary
trading activities, disclosure of whether the firm, within
the past 3 months, has entered into any proprietary trades
for its own account in State of Illinois CDS;
(4) include, in the event of State of Illinois
proprietary trades, disclosure of the firm's outstanding
gross and net notional amount of proprietary State of
Illinois CDS and whether the net position is short or long
credit protection, as of the end of the current 3-month
period;
(5) list all time periods during the past 3 months
during which the firm held net long or net short State of
Illinois CDS proprietary credit protection positions, the
amount of such positions, and whether those positions were
net long or net short credit protection positions; and
(6) indicate whether, within the previous 3 months, the
firm released any publicly available research or marketing
reports that reference State of Illinois CDS and include
those research or marketing reports as attachments.
(h) Notwithstanding any other provision of this Section,
for purposes of maximizing market efficiencies and cost
savings, State Pension Obligation Acceleration Bonds may be
issued and sold from time to time, in one or more series, in
such amounts and at such prices as may be directed by the

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Governor, upon recommendation by the Director of the Governor's
Office of Management and Budget. State Pension Obligation
Acceleration Bonds shall be in such form, either coupon,
registered, or book entry, in such denominations, shall bear
interest payable at such times and at such fixed or variable
rate or rates, and be dated as shall be fixed and determined by
the Director of the Governor's Office of Management and Budget
in the order authorizing the issuance and sale of any series of
State Pension Obligation Acceleration Bonds, which order shall
be approved by the Governor and is herein called a "Bond Sale
Order"; provided, however, that interest payable at fixed or
variable rates shall not exceed that permitted in the Bond
Authorization Act. State Pension Obligation Acceleration Bonds
shall be payable at such place or places, within or without the
State of Illinois, and may be made registrable as to either
principal or as to both principal and interest, as shall be
specified in the Bond Sale Order. State Pension Obligation
Acceleration Bonds may be callable or subject to purchase and
retirement or tender and remarketing as fixed and determined in
the Bond Sale Order.
(Source: P.A. 99-523, eff. 6-30-16.)
(30 ILCS 330/11) (from Ch. 127, par. 661)
Sec. 11. Sale of Bonds. Except as otherwise provided in
this Section, Bonds shall be sold from time to time pursuant to
notice of sale and public bid or by negotiated sale in such

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amounts and at such times as is directed by the Governor, upon
recommendation by the Director of the Governor's Office of
Management and Budget. At least 25%, based on total principal
amount, of all Bonds issued each fiscal year shall be sold
pursuant to notice of sale and public bid. At all times during
each fiscal year, no more than 75%, based on total principal
amount, of the Bonds issued each fiscal year, shall have been
sold by negotiated sale. Failure to satisfy the requirements in
the preceding 2 sentences shall not affect the validity of any
previously issued Bonds; provided that all Bonds authorized by
Public Act 96-43 and Public Act 96-1497 shall not be included
in determining compliance for any fiscal year with the
requirements of the preceding 2 sentences; and further provided
that refunding Bonds satisfying the requirements of Section 16
of this Act and sold during fiscal year 2009, 2010, 2011, or
2017 shall not be subject to the requirements in the preceding
2 sentences.
If any Bonds, including refunding Bonds, are to be sold by
negotiated sale, the Director of the Governor's Office of
Management and Budget shall comply with the competitive request
for proposal process set forth in the Illinois Procurement Code
and all other applicable requirements of that Code.
If Bonds are to be sold pursuant to notice of sale and
public bid, the Director of the Governor's Office of Management
and Budget may, from time to time, as Bonds are to be sold,
advertise the sale of the Bonds in at least 2 daily newspapers,

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one of which is published in the City of Springfield and one in
the City of Chicago. The sale of the Bonds shall also be
advertised in the volume of the Illinois Procurement Bulletin
that is published by the Department of Central Management
Services, and shall be published once at least 10 days prior to
the date fixed for the opening of the bids. The Director of the
Governor's Office of Management and Budget may reschedule the
date of sale upon the giving of such additional notice as the
Director deems adequate to inform prospective bidders of such
change; provided, however, that all other conditions of the
sale shall continue as originally advertised.
Executed Bonds shall, upon payment therefor, be delivered
to the purchaser, and the proceeds of Bonds shall be paid into
the State Treasury as directed by Section 12 of this Act.
All State Pension Obligation Acceleration Bonds shall
comply with this Section. Notwithstanding anything to the
contrary, however, for purposes of complying with this Section,
State Pension Obligation Acceleration Bonds, regardless of the
number of series or issuances sold thereunder, shall be
considered a single issue or series. Furthermore, for purposes
of complying with the competitive bidding requirements of this
Section, the words "at all times" shall not apply to any such
sale of the State Pension Obligation Acceleration Bonds. The
Director of the Governor's Office of Management and Budget
shall determine the time and manner of any competitive sale of
the State Pension Obligation Acceleration Bonds; however, that

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sale shall under no circumstances take place later than 60 days
after the State closes the sale of 75% of the State Pension
Obligation Acceleration Bonds by negotiated sale.
(Source: P.A. 98-44, eff. 6-28-13; 99-523, eff. 6-30-16.)
(30 ILCS 330/12) (from Ch. 127, par. 662)
Sec. 12. Allocation of Proceeds from Sale of Bonds.
(a) Proceeds from the sale of Bonds, authorized by Section
3 of this Act, shall be deposited in the separate fund known as
the Capital Development Fund.
(b) Proceeds from the sale of Bonds, authorized by
paragraph (a) of Section 4 of this Act, shall be deposited in
the separate fund known as the Transportation Bond, Series A
Fund.
(c) Proceeds from the sale of Bonds, authorized by
paragraphs (b) and (c) of Section 4 of this Act, shall be
deposited in the separate fund known as the Transportation
Bond, Series B Fund.
(c-1) Proceeds from the sale of Bonds, authorized by
paragraph (d) of Section 4 of this Act, shall be deposited into
the Transportation Bond Series D Fund, which is hereby created.
(d) Proceeds from the sale of Bonds, authorized by Section
5 of this Act, shall be deposited in the separate fund known as
the School Construction Fund.
(e) Proceeds from the sale of Bonds, authorized by Section
6 of this Act, shall be deposited in the separate fund known as

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the Anti-Pollution Fund.
(f) Proceeds from the sale of Bonds, authorized by Section
7 of this Act, shall be deposited in the separate fund known as
the Coal Development Fund.
(f-2) Proceeds from the sale of Bonds, authorized by
Section 7.2 of this Act, shall be deposited as set forth in
Section 7.2.
(f-5) Proceeds from the sale of Bonds, authorized by
Section 7.5 of this Act, shall be deposited as set forth in
Section 7.5.
(f-7) Proceeds from the sale of Bonds, authorized by
Section 7.6 of this Act, shall be deposited as set forth in
Section 7.6.
(g) Proceeds from the sale of Bonds, authorized by Section
8 of this Act, shall be deposited in the Capital Development
Fund.
(h) Subsequent to the issuance of any Bonds for the
purposes described in Sections 2 through 8 of this Act, the
Governor and the Director of the Governor's Office of
Management and Budget may provide for the reallocation of
unspent proceeds of such Bonds to any other purposes authorized
under said Sections of this Act, subject to the limitations on
aggregate principal amounts contained therein. Upon any such
reallocation, such unspent proceeds shall be transferred to the
appropriate funds as determined by reference to paragraphs (a)
through (g) of this Section.

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(Source: P.A. 96-36, eff. 7-13-09.)
(30 ILCS 330/13) (from Ch. 127, par. 663)
Sec. 13. Appropriation of Proceeds from Sale of Bonds.
(a) At all times, the proceeds from the sale of Bonds
issued pursuant to this Act are subject to appropriation by the
General Assembly and, except as provided in Sections 7.2 and
7.6 Section 7.2, may be obligated or expended only with the
written approval of the Governor, in such amounts, at such
times, and for such purposes as the respective State agencies,
as defined in Section 1-7 of the Illinois State Auditing Act,
as amended, deem necessary or desirable for the specific
purposes contemplated in Sections 2 through 8 of this Act.
Notwithstanding any other provision of this Act, proceeds from
the sale of Bonds issued pursuant to this Act appropriated by
the General Assembly to the Architect of the Capitol may be
obligated or expended by the Architect of the Capitol without
the written approval of the Governor.
(b) Proceeds from the sale of Bonds for the purpose of
development of coal and alternative forms of energy shall be
expended in such amounts and at such times as the Department of
Commerce and Economic Opportunity, with the advice and
recommendation of the Illinois Coal Development Board for coal
development projects, may deem necessary and desirable for the
specific purpose contemplated by Section 7 of this Act. In
considering the approval of projects to be funded, the

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Department of Commerce and Economic Opportunity shall give
special consideration to projects designed to remove sulfur and
other pollutants in the preparation and utilization of coal,
and in the use and operation of electric utility generating
plants and industrial facilities which utilize Illinois coal as
their primary source of fuel.
(c) Except as directed in subsection (c-1) or (c-2), any
monies received by any officer or employee of the state
representing a reimbursement of expenditures previously paid
from general obligation bond proceeds shall be deposited into
the General Obligation Bond Retirement and Interest Fund
authorized in Section 14 of this Act.
(c-1) Any money received by the Department of
Transportation as reimbursement for expenditures for high
speed rail purposes pursuant to appropriations from the
Transportation Bond, Series B Fund for (i) CREATE (Chicago
Region Environmental and Transportation Efficiency), (ii) High
Speed Rail, or (iii) AMTRAK projects authorized by the federal
government under the provisions of the American Recovery and
Reinvestment Act of 2009 or the Safe Accountable Flexible
Efficient Transportation Equity Act—A Legacy for Users
(SAFETEA-LU), or any successor federal transportation
authorization Act, shall be deposited into the Federal High
Speed Rail Trust Fund.
(c-2) Any money received by the Department of
Transportation as reimbursement for expenditures for transit

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capital purposes pursuant to appropriations from the
Transportation Bond, Series B Fund for projects authorized by
the federal government under the provisions of the American
Recovery and Reinvestment Act of 2009 or the Safe Accountable
Flexible Efficient Transportation Equity Act—A Legacy for
Users (SAFETEA-LU), or any successor federal transportation
authorization Act, shall be deposited into the Federal Mass
Transit Trust Fund.
(Source: P.A. 98-674, eff. 6-30-14.)
Section 30. The Illinois Pension Code is amended by
changing Sections 1-160, 2-101, 2-105, 2-107, 2-124, 2-134,
2-154.2, 2-162, 14-131, 14-135.08, 14-152.1, 15-108.1,
15-108.2, 15-155, 15-165, 15-198, 16-158, 16-203, 17-129,
18-131, 18-140, 18-169, 20-121, 20-123, 20-124, and 20-125 and
by adding Sections 1-161, 1-162, 2-105.3, 2-154.5, 2-165.1,
2-166.1, 14-103.41, 14-147.5, 14-155.1, 14-155.2, 14-156.1,
15-185.5, 15-200.1, 15-201.1, 16-107.1, 16-190.5, 16-205.1,
16-206.1, 17-106.05, 18-161.5, and 18-169 as follows:
(40 ILCS 5/1-160)
(Text of Section WITHOUT the changes made by P.A. 98-641,
which has been held unconstitutional)
Sec. 1-160. Provisions applicable to new hires.
(a) The provisions of this Section apply to a person who,
on or after January 1, 2011, first becomes a member or a

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participant under any reciprocal retirement system or pension
fund established under this Code, other than a retirement
system or pension fund established under Article 2, 3, 4, 5, 6,
15 or 18 of this Code, notwithstanding any other provision of
this Code to the contrary, but do not apply to any self-managed
plan established under this Code, to any person with respect to
service as a sheriff's law enforcement employee under Article
7, or to any participant of the retirement plan established
under Section 22-101. Notwithstanding anything to the contrary
in this Section, for purposes of this Section, a person who
participated in a retirement system under Article 15 prior to
January 1, 2011 shall be deemed a person who first became a
member or participant prior to January 1, 2011 under any
retirement system or pension fund subject to this Section. The
changes made to this Section by Public Act 98-596 this
amendatory Act of the 98th General Assembly are a clarification
of existing law and are intended to be retroactive to January
1, 2011 (the effective date of Public Act 96-889),
notwithstanding the provisions of Section 1-103.1 of this Code.
This Section does not apply to a person who, on or after 6
months after the effective date of this amendatory Act of the
100th General Assembly, first becomes a member or participant
under Article 14 or 16, unless that person (i) is a covered
employee under Article 14 who has not elected to participate in
the defined contribution plan under Section 14-155.2 or (ii)
elects under subsection (b) of Section 1-161 to receive the

HB4055 - 77 - LRB100 12851 RPS 26572 b
benefits provided under this Section and the applicable
provisions of the Article under which he or she is a member or
participant. This Section also does not apply to a person who
first becomes a member or participant of an affected pension
fund on or after 6 months after the resolution or ordinance
date, as defined in Section 1-162, unless that person elects
under subsection (c) of Section 1-162 to receive the benefits
provided under this Section and the applicable provisions of
the Article under which he or she is a member or participant.
(b) "Final average salary" means the average monthly (or
annual) salary obtained by dividing the total salary or
earnings calculated under the Article applicable to the member
or participant during the 96 consecutive months (or 8
consecutive years) of service within the last 120 months (or 10
years) of service in which the total salary or earnings
calculated under the applicable Article was the highest by the
number of months (or years) of service in that period. For the
purposes of a person who first becomes a member or participant
of any retirement system or pension fund to which this Section
applies on or after January 1, 2011, in this Code, "final
average salary" shall be substituted for the following:
(1) In Article 7 (except for service as sheriff's law
enforcement employees), "final rate of earnings".
(2) In Articles 8, 9, 10, 11, and 12, "highest average
annual salary for any 4 consecutive years within the last
10 years of service immediately preceding the date of

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withdrawal".
(3) In Article 13, "average final salary".
(4) In Article 14, "final average compensation".
(5) In Article 17, "average salary".
(6) In Section 22-207, "wages or salary received by him
at the date of retirement or discharge".
(b-5) Beginning on January 1, 2011, for all purposes under
this Code (including without limitation the calculation of
benefits and employee contributions), the annual earnings,
salary, or wages (based on the plan year) of a member or
participant to whom this Section applies shall not exceed
$106,800; however, that amount shall annually thereafter be
increased by the lesser of (i) 3% of that amount, including all
previous adjustments, or (ii) one-half the annual unadjusted
percentage increase (but not less than zero) in the consumer
price index-u for the 12 months ending with the September
preceding each November 1, including all previous adjustments.
For the purposes of this Section, "consumer price index-u"
means the index published by the Bureau of Labor Statistics of
the United States Department of Labor that measures the average
change in prices of goods and services purchased by all urban
consumers, United States city average, all items, 1982-84 =
100. The new amount resulting from each annual adjustment shall
be determined by the Public Pension Division of the Department
of Insurance and made available to the boards of the retirement
systems and pension funds by November 1 of each year.

HB4055 - 79 - LRB100 12851 RPS 26572 b
(c) A member or participant is entitled to a retirement
annuity upon written application if he or she has attained age
67 (beginning January 1, 2015, age 65 with respect to service
under Article 12 of this Code that is subject to this Section)
and has at least 10 years of service credit and is otherwise
eligible under the requirements of the applicable Article.
A member or participant who has attained age 62 (beginning
January 1, 2015, age 60 with respect to service under Article
12 of this Code that is subject to this Section) and has at
least 10 years of service credit and is otherwise eligible
under the requirements of the applicable Article may elect to
receive the lower retirement annuity provided in subsection (d)
of this Section.
(d) The retirement annuity of a member or participant who
is retiring after attaining age 62 (beginning January 1, 2015,
age 60 with respect to service under Article 12 of this Code
that is subject to this Section) with at least 10 years of
service credit shall be reduced by one-half of 1% for each full
month that the member's age is under age 67 (beginning January
1, 2015, age 65 with respect to service under Article 12 of
this Code that is subject to this Section).
(e) Any retirement annuity or supplemental annuity shall be
subject to annual increases on the January 1 occurring either
on or after the attainment of age 67 (beginning January 1,
2015, age 65 with respect to service under Article 12 of this
Code that is subject to this Section) or the first anniversary

HB4055 - 80 - LRB100 12851 RPS 26572 b
of the annuity start date, whichever is later. Each annual
increase shall be calculated at 3% or one-half the annual
unadjusted percentage increase (but not less than zero) in the
consumer price index-u for the 12 months ending with the
September preceding each November 1, whichever is less, of the
originally granted retirement annuity. If the annual
unadjusted percentage change in the consumer price index-u for
the 12 months ending with the September preceding each November
1 is zero or there is a decrease, then the annuity shall not be
increased.
(f) The initial survivor's or widow's annuity of an
otherwise eligible survivor or widow of a retired member or
participant who first became a member or participant on or
after January 1, 2011 shall be in the amount of 66 2/3% of the
retired member's or participant's retirement annuity at the
date of death. In the case of the death of a member or
participant who has not retired and who first became a member
or participant on or after January 1, 2011, eligibility for a
survivor's or widow's annuity shall be determined by the
applicable Article of this Code. The initial benefit shall be
66 2/3% of the earned annuity without a reduction due to age. A
child's annuity of an otherwise eligible child shall be in the
amount prescribed under each Article if applicable. Any
survivor's or widow's annuity shall be increased (1) on each
January 1 occurring on or after the commencement of the annuity
if the deceased member died while receiving a retirement

HB4055 - 81 - LRB100 12851 RPS 26572 b
annuity or (2) in other cases, on each January 1 occurring
after the first anniversary of the commencement of the annuity.
Each annual increase shall be calculated at 3% or one-half the
annual unadjusted percentage increase (but not less than zero)
in the consumer price index-u for the 12 months ending with the
September preceding each November 1, whichever is less, of the
originally granted survivor's annuity. If the annual
unadjusted percentage change in the consumer price index-u for
the 12 months ending with the September preceding each November
1 is zero or there is a decrease, then the annuity shall not be
increased.
(g) The benefits in Section 14-110 apply only if the person
is a State policeman, a fire fighter in the fire protection
service of a department, or a security employee of the
Department of Corrections or the Department of Juvenile
Justice, as those terms are defined in subsection (b) of
Section 14-110. A person who meets the requirements of this
Section is entitled to an annuity calculated under the
provisions of Section 14-110, in lieu of the regular or minimum
retirement annuity, only if the person has withdrawn from
service with not less than 20 years of eligible creditable
service and has attained age 60, regardless of whether the
attainment of age 60 occurs while the person is still in
service.
(h) If a person who first becomes a member or a participant
of a retirement system or pension fund subject to this Section

HB4055 - 82 - LRB100 12851 RPS 26572 b
on or after January 1, 2011 is receiving a retirement annuity
or retirement pension under that system or fund and becomes a
member or participant under any other system or fund created by
this Code and is employed on a full-time basis, except for
those members or participants exempted from the provisions of
this Section under subsection (a) of this Section, then the
person's retirement annuity or retirement pension under that
system or fund shall be suspended during that employment. Upon
termination of that employment, the person's retirement
annuity or retirement pension payments shall resume and be
recalculated if recalculation is provided for under the
applicable Article of this Code.
If a person who first becomes a member of a retirement
system or pension fund subject to this Section on or after
January 1, 2012 and is receiving a retirement annuity or
retirement pension under that system or fund and accepts on a
contractual basis a position to provide services to a
governmental entity from which he or she has retired, then that
person's annuity or retirement pension earned as an active
employee of the employer shall be suspended during that
contractual service. A person receiving an annuity or
retirement pension under this Code shall notify the pension
fund or retirement system from which he or she is receiving an
annuity or retirement pension, as well as his or her
contractual employer, of his or her retirement status before
accepting contractual employment. A person who fails to submit

HB4055 - 83 - LRB100 12851 RPS 26572 b
such notification shall be guilty of a Class A misdemeanor and
required to pay a fine of $1,000. Upon termination of that
contractual employment, the person's retirement annuity or
retirement pension payments shall resume and, if appropriate,
be recalculated under the applicable provisions of this Code.
(i) (Blank).
(j) Except for Sections 1-161 and 1-162, in In the case of
a conflict between the provisions of this Section and any other
provision of this Code, the provisions of this Section shall
control.
(Source: P.A. 97-609, eff. 1-1-12; 98-92, eff. 7-16-13; 98-596,
eff. 11-19-13; 98-622, eff. 6-1-14; revised 3-24-16.)
(40 ILCS 5/1-161 new)
Sec. 1-161. Optional benefits for certain Tier 2 members
under Articles 14, 15, and 16.
(a) Notwithstanding any other provision of this Code to the
contrary, the provisions of this Section apply to a person who,
on or after 6 months after the effective date of this
amendatory Act of the 100th General Assembly, first becomes a
member or a participant under Article 14, 15, or 16 and who
does not make the election under subsection (b) or (c),
whichever is applicable. The provisions of this Section do not
apply to any participant in a self-managed plan or to a covered
employee under Article 14.
(b) In lieu of the benefits provided under this Section, a

HB4055 - 84 - LRB100 12851 RPS 26572 b
member or participant, except for a participant under Article
15, may irrevocably elect the benefits under Section 1-160 and
the benefits otherwise applicable to that member or
participant. The election must be made within 30 days after
becoming a member or participant. Each retirement system shall
establish procedures for making this election.
(c) A participant under Article 15 may irrevocably elect
the benefits otherwise provided to a Tier 2 participant under
Article 15. The election must be made within 30 days after
becoming a participant. The retirement system under Article 15
shall establish procedures for making this election.
(d) "Final average salary" means the average monthly (or
annual) salary obtained by dividing the total salary or
earnings calculated under the Article applicable to the member
or participant during the last 120 months (or 10 years) of
service in which the total salary or earnings calculated under
the applicable Article was the highest by the number of months
(or years) of service in that period. For the purposes of a
person who first becomes a member or participant of any
retirement system to which this Section applies on or after 6
months after the effective date of this amendatory Act of the
100th General Assembly, in this Code, "final average salary"
shall be substituted for "final average compensation" in
Article 14.
(e) Beginning 6 months after the effective date of this
amendatory Act of the 100th General Assembly, for all purposes

HB4055 - 85 - LRB100 12851 RPS 26572 b
under this Code (including without limitation the calculation
of benefits and employee contributions), the annual earnings,
salary, or wages (based on the plan year) of a member or
participant to whom this Section applies shall not at any time
exceed the federal Social Security Wage Base then in effect.
(f) A member or participant is entitled to a retirement
annuity upon written application if he or she has attained the
normal retirement age determined by the Social Security
Administration for that member or participant's year of birth,
but no earlier than 67 years of age, and has at least 10 years
of service credit and is otherwise eligible under the
requirements of the applicable Article.
(g) The amount of the retirement annuity to which a member
or participant is entitled shall be computed by multiplying
1.25% for each year of service credit by his or her final
average salary.
(h) Any retirement annuity or supplemental annuity shall be
subject to annual increases on the first anniversary of the
annuity start date. Each annual increase shall be one-half the
annual unadjusted percentage increase (but not less than zero)
in the consumer price index-w for the 12 months ending with the
September preceding each November 1 of the originally granted
retirement annuity. If the annual unadjusted percentage change
in the consumer price index-w for the 12 months ending with the
September preceding each November 1 is zero or there is a
decrease, then the annuity shall not be increased.

