Bill Text: IL HB4057 | 2017-2018 | 100th General Assembly | Introduced

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Bill Title: Amends the Illinois Pension Code. For the 5 State-funded Retirement Systems: Requires implementation of a Tier 3 plan that aggregates State and employee contributions in individual participant accounts. Provides that a person who becomes a participant on or after July 1, 2018 shall participate in the Tier 3 plan. Authorizes a Tier 1 or Tier 2 participant to elect to participate in the Tier 3 plan. Requires Systems to offer an optional accelerated benefit payment to certain members in lieu of receiving a pension and authorizes the issuance of bonds for those payments. Authorizes a person to elect not to participate or to terminate participation in the Systems. Restricts participation in the General Assembly Retirement System to current participants. In Articles 7, 14, 15, and 16, for new participants, prohibits unused sick or vacation time from being used to calculate pensionable salary or establish service credit. In Articles 15 and 16, requires an employer to pay the projected costs of the increase in pension benefits associated with an increase in salary. In Article 16, prohibits an employer from making employee contributions on behalf of an employee, except as specified. Amends other Acts to prohibit collective bargaining over that prohibition and make conforming changes. Effective immediately.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2019-01-08 - Session Sine Die [HB4057 Detail]

Download: Illinois-2017-HB4057-Introduced.html

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100TH GENERAL ASSEMBLY State of Illinois 2017 and 2018 HB4057 Introduced , by Rep. Jeanne M Ives SYNOPSIS AS INTRODUCED:
See Index
Amends the Illinois Pension Code. For the 5 State-funded Retirement Systems: Requires implementation of a Tier 3 plan that aggregates State and employee contributions in individual participant accounts. Provides that a person who becomes a participant on or after July 1, 2018 shall participate in the Tier 3 plan. Authorizes a Tier 1 or Tier 2 participant to elect to participate in the Tier 3 plan. Requires Systems to offer an optional accelerated benefit payment to certain members in lieu of receiving a pension and authorizes the issuance of bonds for those payments. Authorizes a person to elect not to participate or to terminate participation in the Systems. Restricts participation in the General Assembly Retirement System to current participants. In Articles 7, 14, 15, and 16, for new participants, prohibits unused sick or vacation time from being used to calculate pensionable salary or establish service credit. In Articles 15 and 16, requires an employer to pay the projected costs of the increase in pension benefits associated with an increase in salary. In Article 16, prohibits an employer from making employee contributions on behalf of an employee, except as specified. Amends other Acts to prohibit collective bargaining over that prohibition and make conforming changes. Effective immediately.
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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 Article Articles 2 (including an
employee who, in lieu of receiving an annuity under that
Article, has retired under the Tier 3 plan established under
Section 2-165.5 of that Article or who meets the criteria for

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retirement and has elected to receive an accelerated pension
benefit payment under Section 2-154.5 of 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, an
employee who, in lieu of receiving an annuity under that
Article, has retired under the Tier 3 plan established under
Section 14-155.5 of that Article, or an employee who meets the
criteria for retirement and has elected to receive an
accelerated pension benefit payment under Section 14-147.5 of
that Article), or 15 (including an employee who has retired
under the optional retirement program established under
Section 15-158.2 or the Tier 3 plan established under Section
15-155.5 of the Illinois Pension Code or who meets the criteria
for retirement and has elected to receive an accelerated
pension benefit payment under Section 15-185.5 of that
Article), paragraphs (2), (3), or (5) of Section 16-106
(including an employee who, in lieu of receiving an annuity
under that Article, has retired under the Tier 3 plan
established under Section 16-205.5 of the Illinois Pension Code
or who meets the criteria for retirement and has elected to
receive an accelerated pension benefit payment under Section
16-190.5 of that Article), or Article 18 (including an employee
who, in lieu of receiving an annuity under that Article, has
retired under the Tier 3 plan established under Section
18-121.5 of that Article or who meets the criteria for

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retirement and 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 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).

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(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.
(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

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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.
(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

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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
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

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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
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

HB4057 - 8 - LRB100 12972 RPS 27085 b
(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),
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"

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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
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.

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(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
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

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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
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

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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
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

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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
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

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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
(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

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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
(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

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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
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

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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
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

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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
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.

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(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
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

HB4057 - 20 - LRB100 12972 RPS 27085 b
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'
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

HB4057 - 21 - LRB100 12972 RPS 27085 b
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
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) For purposes of determining State contributions
under this Section, service established under a Tier 3 plan
under Article 2, 14, 15, 16, or 18 of the Illinois Pension Code
shall be included in determining an employee's creditable
service. Any credit terminated as part of a transfer of
contributions to a Tier 3 plan under Article 2, 14, 15, 16, or
18 of the Illinois Pension Code shall also be included in
determining an employee's creditable service.
(a-15) 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

HB4057 - 22 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 23 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 24 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 25 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 26 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 27 - LRB100 12972 RPS 27085 b
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
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,

HB4057 - 28 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 29 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 30 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 31 - LRB100 12972 RPS 27085 b
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
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.

HB4057 - 32 - LRB100 12972 RPS 27085 b
(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
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.

HB4057 - 33 - LRB100 12972 RPS 27085 b
(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
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

HB4057 - 34 - LRB100 12972 RPS 27085 b
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
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.)

HB4057 - 35 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 36 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 37 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 38 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 39 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 40 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 41 - LRB100 12972 RPS 27085 b
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
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,

HB4057 - 42 - LRB100 12972 RPS 27085 b
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,
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

HB4057 - 43 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 44 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 45 - LRB100 12972 RPS 27085 b
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
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.

HB4057 - 46 - LRB100 12972 RPS 27085 b
(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,
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

HB4057 - 47 - LRB100 12972 RPS 27085 b
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.
(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

HB4057 - 48 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 49 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 50 - LRB100 12972 RPS 27085 b
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;
(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;

HB4057 - 51 - LRB100 12972 RPS 27085 b
(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 13. The State Finance Act is amended by adding
Section 5.878 as follows:
(30 ILCS 105/5.878 new)
Sec. 5.878. The State Pension Obligation Acceleration Bond
Fund.
Section 15. 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:
(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

HB4057 - 52 - LRB100 12972 RPS 27085 b
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.
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

HB4057 - 53 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 54 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 55 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 56 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 57 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 58 - LRB100 12972 RPS 27085 b
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
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.

HB4057 - 59 - LRB100 12972 RPS 27085 b
(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
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

HB4057 - 60 - LRB100 12972 RPS 27085 b
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
from time to time to refund or continue to refund "Build
America Bonds".
(e) Notwithstanding any other provision of this Section,

HB4057 - 61 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 62 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 63 - LRB100 12972 RPS 27085 b
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;
(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

HB4057 - 64 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 65 - LRB100 12972 RPS 27085 b
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
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,

HB4057 - 66 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 67 - LRB100 12972 RPS 27085 b
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,
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

HB4057 - 68 - LRB100 12972 RPS 27085 b
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
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.

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(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
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

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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.
(Source: P.A. 96-36, eff. 7-13-09.)
(30 ILCS 330/13) (from Ch. 127, par. 663)

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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
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,

HB4057 - 72 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 73 - LRB100 12972 RPS 27085 b
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 20. The Illinois Pension Code is amended by
changing Sections 1-160, 2-101, 2-105, 2-107, 2-117, 2-162,
7-114, 7-116, 7-139, 14-103.05, 14-103.10, 14-104.3, 14-106,
14-152.1, 15-108.1, 15-108.2, 15-112, 15-113.4, 15-134,
15-155, 15-198, 16-123, 16-127, 16-158, 16-217, 16-152.1,
16-203, 18-120, 18-124, 18-125, 18-125.1, 18-127, 18-128.01,
18-133, 18-169, 20-121, 20-123, 20-124, and 20-125 and by
adding Sections 2-105.3, 2-154.5, 2-165.5, 14-103.41,
14-103.42, 14-103.43, 14-147.5, 14-155.5, 15-108.3, 15-185.5,
15-200.5, 16-106.40, 16-106.41, 16-106.42, 16-190.5, 16-205.5,
18-110.1, 18-110.2, 18-110.3, 18-121.5, and 18-161.5 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

HB4057 - 74 - LRB100 12972 RPS 27085 b
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.
The provisions of this Section do not apply to service
under a Tier 3 plan established under Article 2, 14, 15, 16, or
18 of this Code.
(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

HB4057 - 75 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 76 - LRB100 12972 RPS 27085 b
previous adjustments, or (ii) one-half the annual unadjusted
percentage increase (but not less than zero) in the consumer
price index-u for the 12 months ending with the September
preceding each November 1, including all previous adjustments.
For the purposes of this Section, "consumer price index-u"
means the index published by the Bureau of Labor Statistics of
the United States Department of Labor that measures the average
change in prices of goods and services purchased by all urban
consumers, United States city average, all items, 1982-84 =
100. The new amount resulting from each annual adjustment shall
be determined by the Public Pension Division of the Department
of Insurance and made available to the boards of the retirement
systems and pension funds by November 1 of each year.
(c) 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.