HB4055 - 86 - LRB100 12851 RPS 26572 b
For the purposes of this Section, "consumer price index-w"
means the index published by the Bureau of Labor Statistics of
the United States Department of Labor that measures the average
change in prices of goods and services purchased by Urban Wage
Earners and Clerical Workers, United States city average, all
items, 1982-84 = 100. The new amount resulting from each annual
adjustment shall be determined by the Public Pension Division
of the Department of Insurance and made available to the boards
of the retirement systems and pension funds by November 1 of
each year.
(i) The initial survivor's or widow's annuity of an
otherwise eligible survivor or widow of a retired member or
participant who first became a member or participant on or
after 6 months after the effective date of this amendatory Act
of the 100th General Assembly shall be in the amount of 66 2/3%
of the retired member's or participant's retirement annuity at
the date of death. In the case of the death of a member or
participant who has not retired and who first became a member
or participant on or after 6 months after the effective date of
this amendatory Act of the 100th General Assembly, eligibility
for a survivor's or widow's annuity shall be determined by the
applicable Article of this Code. The benefit shall be 66 2/3%
of the earned annuity without a reduction due to age. A child's
annuity of an otherwise eligible child shall be in the amount
prescribed under each Article if applicable.
(j) In lieu of any other employee contributions, except for

HB4055 - 87 - LRB100 12851 RPS 26572 b
the contribution to the defined contribution plan under
subsection (k) of this Section, each employee shall contribute
6.2% of his her or salary to the retirement system. However,
the employee contribution under this subsection shall not
exceed the amount of the normal cost of the benefits under this
Section (except for the defined contribution plan under
subsection (k) of this Section), expressed as a percentage of
payroll and determined on or before November 1 of each year by
the board of trustees of the retirement system. If the board of
trustees of the retirement system determines that the 6.2%
employee contribution rate exceeds the normal cost of the
benefits under this Section (except for the defined
contribution plan under subsection (k) of this Section), then
on or before December 1 of that year, the board of trustees
shall certify the amount of the normal cost of the benefits
under this Section (except for the defined contribution plan
under subsection (k) of this Section), expressed as a
percentage of payroll, to the State Actuary and the Commission
on Government Forecasting and Accountability, and the employee
contribution under this subsection shall be reduced to that
amount beginning January 1 of the following year. Thereafter,
if the normal cost of the benefits under this Section (except
for the defined contribution plan under subsection (k) of this
Section), expressed as a percentage of payroll and determined
on or before November 1 of each year by the board of trustees
of the retirement system, exceeds 6.2% of salary, then on or

HB4055 - 88 - LRB100 12851 RPS 26572 b
before December 1 of that year, the board of trustees shall
certify the normal cost to the State Actuary and the Commission
on Government Forecasting and Accountability, and the employee
contributions shall revert back to 6.2% of salary beginning
January 1 of the following year.
(k) No later than 5 months after the effective date of this
amendatory Act of the 100th General Assembly, each retirement
system under Article 14, 15, or 16 shall prepare and implement
a defined contribution plan for members or participants who are
subject to this Section. The defined contribution plan
developed under this subsection shall be a plan that aggregates
employer and employee contributions in individual participant
accounts which, after meeting any other requirements, are used
for payouts after retirement in accordance with this subsection
and any other applicable laws.
(1) Each member or participant shall contribute a
minimum of 4% of his or her salary to the defined
contribution plan.
(2) For each participant in the defined contribution
plan who has been employed with the same employer for at
least one year, employer contributions shall be paid into
that participant's accounts at a rate expressed as a
percentage of salary. This rate may be set for individual
employees, but shall be no higher than 6% of salary and
shall be no lower than 2% of salary.
(3) Employer contributions shall vest when those

HB4055 - 89 - LRB100 12851 RPS 26572 b
contributions are paid into a member's or participant's
account.
(4) The defined contribution plan shall provide a
variety of options for investments. These options shall
include investments handled by the Illinois State Board of
Investment as well as private sector investment options.
(5) The defined contribution plan shall provide a
variety of options for payouts to retirees and their
survivors.
(6) To the extent authorized under federal law and as
authorized by the retirement system, the defined
contribution plan shall allow former participants in the
plan to transfer or roll over employee and employer
contributions, and the earnings thereon, into other
qualified retirement plans.
(7) Each retirement system shall reduce the employee
contributions credited to the member's defined
contribution plan account by an amount determined by that
retirement system to cover the cost of offering the
benefits under this subsection and any applicable
administrative fees.
(8) No person shall begin participating in the defined
contribution plan until it has attained qualified plan
status and received all necessary approvals from the U.S.
Internal Revenue Service.
(l) By accepting the benefits under this Section, a member

HB4055 - 90 - LRB100 12851 RPS 26572 b
or participant acknowledges and consents that benefits once
earned may not be diminished, but that future benefits may be
modified, including, but not limited to, changes in the
retirement age at which a member or participant becomes
eligible to receive future benefits, changes in the amount of
the automatic annual increase for those future benefits, or the
amount of the retirement annuity. Any increase in benefits
under this Section applicable to persons under Article 15 or 16
does not apply unless it is approved by resolution or ordinance
of the governing body of the unit of local government with
regard to the members or participants under that unit of local
government.
(m) In the case of a conflict between the provisions of
this Section and any other provision of this Code, the
provisions of this Section shall control.
(40 ILCS 5/1-162 new)
Sec. 1-162. Optional benefits for certain Tier 2 members of
pension funds under Articles 7, 8, 9, 10, 11, 12, 13, and 17.
(a) As used in this Section:
"Affected pension fund" means a pension fund established
under Article 7, 8, 9, 10, 11, 12, 13, or 17 that the governing
body of the unit of local government has designated as an
affected pension fund by adoption of a resolution or ordinance.
"Resolution or ordinance date" means the date on which the
governing body of the unit of local government designates a

HB4055 - 91 - LRB100 12851 RPS 26572 b
pension fund under Article 7, 8, 9, 10, 11, 12, 13, or 17 as an
affected pension fund by adoption of a resolution or ordinance.
(b) Notwithstanding any other provision of this Code to the
contrary, the provisions of this Section apply to a person who
first becomes a member or a participant in an affected pension
fund on or after 6 months after the resolution or ordinance
date and who does not make the election under subsection (c).
The provisions of this Section do not apply to a sheriff's law
enforcement employee under Article 7.
(c) In lieu of the benefits provided under this Section, a
member or participant may irrevocably elect the benefits under
Section 1-160 and the benefits otherwise applicable to that
member or participant. The election must be made within 30 days
after becoming a member or participant. Each affected pension
fund shall establish procedures for making this election.
(d) "Final average salary" means the average monthly (or
annual) salary obtained by dividing the total salary or
earnings calculated under the Article applicable to the member
or participant during the last 120 months (or 10 years) of
service in which the total salary or earnings calculated under
the applicable Article was the highest by the number of months
(or years) of service in that period. For the purposes of a
person who first becomes a member or participant of an affected
pension fund on or after 6 months after the ordinance or
resolution date, in this Code, "final average salary" shall be
substituted for the following:

HB4055 - 92 - LRB100 12851 RPS 26572 b
(1) In Article 7, (except for service as sheriff's law
enforcement employees), "final rate of earnings".
(2) In Articles 8, 9, 10, 11, and 12, "highest average
annual salary for any 4 consecutive years within the last
10 years of service immediately preceding the date of
withdrawal".
(3) In Article 13, "average final salary".
(4) In Article 17, "average salary".
(e) Beginning 6 months after the resolution or ordinance
date, for all purposes under this Code (including without
limitation the calculation of benefits and employee
contributions), the annual earnings, salary, or wages (based on
the plan year) of a member or participant to whom this Section
applies shall not at any time exceed the federal Social
Security Wage Base then in effect.
(f) A member or participant is entitled to a retirement
annuity upon written application if he or she has attained the
normal retirement age determined by the Social Security
Administration for that member or participant's year of birth,
but no earlier than 67 years of age, and has at least 10 years
of service credit and is otherwise eligible under the
requirements of the applicable Article.
(g) The amount of the retirement annuity to which a member
or participant is entitled shall be computed by multiplying
1.25% for each year of service credit by his or her final
average salary.

HB4055 - 93 - LRB100 12851 RPS 26572 b
(h) Any retirement annuity or supplemental annuity shall be
subject to annual increases on the first anniversary of the
annuity start date. Each annual increase shall be one-half the
annual unadjusted percentage increase (but not less than zero)
in the consumer price index-w for the 12 months ending with the
September preceding each November 1 of the originally granted
retirement annuity. If the annual unadjusted percentage change
in the consumer price index-w for the 12 months ending with the
September preceding each November 1 is zero or there is a
decrease, then the annuity shall not be increased.
For the purposes of this Section, "consumer price index-w"
means the index published by the Bureau of Labor Statistics of
the United States Department of Labor that measures the average
change in prices of goods and services purchased by Urban Wage
Earners and Clerical Workers, United States city average, all
items, 1982-84 = 100. The new amount resulting from each annual
adjustment shall be determined by the Public Pension Division
of the Department of Insurance and made available to the boards
of the retirement systems and pension funds by November 1 of
each year.
(i) The initial survivor's or widow's annuity of an
otherwise eligible survivor or widow of a retired member or
participant who first became a member or participant on or
after 6 months after the resolution or ordinance date shall be
in the amount of 66 2/3% of the retired member's or
participant's retirement annuity at the date of death. In the

HB4055 - 94 - LRB100 12851 RPS 26572 b
case of the death of a member or participant who has not
retired and who first became a member or participant on or
after 6 months after the resolution or ordinance date,
eligibility for a survivor's or widow's annuity shall be
determined by the applicable Article of this Code. The benefit
shall be 66 2/3% of the earned annuity without a reduction due
to age. A child's annuity of an otherwise eligible child shall
be in the amount prescribed under each Article if applicable.
(j) In lieu of any other employee contributions, except for
the contribution to the defined contribution plan under
subsection (k) of this Section, each employee shall contribute
6.2% of his her or salary to the affected pension fund.
However, the employee contribution under this subsection shall
not exceed the amount of the normal cost of the benefits under
this Section (except for the defined contribution plan under
subsection (k) of this Section), expressed as a percentage of
payroll and determined on or before November 1 of each year by
the board of trustees of the affected pension fund. If the
board of trustees of the affected pension fund determines that
the 6.2% employee contribution rate exceeds the normal cost of
the benefits under this Section (except for the defined
contribution plan under subsection (k) of this Section), then
on or before December 1 of that year, the board of trustees
shall certify the amount of the normal cost of the benefits
under this Section (except for the defined contribution plan
under subsection (k) of this Section), expressed as a

HB4055 - 95 - LRB100 12851 RPS 26572 b
percentage of payroll, to the State Actuary and the Commission
on Government Forecasting and Accountability, and the employee
contribution under this subsection shall be reduced to that
amount beginning January 1 of the following year. Thereafter,
if the normal cost of the benefits under this Section (except
for the defined contribution plan under subsection (k) of this
Section), expressed as a percentage of payroll and determined
on or before November 1 of each year by the board of trustees
of the affected pension fund, exceeds 6.2% of salary, then on
or before December 1 of that year, the board of trustees shall
certify the normal cost to the State Actuary and the Commission
on Government Forecasting and Accountability, and the employee
contributions shall revert back to 6.2% of salary beginning
January 1 of the following year.
(k) No later than 5 months after the resolution or
ordinance date, an affected pension fund shall prepare and
implement a defined contribution plan for members or
participants who are subject to this Section. The defined
contribution plan developed under this subsection shall be a
plan that aggregates employer and employee contributions in
individual participant accounts which, after meeting any other
requirements, are used for payouts after retirement in
accordance with this subsection and any other applicable laws.
(1) Each member or participant shall contribute a
minimum of 4% of his or her salary to the defined
contribution plan.

HB4055 - 96 - LRB100 12851 RPS 26572 b
(2) For each participant in the defined contribution
plan who has been employed with the same employer for at
least one year, employer contributions shall be paid into
that participant's accounts at a rate expressed as a
percentage of salary. This rate may be set for individual
employees, but shall be no higher than 6% of salary and
shall be no lower than 2% of salary.
(3) Employer contributions shall vest when those
contributions are paid into a member's or participant's
account.
(4) The defined contribution plan shall provide a
variety of options for investments. These options shall
include investments handled by the Illinois State Board of
Investment as well as private sector investment options.
(5) The defined contribution plan shall provide a
variety of options for payouts to retirees and their
survivors.
(6) To the extent authorized under federal law and as
authorized by the affected pension fund, the defined
contribution plan shall allow former participants in the
plan to transfer or roll over employee and employer
contributions, and the earnings thereon, into other
qualified retirement plans.
(7) Each affected pension fund shall reduce the
employee contributions credited to the member's defined
contribution plan account by an amount determined by that

HB4055 - 97 - LRB100 12851 RPS 26572 b
affected pension fund to cover the cost of offering the
benefits under this subsection and any applicable
administrative fees.
(8) No person shall begin participating in the defined
contribution plan until it has attained qualified plan
status and received all necessary approvals from the U.S.
Internal Revenue Service.
(l) By accepting the benefits under this Section, a member
or participant acknowledges and consents that benefits once
earned may not be diminished, but that future benefits may be
modified, including, but not limited to, changes in the
retirement age at which a member or participant becomes
eligible to receive future benefits, changes in the amount of
the automatic annual increase for those future benefits, or the
amount of the retirement annuity. Any increase in benefits
under this Section does not apply unless it is approved by
resolution or ordinance of the governing body of the unit of
local government with regard to the members or participants
under that unit of local government.
(m) In the case of a conflict between the provisions of
this Section and any other provision of this Code, the
provisions of this Section shall control.
(40 ILCS 5/2-101) (from Ch. 108 1/2, par. 2-101)
Sec. 2-101. Creation of system. A retirement system is
created to provide retirement annuities, survivor's annuities

HB4055 - 98 - LRB100 12851 RPS 26572 b
and other benefits for certain members of the General Assembly,
certain elected state officials, and their beneficiaries.
The system shall be known as the "General Assembly
Retirement System". All its funds and property shall be a trust
separate from all other entities, maintained for the purpose of
securing payment of annuities and benefits under this Article.
Participation in the retirement system created under this
Article is restricted to persons who became participants before
the effective date of this amendatory Act of the 100th General
Assembly. Beginning on that date, the System shall not accept
any new participants.
(Source: P.A. 83-1440.)
(40 ILCS 5/2-105) (from Ch. 108 1/2, par. 2-105)
Sec. 2-105. Member. "Member": Members of the General
Assembly of this State, including persons who enter military
service while a member of the General Assembly, and any person
serving as Governor, Lieutenant Governor, Secretary of State,
Treasurer, Comptroller, or Attorney General for the period of
service in such office.
Any person who has served for 10 or more years as Clerk or
Assistant Clerk of the House of Representatives, Secretary or
Assistant Secretary of the Senate, or any combination thereof,
may elect to become a member of this system while thenceforth
engaged in such service by filing a written election with the
board. Any person so electing shall be deemed an active member

HB4055 - 99 - LRB100 12851 RPS 26572 b
of the General Assembly for the purpose of validating and
transferring any service credits earned under any of the funds
and systems established under Articles 3 through 18 of this
Code.
However, notwithstanding any other provision of this
Article, a person shall not be deemed a member for the purposes
of this Article unless he or she became a participant of the
System before the effective date of this amendatory Act of the
100th General Assembly.
(Source: P.A. 85-1008.)
(40 ILCS 5/2-105.3 new)
Sec. 2-105.3. Tier 1 employee. "Tier 1 employee": A
participant who first became a participant before January 1,
2011.
(40 ILCS 5/2-107) (from Ch. 108 1/2, par. 2-107)
Sec. 2-107. Participant. "Participant": Any member who
elects to participate; and any former member who elects to
continue participation under Section 2-117.1, for the duration
of such continued participation. However, notwithstanding any
other provision of this Article, a person shall not be deemed a
participant for the purposes of this Article unless he or she
became a participant of the System before the effective date of
this amendatory Act of the 100th General Assembly.
(Source: P.A. 86-1488.)

HB4055 - 100 - LRB100 12851 RPS 26572 b
(40 ILCS 5/2-124) (from Ch. 108 1/2, par. 2-124)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 2-124. Contributions by State.
(a) The State shall make contributions to the System by
appropriations of amounts which, together with the
contributions of participants, interest earned on investments,
and other income will meet the cost of maintaining and
administering the System on a 90% funded basis in accordance
with actuarial recommendations.
(b) The Board shall determine the amount of State
contributions required for each fiscal year on the basis of the
actuarial tables and other assumptions adopted by the Board and
the prescribed rate of interest, using the formula in
subsection (c).
(c) For State fiscal years 2018 through 2045, the minimum
contribution to the System to be made by the State for each
fiscal year shall be an amount determined by the System to be
sufficient to bring the total assets of the System up to 90% of
the total actuarial liabilities of the System by the end of
State fiscal year 2045. In making these determinations, the
required State contribution shall be calculated each year as a
level percentage of total payroll, including payroll that is
not deemed pensionable, but excluding payroll attributable to
participants in the defined contribution plan under Section

HB4055 - 101 - LRB100 12851 RPS 26572 b
2-165.1, over the years remaining to and including fiscal year
2045 and shall be determined under the projected unit credit
actuarial cost method.
Beginning in State fiscal year 2018, any increase or
decrease in State contribution over the prior fiscal year due
exclusively to changes in actuarial or investment assumptions
adopted by the Board shall be included in the State
contribution to the System, as a percentage of the applicable
employee payroll, and shall be increased in equal annual
increments so that by the State fiscal year occurring 5 years
after the adoption of the actuarial or investment assumptions,
the State is contributing at the rate otherwise required under
this Section.
For State fiscal years 2012 through 2017 2045, the minimum
contribution to the System to be made by the State for each
fiscal year shall be an amount determined by the System to be
sufficient to bring the total assets of the System up to 90% of
the total actuarial liabilities of the System by the end of
State fiscal year 2045. In making these determinations, the
required State contribution shall be calculated each year as a
level percentage of payroll over the years remaining to and
including fiscal year 2045 and shall be determined under the
projected unit credit actuarial cost method.
For State fiscal years 1996 through 2005, the State
contribution to the System, as a percentage of the applicable
employee payroll, shall be increased in equal annual increments

HB4055 - 102 - LRB100 12851 RPS 26572 b
so that by State fiscal year 2011, the State is contributing at
the rate required under this Section.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2006 is
$4,157,000.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2007 is
$5,220,300.
For each of State fiscal years 2008 through 2009, the State
contribution to the System, as a percentage of the applicable
employee payroll, shall be increased in equal annual increments
from the required State contribution for State fiscal year
2007, so that by State fiscal year 2011, the State is
contributing at the rate otherwise required under this Section.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2010 is
$10,454,000 and shall be made from the proceeds of bonds sold
in fiscal year 2010 pursuant to Section 7.2 of the General
Obligation Bond Act, less (i) the pro rata share of bond sale
expenses determined by the System's share of total bond
proceeds, (ii) any amounts received from the General Revenue
Fund in fiscal year 2010, and (iii) any reduction in bond
proceeds due to the issuance of discounted bonds, if
applicable.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2011 is

HB4055 - 103 - LRB100 12851 RPS 26572 b
the amount recertified by the System on or before April 1, 2011
pursuant to Section 2-134 and shall be made from the proceeds
of bonds sold in fiscal year 2011 pursuant to Section 7.2 of
the General Obligation Bond Act, less (i) the pro rata share of
bond sale expenses determined by the System's share of total
bond proceeds, (ii) any amounts received from the General
Revenue Fund in fiscal year 2011, and (iii) any reduction in
bond proceeds due to the issuance of discounted bonds, if
applicable.
Beginning in State fiscal year 2046, the minimum State
contribution for each fiscal year shall be the amount needed to
maintain the total assets of the System at 90% of the total
actuarial liabilities of the System.
Amounts received by the System pursuant to Section 25 of
the Budget Stabilization Act or Section 8.12 of the State
Finance Act in any fiscal year do not reduce and do not
constitute payment of any portion of the minimum State
contribution required under this Article in that fiscal year.
Such amounts shall not reduce, and shall not be included in the
calculation of, the required State contributions under this
Article in any future year until the System has reached a
funding ratio of at least 90%. A reference in this Article to
the "required State contribution" or any substantially similar
term does not include or apply to any amounts payable to the
System under Section 25 of the Budget Stabilization Act.
Notwithstanding any other provision of this Section, the

HB4055 - 104 - LRB100 12851 RPS 26572 b
required State contribution for State fiscal year 2005 and for
fiscal year 2008 and each fiscal year thereafter, as calculated
under this Section and certified under Section 2-134, shall not
exceed an amount equal to (i) the amount of the required State
contribution that would have been calculated under this Section
for that fiscal year if the System had not received any
payments under subsection (d) of Section 7.2 of the General
Obligation Bond Act, minus (ii) the portion of the State's
total debt service payments for that fiscal year on the bonds
issued in fiscal year 2003 for the purposes of that Section
7.2, as determined and certified by the Comptroller, that is
the same as the System's portion of the total moneys
distributed under subsection (d) of Section 7.2 of the General
Obligation Bond Act. In determining this maximum for State
fiscal years 2008 through 2010, however, the amount referred to
in item (i) shall be increased, as a percentage of the
applicable employee payroll, in equal increments calculated
from the sum of the required State contribution for State
fiscal year 2007 plus the applicable portion of the State's
total debt service payments for fiscal year 2007 on the bonds
issued in fiscal year 2003 for the purposes of Section 7.2 of
the General Obligation Bond Act, so that, by State fiscal year
2011, the State is contributing at the rate otherwise required
under this Section.
(d) For purposes of determining the required State
contribution to the System, the value of the System's assets

HB4055 - 105 - LRB100 12851 RPS 26572 b
shall be equal to the actuarial value of the System's assets,
which shall be calculated as follows:
As of June 30, 2008, the actuarial value of the System's
assets shall be equal to the market value of the assets as of
that date. In determining the actuarial value of the System's
assets for fiscal years after June 30, 2008, any actuarial
gains or losses from investment return incurred in a fiscal
year shall be recognized in equal annual amounts over the
5-year period following that fiscal year.
(e) For purposes of determining the required State
contribution to the system for a particular year, the actuarial
value of assets shall be assumed to earn a rate of return equal
to the system's actuarially assumed rate of return.
(Source: P.A. 96-43, eff. 7-15-09; 96-1497, eff. 1-14-11;
96-1511, eff. 1-27-11; 96-1554, eff. 3-18-11; 97-813, eff.
7-13-12.)
(40 ILCS 5/2-134) (from Ch. 108 1/2, par. 2-134)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 2-134. To certify required State contributions and
submit vouchers.
(a) The Board shall certify to the Governor on or before
December 15 of each year until December 15, 2011 the amount of
the required State contribution to the System for the next
fiscal year and shall specifically identify the System's

HB4055 - 106 - LRB100 12851 RPS 26572 b
projected State normal cost for that fiscal year. The
certification shall include a copy of the actuarial
recommendations upon which it is based and shall specifically
identify the System's projected State normal cost for that
fiscal year.
On or before November 1 of each year, beginning November 1,
2012, the Board shall submit to the State Actuary, the
Governor, and the General Assembly a proposed certification of
the amount of the required State contribution to the System for
the next fiscal year, along with all of the actuarial
assumptions, calculations, and data upon which that proposed
certification is based. On or before January 1 of each year
beginning January 1, 2013, the State Actuary shall issue a
preliminary report concerning the proposed certification and
identifying, if necessary, recommended changes in actuarial
assumptions that the Board must consider before finalizing its
certification of the required State contributions. On or before
January 15, 2013 and every January 15 thereafter, the Board
shall certify to the Governor and the General Assembly the
amount of the required State contribution for the next fiscal
year. The Board's certification must note any deviations from
the State Actuary's recommended changes, the reason or reasons
for not following the State Actuary's recommended changes, and
the fiscal impact of not following the State Actuary's
recommended changes on the required State contribution.
On or before May 1, 2004, the Board shall recalculate and

HB4055 - 107 - LRB100 12851 RPS 26572 b
recertify to the Governor the amount of the required State
contribution to the System for State fiscal year 2005, taking
into account the amounts appropriated to and received by the
System under subsection (d) of Section 7.2 of the General
Obligation Bond Act.
On or before July 1, 2005, the Board shall recalculate and
recertify to the Governor the amount of the required State
contribution to the System for State fiscal year 2006, taking
into account the changes in required State contributions made
by this amendatory Act of the 94th General Assembly.
On or before April 1, 2011, the Board shall recalculate and
recertify to the Governor the amount of the required State
contribution to the System for State fiscal year 2011, applying
the changes made by Public Act 96-889 to the System's assets
and liabilities as of June 30, 2009 as though Public Act 96-889
was approved on that date.
As soon as practical after the effective date of this
amendatory Act of the 100th General Assembly, the Board shall
recalculate and recertify to the State Actuary, the Governor,
and the General Assembly the amount of the State contribution
to the System for State fiscal year 2018, taking into account
the changes in required State contributions made by this
amendatory Act of the 100th General Assembly. The State Actuary
shall review the assumptions and valuations underlying the
Board's revised certification and issue a preliminary report
concerning the proposed recertification and identifying, if

HB4055 - 108 - LRB100 12851 RPS 26572 b
necessary, recommended changes in actuarial assumptions that
the Board must consider before finalizing its certification of
the required State contributions. The Board's final
certification must note any deviations from the State Actuary's
recommended changes, the reason or reasons for not following
the State Actuary's recommended changes, and the fiscal impact
of not following the State Actuary's recommended changes on the
required State contribution.
(b) Beginning in State fiscal year 1996, on or as soon as
possible after the 15th day of each month the Board shall
submit vouchers for payment of State contributions to the
System, in a total monthly amount of one-twelfth of the
required annual State contribution certified under subsection
(a). From the effective date of this amendatory Act of the 93rd
General Assembly through June 30, 2004, the Board shall not
submit vouchers for the remainder of fiscal year 2004 in excess
of the fiscal year 2004 certified contribution amount
determined under this Section after taking into consideration
the transfer to the System under subsection (d) of Section
6z-61 of the State Finance Act. These vouchers shall be paid by
the State Comptroller and Treasurer by warrants drawn on the
funds appropriated to the System for that fiscal year. If in
any month the amount remaining unexpended from all other
appropriations to the System for the applicable fiscal year
(including the appropriations to the System under Section 8.12
of the State Finance Act and Section 1 of the State Pension

HB4055 - 109 - LRB100 12851 RPS 26572 b
Funds Continuing Appropriation Act) is less than the amount
lawfully vouchered under this Section, the difference shall be
paid from the General Revenue Fund under the continuing
appropriation authority provided in Section 1.1 of the State
Pension Funds Continuing Appropriation Act.
(c) The full amount of any annual appropriation for the
System for State fiscal year 1995 shall be transferred and made
available to the System at the beginning of that fiscal year at
the request of the Board. Any excess funds remaining at the end
of any fiscal year from appropriations shall be retained by the
System as a general reserve to meet the System's accrued
liabilities.
(Source: P.A. 96-1497, eff. 1-14-11; 96-1511, eff. 1-27-11;
97-694, eff. 6-18-12.)
(40 ILCS 5/2-154.5 new)
Sec. 2-154.5. Accelerated pension benefit payment.
(a) As used in this Section:
"Eligible person" means a person who:
(1) has terminated service;
(2) has accrued sufficient service credit to be
eligible to receive a retirement annuity under this
Article;
(3) has not received any retirement annuity under this
Article; and
(4) does not have a QILDRO in effect against him or her