HB4057 - 77 - LRB100 12972 RPS 27085 b
(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
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

HB4057 - 78 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 79 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 80 - LRB100 12972 RPS 27085 b
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
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) 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 5/2-101) (from Ch. 108 1/2, par. 2-101)

HB4057 - 81 - LRB100 12972 RPS 27085 b
Sec. 2-101. Creation of system. A retirement system is
created to provide retirement annuities, survivor's annuities
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

HB4057 - 82 - LRB100 12972 RPS 27085 b
engaged in such service by filing a written election with the
board. Any person so electing shall be deemed an active member
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 participant; Tier 2 participant; Tier
3 participant.
"Tier 1 participant": A participant who first became a
participant before January 1, 2011.
In the case of a Tier 1 participant who elects to
participate in the Tier 3 plan under Section 2-165.5 of this
Code, that participant shall be deemed a Tier 1 participant
only with respect to service performed or established before
the effective date of that election.
"Tier 2 participant": A participant who first became a
participant on or after January 1, 2011 but before the
effective date of this amendatory Act of the 100th General

HB4057 - 83 - LRB100 12972 RPS 27085 b
Assembly.
In the case of a Tier 2 participant who elects to
participate in the Tier 3 plan under Section 2-165.5 of this
Code, that Tier 2 member shall be deemed a Tier 2 member only
with respect to service performed or established before the
effective date of that election.
"Tier 3 participant": A participant who elects to
participate in the Tier 3 plan under Section 2-165.5 of this
Code, but only with respect to service performed on or after
the effective date of that election.
(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.)
(40 ILCS 5/2-117) (from Ch. 108 1/2, par. 2-117)
Sec. 2-117. Participants - Election not to participate.
(a) Except as provided in subsection (c), every Every
person who was a member on November 1, 1947, or in military

HB4057 - 84 - LRB100 12972 RPS 27085 b
service on such date, is subject to the provisions of this
system beginning upon such date, unless prior to such date he
or she filed with the board a written notice of election not to
participate.
Every person who becomes a member after November 1, 1947,
and who is then not a participant becomes a participant
beginning upon the date of becoming a member unless, within 24
months from that date, he or she has filed with the board a
written notice of election not to participate.
(b) A member who has filed notice of an election not to
participate (and a former member who has not yet begun to
receive a retirement annuity under this Article) may become a
participant with respect to the period for which the member
elected not to participate upon filing with the board, before
April 1, 1993, a written rescission of the election not to
participate. Upon contributing an amount equal to the
contributions he or she would have made as a participant from
November 1, 1947, or the date of becoming a member, whichever
is later, to the date of becoming a participant, with interest
at the rate of 4% per annum until the contributions are paid,
the participant shall receive credit for service as a member
prior to the date of the rescission, both before and after
November 1, 1947. The required contributions shall be made
before commencement of the retirement annuity; otherwise no
credit for service prior to the date of participation shall be
granted.

HB4057 - 85 - LRB100 12972 RPS 27085 b
(c) Notwithstanding any other provision of this Article, an
active participant may terminate his or her participation in
this System (including active participation in the Tier 3 plan,
if applicable) by notifying the System in writing. An active
participant terminating participation in this System under
this subsection shall be entitled to a refund of his or her
contributions (other than contributions to the Tier 3 plan
under Section 2-165.5) minus the benefits received prior to the
termination of participation.
(Source: P.A. 86-273; 87-1265.)
(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
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

HB4057 - 86 - LRB100 12972 RPS 27085 b
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
Article shall be terminated upon the person's receipt of an

HB4057 - 87 - LRB100 12972 RPS 27085 b
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
payment of applicable taxes, but to the extent permitted by

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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
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

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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 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

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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 5/2-165.5 new)
Sec. 2-165.5. Tier 3 plan.
(a) By July 1, 2018, the System shall prepare and implement
a Tier 3 plan. The Tier 3 plan developed under this Section
shall be a plan that aggregates State and employee

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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. In developing, preparing, and implementing
the Tier 3 plan and adopting rules concerning the Tier 3 plan,
the System shall utilize the framework of the self-managed plan
offered under Article 15 and shall endeavor to adapt the
benefits and structure of the self-managed plan. The System
shall consult with the State Universities Retirement System in
developing the Tier 3 plan.
As used in this Section, "defined benefit plan" means the
retirement plan available under this Article to Tier 1 or Tier
2 participants who have not made the election authorized under
this Section.
(1) A participant in the Tier 3 plan shall pay employee
contributions at a rate of 8% of salary.
(2) State contributions shall be paid into the accounts
of all participants in the Tier 3 plan at a rate of 7.6% of
salary.
(3) The Tier 3 plan shall require one year of
participation in the Tier 3 plan before vesting in State
contributions. If the participant fails to vest in them,
the State contributions, and the earnings thereon, shall be
forfeited.
(4) The Tier 3 plan shall provide a variety of options
for investments. These options shall include investments

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handled by the Illinois State Board of Investment as well
as private sector investment options.
(5) The Tier 3 plan shall provide a variety of options
for payouts to participants in the Tier 3 plan who are no
longer active in the System and their survivors.
(6) 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,
from the Tier 3 plan into other qualified retirement plans.
(7) The System shall reduce the employee contributions
credited to the participant's Tier 3 plan account by an
amount determined by the System to cover the cost of
offering these benefits and any applicable administrative
fees.
(b) Under the Tier 3 plan, an active Tier 1 or Tier 2
participant of this System may elect, in writing, to cease
accruing benefits in the defined benefit plan and begin
accruing benefits for future service in the Tier 3 plan. The
election to participate in the Tier 3 plan is voluntary and
irrevocable.
(1) Service credit under the Tier 3 plan may be used
for determining retirement eligibility under the defined
benefit plan.
(2) The System shall make a good faith effort to
contact all active Tier 1 and Tier 2 participants who are

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eligible to participate in the Tier 3 plan. The System
shall mail information describing the option to join the
Tier 3 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.
(3) 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
benefits and 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 and
Tier 2 participants who are eligible to participate in the
Tier 3 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 private
counsel and financial advisors.
(b-5) A Tier 1 or Tier 2 participant who elects to
participate in the Tier 3 plan may irrevocably elect to
terminate all participation in the defined benefit plan. Upon

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that election, the System shall transfer to the participant's
individual account an amount equal to the amount of
contribution refund that the participant would be eligible to
receive if the member terminated employment on that date and
elected a refund of contributions, including the prescribed
rate of interest for the respective years. The System shall
make the transfer as a tax free transfer in accordance with
Internal Revenue Service guidelines, for purposes of funding
the amount credited to the participant's individual account.
(c) 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 Tier 3
plan in accordance with this amendatory Act of the 100th
General Assembly to provide information concerning the impact
of the Tier 3 plan set forth in this Section.
(d) Notwithstanding any other provision of this Section, no
person shall begin participating in the Tier 3 plan until it
has attained qualified plan status and received all necessary
approvals from the U.S. Internal Revenue Service.
(e) The System shall report on its progress under this
Section, including the available details of the Tier 3 plan and
the System's plans for informing eligible Tier 1 and Tier 2
participants about the plan, to the Governor and the General
Assembly on or before January 15, 2018.

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(f) The Illinois State Board of Investment shall be the
plan sponsor for the Tier 3 plan established under this
Section.
(40 ILCS 5/7-114) (from Ch. 108 1/2, par. 7-114)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 7-114. Earnings. "Earnings":
(a) An amount to be determined by the board, equal to the
sum of:
1. The total amount of money paid to an employee for
personal services or official duties as an employee (except
those employed as independent contractors) paid out of the
general fund, or out of any special funds controlled by the
municipality, or by any instrumentality thereof, or
participating instrumentality, including compensation,
fees, allowances, or other emolument paid for official
duties (but not including automobile maintenance, travel
expense, or reimbursements for expenditures incurred in
the performance of duties or, in the case of a person who
first becomes a participant on or after the effective date
of this amendatory Act of the 100th General Assembly,
payments for unused sick or vacation time) and, for fee
offices, the fees or earnings of the offices to the extent
such fees are paid out of funds controlled by the
municipality, or instrumentality or participating

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instrumentality; and
2. The money value, as determined by rules prescribed
by the governing body of the municipality, or
instrumentality thereof, of any board, lodging, fuel,
laundry, and other allowances provided an employee in lieu
of money.
(b) For purposes of determining benefits payable under this
fund payments to a person who is engaged in an independently
established trade, occupation, profession or business and who
is paid for his service on a basis other than a monthly or
other regular salary, are not earnings.
(c) If a disabled participating employee is eligible to
receive Workers' Compensation for an accidental injury and the
participating municipality or instrumentality which employed
the participating employee when injured continues to pay the
participating employee regular salary or other compensation or
pays the employee an amount in excess of the Workers'
Compensation amount, then earnings shall be deemed to be the
total payments, including an amount equal to the Workers'
Compensation payments. These payments shall be subject to
employee contributions and allocated as if paid to the
participating employee when the regular payroll amounts would
have been paid if the participating employee had continued
working, and creditable service shall be awarded for this
period.
(d) If an elected official who is a participating employee