HB4055 - 110 - LRB100 12851 RPS 26572 b
under this Article.
"Pension benefit" means the benefits under this Article, or
Article 1 as it relates to those benefits, including any
anticipated annual increases, that an eligible person is
entitled to upon attainment of the applicable retirement age.
"Pension benefit" also includes applicable survivor's or
disability benefits.
(b) Before January 1, 2018, the System shall calculate,
using actuarial tables and other assumptions adopted by the
Board, the net present value of pension benefits for each
eligible person and shall offer each eligible person the
opportunity to irrevocably elect to receive an amount
determined by the System to be equal to 70% of the net present
value of his or her pension benefits in lieu of receiving any
pension benefit. The offer shall specify the dollar amount that
the eligible person will receive if he or she so elects and
shall expire when a subsequent offer is made to an eligible
person. The System shall make a good faith effort to contact
every eligible person to notify him or her of the election and
of the amount of the accelerated pension benefit payment.
Beginning January 1, 2018 and until July 1, 2018, an
eligible person may irrevocably elect to receive an accelerated
pension benefit payment in the amount that the System offers
under this subsection in lieu of receiving any pension benefit.
A person who elects to receive an accelerated pension benefit
payment under this Section may not elect to proceed under the

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Retirement Systems Reciprocal Act with respect to service under
this Article.
(c) A person's credits and creditable service under this
Article shall be terminated upon the person's receipt of an
accelerated pension benefit payment under this Section, and no
other benefit shall be paid under this Article based on those
terminated credits and creditable service, including any
retirement, survivor, or other benefit; except that to the
extent that participation, benefits, or premiums under the
State Employees Group Insurance Act of 1971 are based on the
amount of service credit, the terminated service credit shall
be used for that purpose.
(d) If a person who has received an accelerated pension
benefit payment under this Section returns to active service
under this Article, then:
(1) Any benefits under the System earned as a result of
that return to active service shall be based solely on the
person's credits and creditable service arising from the
return to active service.
(2) The accelerated pension benefit payment may not be
repaid to the System, and the terminated credits and
creditable service may not under any circumstances be
reinstated.
(e) As a condition of receiving an accelerated pension
benefit payment, an eligible person must have another
retirement plan or account qualified under the Internal Revenue

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Code of 1986, as amended, for the accelerated pension benefit
payment to be rolled into. The accelerated pension benefit
payment under this Section may be subject to withholding or
payment of applicable taxes, but to the extent permitted by
federal law, a person who receives an accelerated pension
benefit payment under this Section must direct the System to
pay all of that payment as a rollover into another retirement
plan or account qualified under the Internal Revenue Code of
1986, as amended.
(f) Before January 1, 2019, the Board shall certify to the
Illinois Finance Authority and the General Assembly the amount
by which the total amount of accelerated pension benefit
payments made under this Section exceed the amount appropriated
to the System for the purpose of making those payments.
(g) The Board shall adopt any rules necessary to implement
this Section.
(h) No provision of this Section shall be interpreted in a
way that would cause the applicable System to cease to be a
qualified plan under the Internal Revenue Code of 1986.
(40 ILCS 5/2-162)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 2-162. Application and expiration of new benefit
increases.
(a) As used in this Section, "new benefit increase" means

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an increase in the amount of any benefit provided under this
Article, or an expansion of the conditions of eligibility for
any benefit under this Article, that results from an amendment
to this Code that takes effect after the effective date of this
amendatory Act of the 94th General Assembly. "New benefit
increase", however, does not include any benefit increase
resulting from the changes made to this Article by this
amendatory Act of the 100th General Assembly.
(b) Notwithstanding any other provision of this Code or any
subsequent amendment to this Code, every new benefit increase
is subject to this Section and shall be deemed to be granted
only in conformance with and contingent upon compliance with
the provisions of this Section.
(c) The Public Act enacting a new benefit increase must
identify and provide for payment to the System of additional
funding at least sufficient to fund the resulting annual
increase in cost to the System as it accrues.
Every new benefit increase is contingent upon the General
Assembly providing the additional funding required under this
subsection. The Commission on Government Forecasting and
Accountability shall analyze whether adequate additional
funding has been provided for the new benefit increase and
shall report its analysis to the Public Pension Division of the
Department of Insurance Financial and Professional Regulation.
A new benefit increase created by a Public Act that does not
include the additional funding required under this subsection

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is null and void. If the Public Pension Division determines
that the additional funding provided for a new benefit increase
under this subsection is or has become inadequate, it may so
certify to the Governor and the State Comptroller and, in the
absence of corrective action by the General Assembly, the new
benefit increase shall expire at the end of the fiscal year in
which the certification is made.
(d) Every new benefit increase shall expire 5 years after
its effective date or on such earlier date as may be specified
in the language enacting the new benefit increase or provided
under subsection (c). This does not prevent the General
Assembly from extending or re-creating a new benefit increase
by law.
(e) Except as otherwise provided in the language creating
the new benefit increase, a new benefit increase that expires
under this Section continues to apply to persons who applied
and qualified for the affected benefit while the new benefit
increase was in effect and to the affected beneficiaries and
alternate payees of such persons, but does not apply to any
other person, including without limitation a person who
continues in service after the expiration date and did not
apply and qualify for the affected benefit while the new
benefit increase was in effect.
(Source: P.A. 94-4, eff. 6-1-05.)
(40 ILCS 5/2-165.1 new)

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Sec. 2-165.1. Defined contribution plan.
(a) By July 1, 2018, the System shall prepare and implement
a voluntary defined contribution plan for up to 5% of eligible
active Tier 1 employees. The System shall determine the 5% cap
by the number of active Tier 1 employees on the effective date
of this Section. The defined contribution plan developed under
this Section shall be a plan that aggregates employer and
employee contributions in individual participant accounts
which, after meeting any other requirements, are used for
payouts after retirement in accordance with this Section and
any other applicable laws.
As used in this Section, "defined benefit plan" means the
retirement plan available under this Article to Tier 1
employees who have not made the election authorized under this
Section.
(1) Under the defined contribution plan, an active Tier
1 employee of this System could elect to cease accruing
benefits in the defined benefit plan under this Article and
begin accruing benefits for future service in the defined
contribution plan. Service credit under the defined
contribution plan may be used for determining retirement
eligibility under the defined benefit plan.
(2) Participants in the defined contribution plan
shall pay employee contributions at the same rate as Tier 1
employees in this System who do not participate in the
defined contribution plan.

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(3) State contributions shall be paid into the accounts
of all participants in the defined contribution plan at a
uniform rate, expressed as a percentage of compensation and
determined for each year. This rate shall be no higher than
the employer's normal cost for Tier 1 employees in the
defined benefit plan for that year, as determined by the
System and expressed as a percentage of compensation, and
shall be no lower than 3% of compensation. The State shall
adjust this rate annually.
(4) The defined contribution plan shall require 5 years
of participation in the defined contribution plan before
vesting in State contributions. If the participant fails to
vest in them, the State contributions, and the earnings
thereon, shall be forfeited.
(5) The defined contribution plan may provide for
participants in the plan to be eligible for defined
disability benefits. If it does, the System shall reduce
the employee contributions credited to the participant's
defined contribution plan account by an amount determined
by the System to cover the cost of offering such benefits.
(6) The defined contribution plan shall provide a
variety of options for investments. These options shall
include investments handled by the Illinois State Board of
Investment as well as private sector investment options.
(7) The defined contribution plan shall provide a
variety of options for payouts to retirees and their

HB4055 - 117 - LRB100 12851 RPS 26572 b
survivors.
(8) To the extent authorized under federal law and as
authorized by the System, the plan shall allow former
participants in the plan to transfer or roll over employee
and vested State contributions, and the earnings thereon,
into other qualified retirement plans.
(9) The System shall reduce the employee contributions
credited to the participant's defined contribution plan
account by an amount determined by the System to cover the
cost of offering these benefits and any applicable
administrative fees.
(b) Only persons who are active Tier 1 employees of the
System on the effective date of this Section are eligible to
participate in the defined contribution plan. Participation in
the defined contribution plan shall be limited to the first 5%
of eligible persons who elect to participate. The election to
participate in the defined contribution plan is voluntary and
irrevocable.
(c) An eligible active Tier 1 employee may irrevocably
elect to participate in the defined contribution plan by filing
with the System a written application to participate that is
received by the System prior to its determination that 5% of
eligible persons have elected to participate in the defined
contribution plan.
When the System first determines that 5% of eligible
persons have elected to participate in the defined contribution

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plan, the System shall provide notice to previously eligible
employees that the plan is no longer available and shall cease
accepting applications to participate.
(d) The System shall make a good faith effort to contact
each active Tier 1 employee who is eligible to participate in
the defined contribution plan. The System shall mail
information describing the option to join the defined
contribution plan to each of these employees to his or her last
known address on file with the System. If the employee is not
responsive to other means of contact, it is sufficient for the
System to publish the details of the option on its website.
Upon request for further information describing the
option, the System shall provide employees with information
from the System before exercising the option to join the plan,
including information on the impact to their vested benefits or
non-vested service. The individual consultation shall include
projections of the participant's defined benefits at
retirement or earlier termination of service and the value of
the participant's account at retirement or earlier termination
of service. The System shall not provide advice or counseling
with respect to whether the employee should exercise the
option. The System shall inform Tier 1 employees who are
eligible to participate in the defined contribution plan that
they may also wish to obtain information and counsel relating
to their option from any other available source, including but
not limited to labor organizations, private counsel, and

HB4055 - 119 - LRB100 12851 RPS 26572 b
financial advisors.
(e) In no event shall the System, its staff, its authorized
representatives, or the Board be liable for any information
given to an employee under this Section. The System may
coordinate with the Illinois Department of Central Management
Services and other retirement systems administering a defined
contribution plan in accordance with this amendatory Act of the
100th General Assembly to provide information concerning the
impact of the option set forth in this Section.
(f) Notwithstanding any other provision of this Section, no
person shall begin participating in the defined contribution
plan until it has attained qualified plan status and received
all necessary approvals from the U.S. Internal Revenue Service.
(g) The System shall report on its progress under this
Section, including the available details of the defined
contribution plan and the System's plans for informing eligible
Tier 1 employees about the plan, to the Governor and the
General Assembly on or before January 15, 2018.
(h) The Illinois State Board of Investments shall be the
plan sponsor for the defined contribution plan established
under this Section.
(i) The intent of this amendatory Act of the 100th General
Assembly is to ensure that the State's normal cost of
participation in the defined contribution plan is similar, and
if possible equal, to the State's normal cost of participation
in the defined benefit plan, unless a lower State's normal cost

HB4055 - 120 - LRB100 12851 RPS 26572 b
is necessary to ensure cost neutrality.
(40 ILCS 5/2-166.1 new)
Sec. 2-166.1. Defined contribution plan; termination. If
the defined contribution plan under Section 2-165.1 is
terminated or becomes inoperative pursuant to law, then each
participant in the plan shall automatically be deemed to have
been a contributing Tier 1 employee in the System's defined
benefit plan during the time in which he or she participated in
the defined contribution plan, and for that purpose the System
shall be entitled to recover the amounts in the participant's
defined contribution accounts.
(40 ILCS 5/14-103.41 new)
Sec. 14-103.41. Tier 1 employee. "Tier 1 employee": An
employee under this Article who first became a member or
participant before January 1, 2011 under any reciprocal
retirement system or pension fund established under this Code
other than a retirement system or pension fund established
under Article 2, 3, 4, 5, 6, or 18 of this Code.
(40 ILCS 5/14-131)
Sec. 14-131. Contributions by State.
(a) The State shall make contributions to the System by
appropriations of amounts which, together with other employer
contributions from trust, federal, and other funds, employee

HB4055 - 121 - LRB100 12851 RPS 26572 b
contributions, investment income, and other income, will be
sufficient to meet the cost of maintaining and administering
the System on a 90% funded basis in accordance with actuarial
recommendations.
For the purposes of this Section and Section 14-135.08,
references to State contributions refer only to employer
contributions and do not include employee contributions that
are picked up or otherwise paid by the State or a department on
behalf of the employee.
(b) The Board shall determine the total amount of State
contributions required for each fiscal year on the basis of the
actuarial tables and other assumptions adopted by the Board,
using the formula in subsection (e).
The Board shall also determine a State contribution rate
for each fiscal year, expressed as a percentage of payroll,
based on the total required State contribution for that fiscal
year (less the amount received by the System from
appropriations under Section 8.12 of the State Finance Act and
Section 1 of the State Pension Funds Continuing Appropriation
Act, if any, for the fiscal year ending on the June 30
immediately preceding the applicable November 15 certification
deadline), the estimated payroll (including all forms of
compensation) for personal services rendered by eligible
employees, and the recommendations of the actuary.
For the purposes of this Section and Section 14.1 of the
State Finance Act, the term "eligible employees" includes

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employees who participate in the System, persons who may elect
to participate in the System but have not so elected, persons
who are serving a qualifying period that is required for
participation, and annuitants employed by a department as
described in subdivision (a)(1) or (a)(2) of Section 14-111.
(c) Contributions shall be made by the several departments
for each pay period by warrants drawn by the State Comptroller
against their respective funds or appropriations based upon
vouchers stating the amount to be so contributed. These amounts
shall be based on the full rate certified by the Board under
Section 14-135.08 for that fiscal year. From the effective date
of this amendatory Act of the 93rd General Assembly through the
payment of the final payroll from fiscal year 2004
appropriations, the several departments shall not make
contributions for the remainder of fiscal year 2004 but shall
instead make payments as required under subsection (a-1) of
Section 14.1 of the State Finance Act. The several departments
shall resume those contributions at the commencement of fiscal
year 2005.
(c-1) Notwithstanding subsection (c) of this Section, for
fiscal years 2010, 2012, 2013, 2014, 2015, 2016, and 2017 only,
contributions by the several departments are not required to be
made for General Revenue Funds payrolls processed by the
Comptroller. Payrolls paid by the several departments from all
other State funds must continue to be processed pursuant to
subsection (c) of this Section.

HB4055 - 123 - LRB100 12851 RPS 26572 b
(c-2) For State fiscal years 2010, 2012, 2013, 2014, 2015,
2016, and 2017 only, on or as soon as possible after the 15th
day of each month, the Board shall submit vouchers for payment
of State contributions to the System, in a total monthly amount
of one-twelfth of the fiscal year General Revenue Fund
contribution as certified by the System pursuant to Section
14-135.08 of the Illinois Pension Code.
(d) If an employee is paid from trust funds or federal
funds, the department or other employer shall pay employer
contributions from those funds to the System at the certified
rate, unless the terms of the trust or the federal-State
agreement preclude the use of the funds for that purpose, in
which case the required employer contributions shall be paid by
the State. From the effective date of this amendatory Act of
the 93rd General Assembly through the payment of the final
payroll from fiscal year 2004 appropriations, the department or
other employer shall not pay contributions for the remainder of
fiscal year 2004 but shall instead make payments as required
under subsection (a-1) of Section 14.1 of the State Finance
Act. The department or other employer shall resume payment of
contributions at the commencement of fiscal year 2005.
(e) For State fiscal years 2018 through 2045, the minimum
contribution to the System to be made by the State for each
fiscal year shall be an amount determined by the System to be
sufficient to bring the total assets of the System up to 90% of
the total actuarial liabilities of the System by the end of

HB4055 - 124 - LRB100 12851 RPS 26572 b
State fiscal year 2045. In making these determinations, the
required State contribution shall be calculated each year as a
level percentage of total payroll, including payroll that is
not deemed pensionable, over the years remaining to and
including fiscal year 2045 and shall be determined under the
projected unit credit actuarial cost method.
Beginning in State fiscal year 2018, any increase or
decrease in State contribution over the prior fiscal year due
exclusively to changes in actuarial or investment assumptions
adopted by the Board shall be included in the State
contribution to the System, as a percentage of the applicable
employee payroll, and shall be increased in equal annual
increments so that by the State fiscal year occurring 5 years
after the adoption of the actuarial or investment assumptions,
the State is contributing at the rate otherwise required under
this Section.
For State fiscal years 2012 through 2017 2045, the minimum
contribution to the System to be made by the State for each
fiscal year shall be an amount determined by the System to be
sufficient to bring the total assets of the System up to 90% of
the total actuarial liabilities of the System by the end of
State fiscal year 2045. In making these determinations, the
required State contribution shall be calculated each year as a
level percentage of payroll over the years remaining to and
including fiscal year 2045 and shall be determined under the
projected unit credit actuarial cost method.

HB4055 - 125 - LRB100 12851 RPS 26572 b
For State fiscal years 1996 through 2005, the State
contribution to the System, as a percentage of the applicable
employee payroll, shall be increased in equal annual increments
so that by State fiscal year 2011, the State is contributing at
the rate required under this Section; except that (i) for State
fiscal year 1998, for all purposes of this Code and any other
law of this State, the certified percentage of the applicable
employee payroll shall be 5.052% for employees earning eligible
creditable service under Section 14-110 and 6.500% for all
other employees, notwithstanding any contrary certification
made under Section 14-135.08 before the effective date of this
amendatory Act of 1997, and (ii) in the following specified
State fiscal years, the State contribution to the System shall
not be less than the following indicated percentages of the
applicable employee payroll, even if the indicated percentage
will produce a State contribution in excess of the amount
otherwise required under this subsection and subsection (a):
9.8% in FY 1999; 10.0% in FY 2000; 10.2% in FY 2001; 10.4% in FY
2002; 10.6% in FY 2003; and 10.8% in FY 2004.
Notwithstanding any other provision of this Article, the
total required State contribution to the System for State
fiscal year 2006 is $203,783,900.
Notwithstanding any other provision of this Article, the
total required State contribution to the System for State
fiscal year 2007 is $344,164,400.
For each of State fiscal years 2008 through 2009, the State

HB4055 - 126 - LRB100 12851 RPS 26572 b
contribution to the System, as a percentage of the applicable
employee payroll, shall be increased in equal annual increments
from the required State contribution for State fiscal year
2007, so that by State fiscal year 2011, the State is
contributing at the rate otherwise required under this Section.
Notwithstanding any other provision of this Article, the
total required State General Revenue Fund contribution for
State fiscal year 2010 is $723,703,100 and shall be made from
the proceeds of bonds sold in fiscal year 2010 pursuant to
Section 7.2 of the General Obligation Bond Act, less (i) the
pro rata share of bond sale expenses determined by the System's
share of total bond proceeds, (ii) any amounts received from
the General Revenue Fund in fiscal year 2010, and (iii) any
reduction in bond proceeds due to the issuance of discounted
bonds, if applicable.
Notwithstanding any other provision of this Article, the
total required State General Revenue Fund contribution for
State fiscal year 2011 is the amount recertified by the System
on or before April 1, 2011 pursuant to Section 14-135.08 and
shall be made from the proceeds of bonds sold in fiscal year
2011 pursuant to Section 7.2 of the General Obligation Bond
Act, less (i) the pro rata share of bond sale expenses
determined by the System's share of total bond proceeds, (ii)
any amounts received from the General Revenue Fund in fiscal
year 2011, and (iii) any reduction in bond proceeds due to the
issuance of discounted bonds, if applicable.

HB4055 - 127 - LRB100 12851 RPS 26572 b
Beginning in State fiscal year 2046, the minimum State
contribution for each fiscal year shall be the amount needed to
maintain the total assets of the System at 90% of the total
actuarial liabilities of the System.
Amounts received by the System pursuant to Section 25 of
the Budget Stabilization Act or Section 8.12 of the State
Finance Act in any fiscal year do not reduce and do not
constitute payment of any portion of the minimum State
contribution required under this Article in that fiscal year.
Such amounts shall not reduce, and shall not be included in the
calculation of, the required State contributions under this
Article in any future year until the System has reached a
funding ratio of at least 90%. A reference in this Article to
the "required State contribution" or any substantially similar
term does not include or apply to any amounts payable to the
System under Section 25 of the Budget Stabilization Act.
Notwithstanding any other provision of this Section, the
required State contribution for State fiscal year 2005 and for
fiscal year 2008 and each fiscal year thereafter, as calculated
under this Section and certified under Section 14-135.08, shall
not exceed an amount equal to (i) the amount of the required
State contribution that would have been calculated under this
Section for that fiscal year if the System had not received any
payments under subsection (d) of Section 7.2 of the General
Obligation Bond Act, minus (ii) the portion of the State's
total debt service payments for that fiscal year on the bonds

HB4055 - 128 - LRB100 12851 RPS 26572 b
issued in fiscal year 2003 for the purposes of that Section
7.2, as determined and certified by the Comptroller, that is
the same as the System's portion of the total moneys
distributed under subsection (d) of Section 7.2 of the General
Obligation Bond Act. In determining this maximum for State
fiscal years 2008 through 2010, however, the amount referred to
in item (i) shall be increased, as a percentage of the
applicable employee payroll, in equal increments calculated
from the sum of the required State contribution for State
fiscal year 2007 plus the applicable portion of the State's
total debt service payments for fiscal year 2007 on the bonds
issued in fiscal year 2003 for the purposes of Section 7.2 of
the General Obligation Bond Act, so that, by State fiscal year
2011, the State is contributing at the rate otherwise required
under this Section.
(f) After the submission of all payments for eligible
employees from personal services line items in fiscal year 2004
have been made, the Comptroller shall provide to the System a
certification of the sum of all fiscal year 2004 expenditures
for personal services that would have been covered by payments
to the System under this Section if the provisions of this
amendatory Act of the 93rd General Assembly had not been
enacted. Upon receipt of the certification, the System shall
determine the amount due to the System based on the full rate
certified by the Board under Section 14-135.08 for fiscal year
2004 in order to meet the State's obligation under this

HB4055 - 129 - LRB100 12851 RPS 26572 b
Section. The System shall compare this amount due to the amount
received by the System in fiscal year 2004 through payments
under this Section and under Section 6z-61 of the State Finance
Act. If the amount due is more than the amount received, the
difference shall be termed the "Fiscal Year 2004 Shortfall" for
purposes of this Section, and the Fiscal Year 2004 Shortfall
shall be satisfied under Section 1.2 of the State Pension Funds
Continuing Appropriation Act. If the amount due is less than
the amount received, the difference shall be termed the "Fiscal
Year 2004 Overpayment" for purposes of this Section, and the
Fiscal Year 2004 Overpayment shall be repaid by the System to
the Pension Contribution Fund as soon as practicable after the
certification.
(g) For purposes of determining the required State
contribution to the System, the value of the System's assets
shall be equal to the actuarial value of the System's assets,
which shall be calculated as follows:
As of June 30, 2008, the actuarial value of the System's
assets shall be equal to the market value of the assets as of
that date. In determining the actuarial value of the System's
assets for fiscal years after June 30, 2008, any actuarial
gains or losses from investment return incurred in a fiscal
year shall be recognized in equal annual amounts over the
5-year period following that fiscal year.
(h) For purposes of determining the required State
contribution to the System for a particular year, the actuarial

HB4055 - 130 - LRB100 12851 RPS 26572 b
value of assets shall be assumed to earn a rate of return equal
to the System's actuarially assumed rate of return.
(i) After the submission of all payments for eligible
employees from personal services line items paid from the
General Revenue Fund in fiscal year 2010 have been made, the
Comptroller shall provide to the System a certification of the
sum of all fiscal year 2010 expenditures for personal services
that would have been covered by payments to the System under
this Section if the provisions of this amendatory Act of the
96th General Assembly had not been enacted. Upon receipt of the
certification, the System shall determine the amount due to the
System based on the full rate certified by the Board under
Section 14-135.08 for fiscal year 2010 in order to meet the
State's obligation under this Section. The System shall compare
this amount due to the amount received by the System in fiscal
year 2010 through payments under this Section. If the amount
due is more than the amount received, the difference shall be
termed the "Fiscal Year 2010 Shortfall" for purposes of this
Section, and the Fiscal Year 2010 Shortfall shall be satisfied
under Section 1.2 of the State Pension Funds Continuing
Appropriation Act. If the amount due is less than the amount
received, the difference shall be termed the "Fiscal Year 2010
Overpayment" for purposes of this Section, and the Fiscal Year
2010 Overpayment shall be repaid by the System to the General
Revenue Fund as soon as practicable after the certification.
(j) After the submission of all payments for eligible

HB4055 - 131 - LRB100 12851 RPS 26572 b
employees from personal services line items paid from the
General Revenue Fund in fiscal year 2011 have been made, the
Comptroller shall provide to the System a certification of the
sum of all fiscal year 2011 expenditures for personal services
that would have been covered by payments to the System under
this Section if the provisions of this amendatory Act of the
96th General Assembly had not been enacted. Upon receipt of the
certification, the System shall determine the amount due to the
System based on the full rate certified by the Board under
Section 14-135.08 for fiscal year 2011 in order to meet the
State's obligation under this Section. The System shall compare
this amount due to the amount received by the System in fiscal
year 2011 through payments under this Section. If the amount
due is more than the amount received, the difference shall be
termed the "Fiscal Year 2011 Shortfall" for purposes of this
Section, and the Fiscal Year 2011 Shortfall shall be satisfied
under Section 1.2 of the State Pension Funds Continuing
Appropriation Act. If the amount due is less than the amount
received, the difference shall be termed the "Fiscal Year 2011
Overpayment" for purposes of this Section, and the Fiscal Year
2011 Overpayment shall be repaid by the System to the General
Revenue Fund as soon as practicable after the certification.
(k) For fiscal years 2012 through 2017 only, after the
submission of all payments for eligible employees from personal
services line items paid from the General Revenue Fund in the
fiscal year have been made, the Comptroller shall provide to