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becomes disabled but does not resign and is not removed from
office, then earnings shall include all salary payments made
for the remainder of that term of office and the official shall
be awarded creditable service for the term of office.
(e) If a participating employee is paid pursuant to "An Act
to provide for the continuation of compensation for law
enforcement officers, correctional officers and firemen who
suffer disabling injury in the line of duty", approved
September 6, 1973, as amended, the payments shall be deemed
earnings, and the participating employee shall be awarded
creditable service for this period.
(f) Additional compensation received by a person while
serving as a supervisor of assessments, assessor, deputy
assessor or member of a board of review from the State of
Illinois pursuant to Section 4-10 or 4-15 of the Property Tax
Code shall not be earnings for purposes of this Article and
shall not be included in the contribution formula or
calculation of benefits for such person pursuant to this
Article.
(Source: P.A. 87-740; 88-670, eff. 12-2-94.)
(40 ILCS 5/7-116) (from Ch. 108 1/2, par. 7-116)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 7-116. "Final rate of earnings":
(a) For retirement and survivor annuities, the monthly

HB4057 - 98 - LRB100 12972 RPS 27085 b
earnings obtained by dividing the total earnings received by
the employee during the period of either (1) the 48 consecutive
months of service within the last 120 months of service in
which his total earnings were the highest or (2) the employee's
total period of service, by the number of months of service in
such period.
(b) For death benefits, the higher of the rate determined
under paragraph (a) of this Section or total earnings received
in the last 12 months of service divided by twelve. If the
deceased employee has less than 12 months of service, the
monthly final rate shall be the monthly rate of pay the
employee was receiving when he began service.
(c) For disability benefits, the total earnings of a
participating employee in the last 12 calendar months of
service prior to the date he becomes disabled divided by 12.
(d) In computing the final rate of earnings: (1) the
earnings rate for all periods of prior service shall be
considered equal to the average earnings rate for the last 3
calendar years of prior service for which creditable service is
received under Section 7-139 or, if there is less than 3 years
of creditable prior service, the average for the total prior
service period for which creditable service is received under
Section 7-139; (2) for out of state service and authorized
leave, the earnings rate shall be the rate upon which service
credits are granted; (3) periods of military leave shall not be
considered; (4) the earnings rate for all periods of disability

HB4057 - 99 - LRB100 12972 RPS 27085 b
shall be considered equal to the rate of earnings upon which
the employee's disability benefits are computed for such
periods; (5) the earnings to be considered for each of the
final three months of the final earnings period for persons who
first became participants before January 1, 2012 and the
earnings to be considered for each of the final 24 months for
participants who first become participants on or after January
1, 2012 shall not exceed 125% of the highest earnings of any
other month in the final earnings period; and (6) the annual
amount of final rate of earnings shall be the monthly amount
multiplied by the number of months of service normally required
by the position in a year; and (7) in the case of a person who
first becomes a participant on or after the effective date of
this amendatory Act of the 100th General Assembly, payments for
unused sick or vacation time shall not be considered.
(Source: P.A. 97-609, eff. 1-1-12.)
(40 ILCS 5/7-139) (from Ch. 108 1/2, par. 7-139)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 7-139. Credits and creditable service to employees.
(a) Each participating employee shall be granted credits
and creditable service, for purposes of determining the amount
of any annuity or benefit to which he or a beneficiary is
entitled, as follows:
1. For prior service: Each participating employee who

HB4057 - 100 - LRB100 12972 RPS 27085 b
is an employee of a participating municipality or
participating instrumentality on the effective date shall
be granted creditable service, but no credits under
paragraph 2 of this subsection (a), for periods of prior
service for which credit has not been received under any
other pension fund or retirement system established under
this Code, as follows:
If the effective date of participation for the
participating municipality or participating
instrumentality is on or before January 1, 1998, creditable
service shall be granted for the entire period of prior
service with that employer without any employee
contribution.
If the effective date of participation for the
participating municipality or participating
instrumentality is after January 1, 1998, creditable
service shall be granted for the last 20% of the period of
prior service with that employer, but no more than 5 years,
without any employee contribution. A participating
employee may establish creditable service for the
remainder of the period of prior service with that employer
by making an application in writing, accompanied by payment
of an employee contribution in an amount determined by the
Fund, based on the employee contribution rates in effect at
the time of application for the creditable service and the
employee's salary rate on the effective date of

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participation for that employer, plus interest at the
effective rate from the date of the prior service to the
date of payment. Application for this creditable service
may be made at any time while the employee is still in
service.
A municipality that (i) has at least 35 employees; (ii)
is located in a county with at least 2,000,000 inhabitants;
and (iii) maintains an independent defined benefit pension
plan for the benefit of its eligible employees may restrict
creditable service in whole or in part for periods of prior
service with the employer if the governing body of the
municipality adopts an irrevocable resolution to restrict
that creditable service and files the resolution with the
board before the municipality's effective date of
participation.
Any person who has withdrawn from the service of a
participating municipality or participating
instrumentality prior to the effective date, who reenters
the service of the same municipality or participating
instrumentality after the effective date and becomes a
participating employee is entitled to creditable service
for prior service as otherwise provided in this subdivision
(a)(1) only if he or she renders 2 years of service as a
participating employee after the effective date.
Application for such service must be made while in a
participating status. The salary rate to be used in the

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calculation of the required employee contribution, if any,
shall be the employee's salary rate at the time of first
reentering service with the employer after the employer's
effective date of participation.
2. For current service, each participating employee
shall be credited with:
a. Additional credits of amounts equal to each
payment of additional contributions received from him
under Section 7-173, as of the date the corresponding
payment of earnings is payable to him.
b. Normal credits of amounts equal to each payment
of normal contributions received from him, as of the
date the corresponding payment of earnings is payable
to him, and normal contributions made for the purpose
of establishing out-of-state service credits as
permitted under the conditions set forth in paragraph 6
of this subsection (a).
c. Municipality credits in an amount equal to 1.4
times the normal credits, except those established by
out-of-state service credits, as of the date of
computation of any benefit if these credits would
increase the benefit.
d. Survivor credits equal to each payment of
survivor contributions received from the participating
employee as of the date the corresponding payment of
earnings is payable, and survivor contributions made

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for the purpose of establishing out-of-state service
credits.
3. For periods of temporary and total and permanent
disability benefits, each employee receiving disability
benefits shall be granted creditable service for the period
during which disability benefits are payable. Normal and
survivor credits, based upon the rate of earnings applied
for disability benefits, shall also be granted if such
credits would result in a higher benefit to any such
employee or his beneficiary.
4. For authorized leave of absence without pay: A
participating employee shall be granted credits and
creditable service for periods of authorized leave of
absence without pay under the following conditions:
a. An application for credits and creditable
service is submitted to the board while the employee is
in a status of active employment.
b. Not more than 12 complete months of creditable
service for authorized leave of absence without pay
shall be counted for purposes of determining any
benefits payable under this Article.
c. Credits and creditable service shall be granted
for leave of absence only if such leave is approved by
the governing body of the municipality, including
approval of the estimated cost thereof to the
municipality as determined by the fund, and employee

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contributions, plus interest at the effective rate
applicable for each year from the end of the period of
leave to date of payment, have been paid to the fund in
accordance with Section 7-173. The contributions shall
be computed upon the assumption earnings continued
during the period of leave at the rate in effect when
the leave began.
d. Benefits under the provisions of Sections
7-141, 7-146, 7-150 and 7-163 shall become payable to
employees on authorized leave of absence, or their
designated beneficiary, only if such leave of absence
is creditable hereunder, and if the employee has at
least one year of creditable service other than the
service granted for leave of absence. Any employee
contributions due may be deducted from any benefits
payable.
e. No credits or creditable service shall be
allowed for leave of absence without pay during any
period of prior service.
5. For military service: The governing body of a
municipality or participating instrumentality may elect to
allow creditable service to participating employees who
leave their employment to serve in the armed forces of the
United States for all periods of such service, provided
that the person returns to active employment within 90 days
after completion of full time active duty, but no

HB4057 - 105 - LRB100 12972 RPS 27085 b
creditable service shall be allowed such person for any
period that can be used in the computation of a pension or
any other pay or benefit, other than pay for active duty,
for service in any branch of the armed forces of the United
States. If necessary to the computation of any benefit, the
board shall establish municipality credits for
participating employees under this paragraph on the
assumption that the employee received earnings at the rate
received at the time he left the employment to enter the
armed forces. A participating employee in the armed forces
shall not be considered an employee during such period of
service and no additional death and no disability benefits
are payable for death or disability during such period.
Any participating employee who left his employment
with a municipality or participating instrumentality to
serve in the armed forces of the United States and who
again became a participating employee within 90 days after
completion of full time active duty by entering the service
of a different municipality or participating
instrumentality, which has elected to allow creditable
service for periods of military service under the preceding
paragraph, shall also be allowed creditable service for his
period of military service on the same terms that would
apply if he had been employed, before entering military
service, by the municipality or instrumentality which
employed him after he left the military service and the