HB4055 - 132 - LRB100 12851 RPS 26572 b
the System a certification of the sum of all expenditures in
the fiscal year for personal services. Upon receipt of the
certification, the System shall determine the amount due to the
System based on the full rate certified by the Board under
Section 14-135.08 for the fiscal year in order to meet the
State's obligation under this Section. The System shall compare
this amount due to the amount received by the System for the
fiscal year. If the amount due is more than the amount
received, the difference shall be termed the "Prior Fiscal Year
Shortfall" for purposes of this Section, and the Prior Fiscal
Year Shortfall shall be satisfied under Section 1.2 of the
State Pension Funds Continuing Appropriation Act. If the amount
due is less than the amount received, the difference shall be
termed the "Prior Fiscal Year Overpayment" for purposes of this
Section, and the Prior Fiscal Year Overpayment shall be repaid
by the System to the General Revenue Fund as soon as
practicable after the certification.
(Source: P.A. 98-24, eff. 6-19-13; 98-674, eff. 6-30-14; 99-8,
eff. 7-9-15; 99-523, eff. 6-30-16.)
(40 ILCS 5/14-135.08) (from Ch. 108 1/2, par. 14-135.08)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 14-135.08. To certify required State contributions.
(a) To certify to the Governor and to each department, on
or before November 15 of each year until November 15, 2011, the

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required rate for State contributions to the System for the
next State fiscal year, as determined under subsection (b) of
Section 14-131. The certification to the Governor under this
subsection (a) shall include a copy of the actuarial
recommendations upon which the rate is based and shall
specifically identify the System's projected State normal cost
for that fiscal year.
(a-5) On or before November 1 of each year, beginning
November 1, 2012, the Board shall submit to the State Actuary,
the Governor, and the General Assembly a proposed certification
of the amount of the required State contribution to the System
for the next fiscal year, along with all of the actuarial
assumptions, calculations, and data upon which that proposed
certification is based. On or before January 1 of each year
beginning January 1, 2013, the State Actuary shall issue a
preliminary report concerning the proposed certification and
identifying, if necessary, recommended changes in actuarial
assumptions that the Board must consider before finalizing its
certification of the required State contributions. On or before
January 15, 2013 and each January 15 thereafter, the Board
shall certify to the Governor and the General Assembly the
amount of the required State contribution for the next fiscal
year. The Board's certification must note any deviations from
the State Actuary's recommended changes, the reason or reasons
for not following the State Actuary's recommended changes, and
the fiscal impact of not following the State Actuary's

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recommended changes on the required State contribution.
(a-10) For purposes of subsection (c-5) of Section 20 of
the Budget Stabilization Act, on or before November 1 of each
year beginning November 1, 2019, the Board shall determine the
amount of the State contribution to the System that would have
been required for the next fiscal year if Section 1-161,
Section 14-155.2, and the changes made to Section 1-160 by this
amendatory Act of the 100th General Assembly had not taken
effect, using the best and most recent available data but based
on the law in effect on May 31, 2019. The Board shall submit to
the State Actuary, the Governor, and the General Assembly a
proposed certification, along with the relevant law, actuarial
assumptions, calculations, and data upon which that
certification is based. On or before January 1, 2020 and every
January 1 thereafter, the State Actuary shall issue a
preliminary report concerning the proposed certification and
identifying, if necessary, recommended changes in actuarial
assumptions that the Board must consider before finalizing its
certification. On or before January 15, 2020 and every January
1 thereafter, the Board shall certify to the Governor and the
General Assembly the amount of the State contribution to the
System that would have been required for the next fiscal year
if Section 1-161, Section 14-155.2, and the changes made to
Section 1-160 by this amendatory Act of the 100th General
Assembly had not taken effect, using the best and most recent
available data but based on the law in effect on May 31, 2019.

HB4055 - 135 - LRB100 12851 RPS 26572 b
The Board's certification must note any deviations from the
State Actuary's recommended changes, the reason or reasons for
not following the State Actuary's recommended changes, and the
impact of not following the State Actuary's recommended
changes.
(b) The certifications under subsections (a) and (a-5)
shall include an additional amount necessary to pay all
principal of and interest on those general obligation bonds due
the next fiscal year authorized by Section 7.2(a) of the
General Obligation Bond Act and issued to provide the proceeds
deposited by the State with the System in July 2003,
representing deposits other than amounts reserved under
Section 7.2(c) of the General Obligation Bond Act. For State
fiscal year 2005, the Board shall make a supplemental
certification of the additional amount necessary to pay all
principal of and interest on those general obligation bonds due
in State fiscal years 2004 and 2005 authorized by Section
7.2(a) of the General Obligation Bond Act and issued to provide
the proceeds deposited by the State with the System in July
2003, representing deposits other than amounts reserved under
Section 7.2(c) of the General Obligation Bond Act, as soon as
practical after the effective date of this amendatory Act of
the 93rd General Assembly.
On or before May 1, 2004, the Board shall recalculate and
recertify to the Governor and to each department the amount of
the required State contribution to the System and the required

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rates for State contributions to the System for State fiscal
year 2005, taking into account the amounts appropriated to and
received by the System under subsection (d) of Section 7.2 of
the General Obligation Bond Act.
On or before July 1, 2005, the Board shall recalculate and
recertify to the Governor and to each department the amount of
the required State contribution to the System and the required
rates for State contributions to the System for State fiscal
year 2006, taking into account the changes in required State
contributions made by this amendatory Act of the 94th General
Assembly.
On or before April 1, 2011, the Board shall recalculate and
recertify to the Governor and to each department the amount of
the required State contribution to the System for State fiscal
year 2011, applying the changes made by Public Act 96-889 to
the System's assets and liabilities as of June 30, 2009 as
though Public Act 96-889 was approved on that date.
As soon as practical after the effective date of this
amendatory Act of the 100th General Assembly, the Board shall
recalculate and recertify to the State Actuary, the Governor,
and the General Assembly the amount of the State contribution
to the System for State fiscal year 2018, taking into account
the changes in required State contributions made by this
amendatory Act of the 100th General Assembly. The State Actuary
shall review the assumptions and valuations underlying the
Board's revised certification and issue a preliminary report

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concerning the proposed recertification and identifying, if
necessary, recommended changes in actuarial assumptions that
the Board must consider before finalizing its certification of
the required State contributions. The Board's final
certification must note any deviations from the State Actuary's
recommended changes, the reason or reasons for not following
the State Actuary's recommended changes, and the fiscal impact
of not following the State Actuary's recommended changes on the
required State contribution.
(Source: P.A. 96-1497, eff. 1-14-11; 96-1511, eff. 1-27-11;
97-694, eff. 6-18-12.)
(40 ILCS 5/14-147.5 new)
Sec. 14-147.5. Accelerated pension benefit payment.
(a) As used in this Section:
"Eligible person" means a person who:
(1) has terminated service;
(2) has accrued sufficient service credit to be
eligible to receive a retirement annuity under this
Article;
(3) has not received any retirement annuity under this
Article; and
(4) does not have a QILDRO in effect against him or her
under this Article.
"Pension benefit" means the benefits under this Article, or
Article 1 as it relates to those benefits, including any

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anticipated annual increases, that an eligible person is
entitled to upon attainment of the applicable retirement age.
"Pension benefit" also includes applicable survivor's or
disability benefits.
(b) Before January 1, 2018, the System shall calculate,
using actuarial tables and other assumptions adopted by the
Board, the net present value of pension benefits for each
eligible person and shall offer each eligible person the
opportunity to irrevocably elect to receive an amount
determined by the System to be equal to 70% of the net present
value of his or her pension benefits in lieu of receiving any
pension benefit. The offer shall specify the dollar amount that
the eligible person will receive if he or she so elects and
shall expire when a subsequent offer is made to an eligible
person. The System shall make a good faith effort to contact
every eligible person to notify him or her of the election and
of the amount of the accelerated pension benefit payment.
Beginning January 1, 2018 and until July 1, 2018, an
eligible person may irrevocably elect to receive an accelerated
pension benefit payment in the amount that the System offers
under this subsection in lieu of receiving any pension benefit.
A person who elects to receive an accelerated pension benefit
payment under this Section may not elect to proceed under the
Retirement Systems Reciprocal Act with respect to service under
this Article.
(c) A person's credits and creditable service under this

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Article shall be terminated upon the person's receipt of an
accelerated pension benefit payment under this Section, and no
other benefit shall be paid under this Article based on those
terminated credits and creditable service, including any
retirement, survivor, or other benefit; except that to the
extent that participation, benefits, or premiums under the
State Employees Group Insurance Act of 1971 are based on the
amount of service credit, the terminated service credit shall
be used for that purpose.
(d) If a person who has received an accelerated pension
benefit payment under this Section returns to active service
under this Article, then:
(1) Any benefits under the System earned as a result of
that return to active service shall be based solely on the
person's credits and creditable service arising from the
return to active service.
(2) The accelerated pension benefit payment may not be
repaid to the System, and the terminated credits and
creditable service may not under any circumstances be
reinstated.
(e) As a condition of receiving an accelerated pension
benefit payment, an eligible person must have another
retirement plan or account qualified under the Internal Revenue
Code of 1986, as amended, for the accelerated pension benefit
payment to be rolled into. The accelerated pension benefit
payment under this Section may be subject to withholding or

HB4055 - 140 - LRB100 12851 RPS 26572 b
payment of applicable taxes, but to the extent permitted by
federal law, a person who receives an accelerated pension
benefit payment under this Section must direct the System to
pay all of that payment as a rollover into another retirement
plan or account qualified under the Internal Revenue Code of
1986, as amended.
(f) Before January 1, 2019, the Board shall certify to the
Illinois Finance Authority and the General Assembly the amount
by which the total amount of accelerated pension benefit
payments made under this Section exceed the amount appropriated
to the System for the purpose of making those payments.
(g) The Board shall adopt any rules necessary to implement
this Section.
(h) No provision of this Section shall be interpreted in a
way that would cause the applicable System to cease to be a
qualified plan under the Internal Revenue Code of 1986.
(40 ILCS 5/14-152.1)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 14-152.1. Application and expiration of new benefit
increases.
(a) As used in this Section, "new benefit increase" means
an increase in the amount of any benefit provided under this
Article, or an expansion of the conditions of eligibility for
any benefit under this Article, that results from an amendment

HB4055 - 141 - LRB100 12851 RPS 26572 b
to this Code that takes effect after June 1, 2005 (the
effective date of Public Act 94-4). "New benefit increase",
however, does not include any benefit increase resulting from
the changes made to this Article by Public Act 96-37 or by this
amendatory Act of the 100th General Assembly this amendatory
Act of the 96th General Assembly.
(b) Notwithstanding any other provision of this Code or any
subsequent amendment to this Code, every new benefit increase
is subject to this Section and shall be deemed to be granted
only in conformance with and contingent upon compliance with
the provisions of this Section.
(c) The Public Act enacting a new benefit increase must
identify and provide for payment to the System of additional
funding at least sufficient to fund the resulting annual
increase in cost to the System as it accrues.
Every new benefit increase is contingent upon the General
Assembly providing the additional funding required under this
subsection. The Commission on Government Forecasting and
Accountability shall analyze whether adequate additional
funding has been provided for the new benefit increase and
shall report its analysis to the Public Pension Division of the
Department of Insurance Financial and Professional Regulation.
A new benefit increase created by a Public Act that does not
include the additional funding required under this subsection
is null and void. If the Public Pension Division determines
that the additional funding provided for a new benefit increase

HB4055 - 142 - LRB100 12851 RPS 26572 b
under this subsection is or has become inadequate, it may so
certify to the Governor and the State Comptroller and, in the
absence of corrective action by the General Assembly, the new
benefit increase shall expire at the end of the fiscal year in
which the certification is made.
(d) Every new benefit increase shall expire 5 years after
its effective date or on such earlier date as may be specified
in the language enacting the new benefit increase or provided
under subsection (c). This does not prevent the General
Assembly from extending or re-creating a new benefit increase
by law.
(e) Except as otherwise provided in the language creating
the new benefit increase, a new benefit increase that expires
under this Section continues to apply to persons who applied
and qualified for the affected benefit while the new benefit
increase was in effect and to the affected beneficiaries and
alternate payees of such persons, but does not apply to any
other person, including without limitation a person who
continues in service after the expiration date and did not
apply and qualify for the affected benefit while the new
benefit increase was in effect.
(Source: P.A. 96-37, eff. 7-13-09.)
(40 ILCS 5/14-155.1 new)
Sec. 14-155.1. Defined contribution plan.
(a) By July 1, 2019, the System shall prepare and implement

HB4055 - 143 - LRB100 12851 RPS 26572 b
a voluntary defined contribution plan for up to 5% of eligible
active Tier 1 employees. The System shall determine the 5% cap
by the number of active Tier 1 employees on the effective date
of this Section. The defined contribution plan developed under
this Section shall be a plan that aggregates employer and
employee contributions in individual participant accounts
which, after meeting any other requirements, are used for
payouts after retirement in accordance with this Section and
any other applicable laws.
As used in this Section, "defined benefit plan" means the
retirement plan available under this Article to Tier 1
employees who have not made the election authorized under this
Section.
(1) Under the defined contribution plan, an active Tier
1 employee of this System could elect to cease accruing
benefits in the defined benefit plan under this Article and
begin accruing benefits for future service in the defined
contribution plan. Service credit under the defined
contribution plan may be used for determining retirement
eligibility under the defined benefit plan.
(2) Participants in the defined contribution plan
shall pay employee contributions at the same rate as Tier 1
employees in this System who do not participate in the
defined contribution plan.
(3) State contributions shall be paid into the accounts
of all participants in the defined contribution plan at a

HB4055 - 144 - LRB100 12851 RPS 26572 b
uniform rate, expressed as a percentage of compensation and
determined for each year. This rate shall be no higher than
the employer's normal cost for Tier 1 employees in the
defined benefit plan for that year, as determined by the
System and expressed as a percentage of compensation, and
shall be no lower than 3% of compensation. The State shall
adjust this rate annually.
(4) The defined contribution plan shall require 5 years
of participation in the defined contribution plan before
vesting in State contributions. If the participant fails to
vest in them, the State contributions, and the earnings
thereon, shall be forfeited.
(5) The defined contribution plan may provide for
participants in the plan to be eligible for the defined
disability benefits available to other participants under
this Article. If it does, the System shall reduce the
employee contributions credited to the member's defined
contribution plan account by an amount determined by the
System to cover the cost of offering such benefits.
(6) The defined contribution plan shall provide a
variety of options for investments. These options shall
include investments handled by the Illinois State Board of
Investment as well as private sector investment options.
(7) The defined contribution plan shall provide a
variety of options for payouts to retirees and their
survivors.

HB4055 - 145 - LRB100 12851 RPS 26572 b
(8) To the extent authorized under federal law and as
authorized by the System, the plan shall allow former
participants in the plan to transfer or roll over employee
and vested State contributions, and the earnings thereon,
into other qualified retirement plans.
(9) The System shall reduce the employee contributions
credited to the member's defined contribution plan account
by an amount determined by the System to cover the cost of
offering these benefits and any applicable administrative
fees.
(b) Only persons who are active Tier 1 employees of the
System on the effective date of this Section are eligible to
participate in the defined contribution plan. Participation in
the defined contribution plan shall be limited to the first 5%
of eligible persons who elect to participate. The election to
participate in the defined contribution plan is voluntary and
irrevocable.
(c) An eligible Tier 1 employee may irrevocably elect to
participate in the defined contribution plan by filing with the
System a written application to participate that is received by
the System prior to its determination that 5% of eligible
persons have elected to participate in the defined contribution
plan.
When the System first determines that 5% of eligible
persons have elected to participate in the defined contribution
plan, the System shall provide notice to previously eligible

HB4055 - 146 - LRB100 12851 RPS 26572 b
employees that the plan is no longer available and shall cease
accepting applications to participate.
(d) The System shall make a good faith effort to contact
each active Tier 1 employee who is eligible to participate in
the defined contribution plan. The System shall mail
information describing the option to join the defined
contribution plan to each of these employees to his or her last
known address on file with the System. If the employee is not
responsive to other means of contact, it is sufficient for the
System to publish the details of the option on its website.
Upon request for further information describing the
option, the System shall provide employees with information
from the System before exercising the option to join the plan,
including information on the impact to their vested benefits or
non-vested service. The individual consultation shall include
projections of the member's defined benefits at retirement or
earlier termination of service and the value of the member's
account at retirement or earlier termination of service. The
System shall not provide advice or counseling with respect to
whether the employee should exercise the option. The System
shall inform Tier 1 employees who are eligible to participate
in the defined contribution plan that they may also wish to
obtain information and counsel relating to their option from
any other available source, including, but not limited to,
labor organizations, private counsel, and financial advisors.
(e) In no event shall the System, its staff, its authorized

HB4055 - 147 - LRB100 12851 RPS 26572 b
representatives, or the Board be liable for any information
given to an employee under this Section. The System may
coordinate with the Illinois Department of Central Management
Services and other retirement systems administering a defined
contribution plan in accordance with this amendatory Act of the
100th General Assembly to provide information concerning the
impact of the option set forth in this Section.
(f) Notwithstanding any other provision of this Section, no
person shall begin participating in the defined contribution
plan until it has attained qualified plan status and received
all necessary approvals from the U.S. Internal Revenue Service.
(g) The System shall report on its progress under this
Section, including the available details of the defined
contribution plan and the System's plans for informing eligible
Tier 1 employees about the plan, to the Governor and the
General Assembly on or before January 15, 2019.
(h) The Illinois State Board of Investment shall be the
plan sponsor for the defined contribution plan established
under this Section.
(i) The intent of this amendatory Act of the 100th General
Assembly is to ensure that the State's normal cost of
participation in the defined contribution plan is similar, and
if possible equal, to the State's normal cost of participation
in the defined benefit plan, unless a lower State's normal cost
is necessary to ensure cost neutrality.

HB4055 - 148 - LRB100 12851 RPS 26572 b
(40 ILCS 5/14-155.2 new)
Sec. 14-155.2. Defined contribution plan for certain
covered employees.
(a) As used in this Section:
"Defined benefit plan" means the retirement plan available
under this Article and Section 1-160 to eligible covered
employees who do not make the election authorized under this
Section.
"Eligible covered employee" means a covered employee who
first becomes a participant under this Article on or after 6
months after the effective date of this amendatory Act of the
100th General Assembly.
(b) In lieu of the defined benefit plan, an eligible
covered employee may irrevocably elect to participate in the
defined contribution plan under this Section. The election to
participate in the defined contribution plan must be made
within 30 days after becoming an eligible covered employee. The
election to participate in the defined contribution plan under
this Section is voluntary and irrevocable.
(c) No later than 5 months after the effective date of this
amendatory Act of the 100th General Assembly, the System shall
prepare and implement a voluntary defined contribution plan for
eligible covered employees. The defined contribution plan
developed under this Section shall be a plan that aggregates
employer and employee contributions in individual participant
accounts which, after meeting any other requirements, are used

HB4055 - 149 - LRB100 12851 RPS 26572 b
for payouts after retirement in accordance with this Section
and any other applicable laws.
(1) A participant in the defined contribution plan
shall contribute a minimum of 3% of his or her compensation
to the defined contribution plan.
(2) For persons who participate in the defined
contribution plan for at least one year, employer
contributions shall be paid into the accounts of those
participants at a rate of 3% of compensation.
(3) Employer contributions shall vest when those
contributions are paid into a participant's account.
(4) The defined contribution plan shall provide a
variety of options for investments. These options shall
include investments handled by the Illinois State Board of
Investment as well as private sector investment options.
(5) The defined contribution plan shall provide a
variety of options for payouts to retirees and their
survivors.
(6) To the extent authorized under federal law and as
authorized by the System, the defined contribution plan
shall allow former participants in the plan to transfer or
roll over employee and employer contributions, and the
earnings thereon, into other qualified retirement plans.
(7) The System shall reduce the employee contributions
credited to the participant's defined contribution plan
account by an amount determined by the System to cover the

HB4055 - 150 - LRB100 12851 RPS 26572 b
cost of offering the benefits under this Section and any
applicable administrative fees.
(40 ILCS 5/14-156.1 new)
Sec. 14-156.1. Defined contribution plan; termination. If
the defined contribution plan under Section 14-155.1 is
terminated or becomes inoperative pursuant to law, then each
participant in the plan shall automatically be deemed to have
been a contributing Tier 1 employee in the System's defined
benefit plan during the time in which he or she participated in
the defined contribution plan, and for that purpose the System
shall be entitled to recover the amounts in the participant's
defined contribution accounts.
(40 ILCS 5/15-108.1)
Sec. 15-108.1. Tier 1 member; Tier 1 employee.
"Tier 1 member": A participant or an annuitant of a
retirement annuity under this Article, other than a participant
in the self-managed plan under Section 15-158.2, who first
became a participant or member before January 1, 2011 under any
reciprocal retirement system or pension fund established under
this Code, other than a retirement system or pension fund
established under Articles 2, 3, 4, 5, 6, or 18 of this Code.
"Tier 1 member" includes a person who first became a
participant under this System before January 1, 2011 and who
accepts a refund and is subsequently reemployed by an employer

HB4055 - 151 - LRB100 12851 RPS 26572 b
on or after January 1, 2011.
"Tier 1 employee": A Tier 1 member who is a participating
employee, unless he or she is a disability benefit recipient
under Section 15-150.
(Source: P.A. 98-92, eff. 7-16-13.)
(40 ILCS 5/15-108.2)
Sec. 15-108.2. Tier 2 member. "Tier 2 member": A person who
first becomes a participant under this Article on or after
January 1, 2011 and before 6 months after the effective date of
this amendatory Act of the 100th General Assembly, other than a
person in the self-managed plan established under Section
15-158.2 or a person who makes the election under subsection
(c) of Section 1-161, unless the person is otherwise a Tier 1
member. The changes made to this Section by this amendatory Act
of the 98th General Assembly are a correction of existing law
and are intended to be retroactive to the effective date of
Public Act 96-889, notwithstanding the provisions of Section
1-103.1 of this Code.
(Source: P.A. 98-92, eff. 7-16-13; 98-596, eff. 11-19-13.)
(40 ILCS 5/15-155) (from Ch. 108 1/2, par. 15-155)
Sec. 15-155. Employer contributions.
(a) The State of Illinois shall make contributions by
appropriations of amounts which, together with the other
employer contributions from trust, federal, and other funds,

HB4055 - 152 - LRB100 12851 RPS 26572 b
employee contributions, income from investments, and other
income of this System, will be sufficient to meet the cost of
maintaining and administering the System on a 90% funded basis
in accordance with actuarial recommendations.
The Board shall determine the amount of State contributions
required for each fiscal year on the basis of the actuarial
tables and other assumptions adopted by the Board and the
recommendations of the actuary, using the formula in subsection
(a-1).
(a-1) For State fiscal years 2018 through 2045, the minimum
contribution to the System to be made by the State for each
fiscal year shall be an amount determined by the System to be
sufficient to bring the total assets of the System up to 90% of
the total actuarial liabilities of the System by the end of
State fiscal year 2045. In making these determinations, the
required State contribution shall be calculated each year as a
level percentage of total payroll, including payroll that is
not deemed pensionable, but excluding payroll attributable to
participants in the defined contribution plan under Section
15-200.1, over the years remaining to and including fiscal year
2045 and shall be determined under the projected unit credit
actuarial cost method.
Beginning in State fiscal year 2018, any increase or
decrease in State contribution over the prior fiscal year due
exclusively to changes in actuarial or investment assumptions
adopted by the Board shall be included in the State

HB4055 - 153 - LRB100 12851 RPS 26572 b
contribution to the System, as a percentage of the applicable
employee payroll, and shall be increased in equal annual
increments so that by the State fiscal year occurring 5 years
after the adoption of the actuarial or investment assumptions,
the State is contributing at the rate otherwise required under
this Section.
For State fiscal years 2012 through 2017 2045, the minimum
contribution to the System to be made by the State for each
fiscal year shall be an amount determined by the System to be
sufficient to bring the total assets of the System up to 90% of
the total actuarial liabilities of the System by the end of
State fiscal year 2045. In making these determinations, the
required State contribution shall be calculated each year as a
level percentage of payroll over the years remaining to and
including fiscal year 2045 and shall be determined under the
projected unit credit actuarial cost method.
For State fiscal years 1996 through 2005, the State
contribution to the System, as a percentage of the applicable
employee payroll, shall be increased in equal annual increments
so that by State fiscal year 2011, the State is contributing at
the rate required under this Section.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2006 is
$166,641,900.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2007 is