HB4057 - 106 - LRB100 12972 RPS 27085 b
employer costs arising in relation to such grant of
creditable service shall be charged to and paid by that
municipality or instrumentality.
Notwithstanding the foregoing, any participating
employee shall be entitled to creditable service as
required by any federal law relating to re-employment
rights of persons who served in the United States Armed
Services. Such creditable service shall be granted upon
payment by the member of an amount equal to the employee
contributions which would have been required had the
employee continued in service at the same rate of earnings
during the military leave period, plus interest at the
effective rate.
5.1. In addition to any creditable service established
under paragraph 5 of this subsection (a), creditable
service may be granted for up to 48 months of service in
the armed forces of the United States.
In order to receive creditable service for military
service under this paragraph 5.1, a participating employee
must (1) apply to the Fund in writing and provide evidence
of the military service that is satisfactory to the Board;
(2) obtain the written approval of the current employer;
and (3) make contributions to the Fund equal to (i) the
employee contributions that would have been required had
the service been rendered as a member, plus (ii) an amount
determined by the board to be equal to the employer's

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normal cost of the benefits accrued for that military
service, plus (iii) interest on items (i) and (ii) from the
date of first membership in the Fund to the date of
payment. The required interest shall be calculated at the
regular interest rate.
The changes made to this paragraph 5.1 by Public Acts
95-483 and 95-486 apply only to participating employees in
service on or after August 28, 2007 (the effective date of
those Public Acts).
6. For out-of-state service: Creditable service shall
be granted for service rendered to an out-of-state local
governmental body under the following conditions: The
employee had participated and has irrevocably forfeited
all rights to benefits in the out-of-state public employees
pension system; the governing body of his participating
municipality or instrumentality authorizes the employee to
establish such service; the employee has 2 years current
service with this municipality or participating
instrumentality; the employee makes a payment of
contributions, which shall be computed at 8% (normal) plus
2% (survivor) times length of service purchased times the
average rate of earnings for the first 2 years of service
with the municipality or participating instrumentality
whose governing body authorizes the service established
plus interest at the effective rate on the date such
credits are established, payable from the date the employee

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completes the required 2 years of current service to date
of payment. In no case shall more than 120 months of
creditable service be granted under this provision.
7. For retroactive service: Any employee who could have
but did not elect to become a participating employee, or
who should have been a participant in the Municipal Public
Utilities Annuity and Benefit Fund before that fund was
superseded, may receive creditable service for the period
of service not to exceed 50 months; however, a current or
former elected or appointed official of a participating
municipality may establish credit under this paragraph 7
for more than 50 months of service as an official of that
municipality, if the excess over 50 months is approved by
resolution of the governing body of the affected
municipality filed with the Fund before January 1, 2002.
Any employee who is a participating employee on or
after September 24, 1981 and who was excluded from
participation by the age restrictions removed by Public Act
82-596 may receive creditable service for the period, on or
after January 1, 1979, excluded by the age restriction and,
in addition, if the governing body of the participating
municipality or participating instrumentality elects to
allow creditable service for all employees excluded by the
age restriction prior to January 1, 1979, for service
during the period prior to that date excluded by the age
restriction. Any employee who was excluded from

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participation by the age restriction removed by Public Act
82-596 and who is not a participating employee on or after
September 24, 1981 may receive creditable service for
service after January 1, 1979. Creditable service under
this paragraph shall be granted upon payment of the
employee contributions which would have been required had
he participated, with interest at the effective rate for
each year from the end of the period of service established
to date of payment.
8. For accumulated unused sick leave: A participating
employee who first becomes a participating employee before
the effective date of this amendatory Act of the 100th
General Assembly and who is applying for a retirement
annuity shall be entitled to creditable service for that
portion of the employee's accumulated unused sick leave for
which payment is not received, as follows:
a. Sick leave days shall be limited to those
accumulated under a sick leave plan established by a
participating municipality or participating
instrumentality which is available to all employees or
a class of employees.
b. Except as provided in item b-1, only sick leave
days accumulated with a participating municipality or
participating instrumentality with which the employee
was in service within 60 days of the effective date of
his retirement annuity shall be credited; If the

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employee was in service with more than one employer
during this period only the sick leave days with the
employer with which the employee has the greatest
number of unpaid sick leave days shall be considered.
b-1. If the employee was in the service of more
than one employer as defined in item (2) of paragraph
(a) of subsection (A) of Section 7-132, then the sick
leave days from all such employers shall be credited,
as long as the creditable service attributed to those
sick leave days does not exceed the limitation in item
f of this paragraph 8. In calculating the creditable
service under this item b-1, the sick leave days from
the last employer shall be considered first, then the
remaining sick leave days shall be considered until
there are no more days or the maximum creditable sick
leave threshold under item f of this paragraph 8 has
been reached.
c. The creditable service granted shall be
considered solely for the purpose of computing the
amount of the retirement annuity and shall not be used
to establish any minimum service period required by any
provision of the Illinois Pension Code, the effective
date of the retirement annuity, or the final rate of
earnings.
d. The creditable service shall be at the rate of
1/20 of a month for each full sick day, provided that

HB4057 - 111 - LRB100 12972 RPS 27085 b
no more than 12 months may be credited under this
subdivision 8.
e. Employee contributions shall not be required
for creditable service under this subdivision 8.
f. Each participating municipality and
participating instrumentality with which an employee
has service within 60 days of the effective date of his
retirement annuity shall certify to the board the
number of accumulated unpaid sick leave days credited
to the employee at the time of termination of service.
9. For service transferred from another system:
Credits and creditable service shall be granted for service
under Article 4, 5, 8, 14, or 16 of this Act, to any active
member of this Fund, and to any inactive member who has
been a county sheriff, upon transfer of such credits
pursuant to Section 4-108.3, 5-235, 8-226.7, 14-105.6, or
16-131.4, and payment by the member of the amount by which
(1) the employer and employee contributions that would have
been required if he had participated in this Fund as a
sheriff's law enforcement employee during the period for
which credit is being transferred, plus interest thereon at
the effective rate for each year, compounded annually, from
the date of termination of the service for which credit is
being transferred to the date of payment, exceeds (2) the
amount actually transferred to the Fund. Such transferred
service shall be deemed to be service as a sheriff's law

HB4057 - 112 - LRB100 12972 RPS 27085 b
enforcement employee for the purposes of Section 7-142.1.
10. (Blank).
11. For service transferred from an Article 3 system
under Section 3-110.3: Credits and creditable service
shall be granted for service under Article 3 of this Act as
provided in Section 3-110.3, to any active member of this
Fund, upon transfer of such credits pursuant to Section
3-110.3. If the board determines that the amount
transferred is less than the true cost to the Fund of
allowing that creditable service to be established, then in
order to establish that creditable service, the member must
pay to the Fund an additional contribution equal to the
difference, as determined by the board in accordance with
the rules and procedures adopted under this paragraph. If
the member does not make the full additional payment as
required by this paragraph prior to termination of his
participation with that employer, then his or her
creditable service shall be reduced by an amount equal to
the difference between the amount transferred under
Section 3-110.3, including any payments made by the member
under this paragraph prior to termination, and the true
cost to the Fund of allowing that creditable service to be
established, as determined by the board in accordance with
the rules and procedures adopted under this paragraph.
The board shall establish by rule the manner of making
the calculation required under this paragraph 11, taking

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into account the appropriate actuarial assumptions; the
member's service, age, and salary history, and any other
factors that the board determines to be relevant.
12. For omitted service: Any employee who was employed
by a participating employer in a position that required
participation, but who was not enrolled in the Fund, may
establish such credits under the following conditions:
a. Application for such credits is received by the
Board while the employee is an active participant of
the Fund or a reciprocal retirement system.
b. Eligibility for participation and earnings are
verified by the Authorized Agent of the participating
employer for which the service was rendered.
Creditable service under this paragraph shall be
granted upon payment of the employee contributions that
would have been required had he participated, which shall
be calculated by the Fund using the member contribution
rate in effect during the period that the service was
rendered.
(b) Creditable service - amount:
1. One month of creditable service shall be allowed for
each month for which a participating employee made
contributions as required under Section 7-173, or for which
creditable service is otherwise granted hereunder. Not
more than 1 month of service shall be credited and counted
for 1 calendar month, and not more than 1 year of service

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shall be credited and counted for any calendar year. A
calendar month means a nominal month beginning on the first
day thereof, and a calendar year means a year beginning
January 1 and ending December 31.
2. A seasonal employee shall be given 12 months of
creditable service if he renders the number of months of
service normally required by the position in a 12-month
period and he remains in service for the entire 12-month
period. Otherwise a fractional year of service in the
number of months of service rendered shall be credited.
3. An intermittent employee shall be given creditable
service for only those months in which a contribution is
made under Section 7-173.
(c) No application for correction of credits or creditable
service shall be considered unless the board receives an
application for correction while (1) the applicant is a
participating employee and in active employment with a
participating municipality or instrumentality, or (2) while
the applicant is actively participating in a pension fund or
retirement system which is a participating system under the
Retirement Systems Reciprocal Act. A participating employee or
other applicant shall not be entitled to credits or creditable
service unless the required employee contributions are made in
a lump sum or in installments made in accordance with board
rule.
(d) Upon the granting of a retirement, surviving spouse or

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child annuity, a death benefit or a separation benefit, on
account of any employee, all individual accumulated credits
shall thereupon terminate. Upon the withdrawal of additional
contributions, the credits applicable thereto shall thereupon
terminate. Terminated credits shall not be applied to increase
the benefits any remaining employee would otherwise receive
under this Article.
(Source: P.A. 97-415, eff. 8-16-11; 98-439, eff. 8-16-13;
98-932, eff. 8-15-14.)
(40 ILCS 5/14-103.05) (from Ch. 108 1/2, par. 14-103.05)
Sec. 14-103.05. Employee.
(a) Except as provided in subsection (d), any Any person
employed by a Department who receives salary for personal
services rendered to the Department on a warrant issued
pursuant to a payroll voucher certified by a Department and
drawn by the State Comptroller upon the State Treasurer,
including an elected official described in subparagraph (d) of
Section 14-104, shall become an employee for purpose of
membership in the Retirement System on the first day of such
employment.
A person entering service on or after January 1, 1972 and
prior to January 1, 1984 shall become a member as a condition
of employment and shall begin making contributions as of the
first day of employment.
A person entering service on or after January 1, 1984

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shall, upon completion of 6 months of continuous service which
is not interrupted by a break of more than 2 months, become a
member as a condition of employment. Contributions shall begin
the first of the month after completion of the qualifying
period.
A person employed by the Chicago Metropolitan Agency for
Planning on the effective date of this amendatory Act of the
95th General Assembly who was a member of this System as an
employee of the Chicago Area Transportation Study and makes an
election under Section 14-104.13 to participate in this System
for his or her employment with the Chicago Metropolitan Agency
for Planning.
The qualifying period of 6 months of service is not
applicable to: (1) a person who has been granted credit for
service in a position covered by the State Universities
Retirement System, the Teachers' Retirement System of the State
of Illinois, the General Assembly Retirement System, or the
Judges Retirement System of Illinois unless that service has
been forfeited under the laws of those systems; (2) a person
entering service on or after July 1, 1991 in a noncovered
position; (3) a person to whom Section 14-108.2a or 14-108.2b
applies; or (4) a person to whom subsection (a-5) of this
Section applies.
(a-5) Except as provided in subsection (d), a A person
entering service on or after December 1, 2010 and before the
effective date of this amendatory Act of the 100th General

HB4057 - 117 - LRB100 12972 RPS 27085 b
Assembly shall become a member as a condition of employment and
shall begin making contributions as of the first day of
employment. A person serving in the qualifying period on
December 1, 2010 will become a member on December 1, 2010 and
shall begin making contributions as of December 1, 2010.
(b) The term "employee" does not include the following:
(1) members of the State Legislature, and persons
electing to become members of the General Assembly
Retirement System pursuant to Section 2-105;
(2) incumbents of offices normally filled by vote of
the people;
(3) except as otherwise provided in this Section, any
person appointed by the Governor with the advice and
consent of the Senate unless that person elects to
participate in this system;
(3.1) any person serving as a commissioner of an ethics
commission created under the State Officials and Employees
Ethics Act unless that person elects to participate in this
system with respect to that service as a commissioner;
(3.2) any person serving as a part-time employee in any
of the following positions: Legislative Inspector General,
Special Legislative Inspector General, employee of the
Office of the Legislative Inspector General, Executive
Director of the Legislative Ethics Commission, or staff of
the Legislative Ethics Commission, regardless of whether
he or she is in active service on or after July 8, 2004

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(the effective date of Public Act 93-685), unless that
person elects to participate in this System with respect to
that service; in this item (3.2), a "part-time employee" is
a person who is not required to work at least 35 hours per
week;
(3.3) any person who has made an election under Section
1-123 and who is serving either as legal counsel in the
Office of the Governor or as Chief Deputy Attorney General;
(4) except as provided in Section 14-108.2 or
14-108.2c, any person who is covered or eligible to be
covered by the Teachers' Retirement System of the State of
Illinois, the State Universities Retirement System, or the
Judges Retirement System of Illinois;
(5) an employee of a municipality or any other
political subdivision of the State;
(6) any person who becomes an employee after June 30,
1979 as a public service employment program participant
under the Federal Comprehensive Employment and Training
Act and whose wages or fringe benefits are paid in whole or
in part by funds provided under such Act;
(7) enrollees of the Illinois Young Adult Conservation
Corps program, administered by the Department of Natural
Resources, authorized grantee pursuant to Title VIII of the
"Comprehensive Employment and Training Act of 1973", 29 USC
993, as now or hereafter amended;
(8) enrollees and temporary staff of programs

HB4057 - 119 - LRB100 12972 RPS 27085 b
administered by the Department of Natural Resources under
the Youth Conservation Corps Act of 1970;
(9) any person who is a member of any professional
licensing or disciplinary board created under an Act
administered by the Department of Professional Regulation
or a successor agency or created or re-created after the
effective date of this amendatory Act of 1997, and who
receives per diem compensation rather than a salary,
notwithstanding that such per diem compensation is paid by
warrant issued pursuant to a payroll voucher; such persons
have never been included in the membership of this System,
and this amendatory Act of 1987 (P.A. 84-1472) is not
intended to effect any change in the status of such
persons;
(10) any person who is a member of the Illinois Health
Care Cost Containment Council, and receives per diem
compensation rather than a salary, notwithstanding that
such per diem compensation is paid by warrant issued
pursuant to a payroll voucher; such persons have never been
included in the membership of this System, and this
amendatory Act of 1987 is not intended to effect any change
in the status of such persons;
(11) any person who is a member of the Oil and Gas
Board created by Section 1.2 of the Illinois Oil and Gas
Act, and receives per diem compensation rather than a
salary, notwithstanding that such per diem compensation is

HB4057 - 120 - LRB100 12972 RPS 27085 b
paid by warrant issued pursuant to a payroll voucher;
(12) a person employed by the State Board of Higher
Education in a position with the Illinois Century Network
as of June 30, 2004, who remains continuously employed
after that date by the Department of Central Management
Services in a position with the Illinois Century Network
and participates in the Article 15 system with respect to
that employment;
(13) any person who first becomes a member of the Civil
Service Commission on or after January 1, 2012;
(14) any person, other than the Director of Employment
Security, who first becomes a member of the Board of Review
of the Department of Employment Security on or after
January 1, 2012;
(15) any person who first becomes a member of the Civil
Service Commission on or after January 1, 2012;
(16) any person who first becomes a member of the
Illinois Liquor Control Commission on or after January 1,
2012;
(17) any person who first becomes a member of the
Secretary of State Merit Commission on or after January 1,
2012;
(18) any person who first becomes a member of the Human
Rights Commission on or after January 1, 2012;
(19) any person who first becomes a member of the State
Mining Board on or after January 1, 2012;

HB4057 - 121 - LRB100 12972 RPS 27085 b
(20) any person who first becomes a member of the
Property Tax Appeal Board on or after January 1, 2012;
(21) any person who first becomes a member of the
Illinois Racing Board on or after January 1, 2012;
(22) any person who first becomes a member of the
Department of State Police Merit Board on or after January
1, 2012;
(23) any person who first becomes a member of the
Illinois State Toll Highway Authority on or after January
1, 2012; or
(24) any person who first becomes a member of the
Illinois State Board of Elections on or after January 1,
2012.
(c) An individual who represents or is employed as an
officer or employee of a statewide labor organization that
represents members of this System may participate in the System
and shall be deemed an employee, provided that (1) the
individual has previously earned creditable service under this
Article, (2) the individual files with the System an
irrevocable election to become a participant within 6 months
after the effective date of this amendatory Act of the 94th
General Assembly, and (3) the individual does not receive
credit for that employment under any other provisions of this
Code. An employee under this subsection (c) is responsible for
paying to the System both (i) employee contributions based on
the actual compensation received for service with the labor