HB4055 - 154 - LRB100 12851 RPS 26572 b
$252,064,100.
For each of State fiscal years 2008 through 2009, the State
contribution to the System, as a percentage of the applicable
employee payroll, shall be increased in equal annual increments
from the required State contribution for State fiscal year
2007, so that by State fiscal year 2011, the State is
contributing at the rate otherwise required under this Section.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2010 is
$702,514,000 and shall be made from the State Pensions Fund and
proceeds of bonds sold in fiscal year 2010 pursuant to Section
7.2 of the General Obligation Bond Act, less (i) the pro rata
share of bond sale expenses determined by the System's share of
total bond proceeds, (ii) any amounts received from the General
Revenue Fund in fiscal year 2010, (iii) any reduction in bond
proceeds due to the issuance of discounted bonds, if
applicable.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2011 is
the amount recertified by the System on or before April 1, 2011
pursuant to Section 15-165 and shall be made from the State
Pensions Fund and proceeds of bonds sold in fiscal year 2011
pursuant to Section 7.2 of the General Obligation Bond Act,
less (i) the pro rata share of bond sale expenses determined by
the System's share of total bond proceeds, (ii) any amounts
received from the General Revenue Fund in fiscal year 2011, and

HB4055 - 155 - LRB100 12851 RPS 26572 b
(iii) any reduction in bond proceeds due to the issuance of
discounted bonds, if applicable.
Beginning in State fiscal year 2046, the minimum State
contribution for each fiscal year shall be the amount needed to
maintain the total assets of the System at 90% of the total
actuarial liabilities of the System.
Amounts received by the System pursuant to Section 25 of
the Budget Stabilization Act or Section 8.12 of the State
Finance Act in any fiscal year do not reduce and do not
constitute payment of any portion of the minimum State
contribution required under this Article in that fiscal year.
Such amounts shall not reduce, and shall not be included in the
calculation of, the required State contributions under this
Article in any future year until the System has reached a
funding ratio of at least 90%. A reference in this Article to
the "required State contribution" or any substantially similar
term does not include or apply to any amounts payable to the
System under Section 25 of the Budget Stabilization Act.
Notwithstanding any other provision of this Section, the
required State contribution for State fiscal year 2005 and for
fiscal year 2008 and each fiscal year thereafter, as calculated
under this Section and certified under Section 15-165, shall
not exceed an amount equal to (i) the amount of the required
State contribution that would have been calculated under this
Section for that fiscal year if the System had not received any
payments under subsection (d) of Section 7.2 of the General

HB4055 - 156 - LRB100 12851 RPS 26572 b
Obligation Bond Act, minus (ii) the portion of the State's
total debt service payments for that fiscal year on the bonds
issued in fiscal year 2003 for the purposes of that Section
7.2, as determined and certified by the Comptroller, that is
the same as the System's portion of the total moneys
distributed under subsection (d) of Section 7.2 of the General
Obligation Bond Act. In determining this maximum for State
fiscal years 2008 through 2010, however, the amount referred to
in item (i) shall be increased, as a percentage of the
applicable employee payroll, in equal increments calculated
from the sum of the required State contribution for State
fiscal year 2007 plus the applicable portion of the State's
total debt service payments for fiscal year 2007 on the bonds
issued in fiscal year 2003 for the purposes of Section 7.2 of
the General Obligation Bond Act, so that, by State fiscal year
2011, the State is contributing at the rate otherwise required
under this Section.
(a-2) For employees first hired on or after 6 months after
the effective date of this amendatory Act of the 100th General
Assembly who have elected the benefits under Section 1-161 of
this Code, the employer shall annually contribute an amount,
expressed as a percentage of payroll, equal to the defined
benefit normal cost of the defined benefit plan, less the
employee contribution, plus 2%. On an annual basis, the System
shall certify to each employer the amount of unfunded liability
accrued in the employer's account to be paid by the employer so

HB4055 - 157 - LRB100 12851 RPS 26572 b
that the System is 90% funded by the end of State fiscal year
2045. The contributions shall be divided equally over a
12-month period and made monthly. The employer shall also
contribute an amount equal to the employer defined
contribution, as set on an individual employee basis, under
paragraph (2) of subsection (k) of Section 1-161 during each
pay period. The System shall have the authority to adopt rules
regarding implementation of employer contributions.
(b) If an employee is paid from trust or federal funds, the
employer shall pay to the Board contributions from those funds
which are sufficient to cover the accruing normal costs on
behalf of the employee. However, universities having employees
who are compensated out of local auxiliary funds, income funds,
or service enterprise funds are not required to pay such
contributions on behalf of those employees. The local auxiliary
funds, income funds, and service enterprise funds of
universities shall not be considered trust funds for the
purpose of this Article, but funds of alumni associations,
foundations, and athletic associations which are affiliated
with the universities included as employers under this Article
and other employers which do not receive State appropriations
are considered to be trust funds for the purpose of this
Article.
(b-1) The City of Urbana and the City of Champaign shall
each make employer contributions to this System for their
respective firefighter employees who participate in this

HB4055 - 158 - LRB100 12851 RPS 26572 b
System pursuant to subsection (h) of Section 15-107. The rate
of contributions to be made by those municipalities shall be
determined annually by the Board on the basis of the actuarial
assumptions adopted by the Board and the recommendations of the
actuary, and shall be expressed as a percentage of salary for
each such employee. The Board shall certify the rate to the
affected municipalities as soon as may be practical. The
employer contributions required under this subsection shall be
remitted by the municipality to the System at the same time and
in the same manner as employee contributions.
(c) Through State fiscal year 1995: The total employer
contribution shall be apportioned among the various funds of
the State and other employers, whether trust, federal, or other
funds, in accordance with actuarial procedures approved by the
Board. State of Illinois contributions for employers receiving
State appropriations for personal services shall be payable
from appropriations made to the employers or to the System. The
contributions for Class I community colleges covering earnings
other than those paid from trust and federal funds, shall be
payable solely from appropriations to the Illinois Community
College Board or the System for employer contributions.
(d) Beginning in State fiscal year 1996, the required State
contributions to the System shall be appropriated directly to
the System and shall be payable through vouchers issued in
accordance with subsection (c) of Section 15-165, except as
provided in subsection (g).

HB4055 - 159 - LRB100 12851 RPS 26572 b
(e) The State Comptroller shall draw warrants payable to
the System upon proper certification by the System or by the
employer in accordance with the appropriation laws and this
Code.
(f) Normal costs under this Section means liability for
pensions and other benefits which accrues to the System because
of the credits earned for service rendered by the participants
during the fiscal year and expenses of administering the
System, but shall not include the principal of or any
redemption premium or interest on any bonds issued by the Board
or any expenses incurred or deposits required in connection
therewith.
(g) For academic years beginning on or after June 1, 2005
and before July 1, 2018, if If the amount of a participant's
earnings for any academic year used to determine the final rate
of earnings, determined on a full-time equivalent basis,
exceeds the amount of his or her earnings with the same
employer for the previous academic year, determined on a
full-time equivalent basis, by more than 6%, the participant's
employer shall pay to the System, in addition to all other
payments required under this Section and in accordance with
guidelines established by the System, the present value of the
increase in benefits resulting from the portion of the increase
in earnings that is in excess of 6%. This present value shall
be computed by the System on the basis of the actuarial
assumptions and tables used in the most recent actuarial

HB4055 - 160 - LRB100 12851 RPS 26572 b
valuation of the System that is available at the time of the
computation. The System may require the employer to provide any
pertinent information or documentation.
Whenever it determines that a payment is or may be required
under this subsection (g), the System shall calculate the
amount of the payment and bill the employer for that amount.
The bill shall specify the calculations used to determine the
amount due. If the employer disputes the amount of the bill, it
may, within 30 days after receipt of the bill, apply to the
System in writing for a recalculation. The application must
specify in detail the grounds of the dispute and, if the
employer asserts that the calculation is subject to subsection
(h) or (i) of this Section, must include an affidavit setting
forth and attesting to all facts within the employer's
knowledge that are pertinent to the applicability of subsection
(h) or (i). Upon receiving a timely application for
recalculation, the System shall review the application and, if
appropriate, recalculate the amount due.
The employer contributions required under this subsection
(g) may be paid in the form of a lump sum within 90 days after
receipt of the bill. If the employer contributions are not paid
within 90 days after receipt of the bill, then interest will be
charged at a rate equal to the System's annual actuarially
assumed rate of return on investment compounded annually from
the 91st day after receipt of the bill. Payments must be
concluded within 3 years after the employer's receipt of the

HB4055 - 161 - LRB100 12851 RPS 26572 b
bill.
When assessing payment for any amount due under this
subsection (g), the System shall include earnings, to the
extent not established by a participant under Section 15-113.11
or 15-113.12, that would have been paid to the participant had
the participant not taken (i) periods of voluntary or
involuntary furlough occurring on or after July 1, 2015 and on
or before June 30, 2017 or (ii) periods of voluntary pay
reduction in lieu of furlough occurring on or after July 1,
2015 and on or before June 30, 2017. Determining earnings that
would have been paid to a participant had the participant not
taken periods of voluntary or involuntary furlough or periods
of voluntary pay reduction shall be the responsibility of the
employer, and shall be reported in a manner prescribed by the
System.
(g-1) Beginning in fiscal year 2019, if a contract or
collective bargaining agreement entered into, amended, or
renewed on or after the effective date of this amendatory Act
of the 100th General Assembly provides for earnings to exceed
the salaries provided under the preceding contract or
collective bargaining agreement, then the employer shall pay to
the System, in addition to all other payments required under
this Section and in accordance with guidelines established by
the System, the current value of the projected amount of the
increase in benefits, as determined by the System and
reflecting whether the participants covered under the contract

HB4055 - 162 - LRB100 12851 RPS 26572 b
or collective bargaining agreement are Tier 1 members or Tier 2
members, resulting from the portion of the earnings that exceed
the amount of the earnings provided under the preceding
contract or collective bargaining agreement. The System may
require the employer to provide any pertinent information or
documentation.
Whenever it determines that a payment is or may be required
under this subsection (g-1), the System shall calculate the
amount of the payment and bill the employer for that amount.
The bill shall specify the calculations used to determine the
amount due. If the employer disputes the amount of the bill, it
may, within 30 days after receipt of the bill, apply to the
System in writing for a recalculation. The application must
specify in detail the grounds of the dispute. Upon receiving a
timely application for recalculation, the System shall review
the application and, if appropriate, recalculate the amount
due.
The employer contributions required under this subsection
(g-1) may be paid in the form of a lump sum within 90 days after
receipt of the bill. If the employer contributions are not paid
within 90 days after receipt of the bill, then interest shall
be charged at a rate equal to the System's annual actuarially
assumed rate of return on investment compounded annually from
the 91st day after receipt of the bill. Payments must be
concluded within 3 years after the employer's receipt of the
bill.

HB4055 - 163 - LRB100 12851 RPS 26572 b
(h) This subsection (h) applies only to payments made or
salary increases given on or after June 1, 2005 but before July
1, 2011. The changes made by Public Act 94-1057 shall not
require the System to refund any payments received before July
31, 2006 (the effective date of Public Act 94-1057).
When assessing payment for any amount due under subsection
(g), the System shall exclude earnings increases paid to
participants under contracts or collective bargaining
agreements entered into, amended, or renewed before June 1,
2005.
When assessing payment for any amount due under subsection
(g), the System shall exclude earnings increases paid to a
participant at a time when the participant is 10 or more years
from retirement eligibility under Section 15-135.
When assessing payment for any amount due under subsection
(g), the System shall exclude earnings increases resulting from
overload work, including a contract for summer teaching, or
overtime when the employer has certified to the System, and the
System has approved the certification, that: (i) in the case of
overloads (A) the overload work is for the sole purpose of
academic instruction in excess of the standard number of
instruction hours for a full-time employee occurring during the
academic year that the overload is paid and (B) the earnings
increases are equal to or less than the rate of pay for
academic instruction computed using the participant's current
salary rate and work schedule; and (ii) in the case of

HB4055 - 164 - LRB100 12851 RPS 26572 b
overtime, the overtime was necessary for the educational
mission.
When assessing payment for any amount due under subsection
(g), the System shall exclude any earnings increase resulting
from (i) a promotion for which the employee moves from one
classification to a higher classification under the State
Universities Civil Service System, (ii) a promotion in academic
rank for a tenured or tenure-track faculty position, or (iii) a
promotion that the Illinois Community College Board has
recommended in accordance with subsection (k) of this Section.
These earnings increases shall be excluded only if the
promotion is to a position that has existed and been filled by
a member for no less than one complete academic year and the
earnings increase as a result of the promotion is an increase
that results in an amount no greater than the average salary
paid for other similar positions.
(i) When assessing payment for any amount due under
subsection (g), the System shall exclude any salary increase
described in subsection (h) of this Section given on or after
July 1, 2011 but before July 1, 2014 under a contract or
collective bargaining agreement entered into, amended, or
renewed on or after June 1, 2005 but before July 1, 2011.
Notwithstanding any other provision of this Section, any
payments made or salary increases given after June 30, 2014
shall be used in assessing payment for any amount due under
subsection (g) of this Section.

HB4055 - 165 - LRB100 12851 RPS 26572 b
(j) The System shall prepare a report and file copies of
the report with the Governor and the General Assembly by
January 1, 2007 that contains all of the following information:
(1) The number of recalculations required by the
changes made to this Section by Public Act 94-1057 for each
employer.
(2) The dollar amount by which each employer's
contribution to the System was changed due to
recalculations required by Public Act 94-1057.
(3) The total amount the System received from each
employer as a result of the changes made to this Section by
Public Act 94-4.
(4) The increase in the required State contribution
resulting from the changes made to this Section by Public
Act 94-1057.
(k) The Illinois Community College Board shall adopt rules
for recommending lists of promotional positions submitted to
the Board by community colleges and for reviewing the
promotional lists on an annual basis. When recommending
promotional lists, the Board shall consider the similarity of
the positions submitted to those positions recognized for State
universities by the State Universities Civil Service System.
The Illinois Community College Board shall file a copy of its
findings with the System. The System shall consider the
findings of the Illinois Community College Board when making
determinations under this Section. The System shall not exclude

HB4055 - 166 - LRB100 12851 RPS 26572 b
any earnings increases resulting from a promotion when the
promotion was not submitted by a community college. Nothing in
this subsection (k) shall require any community college to
submit any information to the Community College Board.
(l) For purposes of determining the required State
contribution to the System, the value of the System's assets
shall be equal to the actuarial value of the System's assets,
which shall be calculated as follows:
As of June 30, 2008, the actuarial value of the System's
assets shall be equal to the market value of the assets as of
that date. In determining the actuarial value of the System's
assets for fiscal years after June 30, 2008, any actuarial
gains or losses from investment return incurred in a fiscal
year shall be recognized in equal annual amounts over the
5-year period following that fiscal year.
(m) For purposes of determining the required State
contribution to the system for a particular year, the actuarial
value of assets shall be assumed to earn a rate of return equal
to the system's actuarially assumed rate of return.
(Source: P.A. 98-92, eff. 7-16-13; 98-463, eff. 8-16-13;
99-897, eff. 1-1-17.)
(40 ILCS 5/15-165) (from Ch. 108 1/2, par. 15-165)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 15-165. To certify amounts and submit vouchers.

HB4055 - 167 - LRB100 12851 RPS 26572 b
(a) The Board shall certify to the Governor on or before
November 15 of each year until November 15, 2011 the
appropriation required from State funds for the purposes of
this System for the following fiscal year. The certification
under this subsection (a) shall include a copy of the actuarial
recommendations upon which it is based and shall specifically
identify the System's projected State normal cost for that
fiscal year and the projected State cost for the self-managed
plan for that fiscal year.
On or before May 1, 2004, the Board shall recalculate and
recertify to the Governor the amount of the required State
contribution to the System for State fiscal year 2005, taking
into account the amounts appropriated to and received by the
System under subsection (d) of Section 7.2 of the General
Obligation Bond Act.
On or before July 1, 2005, the Board shall recalculate and
recertify to the Governor the amount of the required State
contribution to the System for State fiscal year 2006, taking
into account the changes in required State contributions made
by this amendatory Act of the 94th General Assembly.
On or before April 1, 2011, the Board shall recalculate and
recertify to the Governor the amount of the required State
contribution to the System for State fiscal year 2011, applying
the changes made by Public Act 96-889 to the System's assets
and liabilities as of June 30, 2009 as though Public Act 96-889
was approved on that date.

HB4055 - 168 - LRB100 12851 RPS 26572 b
(a-5) On or before November 1 of each year, beginning
November 1, 2012, the Board shall submit to the State Actuary,
the Governor, and the General Assembly a proposed certification
of the amount of the required State contribution to the System
for the next fiscal year, along with all of the actuarial
assumptions, calculations, and data upon which that proposed
certification is based. On or before January 1 of each year,
beginning January 1, 2013, the State Actuary shall issue a
preliminary report concerning the proposed certification and
identifying, if necessary, recommended changes in actuarial
assumptions that the Board must consider before finalizing its
certification of the required State contributions. On or before
January 15, 2013 and each January 15 thereafter, the Board
shall certify to the Governor and the General Assembly the
amount of the required State contribution for the next fiscal
year. The Board's certification must note, in a written
response to the State Actuary, any deviations from the State
Actuary's recommended changes, the reason or reasons for not
following the State Actuary's recommended changes, and the
fiscal impact of not following the State Actuary's recommended
changes on the required State contribution.
(a-10) For purposes of subsection (c-5) of Section 20 of
the Budget Stabilization Act, on or before November 1 of each
year beginning November 1, 2019, the Board shall determine the
amount of the State contribution to the System that would have
been required for the next fiscal year if Section 1-161,

HB4055 - 169 - LRB100 12851 RPS 26572 b
subsection (a-2) of Section 15-155, and the changes made to
Section 1-160 by this amendatory Act of the 100th General
Assembly had not taken effect, using the best and most recent
available data but based on the law in effect on May 31, 2019.
The Board shall submit to the State Actuary, the Governor, and
the General Assembly a proposed certification, along with the
relevant law, actuarial assumptions, calculations, and data
upon which that certification is based. On or before January 1,
2020 and every January 1 thereafter, the State Actuary shall
issue a preliminary report concerning the proposed
certification and identifying, if necessary, recommended
changes in actuarial assumptions that the Board must consider
before finalizing its certification. On or before January 15,
2020 and every January 1 thereafter, the Board shall certify to
the Governor and the General Assembly the amount of the State
contribution to the System that would have been required for
the next fiscal year if Section 1-161, subsection (a-2) of
Section 15-155, and the changes made to Section 1-160 by this
amendatory Act of the 100th General Assembly had not taken
effect, using the best and most recent available data but based
on the law in effect on May 31, 2019. The Board's certification
must note any deviations from the State Actuary's recommended
changes, the reason or reasons for not following the State
Actuary's recommended changes, and the impact of not following
the State Actuary's recommended changes.
(a-15) As soon as practical after the effective date of

HB4055 - 170 - LRB100 12851 RPS 26572 b
this amendatory Act of the 100th General Assembly, the Board
shall recalculate and recertify to the State Actuary, the
Governor, and the General Assembly the amount of the State
contribution to the System for State fiscal year 2018, taking
into account the changes in required State contributions made
by this amendatory Act of the 100th General Assembly. The State
Actuary shall review the assumptions and valuations underlying
the Board's revised certification and issue a preliminary
report concerning the proposed recertification and
identifying, if necessary, recommended changes in actuarial
assumptions that the Board must consider before finalizing its
certification of the required State contributions. The Board's
final certification must note any deviations from the State
Actuary's recommended changes, the reason or reasons for not
following the State Actuary's recommended changes, and the
fiscal impact of not following the State Actuary's recommended
changes on the required State contribution.
(b) The Board shall certify to the State Comptroller or
employer, as the case may be, from time to time, by its
chairperson and secretary, with its seal attached, the amounts
payable to the System from the various funds.
(c) Beginning in State fiscal year 1996, on or as soon as
possible after the 15th day of each month the Board shall
submit vouchers for payment of State contributions to the
System, in a total monthly amount of one-twelfth of the
required annual State contribution certified under subsection

HB4055 - 171 - LRB100 12851 RPS 26572 b
(a). From the effective date of this amendatory Act of the 93rd
General Assembly through June 30, 2004, the Board shall not
submit vouchers for the remainder of fiscal year 2004 in excess
of the fiscal year 2004 certified contribution amount
determined under this Section after taking into consideration
the transfer to the System under subsection (b) of Section
6z-61 of the State Finance Act. These vouchers shall be paid by
the State Comptroller and Treasurer by warrants drawn on the
funds appropriated to the System for that fiscal year.
If in any month the amount remaining unexpended from all
other appropriations to the System for the applicable fiscal
year (including the appropriations to the System under Section
8.12 of the State Finance Act and Section 1 of the State
Pension Funds Continuing Appropriation Act) is less than the
amount lawfully vouchered under this Section, the difference
shall be paid from the General Revenue Fund under the
continuing appropriation authority provided in Section 1.1 of
the State Pension Funds Continuing Appropriation Act.
(d) So long as the payments received are the full amount
lawfully vouchered under this Section, payments received by the
System under this Section shall be applied first toward the
employer contribution to the self-managed plan established
under Section 15-158.2. Payments shall be applied second toward
the employer's portion of the normal costs of the System, as
defined in subsection (f) of Section 15-155. The balance shall
be applied toward the unfunded actuarial liabilities of the

HB4055 - 172 - LRB100 12851 RPS 26572 b
System.
(e) In the event that the System does not receive, as a
result of legislative enactment or otherwise, payments
sufficient to fully fund the employer contribution to the
self-managed plan established under Section 15-158.2 and to
fully fund that portion of the employer's portion of the normal
costs of the System, as calculated in accordance with Section
15-155(a-1), then any payments received shall be applied
proportionately to the optional retirement program established
under Section 15-158.2 and to the employer's portion of the
normal costs of the System, as calculated in accordance with
Section 15-155(a-1).
(Source: P.A. 97-694, eff. 6-18-12; 98-92, eff. 7-16-13.)
(40 ILCS 5/15-185.5 new)
Sec. 15-185.5. Accelerated pension benefit payment.
(a) As used in this Section:
"Eligible person" means a person who:
(1) has terminated service;
(2) has accrued sufficient service credit to be
eligible to receive a retirement annuity under this
Article;
(3) has not received any retirement annuity under this
Article;
(4) does not have a QILDRO in effect against him or her
under this Article; and

HB4055 - 173 - LRB100 12851 RPS 26572 b
(5) is not a participant in the self-managed plan under
Section 15-158.2.
"Pension benefit" means the benefits under this Article, or
Article 1 as it relates to those benefits, including any
anticipated annual increases, that an eligible person is
entitled to upon attainment of the applicable retirement age.
"Pension benefit" also includes applicable survivor's or
disability benefits.
(b) Before January 1, 2018, the System shall calculate,
using actuarial tables and other assumptions adopted by the
Board, the net present value of pension benefits for each
eligible person and shall offer each eligible person the
opportunity to irrevocably elect to receive an amount
determined by the System to be equal to 70% of the net present
value of his or her pension benefits in lieu of receiving any
pension benefit. The offer shall specify the dollar amount that
the eligible person will receive if he or she so elects and
shall expire when a subsequent offer is made to an eligible
person. The System shall make a good faith effort to contact
every eligible person to notify him or her of the election and
of the amount of the accelerated pension benefit payment.
Beginning January 1, 2018 and until July 1, 2018, an
eligible person may irrevocably elect to receive an accelerated
pension benefit payment in the amount that the System offers
under this subsection in lieu of receiving any pension benefit.
A person who elects to receive an accelerated pension benefit

HB4055 - 174 - LRB100 12851 RPS 26572 b
payment under this Section may not elect to proceed under the
Retirement Systems Reciprocal Act with respect to service under
this Article.
(c) A person's credits and creditable service under this
Article shall be terminated upon the person's receipt of an
accelerated pension benefit payment under this Section, and no
other benefit shall be paid under this Article based on those
terminated credits and creditable service, including any
retirement, survivor, or other benefit; except that to the
extent that participation, benefits, or premiums under the
State Employees Group Insurance Act of 1971 are based on the
amount of service credit, the terminated service credit shall
be used for that purpose.
(d) If a person who has received an accelerated pension
benefit payment under this Section returns to active service
under this Article, then:
(1) Any benefits under the System earned as a result of
that return to active service shall be based solely on the
person's credits and creditable service arising from the
return to active service.
(2) The accelerated pension benefit payment may not be
repaid to the System, and the terminated credits and
creditable service may not under any circumstances be
reinstated.
(e) As a condition of receiving an accelerated pension
benefit payment, an eligible person must have another

HB4055 - 175 - LRB100 12851 RPS 26572 b
retirement plan or account qualified under the Internal Revenue
Code of 1986, as amended, for the accelerated pension benefit
payment to be rolled into. The accelerated pension benefit
payment under this Section may be subject to withholding or
payment of applicable taxes, but to the extent permitted by
federal law, a person who receives an accelerated pension
benefit payment under this Section must direct the System to
pay all of that payment as a rollover into another retirement
plan or account qualified under the Internal Revenue Code of
1986, as amended.
(f) Before January 1, 2019, the Board shall certify to the
Illinois Finance Authority and the General Assembly the amount
by which the total amount of accelerated pension benefit
payments made under this Section exceed the amount appropriated
to the System for the purpose of making those payments.
(g) The Board shall adopt any rules necessary to implement
this Section.
(h) No provision of this Section shall be interpreted in a
way that would cause the applicable System to cease to be a
qualified plan under the Internal Revenue Code of 1986.
(40 ILCS 5/15-198)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 15-198. Application and expiration of new benefit
increases.

HB4055 - 176 - LRB100 12851 RPS 26572 b
(a) As used in this Section, "new benefit increase" means
an increase in the amount of any benefit provided under this
Article, or an expansion of the conditions of eligibility for
any benefit under this Article, that results from an amendment
to this Code that takes effect after the effective date of this
amendatory Act of the 94th General Assembly. "New benefit
increase", however, does not include any benefit increase
resulting from the changes made to this Article by this
amendatory Act of the 100th General Assembly.
(b) Notwithstanding any other provision of this Code or any
subsequent amendment to this Code, every new benefit increase
is subject to this Section and shall be deemed to be granted
only in conformance with and contingent upon compliance with
the provisions of this Section.
(c) The Public Act enacting a new benefit increase must
identify and provide for payment to the System of additional
funding at least sufficient to fund the resulting annual
increase in cost to the System as it accrues.
Every new benefit increase is contingent upon the General
Assembly providing the additional funding required under this
subsection. The Commission on Government Forecasting and
Accountability shall analyze whether adequate additional
funding has been provided for the new benefit increase and
shall report its analysis to the Public Pension Division of the
Department of Insurance Financial and Professional Regulation.
A new benefit increase created by a Public Act that does not

HB4055 - 177 - LRB100 12851 RPS 26572 b
include the additional funding required under this subsection
is null and void. If the Public Pension Division determines
that the additional funding provided for a new benefit increase
under this subsection is or has become inadequate, it may so
certify to the Governor and the State Comptroller and, in the
absence of corrective action by the General Assembly, the new
benefit increase shall expire at the end of the fiscal year in
which the certification is made.
(d) Every new benefit increase shall expire 5 years after
its effective date or on such earlier date as may be specified
in the language enacting the new benefit increase or provided
under subsection (c). This does not prevent the General
Assembly from extending or re-creating a new benefit increase
by law.
(e) Except as otherwise provided in the language creating
the new benefit increase, a new benefit increase that expires
under this Section continues to apply to persons who applied
and qualified for the affected benefit while the new benefit
increase was in effect and to the affected beneficiaries and
alternate payees of such persons, but does not apply to any
other person, including without limitation a person who
continues in service after the expiration date and did not
apply and qualify for the affected benefit while the new
benefit increase was in effect.
(Source: P.A. 94-4, eff. 6-1-05.)

HB4055 - 178 - LRB100 12851 RPS 26572 b
(40 ILCS 5/15-200.1 new)
Sec. 15-200.1. Defined contribution plan.
(a) By July 1, 2018, the System shall prepare and implement
a voluntary defined contribution plan for up to 5% of eligible
Tier 1 employees. The System shall determine the 5% cap by the
number of Tier 1 employees on the effective date of this
Section. The defined contribution plan developed under this
Section shall be a plan that aggregates employer and employee
contributions in individual participant accounts which, after
meeting any other requirements, are used for payouts after
retirement in accordance with this Section and any other
applicable laws.
As used in this Section, "defined benefit plan" means the
retirement plan available under this Article to Tier 1
employees who have not made the election authorized under this
Section.
(1) Under the defined contribution plan, a Tier 1
employee of this System could elect to cease accruing
benefits in the defined benefit plan under this Article and
begin accruing benefits for future service in the defined
contribution plan. Service credit under the defined
contribution plan may be used for determining retirement
eligibility under the defined benefit plan. A Tier 1
employee who elects to cease accruing benefits in his or
her defined benefit plan shall be prohibited from
purchasing service credit on or after the date of his or

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her election. A Tier 1 employee making the irrevocable
election provided under this Section shall not receive
interest accruals to his or her Rule 2 benefit on or after
the date of his or her election.
(2) Participants in the defined contribution plan
shall pay employee contributions at the same rate as other
participants under this Article as determined by the
System.
(3) State contributions shall be paid into the accounts
of all participants in the defined contribution plan at a
uniform rate, expressed as a percentage of earnings and
determined for each year. This rate shall be no higher than
the employer's normal cost for Tier 1 employees in the
defined benefit plan for that year, as determined by the
System and expressed as a percentage of earnings, and shall
be no lower than 3% of earnings. The State shall adjust
this rate annually.
(4) The defined contribution plan shall require 5 years
of participation in the defined contribution plan before
vesting in State contributions. If the participant fails to
vest in them, the State contributions, and the earnings
thereon, shall be forfeited.
(5) The defined contribution plan may provide for
participants in the plan to be eligible for the defined
disability benefits available to other participants under
this Article. If it does, the System shall reduce the

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employee contributions credited to the member's defined
contribution plan account by an amount determined by the
System to cover the cost of offering such benefits.
(6) The defined contribution plan shall provide a
variety of options for investments. These options shall
include investments handled by the System as well as
private sector investment options.
(7) The defined contribution plan shall provide a
variety of options for payouts to retirees and their
survivors.
(8) To the extent authorized under federal law and as
authorized by the System, the plan shall allow former
participants in the plan to transfer or roll over employee
and vested State contributions, and the earnings thereon,
into other qualified retirement plans.
(9) The System shall reduce the employee contributions
credited to the member's defined contribution plan account
by an amount determined by the System to cover the cost of
offering these benefits and any applicable administrative
fees.
(b) Only persons who are Tier 1 employees of the System on
the effective date of this Section are eligible to participate
in the defined contribution plan. Participation in the defined
contribution plan shall be limited to the first 5% of eligible
persons who elect to participate. The election to participate
in the defined contribution plan is voluntary and irrevocable.

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(c) An eligible Tier 1 employee may irrevocably elect to
participate in the defined contribution plan by filing with the
System a written application to participate that is received by
the System prior to its determination that 5% of eligible
persons have elected to participate in the defined contribution
plan.
When the System first determines that 5% of eligible
persons have elected to participate in the defined contribution
plan, the System shall provide notice to previously eligible
employees that the plan is no longer available and shall cease
accepting applications to participate.
(d) The System shall make a good faith effort to contact
each Tier 1 employee who is eligible to participate in the
defined contribution plan. The System shall mail information
describing the option to join the defined contribution plan to
each of these employees to his or her last known address on
file with the System. If the employee is not responsive to
other means of contact, it is sufficient for the System to
publish the details of the option on its website.
Upon request for further information describing the
option, the System shall provide employees with information
from the System before exercising the option to join the plan,
including information on the impact to their vested benefits or
non-vested service. The individual consultation shall include
projections of the member's defined benefits at retirement or
earlier termination of service and the value of the member's

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account at retirement or earlier termination of service. The
System shall not provide advice or counseling with respect to
whether the employee should exercise the option. The System
shall inform Tier 1 employees who are eligible to participate
in the defined contribution plan that they may also wish to
obtain information and counsel relating to their option from
any other available source, including but not limited to labor
organizations, private counsel, and financial advisors.
(e) In no event shall the System, its staff, its authorized
representatives, or the Board be liable for any information
given to an employee under this Section. The System may
coordinate with the Illinois Department of Central Management
Services and other retirement systems administering a defined
contribution plan in accordance with this amendatory Act of the
100th General Assembly to provide information concerning the
impact of the option set forth in this Section.
(f) Notwithstanding any other provision of this Section, no
person shall begin participating in the defined contribution
plan until it has attained qualified plan status and received
all necessary approvals from the U.S. Internal Revenue Service.
(g) The System shall report on its progress under this
Section, including the available details of the defined
contribution plan and the System's plans for informing eligible
Tier 1 employees about the plan, to the Governor and the
General Assembly on or before January 15, 2018.
(h) If a Tier 1 employee has not made an election under

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Section 15-134.5 of this Code, then the plan prescribed under
this Section shall not apply to that Tier 1 employee and that
Tier 1 employee shall remain eligible to make the election
prescribed under Section 15-134.5.
(i) The intent of this amendatory Act of the 100th General
Assembly is to ensure that the State's normal cost of
participation in the defined contribution plan is similar, and
if possible equal, to the State's normal cost of participation
in the defined benefit plan, unless a lower State's normal cost
is necessary to ensure cost neutrality.
(40 ILCS 5/15-201.1 new)
Sec. 15-201.1. Defined contribution plan; termination. If
the defined contribution plan under Section 15-200.1 is
terminated or becomes inoperative pursuant to law, then each
participant in the plan shall automatically be deemed to have
been a contributing Tier 1 employee participating in the
System's defined benefit plan during the time in which he or
she participated in the defined contribution plan, and for that
purpose the System shall be entitled to recover the amounts in
the participant's defined contribution accounts.
(40 ILCS 5/16-107.1 new)
Sec. 16-107.1. Tier 1 employee. "Tier 1 employee": A
teacher under this Article who first became a member or
participant before January 1, 2011 under any reciprocal

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retirement system or pension fund established under this Code
other than a retirement system or pension fund established
under Article 2, 3, 4, 5, 6, or 18 of this Code.
(40 ILCS 5/16-158) (from Ch. 108 1/2, par. 16-158)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 16-158. Contributions by State and other employing
units.
(a) The State shall make contributions to the System by
means of appropriations from the Common School Fund and other
State funds of amounts which, together with other employer
contributions, employee contributions, investment income, and
other income, will be sufficient to meet the cost of
maintaining and administering the System on a 90% funded basis
in accordance with actuarial recommendations.
The Board shall determine the amount of State contributions
required for each fiscal year on the basis of the actuarial
tables and other assumptions adopted by the Board and the
recommendations of the actuary, using the formula in subsection
(b-3).
(a-1) Annually, on or before November 15 until November 15,
2011, the Board shall certify to the Governor the amount of the
required State contribution for the coming fiscal year. The
certification under this subsection (a-1) shall include a copy
of the actuarial recommendations upon which it is based and

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shall specifically identify the System's projected State
normal cost for that fiscal year.
On or before May 1, 2004, the Board shall recalculate and
recertify to the Governor the amount of the required State
contribution to the System for State fiscal year 2005, taking
into account the amounts appropriated to and received by the
System under subsection (d) of Section 7.2 of the General
Obligation Bond Act.
On or before July 1, 2005, the Board shall recalculate and
recertify to the Governor the amount of the required State
contribution to the System for State fiscal year 2006, taking
into account the changes in required State contributions made
by this amendatory Act of the 94th General Assembly.
On or before April 1, 2011, the Board shall recalculate and
recertify to the Governor the amount of the required State
contribution to the System for State fiscal year 2011, applying
the changes made by Public Act 96-889 to the System's assets
and liabilities as of June 30, 2009 as though Public Act 96-889
was approved on that date.
(a-5) On or before November 1 of each year, beginning
November 1, 2012, the Board shall submit to the State Actuary,
the Governor, and the General Assembly a proposed certification
of the amount of the required State contribution to the System
for the next fiscal year, along with all of the actuarial
assumptions, calculations, and data upon which that proposed
certification is based. On or before January 1 of each year,

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beginning January 1, 2013, the State Actuary shall issue a
preliminary report concerning the proposed certification and
identifying, if necessary, recommended changes in actuarial
assumptions that the Board must consider before finalizing its
certification of the required State contributions. On or before
January 15, 2013 and each January 15 thereafter, the Board
shall certify to the Governor and the General Assembly the
amount of the required State contribution for the next fiscal
year. The Board's certification must note any deviations from
the State Actuary's recommended changes, the reason or reasons
for not following the State Actuary's recommended changes, and
the fiscal impact of not following the State Actuary's
recommended changes on the required State contribution.
(a-10) For purposes of subsection (c-5) of Section 20 of
the Budget Stabilization Act, on or before November 1 of each
year beginning November 1, 2019, the Board shall determine the
amount of the State contribution to the System that would have
been required for the next fiscal year if Section 1-161,
subsection (b-4) of Section 16-158, and the changes made to
Section 1-160 by this amendatory Act of the 100th General
Assembly had not taken effect, using the best and most recent
available data but based on the law in effect on May 31, 2019.
The Board shall submit to the State Actuary, the Governor, and
the General Assembly a proposed certification, along with the
relevant law, actuarial assumptions, calculations, and data
upon which that certification is based. On or before January 1,

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2020 and every January 1 thereafter, the State Actuary shall
issue a preliminary report concerning the proposed
certification and identifying, if necessary, recommended
changes in actuarial assumptions that the Board must consider
before finalizing its certification. On or before January 15,
2020 and every January 1 thereafter, the Board shall certify to
the Governor and the General Assembly the amount of the State
contribution to the System that would have been required for
the next fiscal year if if Section 1-161, subsection (b-4) of
Section 16-158, and the changes made to Section 1-160 by this
amendatory Act of the 100th General Assembly had not taken
effect, using the best and most recent available data but based
on the law in effect on May 31, 2019. The Board's certification
must note any deviations from the State Actuary's recommended
changes, the reason or reasons for not following the State
Actuary's recommended changes, and the impact of not following
the State Actuary's recommended changes.
(a-15) As soon as practical after the effective date of
this amendatory Act of the 100th General Assembly, the Board
shall recalculate and recertify to the State Actuary, the
Governor, and the General Assembly the amount of the State
contribution to the System for State fiscal year 2018, taking
into account the changes in required State contributions made
by this amendatory Act of the 100th General Assembly. The State
Actuary shall review the assumptions and valuations underlying
the Board's revised certification and issue a preliminary

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report concerning the proposed recertification and
identifying, if necessary, recommended changes in actuarial
assumptions that the Board must consider before finalizing its
certification of the required State contributions. The Board's
final certification must note any deviations from the State
Actuary's recommended changes, the reason or reasons for not
following the State Actuary's recommended changes, and the
fiscal impact of not following the State Actuary's recommended
changes on the required State contribution.
(b) Through State fiscal year 1995, the State contributions
shall be paid to the System in accordance with Section 18-7 of
the School Code.
(b-1) Beginning in State fiscal year 1996, on the 15th day
of each month, or as soon thereafter as may be practicable, the
Board shall submit vouchers for payment of State contributions
to the System, in a total monthly amount of one-twelfth of the
required annual State contribution certified under subsection
(a-1). From the effective date of this amendatory Act of the
93rd General Assembly through June 30, 2004, the Board shall
not submit vouchers for the remainder of fiscal year 2004 in
excess of the fiscal year 2004 certified contribution amount
determined under this Section after taking into consideration
the transfer to the System under subsection (a) of Section
6z-61 of the State Finance Act. These vouchers shall be paid by
the State Comptroller and Treasurer by warrants drawn on the
funds appropriated to the System for that fiscal year.

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If in any month the amount remaining unexpended from all
other appropriations to the System for the applicable fiscal
year (including the appropriations to the System under Section
8.12 of the State Finance Act and Section 1 of the State
Pension Funds Continuing Appropriation Act) is less than the
amount lawfully vouchered under this subsection, the
difference shall be paid from the Common School Fund under the
continuing appropriation authority provided in Section 1.1 of
the State Pension Funds Continuing Appropriation Act.
(b-2) Allocations from the Common School Fund apportioned
to school districts not coming under this System shall not be
diminished or affected by the provisions of this Article.
(b-3) For State fiscal years 2018 through 2045, the minimum
contribution to the System to be made by the State for each
fiscal year shall be an amount determined by the System to be
sufficient to bring the total assets of the System up to 90% of
the total actuarial liabilities of the System by the end of
State fiscal year 2045. In making these determinations, the
required State contribution shall be calculated each year as a
level percentage of total payroll, including payroll that is
not deemed pensionable, but excluding payroll attributable to
participants in the defined contribution plan under Section
16-205.1, over the years remaining to and including fiscal year
2045 and shall be determined under the projected unit credit
actuarial cost method.
Beginning in State fiscal year 2018, any increase or

HB4055 - 190 - LRB100 12851 RPS 26572 b
decrease in State contribution over the prior fiscal year due
exclusively to changes in actuarial or investment assumptions
adopted by the Board shall be included in the State
contribution to the System, as a percentage of the applicable
employee payroll, and shall be increased in equal annual
increments so that by the State fiscal year occurring 5 years
after the adoption of the actuarial or investment assumptions,
the State is contributing at the rate otherwise required under
this Section.
For State fiscal years 2012 through 2017 2045, the minimum
contribution to the System to be made by the State for each
fiscal year shall be an amount determined by the System to be
sufficient to bring the total assets of the System up to 90% of
the total actuarial liabilities of the System by the end of
State fiscal year 2045. In making these determinations, the
required State contribution shall be calculated each year as a
level percentage of payroll over the years remaining to and
including fiscal year 2045 and shall be determined under the
projected unit credit actuarial cost method.
For State fiscal years 1996 through 2005, the State
contribution to the System, as a percentage of the applicable
employee payroll, shall be increased in equal annual increments
so that by State fiscal year 2011, the State is contributing at
the rate required under this Section; except that in the
following specified State fiscal years, the State contribution
to the System shall not be less than the following indicated

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percentages of the applicable employee payroll, even if the
indicated percentage will produce a State contribution in
excess of the amount otherwise required under this subsection
and subsection (a), and notwithstanding any contrary
certification made under subsection (a-1) before the effective
date of this amendatory Act of 1998: 10.02% in FY 1999; 10.77%
in FY 2000; 11.47% in FY 2001; 12.16% in FY 2002; 12.86% in FY
2003; and 13.56% in FY 2004.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2006 is
$534,627,700.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2007 is
$738,014,500.
For each of State fiscal years 2008 through 2009, the State
contribution to the System, as a percentage of the applicable
employee payroll, shall be increased in equal annual increments
from the required State contribution for State fiscal year
2007, so that by State fiscal year 2011, the State is
contributing at the rate otherwise required under this Section.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2010 is
$2,089,268,000 and shall be made from the proceeds of bonds
sold in fiscal year 2010 pursuant to Section 7.2 of the General
Obligation Bond Act, less (i) the pro rata share of bond sale
expenses determined by the System's share of total bond

HB4055 - 192 - LRB100 12851 RPS 26572 b
proceeds, (ii) any amounts received from the Common School Fund
in fiscal year 2010, and (iii) any reduction in bond proceeds
due to the issuance of discounted bonds, if applicable.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2011 is
the amount recertified by the System on or before April 1, 2011
pursuant to subsection (a-1) of this Section and shall be made
from the proceeds of bonds sold in fiscal year 2011 pursuant to
Section 7.2 of the General Obligation Bond Act, less (i) the
pro rata share of bond sale expenses determined by the System's
share of total bond proceeds, (ii) any amounts received from
the Common School Fund in fiscal year 2011, and (iii) any
reduction in bond proceeds due to the issuance of discounted
bonds, if applicable. This amount shall include, in addition to
the amount certified by the System, an amount necessary to meet
employer contributions required by the State as an employer
under paragraph (e) of this Section, which may also be used by
the System for contributions required by paragraph (a) of
Section 16-127.
Beginning in State fiscal year 2046, the minimum State
contribution for each fiscal year shall be the amount needed to
maintain the total assets of the System at 90% of the total
actuarial liabilities of the System.
Amounts received by the System pursuant to Section 25 of
the Budget Stabilization Act or Section 8.12 of the State
Finance Act in any fiscal year do not reduce and do not

HB4055 - 193 - LRB100 12851 RPS 26572 b
constitute payment of any portion of the minimum State
contribution required under this Article in that fiscal year.
Such amounts shall not reduce, and shall not be included in the
calculation of, the required State contributions under this
Article in any future year until the System has reached a
funding ratio of at least 90%. A reference in this Article to
the "required State contribution" or any substantially similar
term does not include or apply to any amounts payable to the
System under Section 25 of the Budget Stabilization Act.
Notwithstanding any other provision of this Section, the
required State contribution for State fiscal year 2005 and for
fiscal year 2008 and each fiscal year thereafter, as calculated
under this Section and certified under subsection (a-1), shall
not exceed an amount equal to (i) the amount of the required
State contribution that would have been calculated under this
Section for that fiscal year if the System had not received any
payments under subsection (d) of Section 7.2 of the General
Obligation Bond Act, minus (ii) the portion of the State's
total debt service payments for that fiscal year on the bonds
issued in fiscal year 2003 for the purposes of that Section
7.2, as determined and certified by the Comptroller, that is
the same as the System's portion of the total moneys
distributed under subsection (d) of Section 7.2 of the General
Obligation Bond Act. In determining this maximum for State
fiscal years 2008 through 2010, however, the amount referred to
in item (i) shall be increased, as a percentage of the

HB4055 - 194 - LRB100 12851 RPS 26572 b
applicable employee payroll, in equal increments calculated
from the sum of the required State contribution for State
fiscal year 2007 plus the applicable portion of the State's
total debt service payments for fiscal year 2007 on the bonds
issued in fiscal year 2003 for the purposes of Section 7.2 of
the General Obligation Bond Act, so that, by State fiscal year
2011, the State is contributing at the rate otherwise required
under this Section.
(b-4) For employees first hired on or after 6 months after
the effective date of this amendatory Act of the 100th General
Assembly who have elected the benefits under Section 1-161 of
this Code, the employer shall annually contribute an amount,
expressed as a percentage of payroll, equal to the defined
benefit normal cost of the defined benefit plan, less the
employee contribution, plus 2%. On an annual basis, the System
shall certify to each employer the amount of unfunded liability
accrued in the employer's account to be paid by the employer so
that the System is 90% funded by the end of State fiscal year
2045. The contributions shall be divided equally over a
12-month period and made monthly. The employer shall also
contribute an amount equal to the employer defined
contribution, as set on an individual employee basis, under
paragraph (2) of subsection (k) of Section 1-161 during each
pay period. The System shall have the authority to adopt rules
regarding implementation of employer contributions.
(c) Payment of the required State contributions and of all

HB4055 - 195 - LRB100 12851 RPS 26572 b
pensions, retirement annuities, death benefits, refunds, and
other benefits granted under or assumed by this System, and all
expenses in connection with the administration and operation
thereof, are obligations of the State.
If members are paid from special trust or federal funds
which are administered by the employing unit, whether school
district or other unit, the employing unit shall pay to the
System from such funds the full accruing retirement costs based
upon that service, which, beginning July 1, 2014, shall be at a
rate, expressed as a percentage of salary, equal to the total
minimum contribution to the System to be made by the State for
that fiscal year, including both normal cost and unfunded
liability components, expressed as a percentage of payroll, as
determined by the System under subsection (b-3) of this
Section. Employer contributions, based on salary paid to
members from federal funds, may be forwarded by the
distributing agency of the State of Illinois to the System
prior to allocation, in an amount determined in accordance with
guidelines established by such agency and the System. Any
contribution for fiscal year 2015 collected as a result of the
change made by this amendatory Act of the 98th General Assembly
shall be considered a State contribution under subsection (b-3)
of this Section.
(d) Effective July 1, 1986, any employer of a teacher as
defined in paragraph (8) of Section 16-106 shall pay the
employer's normal cost of benefits based upon the teacher's

HB4055 - 196 - LRB100 12851 RPS 26572 b
service, in addition to employee contributions, as determined
by the System. Such employer contributions shall be forwarded
monthly in accordance with guidelines established by the
System.
However, with respect to benefits granted under Section
16-133.4 or 16-133.5 to a teacher as defined in paragraph (8)
of Section 16-106, the employer's contribution shall be 12%
(rather than 20%) of the member's highest annual salary rate
for each year of creditable service granted, and the employer
shall also pay the required employee contribution on behalf of
the teacher. For the purposes of Sections 16-133.4 and
16-133.5, a teacher as defined in paragraph (8) of Section
16-106 who is serving in that capacity while on leave of
absence from another employer under this Article shall not be
considered an employee of the employer from which the teacher
is on leave.
(e) Beginning July 1, 1998, every employer of a teacher
shall pay to the System an employer contribution computed as
follows:
(1) Beginning July 1, 1998 through June 30, 1999, the
employer contribution shall be equal to 0.3% of each
teacher's salary.
(2) Beginning July 1, 1999 and thereafter, the employer
contribution shall be equal to 0.58% of each teacher's
salary.
The school district or other employing unit may pay these

HB4055 - 197 - LRB100 12851 RPS 26572 b
employer contributions out of any source of funding available
for that purpose and shall forward the contributions to the
System on the schedule established for the payment of member
contributions.
These employer contributions are intended to offset a
portion of the cost to the System of the increases in
retirement benefits resulting from this amendatory Act of 1998.
Each employer of teachers is entitled to a credit against
the contributions required under this subsection (e) with
respect to salaries paid to teachers for the period January 1,
2002 through June 30, 2003, equal to the amount paid by that
employer under subsection (a-5) of Section 6.6 of the State
Employees Group Insurance Act of 1971 with respect to salaries
paid to teachers for that period.
The additional 1% employee contribution required under
Section 16-152 by this amendatory Act of 1998 is the
responsibility of the teacher and not the teacher's employer,
unless the employer agrees, through collective bargaining or
otherwise, to make the contribution on behalf of the teacher.
If an employer is required by a contract in effect on May
1, 1998 between the employer and an employee organization to
pay, on behalf of all its full-time employees covered by this
Article, all mandatory employee contributions required under
this Article, then the employer shall be excused from paying
the employer contribution required under this subsection (e)
for the balance of the term of that contract. The employer and