HB4057 - 122 - LRB100 12972 RPS 27085 b
organization and (ii) employer contributions based on the
percentage of payroll certified by the board; all or any part
of these contributions may be paid on the employee's behalf or
picked up for tax purposes (if authorized under federal law) by
the labor organization.
A person who is an employee as defined in this subsection
(c) may establish service credit for similar employment prior
to becoming an employee under this subsection by paying to the
System for that employment the contributions specified in this
subsection, plus interest at the effective rate from the date
of service to the date of payment. However, credit shall not be
granted under this subsection (c) for any such prior employment
for which the applicant received credit under any other
provision of this Code or during which the applicant was on a
leave of absence.
(d) Notwithstanding any other provision of this Article,
beginning on the effective date of this amendatory Act of the
100th General Assembly, a person is not required, as a
condition of employment or otherwise, to participate in this
System. An active employee may terminate his or her
participation in this System (including active participation
in the Tier 3 plan, if applicable) by notifying the System in
writing. An active employee terminating participation in this
System under this subsection shall be entitled to a refund of
his or her contributions (other than contributions to the Tier
3 plan under Section 14-155.5) minus the benefits received

HB4057 - 123 - LRB100 12972 RPS 27085 b
prior to the termination of participation.
(Source: P.A. 96-1490, eff. 1-1-11; 97-609, eff. 1-1-12.)
(40 ILCS 5/14-103.10) (from Ch. 108 1/2, par. 14-103.10)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 14-103.10. Compensation.
(a) For periods of service prior to January 1, 1978, the
full rate of salary or wages payable to an employee for
personal services performed if he worked the full normal
working period for his position, subject to the following
maximum amounts: (1) prior to July 1, 1951, $400 per month or
$4,800 per year; (2) between July 1, 1951 and June 30, 1957
inclusive, $625 per month or $7,500 per year; (3) beginning
July 1, 1957, no limitation.
In the case of service of an employee in a position
involving part-time employment, compensation shall be
determined according to the employees' earnings record.
(b) For periods of service on and after January 1, 1978,
all remuneration for personal services performed defined as
"wages" under the Social Security Enabling Act, including that
part of such remuneration which is in excess of any maximum
limitation provided in such Act, and including any benefits
received by an employee under a sick pay plan in effect before
January 1, 1981, but excluding lump sum salary payments:
(1) for vacation,

HB4057 - 124 - LRB100 12972 RPS 27085 b
(2) for accumulated unused sick leave,
(3) upon discharge or dismissal,
(4) for approved holidays.
(c) For periods of service on or after December 16, 1978,
compensation also includes any benefits, other than lump sum
salary payments made at termination of employment, which an
employee receives or is eligible to receive under a sick pay
plan authorized by law.
(d) For periods of service after September 30, 1985,
compensation also includes any remuneration for personal
services not included as "wages" under the Social Security
Enabling Act, which is deducted for purposes of participation
in a program established pursuant to Section 125 of the
Internal Revenue Code or its successor laws.
(e) For members for which Section 1-160 applies for periods
of service on and after January 1, 2011, all remuneration for
personal services performed defined as "wages" under the Social
Security Enabling Act, excluding remuneration that is in excess
of the annual earnings, salary, or wages of a member or
participant, as provided in subsection (b-5) of Section 1-160,
but including any benefits received by an employee under a sick
pay plan in effect before January 1, 1981. Compensation shall
exclude lump sum salary payments:
(1) for vacation;
(2) for accumulated unused sick leave;
(3) upon discharge or dismissal; and

HB4057 - 125 - LRB100 12972 RPS 27085 b
(4) for approved holidays.
(f) Notwithstanding the other provisions of this Section,
for service on or after July 1, 2013, "compensation" does not
include any stipend payable to an employee for service on a
board or commission.
(g) Notwithstanding any other provision of this Section,
for an employee who first becomes a participant on or after the
effective date of this amendatory Act of the 100th General
Assembly, "compensation" does not include any payments or
reimbursements for travel vouchers submitted more than 30 days
after the last day of travel for which the voucher is
submitted.
(Source: P.A. 98-449, eff. 8-16-13.)
(40 ILCS 5/14-103.41 new)
Sec. 14-103.41. Tier 1 member. "Tier 1 member": A member of
this System 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.
In the case of a Tier 1 member who elects to participate in
the Tier 3 plan under Section 14-155.5 of this Code, that Tier
1 member shall be deemed a Tier 1 member only with respect to
service performed or established before the effective date of
that election.

HB4057 - 126 - LRB100 12972 RPS 27085 b
(40 ILCS 5/14-103.42 new)
Sec. 14-103.42. Tier 2 member. "Tier 2 member": A member of
this System who first becomes a member under this Article on or
after January 1, 2011 and who is not a Tier 1 member.
In the case of a Tier 2 member who elects to participate in
the Tier 3 plan under Section 14-155.5 of this Code, that Tier
2 member shall be deemed a Tier 2 member only with respect to
service performed or established before the effective date of
that election.
(40 ILCS 5/14-103.43 new)
Sec. 14-103.43. Tier 3 member. "Tier 3 member": A member of
this System who first becomes a member on or after July 1, 2018
or a Tier 1 or Tier 2 member who elects to participate in the
Tier 3 plan under Section 14-155.5 of this Code, but only with
respect to service performed on or after the effective date of
that election.
(40 ILCS 5/14-104.3) (from Ch. 108 1/2, par. 14-104.3)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 14-104.3. Notwithstanding provisions contained in
Section 14-103.10, any person who first becomes a member before
the effective date of this amendatory Act of the 100th General
Assembly and who at the time of retirement and after December

HB4057 - 127 - LRB100 12972 RPS 27085 b
6, 1983 receives compensation in a lump sum for accumulated
vacation, sickness, or personal business may receive service
credit for such periods by making contributions within 90 days
of withdrawal, based on the rate of compensation in effect
immediately prior to retirement and the contribution rate then
in effect. Any person who first becomes a member on or after
the effective date of this amendatory Act of the 100th General
Assembly and who receives compensation in a lump sum for
accumulated vacation, sickness, or personal business may not
receive service credit for such periods. Exercising the option
provided in this Section shall not change a member's date of
withdrawal or final average compensation for purposes of
computing the amount or effective date of a retirement annuity.
Any annuitant who establishes service credit as herein provided
shall have his retirement annuity adjusted retroactively to the
date of retirement.
(Source: P.A. 83-1362.)
(40 ILCS 5/14-106) (from Ch. 108 1/2, par. 14-106)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 14-106. Membership service credit.
(a) After January 1, 1944, all service of a member since he
last became a member with respect to which contributions are
made shall count as membership service; provided, that for
service on and after July 1, 1950, 12 months of service shall

HB4057 - 128 - LRB100 12972 RPS 27085 b
constitute a year of membership service, the completion of 15
days or more of service during any month shall constitute 1
month of membership service, 8 to 15 days shall constitute 1/2
month of membership service and less than 8 days shall
constitute 1/4 month of membership service. The payroll record
of each department shall constitute conclusive evidence of the
record of service rendered by a member.
(b) For a member who is employed and paid on an
academic-year basis rather than on a 12-month annual basis,
employment for a full academic year shall constitute a full
year of membership service, except that the member shall not
receive more than one year of membership service credit (plus
any additional service credit granted for unused sick leave)
for service during any 12-month period. This subsection (b)
applies to all such service for which the member has not begun
to receive a retirement annuity before January 1, 2001.
(c) A person who first becomes a member before the
effective date of this amendatory Act of the 100th General
Assembly shall be entitled to additional service credit, under
rules prescribed by the Board, for accumulated unused sick
leave credited to his account in the last Department on the
date of withdrawal from service or for any period for which he
would have been eligible to receive benefits under a sick pay
plan authorized by law, if he had suffered a sickness or
accident on the date of withdrawal from service. It shall be
the responsibility of the last Department to certify to the

HB4057 - 129 - LRB100 12972 RPS 27085 b
Board the length of time salary or benefits would have been
paid to the member based upon the accumulated unused sick leave
or the applicable sick pay plan if he had become entitled
thereto because of sickness on the date that his status as an
employee terminated. This period of service credit granted
under this paragraph shall not be considered in determining the
date the retirement annuity is to begin, or final average
compensation.
(d) A person who first becomes a member on or after the
effective date of this amendatory Act of the 100th General
Assembly shall not be entitled to additional service credit for
accumulated unused sick leave.
(Source: P.A. 92-14, eff. 6-28-01.)
(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.