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the employee organization shall jointly certify to the System
the existence of the contractual requirement, in such form as
the System may prescribe. This exclusion shall cease upon the
termination, extension, or renewal of the contract at any time
after May 1, 1998.
(f) For school years beginning on or after June 1, 2005 and
before July 1, 2018, if If the amount of a teacher's salary for
any school year used to determine final average salary exceeds
the member's annual full-time salary rate with the same
employer for the previous school year by more than 6%, the
teacher's employer shall pay to the System, in addition to all
other payments required under this Section and in accordance
with guidelines established by the System, the present value of
the increase in benefits resulting from the portion of the
increase in salary that is in excess of 6%. This present value
shall be computed by the System on the basis of the actuarial
assumptions and tables used in the most recent actuarial
valuation of the System that is available at the time of the
computation. If a teacher's salary for the 2005-2006 school
year is used to determine final average salary under this
subsection (f), then the changes made to this subsection (f) by
Public Act 94-1057 shall apply in calculating whether the
increase in his or her salary is in excess of 6%. For the
purposes of this Section, change in employment under Section
10-21.12 of the School Code on or after June 1, 2005 shall
constitute a change in employer. The System may require the

HB4055 - 199 - LRB100 12851 RPS 26572 b
employer to provide any pertinent information or
documentation. The changes made to this subsection (f) by this
amendatory Act of the 94th General Assembly apply without
regard to whether the teacher was in service on or after its
effective date.
Whenever it determines that a payment is or may be required
under this subsection, the System shall calculate the amount of
the payment and bill the employer for that amount. The bill
shall specify the calculations used to determine the amount
due. If the employer disputes the amount of the bill, it may,
within 30 days after receipt of the bill, apply to the System
in writing for a recalculation. The application must specify in
detail the grounds of the dispute and, if the employer asserts
that the calculation is subject to subsection (g) or (h) of
this Section, must include an affidavit setting forth and
attesting to all facts within the employer's knowledge that are
pertinent to the applicability of that subsection. Upon
receiving a timely application for recalculation, the System
shall review the application and, if appropriate, recalculate
the amount due.
The employer contributions required under this subsection
(f) may be paid in the form of a lump sum within 90 days after
receipt of the bill. If the employer contributions are not paid
within 90 days after receipt of the bill, then interest will be
charged at a rate equal to the System's annual actuarially
assumed rate of return on investment compounded annually from

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the 91st day after receipt of the bill. Payments must be
concluded within 3 years after the employer's receipt of the
bill.
(f-1) Beginning in fiscal year 2019, if a contract or
collective bargaining agreement entered into, amended, or
renewed on or after the effective date of this amendatory Act
of the 100th General Assembly provides for salaries to exceed
the salaries provided under the preceding contract or
collective bargaining agreement, then the employer shall pay to
the System, in addition to all other payments required under
this Section and in accordance with guidelines established by
the System, the current value of the projected amount of the
increase in benefits, as determined by the System and
reflecting whether the teachers covered under the contract or
collective bargaining agreement are Tier 1 members or Tier 2
members, resulting from the portion of the salaries that exceed
the amount of the salaries provided under the preceding
contract or collective bargaining agreement. The System may
require the employer to provide any pertinent information or
documentation.
Whenever it determines that a payment is or may be required
under this subsection (f-1), the System shall calculate the
amount of the payment and bill the employer for that amount.
The bill shall specify the calculations used to determine the
amount due. If the employer disputes the amount of the bill, it
may, within 30 days after receipt of the bill, apply to the

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System in writing for a recalculation. The application must
specify in detail the grounds of the dispute. Upon receiving a
timely application for recalculation, the System shall review
the application and, if appropriate, recalculate the amount
due.
The employer contributions required under this subsection
(f-1) may be paid in the form of a lump sum within 90 days after
receipt of the bill. If the employer contributions are not paid
within 90 days after receipt of the bill, then interest shall
be charged at a rate equal to the System's annual actuarially
assumed rate of return on investment compounded annually from
the 91st day after receipt of the bill. Payments must be
concluded within 3 years after the employer's receipt of the
bill.
(g) This subsection (g) applies only to payments made or
salary increases given on or after June 1, 2005 but before July
1, 2011. The changes made by Public Act 94-1057 shall not
require the System to refund any payments received before July
31, 2006 (the effective date of Public Act 94-1057).
When assessing payment for any amount due under subsection
(f), the System shall exclude salary increases paid to teachers
under contracts or collective bargaining agreements entered
into, amended, or renewed before June 1, 2005.
When assessing payment for any amount due under subsection
(f), the System shall exclude salary increases paid to a
teacher at a time when the teacher is 10 or more years from

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retirement eligibility under Section 16-132 or 16-133.2.
When assessing payment for any amount due under subsection
(f), the System shall exclude salary increases resulting from
overload work, including summer school, when the school
district has certified to the System, and the System has
approved the certification, that (i) the overload work is for
the sole purpose of classroom instruction in excess of the
standard number of classes for a full-time teacher in a school
district during a school year and (ii) the salary increases are
equal to or less than the rate of pay for classroom instruction
computed on the teacher's current salary and work schedule.
When assessing payment for any amount due under subsection
(f), the System shall exclude a salary increase resulting from
a promotion (i) for which the employee is required to hold a
certificate or supervisory endorsement issued by the State
Teacher Certification Board that is a different certification
or supervisory endorsement than is required for the teacher's
previous position and (ii) to a position that has existed and
been filled by a member for no less than one complete academic
year and the salary increase from the promotion is an increase
that results in an amount no greater than the lesser of the
average salary paid for other similar positions in the district
requiring the same certification or the amount stipulated in
the collective bargaining agreement for a similar position
requiring the same certification.
When assessing payment for any amount due under subsection

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(f), the System shall exclude any payment to the teacher from
the State of Illinois or the State Board of Education over
which the employer does not have discretion, notwithstanding
that the payment is included in the computation of final
average salary.
(h) When assessing payment for any amount due under
subsection (f), the System shall exclude any salary increase
described in subsection (g) of this Section given on or after
July 1, 2011 but before July 1, 2014 under a contract or
collective bargaining agreement entered into, amended, or
renewed on or after June 1, 2005 but before July 1, 2011.
Notwithstanding any other provision of this Section, any
payments made or salary increases given after June 30, 2014
shall be used in assessing payment for any amount due under
subsection (f) of this Section.
(i) The System shall prepare a report and file copies of
the report with the Governor and the General Assembly by
January 1, 2007 that contains all of the following information:
(1) The number of recalculations required by the
changes made to this Section by Public Act 94-1057 for each
employer.
(2) The dollar amount by which each employer's
contribution to the System was changed due to
recalculations required by Public Act 94-1057.
(3) The total amount the System received from each
employer as a result of the changes made to this Section by

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Public Act 94-4.
(4) The increase in the required State contribution
resulting from the changes made to this Section by Public
Act 94-1057.
(j) For purposes of determining the required State
contribution to the System, the value of the System's assets
shall be equal to the actuarial value of the System's assets,
which shall be calculated as follows:
As of June 30, 2008, the actuarial value of the System's
assets shall be equal to the market value of the assets as of
that date. In determining the actuarial value of the System's
assets for fiscal years after June 30, 2008, any actuarial
gains or losses from investment return incurred in a fiscal
year shall be recognized in equal annual amounts over the
5-year period following that fiscal year.
(k) For purposes of determining the required State
contribution to the system for a particular year, the actuarial
value of assets shall be assumed to earn a rate of return equal
to the system's actuarially assumed rate of return.
(Source: P.A. 96-43, eff. 7-15-09; 96-1497, eff. 1-14-11;
96-1511, eff. 1-27-11; 96-1554, eff. 3-18-11; 97-694, eff.
6-18-12; 97-813, eff. 7-13-12; 98-674, eff. 6-30-14.)
(40 ILCS 5/16-190.5 new)
Sec. 16-190.5. Accelerated pension benefit payment.
(a) As used in this Section:

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"Eligible person" means a person who:
(1) has terminated service;
(2) has accrued sufficient service credit to be
eligible to receive a retirement annuity under this
Article;
(3) has not received any retirement annuity under this
Article; and
(4) does not have a QILDRO in effect against him or her
under this Article.
"Pension benefit" means the benefits under this Article, or
Article 1 as it relates to those benefits, including any
anticipated annual increases, that an eligible person is
entitled to upon attainment of the applicable retirement age.
"Pension benefit" also includes applicable survivor's or
disability benefits.
(b) Before January 1, 2018, the System shall calculate,
using actuarial tables and other assumptions adopted by the
Board, the net present value of pension benefits for each
eligible person and shall offer each eligible person the
opportunity to irrevocably elect to receive an amount
determined by the System to be equal to 70% of the net present
value of his or her pension benefits in lieu of receiving any
pension benefit. The offer shall specify the dollar amount that
the eligible person will receive if he or she so elects and
shall expire when a subsequent offer is made to an eligible
person. The System shall make a good faith effort to contact

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every eligible person to notify him or her of the election and
of the amount of the accelerated pension benefit payment.
Beginning January 1, 2018 and until July 1, 2018, an
eligible person may irrevocably elect to receive an accelerated
pension benefit payment in the amount that the System offers
under this subsection in lieu of receiving any pension benefit.
A person who elects to receive an accelerated pension benefit
payment under this Section may not elect to proceed under the
Retirement Systems Reciprocal Act with respect to service under
this Article.
(c) A person's credits and creditable service under this
Article shall be terminated upon the person's receipt of an
accelerated pension benefit payment under this Section, and no
other benefit shall be paid under this Article based on those
terminated credits and creditable service, including any
retirement, survivor, or other benefit; except that to the
extent that participation, benefits, or premiums under the
State Employees Group Insurance Act of 1971 are based on the
amount of service credit, the terminated service credit shall
be used for that purpose.
(d) If a person who has received an accelerated pension
benefit payment under this Section returns to active service
under this Article, then:
(1) Any benefits under the System earned as a result of
that return to active service shall be based solely on the
person's credits and creditable service arising from the

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return to active service.
(2) The accelerated pension benefit payment may not be
repaid to the System, and the terminated credits and
creditable service may not under any circumstances be
reinstated.
(e) As a condition of receiving an accelerated pension
benefit payment, an eligible person must have another
retirement plan or account qualified under the Internal Revenue
Code of 1986, as amended, for the accelerated pension benefit
payment to be rolled into. The accelerated pension benefit
payment under this Section may be subject to withholding or
payment of applicable taxes, but to the extent permitted by
federal law, a person who receives an accelerated pension
benefit payment under this Section must direct the System to
pay all of that payment as a rollover into another retirement
plan or account qualified under the Internal Revenue Code of
1986, as amended.
(f) Before January 1, 2019, the Board shall certify to the
Illinois Finance Authority and the General Assembly the amount
by which the total amount of accelerated pension benefit
payments made under this Section exceed the amount appropriated
to the System for the purpose of making those payments.
(g) The Board shall adopt any rules necessary to implement
this Section.
(h) No provision of this Section shall be interpreted in a
way that would cause the applicable System to cease to be a

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qualified plan under the Internal Revenue Code of 1986.
(40 ILCS 5/16-203)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 16-203. Application and expiration of new benefit
increases.
(a) As used in this Section, "new benefit increase" means
an increase in the amount of any benefit provided under this
Article, or an expansion of the conditions of eligibility for
any benefit under this Article, that results from an amendment
to this Code that takes effect after June 1, 2005 (the
effective date of Public Act 94-4). "New benefit increase",
however, does not include any benefit increase resulting from
the changes made to this Article by Public Act 95-910 or this
amendatory Act of the 100th General Assembly this amendatory
Act of the 95th General Assembly.
(b) Notwithstanding any other provision of this Code or any
subsequent amendment to this Code, every new benefit increase
is subject to this Section and shall be deemed to be granted
only in conformance with and contingent upon compliance with
the provisions of this Section.
(c) The Public Act enacting a new benefit increase must
identify and provide for payment to the System of additional
funding at least sufficient to fund the resulting annual
increase in cost to the System as it accrues.

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Every new benefit increase is contingent upon the General
Assembly providing the additional funding required under this
subsection. The Commission on Government Forecasting and
Accountability shall analyze whether adequate additional
funding has been provided for the new benefit increase and
shall report its analysis to the Public Pension Division of the
Department of Insurance Financial and Professional Regulation.
A new benefit increase created by a Public Act that does not
include the additional funding required under this subsection
is null and void. If the Public Pension Division determines
that the additional funding provided for a new benefit increase
under this subsection is or has become inadequate, it may so
certify to the Governor and the State Comptroller and, in the
absence of corrective action by the General Assembly, the new
benefit increase shall expire at the end of the fiscal year in
which the certification is made.
(d) Every new benefit increase shall expire 5 years after
its effective date or on such earlier date as may be specified
in the language enacting the new benefit increase or provided
under subsection (c). This does not prevent the General
Assembly from extending or re-creating a new benefit increase
by law.
(e) Except as otherwise provided in the language creating
the new benefit increase, a new benefit increase that expires
under this Section continues to apply to persons who applied
and qualified for the affected benefit while the new benefit

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increase was in effect and to the affected beneficiaries and
alternate payees of such persons, but does not apply to any
other person, including without limitation a person who
continues in service after the expiration date and did not
apply and qualify for the affected benefit while the new
benefit increase was in effect.
(Source: P.A. 94-4, eff. 6-1-05; 95-910, eff. 8-26-08.)
(40 ILCS 5/16-205.1 new)
Sec. 16-205.1. Defined contribution plan.
(a) By July 1, 2018, the System shall prepare and implement
a voluntary defined contribution plan for up to 5% of eligible
active Tier 1 employees. The System shall determine the 5% cap
by the number of active Tier 1 employees on the effective date
of this Section. The defined contribution plan developed under
this Section shall be a plan that aggregates employer and
employee contributions in individual participant accounts
which, after meeting any other requirements, are used for
payouts after retirement in accordance with this Section and
any other applicable laws.
As used in this Section, "defined benefit plan" means the
retirement plan available under this Article to Tier 1
employees who have not made the election authorized under this
Section.
(1) Under the defined contribution plan, an active Tier
1 employee of this System could elect to cease accruing

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benefits in the defined benefit plan under this Article and
begin accruing benefits for future service in the defined
contribution plan. Service credit under the defined
contribution plan may be used for determining retirement
eligibility under the defined benefit plan. An active Tier
1 employee who elects to cease accruing benefits in his or
her defined benefit plan shall be prohibited from
purchasing service credit on or after the date of his or
her election. A Tier 1 employee making the irrevocable
election provided under this Section shall not receive
interest accruals to his or her benefit under paragraph (A)
of subsection (a) of Section 16-133 on or after the date of
his or her election.
(2) Participants in the defined contribution plan
shall pay employee contributions at the same rate as Tier 1
employees in this System who do not participate in the
defined contribution plan.
(3) State contributions shall be paid into the accounts
of all participants in the defined contribution plan at a
uniform rate, expressed as a percentage of salary and
determined for each year. This rate shall be no higher than
the employer's normal cost for Tier 1 employees in the
defined benefit plan for that year, as determined by the
System and expressed as a percentage of salary, and shall
be no lower than 0% of salary. The State shall adjust this
rate annually.

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(4) The defined contribution plan shall require 5 years
of participation in the defined contribution plan before
vesting in State contributions. If the participant fails to
vest in them, the State contributions, and the earnings
thereon, shall be forfeited.
(5) The defined contribution plan may provide for
participants in the plan to be eligible for the defined
disability benefits available to other participants under
this Article. If it does, the System shall reduce the
employee contributions credited to the member's defined
contribution plan account by an amount determined by the
System to cover the cost of offering such benefits.
(6) The defined contribution plan shall provide a
variety of options for investments. These options shall
include investments in a fund created by the System and
managed in accordance with legal and fiduciary standards,
as well as investment options otherwise available.
(7) The defined contribution plan shall provide a
variety of options for payouts to retirees and their
survivors.
(8) To the extent authorized under federal law and as
authorized by the System, the plan shall allow former
participants in the plan to transfer or roll over employee
and vested State contributions, and the earnings thereon,
into other qualified retirement plans.
(9) The System shall reduce the employee contributions

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credited to the member's defined contribution plan account
by an amount determined by the System to cover the cost of
offering these benefits and any applicable administrative
fees.
(b) Only persons who are active Tier 1 employees of the
System on the effective date of this Section are eligible to
participate in the defined contribution plan. Participation in
the defined contribution plan shall be limited to the first 5%
of eligible persons who elect to participate. The election to
participate in the defined contribution plan is voluntary and
irrevocable.
(c) An eligible Tier 1 employee may irrevocably elect to
participate in the defined contribution plan by filing with the
System a written application to participate that is received by
the System prior to its determination that 5% of eligible
persons have elected to participate in the defined contribution
plan.
When the System first determines that 5% of eligible
persons have elected to participate in the defined contribution
plan, the System shall provide notice to previously eligible
employees that the plan is no longer available and shall cease
accepting applications to participate.
(d) The System shall make a good faith effort to contact
each active Tier 1 employee who is eligible to participate in
the defined contribution plan. The System shall mail
information describing the option to join the defined

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contribution plan to each of these employees to his or her last
known address on file with the System. If the employee is not
responsive to other means of contact, it is sufficient for the
System to publish the details of the option on its website.
Upon request for further information describing the
option, the System shall provide employees with information
from the System before exercising the option to join the plan,
including information on the impact to their vested benefits or
non-vested service. The individual consultation shall include
projections of the member's defined benefits at retirement or
earlier termination of service and the value of the member's
account at retirement or earlier termination of service. The
System shall not provide advice or counseling with respect to
whether the employee should exercise the option. The System
shall inform Tier 1 employees who are eligible to participate
in the defined contribution plan that they may also wish to
obtain information and counsel relating to their option from
any other available source, including but not limited to labor
organizations, private counsel, and financial advisors.
(e) In no event shall the System, its staff, its authorized
representatives, or the Board be liable for any information
given to an employee under this Section. The System may
coordinate with the Illinois Department of Central Management
Services and other retirement systems administering a defined
contribution plan in accordance with this amendatory Act of the
100th General Assembly to provide information concerning the

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impact of the option set forth in this Section.
(f) Notwithstanding any other provision of this Section, no
person shall begin participating in the defined contribution
plan until it has attained qualified plan status and received
all necessary approvals from the U.S. Internal Revenue Service.
(g) The System shall report on its progress under this
Section, including the available details of the defined
contribution plan and the System's plans for informing eligible
Tier 1 employees about the plan, to the Governor and the
General Assembly on or before January 15, 2018.
(h) The intent of this amendatory Act of the 100th General
Assembly is to ensure that the State's normal cost of
participation in the defined contribution plan is similar, and
if possible equal, to the State's normal cost of participation
in the defined benefit plan, unless a lower State's normal cost
is necessary to ensure cost neutrality.
(40 ILCS 5/16-206.1 new)
Sec. 16-206.1. Defined contribution plan; termination. If
the defined contribution plan under Section 16-205.1 is
terminated or becomes inoperative pursuant to law, then each
participant in the plan shall automatically be deemed to have
been a contributing Tier 1 employee in the System's defined
benefit plan during the time in which he or she participated in
the defined contribution plan, and for that purpose the System
shall be entitled to recover the amounts in the participant's

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defined contribution accounts.
(40 ILCS 5/17-106.05 new)
Sec. 17-106.05. Tier 1 employee. "Tier 1 employee": A
teacher under this Article who first became a member or
participant before January 1, 2011 under any reciprocal
retirement system or pension fund established under this Code
other than a retirement system or pension fund established
under Article 2, 3, 4, 5, 6, or 18 of this Code.
(40 ILCS 5/17-129) (from Ch. 108 1/2, par. 17-129)
Sec. 17-129. Employer contributions; deficiency in Fund.
(a) If in any fiscal year of the Board of Education ending
prior to 1997 the total amounts paid to the Fund from the Board
of Education (other than under this subsection, and other than
amounts used for making or "picking up" contributions on behalf
of teachers) and from the State do not equal the total
contributions made by or on behalf of the teachers for such
year, or if the total income of the Fund in any such fiscal
year of the Board of Education from all sources is less than
the total such expenditures by the Fund for such year, the
Board of Education shall, in the next succeeding year, in
addition to any other payment to the Fund set apart and
appropriate from moneys from its tax levy for educational
purposes, a sum sufficient to remove such deficiency or
deficiencies, and promptly pay such sum into the Fund in order

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to restore any of the reserves of the Fund that may have been
so temporarily applied. Any amounts received by the Fund after
December 4, 1997 from State appropriations, including under
Section 17-127, shall be a credit against and shall fully
satisfy any obligation that may have arisen, or be claimed to
have arisen, under this subsection (a) as a result of any
deficiency or deficiencies in the fiscal year of the Board of
Education ending in calendar year 1997.
(b) (i) Notwithstanding any other provision of this
Section, and notwithstanding any prior certification by the
Board under subsection (c) for fiscal year 2011, the Board of
Education's total required contribution to the Fund for fiscal
year 2011 under this Section is $187,000,000.
(ii) Notwithstanding any other provision of this Section,
the Board of Education's total required contribution to the
Fund for fiscal year 2012 under this Section is $192,000,000.
(iii) Notwithstanding any other provision of this Section,
the Board of Education's total required contribution to the
Fund for fiscal year 2013 under this Section is $196,000,000.
(iv) For fiscal years 2014 through 2059, the minimum
contribution to the Fund to be made by the Board of Education
in each fiscal year shall be an amount determined by the Fund
to be sufficient to bring the total assets of the Fund up to
90% of the total actuarial liabilities of the Fund by the end
of fiscal year 2059. In making these determinations, the
required Board of Education contribution shall be calculated

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each year as a level percentage of the applicable employee
payrolls over the years remaining to and including fiscal year
2059 and shall be determined under the projected unit credit
actuarial cost method.
(v) Beginning in fiscal year 2060, the minimum Board of
Education contribution for each fiscal year shall be the amount
needed to maintain the total assets of the Fund at 90% of the
total actuarial liabilities of the Fund.
(vi) Notwithstanding any other provision of this
subsection (b), for any fiscal year, the contribution to the
Fund from the Board of Education shall not be required to be in
excess of the amount calculated as needed to maintain the
assets (or cause the assets to be) at the 90% level by the end
of the fiscal year.
(vii) Any contribution by the State to or for the benefit
of the Fund, including, without limitation, as referred to
under Section 17-127, shall be a credit against any
contribution required to be made by the Board of Education
under this subsection (b).
(c) The Board shall determine the amount of Board of
Education contributions required for each fiscal year on the
basis of the actuarial tables and other assumptions adopted by
the Board and the recommendations of the actuary, in order to
meet the minimum contribution requirements of subsections (a)
and (b). Annually, on or before February 28, the Board shall
certify to the Board of Education the amount of the required

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Board of Education contribution for the coming fiscal year. The
certification shall include a copy of the actuarial
recommendations upon which it is based.
Beginning in fiscal year 2018, any increase or decrease in
the Board of Education's contribution over the prior fiscal
year due exclusively to changes in actuarial or investment
assumptions adopted by the Board shall be included in the Board
of Education's contribution to the Fund, as a percentage of the
applicable employee payroll, and shall be increased in equal
annual increments so that by the fiscal year occurring 5 years
after the adoption of the actuarial or investment assumptions,
the Board of Education is contributing at the rate otherwise
required under this Section.
(d) As soon as practical after the effective date of this
amendatory Act of the 100th General Assembly, the Board shall
recalculate and recertify to the Board of Education the amount
of the required Board of Education contribution to the Fund for
fiscal year 2018, as necessary to take into account the changes
in required Board of Education contributions made by this
amendatory Act of the 100th General Assembly.
(Source: P.A. 96-889, eff. 4-14-10.)
(40 ILCS 5/18-131) (from Ch. 108 1/2, par. 18-131)
Sec. 18-131. Financing; employer contributions.
(a) The State of Illinois shall make contributions to this
System by appropriations of the amounts which, together with

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the contributions of participants, net earnings on
investments, and other income, will meet the costs of
maintaining and administering this System on a 90% funded basis
in accordance with actuarial recommendations.
(b) The Board shall determine the amount of State
contributions required for each fiscal year on the basis of the
actuarial tables and other assumptions adopted by the Board and
the prescribed rate of interest, using the formula in
subsection (c).
(c) For State fiscal years 2018 through 2045, the minimum
contribution to the System to be made by the State for each
fiscal year shall be an amount determined by the System to be
sufficient to bring the total assets of the System up to 90% of
the total actuarial liabilities of the System by the end of
State fiscal year 2045. In making these determinations, the
required State contribution shall be calculated each year as a
level percentage of total payroll, including payroll that is
not deemed pensionable, over the years remaining to and
including fiscal year 2045 and shall be determined under the
projected unit credit actuarial cost method.
Beginning in State fiscal year 2018, any increase or
decrease in State contribution over the prior fiscal year due
exclusively to changes in actuarial or investment assumptions
adopted by the Board shall be included in the State
contribution to the System, as a percentage of the applicable
employee payroll, and shall be increased in equal annual

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increments so that by the State fiscal year occurring 5 years
after the adoption of the actuarial or investment assumptions,
the State is contributing at the rate otherwise required under
this Section.
For State fiscal years 2012 through 2017 2045, the minimum
contribution to the System to be made by the State for each
fiscal year shall be an amount determined by the System to be
sufficient to bring the total assets of the System up to 90% of
the total actuarial liabilities of the System by the end of
State fiscal year 2045. In making these determinations, the
required State contribution shall be calculated each year as a
level percentage of payroll over the years remaining to and
including fiscal year 2045 and shall be determined under the
projected unit credit actuarial cost method.
For State fiscal years 1996 through 2005, the State
contribution to the System, as a percentage of the applicable
employee payroll, shall be increased in equal annual increments
so that by State fiscal year 2011, the State is contributing at
the rate required under this Section.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2006 is
$29,189,400.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2007 is
$35,236,800.
For each of State fiscal years 2008 through 2009, the State

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contribution to the System, as a percentage of the applicable
employee payroll, shall be increased in equal annual increments
from the required State contribution for State fiscal year
2007, so that by State fiscal year 2011, the State is
contributing at the rate otherwise required under this Section.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2010 is
$78,832,000 and shall be made from the proceeds of bonds sold
in fiscal year 2010 pursuant to Section 7.2 of the General
Obligation Bond Act, less (i) the pro rata share of bond sale
expenses determined by the System's share of total bond
proceeds, (ii) any amounts received from the General Revenue
Fund in fiscal year 2010, and (iii) any reduction in bond
proceeds due to the issuance of discounted bonds, if
applicable.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2011 is
the amount recertified by the System on or before April 1, 2011
pursuant to Section 18-140 and shall be made from the proceeds
of bonds sold in fiscal year 2011 pursuant to Section 7.2 of
the General Obligation Bond Act, less (i) the pro rata share of
bond sale expenses determined by the System's share of total
bond proceeds, (ii) any amounts received from the General
Revenue Fund in fiscal year 2011, and (iii) any reduction in
bond proceeds due to the issuance of discounted bonds, if
applicable.

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Beginning in State fiscal year 2046, the minimum State
contribution for each fiscal year shall be the amount needed to
maintain the total assets of the System at 90% of the total
actuarial liabilities of the System.
Amounts received by the System pursuant to Section 25 of
the Budget Stabilization Act or Section 8.12 of the State
Finance Act in any fiscal year do not reduce and do not
constitute payment of any portion of the minimum State
contribution required under this Article in that fiscal year.
Such amounts shall not reduce, and shall not be included in the
calculation of, the required State contributions under this
Article in any future year until the System has reached a
funding ratio of at least 90%. A reference in this Article to
the "required State contribution" or any substantially similar
term does not include or apply to any amounts payable to the
System under Section 25 of the Budget Stabilization Act.
Notwithstanding any other provision of this Section, the
required State contribution for State fiscal year 2005 and for
fiscal year 2008 and each fiscal year thereafter, as calculated
under this Section and certified under Section 18-140, shall
not exceed an amount equal to (i) the amount of the required
State contribution that would have been calculated under this
Section for that fiscal year if the System had not received any
payments under subsection (d) of Section 7.2 of the General
Obligation Bond Act, minus (ii) the portion of the State's
total debt service payments for that fiscal year on the bonds

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issued in fiscal year 2003 for the purposes of that Section
7.2, as determined and certified by the Comptroller, that is
the same as the System's portion of the total moneys
distributed under subsection (d) of Section 7.2 of the General
Obligation Bond Act. In determining this maximum for State
fiscal years 2008 through 2010, however, the amount referred to
in item (i) shall be increased, as a percentage of the
applicable employee payroll, in equal increments calculated
from the sum of the required State contribution for State
fiscal year 2007 plus the applicable portion of the State's
total debt service payments for fiscal year 2007 on the bonds
issued in fiscal year 2003 for the purposes of Section 7.2 of
the General Obligation Bond Act, so that, by State fiscal year
2011, the State is contributing at the rate otherwise required
under this Section.
(d) For purposes of determining the required State
contribution to the System, the value of the System's assets
shall be equal to the actuarial value of the System's assets,
which shall be calculated as follows:
As of June 30, 2008, the actuarial value of the System's
assets shall be equal to the market value of the assets as of
that date. In determining the actuarial value of the System's
assets for fiscal years after June 30, 2008, any actuarial
gains or losses from investment return incurred in a fiscal
year shall be recognized in equal annual amounts over the
5-year period following that fiscal year.

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(e) For purposes of determining the required State
contribution to the system for a particular year, the actuarial
value of assets shall be assumed to earn a rate of return equal
to the system's actuarially assumed rate of return.
(Source: P.A. 96-43, eff. 7-15-09; 96-1497, eff. 1-14-11;
96-1511, eff. 1-27-11; 96-1554, eff. 3-18-11; 97-813, eff.
7-13-12.)
(40 ILCS 5/18-140) (from Ch. 108 1/2, par. 18-140)
Sec. 18-140. To certify required State contributions and
submit vouchers.
(a) The Board shall certify to the Governor, on or before
November 15 of each year until November 15, 2011, the amount of
the required State contribution to the System for the following
fiscal year and shall specifically identify the System's
projected State normal cost for that fiscal year. The
certification shall include a copy of the actuarial
recommendations upon which it is based and shall specifically
identify the System's projected State normal cost for that
fiscal year.
On or before November 1 of each year, beginning November 1,
2012, the Board shall submit to the State Actuary, the
Governor, and the General Assembly a proposed certification of
the amount of the required State contribution to the System for
the next fiscal year, along with all of the actuarial
assumptions, calculations, and data upon which that proposed

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certification is based. On or before January 1 of each year
beginning January 1, 2013, the State Actuary shall issue a
preliminary report concerning the proposed certification and
identifying, if necessary, recommended changes in actuarial
assumptions that the Board must consider before finalizing its
certification of the required State contributions. On or before
January 15, 2013 and every January 15 thereafter, the Board
shall certify to the Governor and the General Assembly the
amount of the required State contribution for the next fiscal
year. The Board's certification must note any deviations from
the State Actuary's recommended changes, the reason or reasons
for not following the State Actuary's recommended changes, and
the fiscal impact of not following the State Actuary's
recommended changes on the required State contribution.
On or before May 1, 2004, the Board shall recalculate and
recertify to the Governor the amount of the required State
contribution to the System for State fiscal year 2005, taking
into account the amounts appropriated to and received by the
System under subsection (d) of Section 7.2 of the General
Obligation Bond Act.
On or before July 1, 2005, the Board shall recalculate and
recertify to the Governor the amount of the required State
contribution to the System for State fiscal year 2006, taking
into account the changes in required State contributions made
by this amendatory Act of the 94th General Assembly.
On or before April 1, 2011, the Board shall recalculate and

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recertify to the Governor the amount of the required State
contribution to the System for State fiscal year 2011, applying
the changes made by Public Act 96-889 to the System's assets
and liabilities as of June 30, 2009 as though Public Act 96-889
was approved on that date.
As soon as practical after the effective date of this
amendatory Act of the 100th General Assembly, the Board shall
recalculate and recertify to the State Actuary, the Governor,
and the General Assembly the amount of the State contribution
to the System for State fiscal year 2018, taking into account
the changes in required State contributions made by this
amendatory Act of the 100th General Assembly. The State Actuary
shall review the assumptions and valuations underlying the
Board's revised certification and issue a preliminary report
concerning the proposed recertification and identifying, if
necessary, recommended changes in actuarial assumptions that
the Board must consider before finalizing its certification of
the required State contributions. The Board's final
certification must note any deviations from the State Actuary's
recommended changes, the reason or reasons for not following
the State Actuary's recommended changes, and the fiscal impact
of not following the State Actuary's recommended changes on the
required State contribution.
(b) Beginning in State fiscal year 1996, on or as soon as
possible after the 15th day of each month the Board shall
submit vouchers for payment of State contributions to the

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System, in a total monthly amount of one-twelfth of the
required annual State contribution certified under subsection
(a). From the effective date of this amendatory Act of the 93rd
General Assembly through June 30, 2004, the Board shall not
submit vouchers for the remainder of fiscal year 2004 in excess
of the fiscal year 2004 certified contribution amount
determined under this Section after taking into consideration
the transfer to the System under subsection (c) of Section
6z-61 of the State Finance Act. These vouchers shall be paid by
the State Comptroller and Treasurer by warrants drawn on the
funds appropriated to the System for that fiscal year.
If in any month the amount remaining unexpended from all
other appropriations to the System for the applicable fiscal
year (including the appropriations to the System under Section
8.12 of the State Finance Act and Section 1 of the State
Pension Funds Continuing Appropriation Act) is less than the
amount lawfully vouchered under this Section, the difference
shall be paid from the General Revenue Fund under the
continuing appropriation authority provided in Section 1.1 of
the State Pension Funds Continuing Appropriation Act.
(Source: P.A. 96-1497, eff. 1-14-11; 96-1511, eff. 1-27-11;
97-694, eff. 6-18-12.)
(40 ILCS 5/18-161.5 new)
Sec. 18-161.5. Accelerated pension benefit payment.
(a) As used in this Section:

HB4055 - 229 - LRB100 12851 RPS 26572 b
"Eligible person" means a person who:
(1) has terminated service;
(2) has accrued sufficient service credit to be
eligible to receive a retirement annuity under this
Article;
(3) has not received any retirement annuity under this
Article; and
(4) does not have a QILDRO in effect against him or her
under this Article.
"Pension benefit" means the benefits under this Article, or
Article 1 as it relates to those benefits, including any
anticipated annual increases, that an eligible person is
entitled to upon attainment of the applicable retirement age.
"Pension benefit" also includes applicable survivor's or
disability benefits.
(b) Before January 1, 2018, the System shall calculate,
using actuarial tables and other assumptions adopted by the
Board, the net present value of pension benefits for each
eligible person and shall offer each eligible person the
opportunity to irrevocably elect to receive an amount
determined by the System to be equal to 70% of the net present
value of his or her pension benefits in lieu of receiving any
pension benefit. The offer shall specify the dollar amount that
the eligible person will receive if he or she so elects and
shall expire when a subsequent offer is made to an eligible
person. The System shall make a good faith effort to contact

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every eligible person to notify him or her of the election and
of the amount of the accelerated pension benefit payment.
Beginning January 1, 2018 and until July 1, 2018, an
eligible person may irrevocably elect to receive an accelerated
pension benefit payment in the amount that the System offers
under this subsection in lieu of receiving any pension benefit.
A person who elects to receive an accelerated pension benefit
payment under this Section may not elect to proceed under the
Retirement Systems Reciprocal Act with respect to service under
this Article.
(c) A person's credits and creditable service under this
Article shall be terminated upon the person's receipt of an
accelerated pension benefit payment under this Section, and no
other benefit shall be paid under this Article based on those
terminated credits and creditable service, including any
retirement, survivor, or other benefit; except that to the
extent that participation, benefits, or premiums under the
State Employees Group Insurance Act of 1971 are based on the
amount of service credit, the terminated service credit shall
be used for that purpose.
(d) If a person who has received an accelerated pension
benefit payment under this Section returns to active service
under this Article, then:
(1) Any benefits under the System earned as a result of
that return to active service shall be based solely on the
person's credits and creditable service arising from the

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return to active service.
(2) The accelerated pension benefit payment may not be
repaid to the System, and the terminated credits and
creditable service may not under any circumstances be
reinstated.
(e) As a condition of receiving an accelerated pension
benefit payment, an eligible person must have another
retirement plan or account qualified under the Internal Revenue
Code of 1986, as amended, for the accelerated pension benefit
payment to be rolled into. The accelerated pension benefit
payment under this Section may be subject to withholding or
payment of applicable taxes, but to the extent permitted by
federal law, a person who receives an accelerated pension
benefit payment under this Section must direct the System to
pay all of that payment as a rollover into another retirement
plan or account qualified under the Internal Revenue Code of
1986, as amended.
(f) Before January 1, 2019, the Board shall certify to the
Illinois Finance Authority and the General Assembly the amount
by which the total amount of accelerated pension benefit
payments made under this Section exceed the amount appropriated
to the System for the purpose of making those payments.
(g) The Board shall adopt any rules necessary to implement
this Section.
(h) No provision of this Section shall be interpreted in a
way that would cause the applicable System to cease to be a

HB4055 - 232 - LRB100 12851 RPS 26572 b
qualified plan under the Internal Revenue Code of 1986.
(40 ILCS 5/18-169)
Sec. 18-169. Application and expiration of new benefit
increases.
(a) As used in this Section, "new benefit increase" means
an increase in the amount of any benefit provided under this
Article, or an expansion of the conditions of eligibility for
any benefit under this Article, that results from an amendment
to this Code that takes effect after June 1, 2005 (the
effective date of Public Act 94-4). "New benefit increase",
however, does not include any benefit increase resulting from
the changes made to this Article by this amendatory Act of the
100th General Assembly the effective date of this amendatory
Act of the 94th General Assembly.
(b) Notwithstanding any other provision of this Code or any
subsequent amendment to this Code, every new benefit increase
is subject to this Section and shall be deemed to be granted
only in conformance with and contingent upon compliance with
the provisions of this Section.
(c) The Public Act enacting a new benefit increase must
identify and provide for payment to the System of additional
funding at least sufficient to fund the resulting annual
increase in cost to the System as it accrues.
Every new benefit increase is contingent upon the General
Assembly providing the additional funding required under this

HB4055 - 233 - LRB100 12851 RPS 26572 b
subsection. The Commission on Government Forecasting and
Accountability shall analyze whether adequate additional
funding has been provided for the new benefit increase and
shall report its analysis to the Public Pension Division of the
Department of Financial and Professional Regulation. A new
benefit increase created by a Public Act that does not include
the additional funding required under this subsection is null
and void. If the Public Pension Division determines that the
additional funding provided for a new benefit increase under
this subsection is or has become inadequate, it may so certify
to the Governor and the State Comptroller and, in the absence
of corrective action by the General Assembly, the new benefit
increase shall expire at the end of the fiscal year in which
the certification is made.
(d) Every new benefit increase shall expire 5 years after
its effective date or on such earlier date as may be specified
in the language enacting the new benefit increase or provided
under subsection (c). This does not prevent the General
Assembly from extending or re-creating a new benefit increase
by law.
(e) Except as otherwise provided in the language creating
the new benefit increase, a new benefit increase that expires
under this Section continues to apply to persons who applied
and qualified for the affected benefit while the new benefit
increase was in effect and to the affected beneficiaries and
alternate payees of such persons, but does not apply to any

HB4055 - 234 - LRB100 12851 RPS 26572 b
other person, including without limitation a person who
continues in service after the expiration date and did not
apply and qualify for the affected benefit while the new
benefit increase was in effect.
(Source: P.A. 94-4, eff. 6-1-05.)
(40 ILCS 5/20-121) (from Ch. 108 1/2, par. 20-121)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 20-121. Calculation of proportional retirement
annuities.
(a) Upon retirement of the employee, a proportional
retirement annuity shall be computed by each participating
system in which pension credit has been established on the
basis of pension credits under each system. The computation
shall be in accordance with the formula or method prescribed by
each participating system which is in effect at the date of the
employee's latest withdrawal from service covered by any of the
systems in which he has pension credits which he elects to have
considered under this Article. However, the amount of any
retirement annuity payable under the self-managed plan
established under Section 15-158.2 of this Code or under the
defined contribution plan established under Article 2, 14, 15,
or 16 of this Code depends solely on the value of the
participant's vested account balances and is not subject to any
proportional adjustment under this Section.

HB4055 - 235 - LRB100 12851 RPS 26572 b
(a-5) For persons who participate in a defined contribution
plan established under Article 2, 14, 15, or 16 of this Code to
whom the provisions of this Article apply, the pension credits
established under the defined contribution plan may be
considered in determining eligibility for or the amount of the
defined benefit retirement annuity that is payable by any other
participating system.
(b) Combined pension credit under all retirement systems
subject to this Article shall be considered in determining
whether the minimum qualification has been met and the formula
or method of computation which shall be applied, except as may
be otherwise provided with respect to vesting in State or
employer contributions in a defined contribution plan. If a
system has a step-rate formula for calculation of the
retirement annuity, pension credits covering previous service
which have been established under another system shall be
considered in determining which range or ranges of the
step-rate formula are to be applicable to the employee.
(c) Interest on pension credit shall continue to accumulate
in accordance with the provisions of the law governing the
retirement system in which the same has been established during
the time an employee is in the service of another employer, on
the assumption such employee, for interest purposes for pension
credit, is continuing in the service covered by such retirement
system.
(Source: P.A. 91-887, eff. 7-6-00.)

HB4055 - 236 - LRB100 12851 RPS 26572 b
(40 ILCS 5/20-123) (from Ch. 108 1/2, par. 20-123)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 20-123. Survivor's annuity. The provisions governing
a retirement annuity shall be applicable to a survivor's
annuity. Appropriate credits shall be established for
survivor's annuity purposes in those participating systems
which provide survivor's annuities, according to the same
conditions and subject to the same limitations and restrictions
herein prescribed for a retirement annuity. If a participating
system has no survivor's annuity benefit, or if the survivor's
annuity benefit under that system is waived, pension credit
established in that system shall not be considered in
determining eligibility for or the amount of the survivor's
annuity which may be payable by any other participating system.
For persons who participate in the self-managed plan
established under Section 15-158.2 or the portable benefit
package established under Section 15-136.4, pension credit
established under Article 15 may be considered in determining
eligibility for or the amount of the survivor's annuity that is
payable by any other participating system, but pension credit
established in any other system shall not result in any right
to a survivor's annuity under the Article 15 system.
For persons who participate in a defined contribution plan
established under Article 2, 14, 15, or 16 of this Code to whom

HB4055 - 237 - LRB100 12851 RPS 26572 b
the provisions of this Article apply, the pension credits
established under the defined contribution plan may be
considered in determining eligibility for or the amount of the
defined benefit survivor's annuity that is payable by any other
participating system, but pension credits established in any
other system shall not result in any right to or increase in
the value of a survivor's annuity under the defined
contribution plan, which depends solely on the options chosen
and the value of the participant's vested account balances and
is not subject to any proportional adjustment under this
Section.
(Source: P.A. 91-887, eff. 7-6-00.)
(40 ILCS 5/20-124) (from Ch. 108 1/2, par. 20-124)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 20-124. Maximum benefits.
(a) In no event shall the combined retirement or survivors
annuities exceed the highest annuity which would have been
payable by any participating system in which the employee has
pension credits, if all of his pension credits had been
validated in that system.
If the combined annuities should exceed the highest maximum
as determined in accordance with this Section, the respective
annuities shall be reduced proportionately according to the
ratio which the amount of each proportional annuity bears to

HB4055 - 238 - LRB100 12851 RPS 26572 b
the aggregate of all such annuities.
(b) In the case of a participant in the self-managed plan
established under Section 15-158.2 of this Code to whom the
provisions of this Article apply:
(i) For purposes of calculating the combined
retirement annuity and the proportionate reduction, if
any, in a retirement annuity other than one payable under
the self-managed plan, the amount of the Article 15
retirement annuity shall be deemed to be the highest
annuity to which the annuitant would have been entitled if
he or she had participated in the traditional benefit
package as defined in Section 15-103.1 rather than the
self-managed plan.
(ii) For purposes of calculating the combined
survivor's annuity and the proportionate reduction, if
any, in a survivor's annuity other than one payable under
the self-managed plan, the amount of the Article 15
survivor's annuity shall be deemed to be the highest
survivor's annuity to which the survivor would have been
entitled if the deceased employee had participated in the
traditional benefit package as defined in Section 15-103.1
rather than the self-managed plan.
(iii) Benefits payable under the self-managed plan are
not subject to proportionate reduction under this Section.
(c) In the case of a participant in a defined contribution
plan established under Article 2, 14, 15, or 16 of this Code to

HB4055 - 239 - LRB100 12851 RPS 26572 b
whom the provisions of this Article apply:
(i) For purposes of calculating the combined
retirement annuity and the proportionate reduction, if
any, in a defined benefit retirement annuity, any benefit
payable under the defined contribution plan shall not be
considered.
(ii) For purposes of calculating the combined
survivor's annuity and the proportionate reduction, if
any, in a defined benefit survivor's annuity, any benefit
payable under the defined contribution plan shall not be
considered.
(iii) Benefits payable under a defined contribution
plan established under Article 2, 14, 15, or 16 of this
Code are not subject to proportionate reduction under this
Section.
(Source: P.A. 91-887, eff. 7-6-00.)
(40 ILCS 5/20-125) (from Ch. 108 1/2, par. 20-125)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 20-125. Return to employment - suspension of benefits.
If a retired employee returns to employment which is covered by
a system from which he is receiving a proportional annuity
under this Article, his proportional annuity from all
participating systems shall be suspended during the period of
re-employment, except that this suspension does not apply to

HB4055 - 240 - LRB100 12851 RPS 26572 b
any distributions payable under the self-managed plan
established under Section 15-158.2 or under a defined
contribution plan established under Article 2, 14, 15, or 16 of
this Code.
The provisions of the Article under which such employment
would be covered shall govern the determination of whether the
employee has returned to employment, and if applicable the
exemption of temporary employment or employment not exceeding a
specified duration or frequency, for all participating systems
from which the retired employee is receiving a proportional
annuity under this Article, notwithstanding any contrary
provisions in the other Articles governing such systems.
(Source: P.A. 91-887, eff. 7-6-00.)
(40 ILCS 5/2-165 rep.)
(40 ILCS 5/2-166 rep.)
(40 ILCS 5/14-155 rep.)
(40 ILCS 5/14-156 rep.)
(40 ILCS 5/15-200 rep.)
(40 ILCS 5/15-201 rep.)
(40 ILCS 5/16-205 rep.)
(40 ILCS 5/16-206 rep.)
Section 35. The Illinois Pension Code is amended by
repealing Sections 2-165, 2-166, 14-155, 14-156, 15-200,
15-201, 16-205, and 16-206.

HB4055 - 241 - LRB100 12851 RPS 26572 b
Section 40. The State Pension Funds Continuing
Appropriation Act is amended by adding Section 1.9 as follows:
(40 ILCS 15/1.9 new)
Sec. 1.9. Appropriations for State Pension Obligation
Acceleration Bonds. If for any reason the aggregate
appropriations made available are insufficient to meet the
levels required for the payment of principal and interest due
on State Pension Obligation Acceleration Bonds under Section
7.6 of the General Obligation Bond Act, this Section shall
constitute a continuing appropriation of all amounts necessary
for those purposes.
Section 900. The State Mandates Act is amended by adding
Section 8.41 as follows:
(30 ILCS 805/8.41 new)
Sec. 8.41. Exempt mandate. Notwithstanding Sections 6 and 8
of this Act, no reimbursement by the State is required for the
implementation of any mandate created by this amendatory Act of
the 100th General Assembly.
Section 970. Severability. The provisions of this Act are
severable under Section 1.31 of the Statute on Statutes.
Section 999. Effective date. This Act takes effect upon
becoming law.
HB4055 - 242 - LRB100 12851 RPS 26572 b
INDEX
Statutes amended in order of appearance
5 ILCS 375/3 from Ch. 127, par. 523
5 ILCS 375/10 from Ch. 127, par. 530
20 ILCS 3501/801-40
30 ILCS 105/5.878 new
30 ILCS 122/20
30 ILCS 330/2 from Ch. 127, par. 652
30 ILCS 330/2.5
30 ILCS 330/7.6 new
30 ILCS 330/9 from Ch. 127, par. 659
30 ILCS 330/11 from Ch. 127, par. 661
30 ILCS 330/12 from Ch. 127, par. 662
30 ILCS 330/13 from Ch. 127, par. 663
40 ILCS 5/1-160
40 ILCS 5/1-161 new
40 ILCS 5/1-162 new
40 ILCS 5/2-101 from Ch. 108 1/2, par. 2-101
40 ILCS 5/2-105 from Ch. 108 1/2, par. 2-105
40 ILCS 5/2-105.3 new
40 ILCS 5/2-107 from Ch. 108 1/2, par. 2-107
40 ILCS 5/2-124 from Ch. 108 1/2, par. 2-124
40 ILCS 5/2-134 from Ch. 108 1/2, par. 2-134
40 ILCS 5/2-154.5 new
40 ILCS 5/2-162
HB4055 - 243 - LRB100 12851 RPS 26572 b
40 ILCS 5/2-165.1 new
40 ILCS 5/2-166.1 new
40 ILCS 5/14-103.41 new
40 ILCS 5/14-131
40 ILCS 5/14-135.08 from Ch. 108 1/2, par. 14-135.08
40 ILCS 5/14-147.5 new
40 ILCS 5/14-152.1
40 ILCS 5/14-155.1 new
40 ILCS 5/14-155.2 new
40 ILCS 5/14-156.1 new
40 ILCS 5/15-108.1
40 ILCS 5/15-108.2
40 ILCS 5/15-155 from Ch. 108 1/2, par. 15-155
40 ILCS 5/15-165 from Ch. 108 1/2, par. 15-165
40 ILCS 5/15-185.5 new
40 ILCS 5/15-198
40 ILCS 5/15-200.1 new
40 ILCS 5/15-201.1 new
40 ILCS 5/16-107.1 new
40 ILCS 5/16-158 from Ch. 108 1/2, par. 16-158
40 ILCS 5/16-190.5 new
40 ILCS 5/16-203
40 ILCS 5/16-205.1 new
40 ILCS 5/16-206.1 new
40 ILCS 5/17-106.05 new
40 ILCS 5/17-129 from Ch. 108 1/2, par. 17-129
HB4055 - 244 - LRB100 12851 RPS 26572 b