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"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
Retirement Systems Reciprocal Act with respect to service under

HB4057 - 131 - LRB100 12972 RPS 27085 b
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
Code of 1986, as amended, for the accelerated pension benefit

HB4057 - 132 - LRB100 12972 RPS 27085 b
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 5/14-152.1)
(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

HB4057 - 133 - LRB100 12972 RPS 27085 b
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 96-37 or 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 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

HB4057 - 134 - LRB100 12972 RPS 27085 b
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. 96-37, eff. 7-13-09.)
(40 ILCS 5/14-155.5 new)

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Sec. 14-155.5. Tier 3 plan.
(a) By July 1, 2018, the System shall prepare and implement
a Tier 3 plan. The Tier 3 plan developed under this Section
shall be a plan that aggregates State 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. In developing, preparing, and implementing
the Tier 3 plan and adopting rules concerning the Tier 3 plan,
the System shall utilize the framework of the self-managed plan
offered under Article 15 and shall endeavor to adapt the
benefits and structure of the self-managed plan. The System
shall consult with the State Universities Retirement System in
developing the Tier 3 plan.
As used in this Section, "defined benefit plan" means the
retirement plan available under this Article to Tier 1 or Tier
2 members who have not made the election authorized under this
Section.
(1) All persons who begin to participate in this System
on or after July 1, 2018 shall participate in the Tier 3
plan rather than the defined benefit plan.
(2) A non-covered employee who participates in the Tier
3 plan shall pay employee contributions at a rate of 8% of
compensation. A covered employee who participates in the
Tier 3 plan shall pay employee contributions at a rate of
3% of compensation.

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(3) State contributions shall be paid into the accounts
of non-covered employees who participate in the Tier 3 plan
at a rate of 7.6% of compensation, less the amount
determined annually by the Board to cover the cost of
offering the defined disability benefits available to
other participants under this Article if the Tier 3 plan
offers such benefits. State contributions shall be paid
into the accounts of covered employees who participate in
the Tier 3 plan at a rate of 3% of compensation.
(4) The Tier 3 plan shall require one year of
participation in the Tier 3 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 Tier 3 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 Tier 3 plan account by an amount
determined by the System to cover the cost of offering such
benefits.
(6) The Tier 3 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 Tier 3 plan shall provide a variety of options

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for payouts to participants in the Tier 3 plan who are no
longer active in the System 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,
from the Tier 3 plan into other qualified retirement plans.
(9) The System shall reduce the employee contributions
credited to the member's Tier 3 plan account by an amount
determined by the System to cover the cost of offering
these benefits and any applicable administrative fees.
(b) Under the Tier 3 plan, an active Tier 1 or Tier 2
member of this System may elect, in writing, to cease accruing
benefits in the defined benefit plan and begin accruing
benefits for future service in the Tier 3 plan. The election to
participate in the Tier 3 plan is voluntary and irrevocable.
(1) Service credit under the Tier 3 plan may be used
for determining retirement eligibility under the defined
benefit plan.
(2) The System shall make a good faith effort to
contact all active Tier 1 and Tier 2 members who are
eligible to participate in the Tier 3 plan. The System
shall mail information describing the option to join the
Tier 3 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

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for the System to publish the details of the option on its
website.
(3) 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
benefits and 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 and
Tier 2 members who are eligible to participate in the Tier
3 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.
(b-5) A Tier 1 or Tier 2 member who elects to participate
in the Tier 3 plan may irrevocably elect to terminate all
participation in the defined benefit plan. Upon that election,
the System shall transfer to the member's individual account an
amount equal to the amount of contribution refund that the
member would be eligible to receive if the member terminated
employment on that date and elected a refund of contributions,
including regular interest for the respective years. The System

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shall make the transfer as a tax free transfer in accordance
with Internal Revenue Service guidelines, for purposes of
funding the amount credited to the member's individual account.
(c) 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 Tier 3
plan in accordance with this amendatory Act of the 100th
General Assembly to provide information concerning the impact
of the Tier 3 plan set forth in this Section.
(d) Notwithstanding any other provision of this Section, no
person shall begin participating in the Tier 3 plan until it
has attained qualified plan status and received all necessary
approvals from the U.S. Internal Revenue Service.
(e) The System shall report on its progress under this
Section, including the available details of the Tier 3 plan and
the System's plans for informing eligible Tier 1 and Tier 2
members about the plan, to the Governor and the General
Assembly on or before January 15, 2018.
(f) The Illinois State Board of Investment shall be the
plan sponsor for the Tier 3 plan established under this
Section.
(40 ILCS 5/15-108.1)
Sec. 15-108.1. Tier 1 member. "Tier 1 member": A

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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 on or after January 1, 2011.
In the case of a Tier 1 member who elects to participate in
the Tier 3 plan under Section 15-200.5 of this Code, that Tier
1 member shall be deemed a Tier 1 member only with respect to
service performed or established before the effective date of
that election.
(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, other than a person in the self-managed plan
established under Section 15-158.2, 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

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provisions of Section 1-103.1 of this Code.
In the case of a Tier 2 member who elects to participate in
the Tier 3 plan under Section 15-200.5 of this Code, that Tier
2 member shall be deemed a Tier 2 member only with respect to
service performed or established before the effective date of
that election.
(Source: P.A. 98-92, eff. 7-16-13; 98-596, eff. 11-19-13.)
(40 ILCS 5/15-108.3 new)
Sec. 15-108.3. Tier 3 member. "Tier 3 member": A person who
first becomes a participant under this Article on or after July
1, 2018 or a Tier 1 or Tier 2 member who elects to participate
in the Tier 3 plan under Section 15-200.5 of this Code, but
only with respect to service performed on or after the
effective date of that election.
(40 ILCS 5/15-112) (from Ch. 108 1/2, par. 15-112)
Sec. 15-112. Final rate of earnings. "Final rate of
earnings":
(a) This subsection (a) applies only to a Tier 1 member.
For an employee who is paid on an hourly basis or who
receives an annual salary in installments during 12 months of
each academic year, the average annual earnings during the 48
consecutive calendar month period ending with the last day of
final termination of employment or the 4 consecutive academic
years of service in which the employee's earnings were the

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highest, whichever is greater. For any other employee, the
average annual earnings during the 4 consecutive academic years
of service in which his or her earnings were the highest. For
an employee with less than 48 months or 4 consecutive academic
years of service, the average earnings during his or her entire
period of service. The earnings of an employee with more than
36 months of service under item (a) of Section 15-113.1 prior
to the date of becoming a participant are, for such period,
considered equal to the average earnings during the last 36
months of such service.
(b) This subsection (b) applies to a Tier 2 member.
For an employee who is paid on an hourly basis or who
receives an annual salary in installments during 12 months of
each academic year, the average annual earnings obtained by
dividing by 8 the total earnings of the employee during the 96
consecutive months in which the total earnings were the highest
within the last 120 months prior to termination.
For any other employee, the average annual earnings during
the 8 consecutive academic years within the 10 years prior to
termination in which the employee's earnings were the highest.
For an employee with less than 96 consecutive months or 8
consecutive academic years of service, whichever is necessary,
the average earnings during his or her entire period of
service.
(c) For an employee on leave of absence with pay, or on
leave of absence without pay who makes contributions during

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such leave, earnings are assumed to be equal to the basic
compensation on the date the leave began.
(d) For an employee on disability leave, earnings are
assumed to be equal to the basic compensation on the date
disability occurs or the average earnings during the 24 months
immediately preceding the month in which disability occurs,
whichever is greater.
(e) For a Tier 1 member who retires on or after the
effective date of this amendatory Act of 1997 with at least 20
years of service as a firefighter or police officer under this
Article, the final rate of earnings shall be the annual rate of
earnings received by the participant on his or her last day as
a firefighter or police officer under this Article, if that is
greater than the final rate of earnings as calculated under the
other provisions of this Section.
(f) If a Tier 1 member is an employee for at least 6 months
during the academic year in which his or her employment is
terminated, the annual final rate of earnings shall be 25% of
the sum of (1) the annual basic compensation for that year, and
(2) the amount earned during the 36 months immediately
preceding that year, if this is greater than the final rate of
earnings as calculated under the other provisions of this
Section.
(g) In the determination of the final rate of earnings for
an employee, that part of an employee's earnings for any
academic year beginning after June 30, 1997, which exceeds the

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employee's earnings with that employer for the preceding year
by more than 20 percent shall be excluded; in the event that an
employee has more than one employer this limitation shall be
calculated separately for the earnings with each employer. In
making such calculation, only the basic compensation of
employees shall be considered, without regard to vacation or
overtime or to contracts for summer employment.
(h) The following are not considered as earnings in
determining final rate of earnings: (1) severance or separation
pay, (2) retirement pay, (3) payment for unused sick leave, and
(4) payments from an employer for the period used in
determining final rate of earnings for any purpose other than
(i) services rendered, (ii) leave of absence or vacation
granted during that period, and (iii) vacation of up to 56 work
days allowed upon termination of employment; except that, if
the benefit has been collectively bargained between the
employer and the recognized collective bargaining agent
pursuant to the Illinois Educational Labor Relations Act,
payment received during a period of up to 2 academic years for
unused sick leave may be considered as earnings in accordance
with the applicable collective bargaining agreement, subject
to the 20% increase limitation of this Section, and if the
person first becomes a participant on or after the effective
date of this amendatory Act of the 100th General Assembly,
payments for unused sick or vacation time shall not be
considered as earnings. Any unused sick leave considered as

HB4057 - 145 - LRB100 12972 RPS 27085 b
earnings under this Section shall not be taken into account in
calculating service credit under Section 15-113.4.
(i) Intermittent periods of service shall be considered as
consecutive in determining final rate of earnings.
(Source: P.A. 98-92, eff. 7-16-13; 99-450, eff. 8-24-15.)
(40 ILCS 5/15-113.4) (from Ch. 108 1/2, par. 15-113.4)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 15-113.4. Service for unused sick leave. "Service for
unused sick leave": A person who first becomes a participant
before the effective date of this amendatory Act of the 100th
General Assembly and who is an employee under this System or
one of the other systems subject to Article 20 of this Code
within 60 days immediately preceding the date on which his or
her retirement annuity begins, is entitled to credit for
service for that portion of unused sick leave earned in the
course of employment with an employer and credited on the date
of termination of employment by an employer for which payment
is not received, in accordance with the following schedule: 30
through 90 full calendar days and 20 through 59 full work days
of unused sick leave, 1/4 of a year of service; 91 through 180
full calendar days and 60 through 119 full work days, 1/2 of a
year of service; 181 through 270 full calendar days and 120
through 179 full work days, 3/4 of a year of service; 271
through 360 full calendar days and 180 through 240 full work

HB4057 - 146 - LRB100 12972 RPS 27085 b
days, one year of service. Only uncompensated, unused sick
leave earned in accordance with an employer's sick leave
accrual policy generally applicable to employees or a class of
employees shall be taken into account in calculating service
credit under this Section. Any uncompensated, unused sick leave
granted by an employer to facilitate the hiring, retirement,
termination, or other special circumstances of an employee
shall not be taken into account in calculating service credit
under this Section. If a participant transfers from one
employer to another, the unused sick leave credited by the
previous employer shall be considered in determining service to
be credited under this Section, even if the participant
terminated service prior to the effective date of P.A. 86-272
(August 23, 1989); if necessary, the retirement annuity shall
be recalculated to reflect such sick leave credit. Each
employer shall certify to the board the number of days of
unused sick leave accrued to the participant's credit on the
date that the participant's status as an employee terminated.
This period of unused sick leave shall not be considered in
determining the date the retirement annuity begins. A person
who first becomes a participant on or after the effective date
of this amendatory Act of the 100th General Assembly shall not
receive service credit for unused sick leave.
(Source: P.A. 90-65, eff. 7-7-97; 90-511, eff. 8-22-97.)
(40 ILCS 5/15-134) (from Ch. 108 1/2, par. 15-134)

HB4057 - 147 - LRB100 12972 RPS 27085 b
Sec. 15-134. Participant.
(a) Except as provided in subsection (a-5), each Each
person shall, as a condition of employment, become a
participant and be subject to this Article on the date that he
or she becomes an employee, makes an election to participate
in, or otherwise becomes a participant in one of the retirement
programs offered under this Article, whichever date is later.
An employee who becomes a participant shall continue to be
a participant until he or she becomes an annuitant, dies or
accepts a refund of contributions.
(a-5) Notwithstanding any other provision of this Article,
beginning on the effective date of this amendatory Act of the
100th General Assembly, a person is not required, as a
condition of employment or otherwise, to participate in this
System. An active employee may terminate his or her
participation in this System (including active participation
in the Tier 3 plan, if applicable) by notifying the System in
writing. An active employee terminating participation in this
System under this subsection shall be entitled to a refund of
his or her contributions (other than contributions to the
self-managed plan under Section 15-158.2 or the Tier 3 plan
under Section 15-200.5) minus the benefits received prior to
the termination of participation.
(b) A person employed concurrently by 2 or more employers
is eligible to participate in the system on compensation
received from all employers.

HB4057 - 148 - LRB100 12972 RPS 27085 b
(Source: P.A. 98-92, eff. 7-16-13.)
(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,
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 2012 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 payroll over the years remaining to and
including fiscal year 2045 and shall be determined under the
projected unit credit actuarial cost method.

HB4057 - 149 - LRB100 12972 RPS 27085 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.
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
$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

HB4057 - 150 - LRB100 12972 RPS 27085 b
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
(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

HB4057 - 151 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 152 - LRB100 12972 RPS 27085 b
under this Section.
(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
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

HB4057 - 153 - LRB100 12972 RPS 27085 b
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).
(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

HB4057 - 154 - LRB100 12972 RPS 27085 b
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) If the amount of a participant's earnings for any
academic year beginning on or after June 1, 2005 and before
July 1, 2018 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 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

HB4057 - 155 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 156 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 157 - LRB100 12972 RPS 27085 b
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.
(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

HB4057 - 158 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 159 - LRB100 12972 RPS 27085 b
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.
(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

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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
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,

HB4057 - 161 - LRB100 12972 RPS 27085 b
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 5/15-185.5 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

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under this Article; and
(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.

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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
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

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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
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

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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 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 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 Financial and Professional Regulation. A new

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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
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.)

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(40 ILCS 5/15-200.5 new)
Sec. 15-200.5. Tier 3 plan.
(a) By July 1, 2018, the System shall prepare and implement
a Tier 3 plan. The Tier 3 plan developed under this Section
shall be a plan that aggregates State 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. In developing, preparing, and implementing
the Tier 3 plan and adopting rules concerning the Tier 3 plan,
the System shall utilize the framework of the self-managed plan
and shall endeavor to adapt the benefits and structure of the
self-managed plan.
As used in this Section, "defined benefit plan" means the
traditional benefit package or the portable benefit package
available under this Article to Tier 1 or Tier 2 members who
have not made the election authorized under this Section and do
not participate in the self-managed plan under Section
15-158.2.
(1) All persons who begin to participate in this System
on or after July 1, 2018 shall participate in the Tier 3
plan rather than the defined benefit plan or the
self-managed plan under Section 15-158.2.
(2) A participant in the Tier 3 plan shall pay employee
contributions at a rate of 8% of earnings.

HB4057 - 168 - LRB100 12972 RPS 27085 b
(3) State contributions shall be paid into the accounts
of all participants in the Tier 3 plan at a rate of 7.6% of
earnings, less the amount determined annually by the Board
to cover the cost of offering the defined disability
benefits available to other participants under this
Article if the Tier 3 plan offers such benefits.
(4) The Tier 3 plan shall require one year of
participation in the Tier 3 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 Tier 3 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 Tier 3 plan account by an amount
determined by the System to cover the cost of offering such
benefits.
(6) The Tier 3 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 Tier 3 plan shall provide a variety of options
for payouts to participants in the Tier 3 plan who are no
longer active in the System and their survivors.
(8) To the extent authorized under federal law and as

HB4057 - 169 - LRB100 12972 RPS 27085 b
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,
from the Tier 3 plan into other qualified retirement plans.
(9) The System shall reduce the employee contributions
credited to the member's Tier 3 plan account by an amount
determined by the System to cover the cost of offering
these benefits and any applicable administrative fees.
(b) Under the Tier 3 plan, an active Tier 1 or Tier 2
member of this System may elect, in writing, to cease accruing
benefits in the defined benefit plan and begin accruing
benefits for future service in the Tier 3 plan. An active Tier
1 or Tier 2 member 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 or Tier 2 member who elects to participate in the Tier 3
plan shall not receive interest accruals to his or her Rule 2
benefit on or after the date of his or her election. The
election to participate in the Tier 3 plan is voluntary and
irrevocable.
(1) Service credit under the Tier 3 plan may be used
for determining retirement eligibility under the defined
benefit plan.
(2) The System shall make a good faith effort to
contact all active Tier 1 and Tier 2 members who are
eligible to participate in the Tier 3 plan. The System

HB4057 - 170 - LRB100 12972 RPS 27085 b
shall mail information describing the option to join the
Tier 3 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.
(3) 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
benefits and 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 and
Tier 2 members who are eligible to participate in the Tier
3 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.
(b-5) A Tier 1 or Tier 2 member who elects to participate
in the Tier 3 plan may irrevocably elect to terminate all
participation in the defined benefit plan. Upon that election,
the System shall transfer to the member's individual account an

HB4057 - 171 - LRB100 12972 RPS 27085 b
amount equal to the amount of contribution refund that the
member would be eligible to receive if the member terminated
employment on that date and elected a refund of contributions,
including interest at the effective rate for the respective
years. The System shall make the transfer as a tax free
transfer in accordance with Internal Revenue Service
guidelines, for purposes of funding the amount credited to the
member's individual account.
(c) 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 Tier 3
plan in accordance with this amendatory Act of the 100th
General Assembly to provide information concerning the impact
of the Tier 3 plan set forth in this Section.
(d) Notwithstanding any other provision of this Section, no
person shall begin participating in the Tier 3 plan until it
has attained qualified plan status and received all necessary
approvals from the U.S. Internal Revenue Service.
(e) The System shall report on its progress under this
Section, including the available details of the Tier 3 plan and
the System's plans for informing eligible Tier 1 and Tier 2
members about the plan, to the Governor and the General
Assembly on or before January 15, 2018.

HB4057 - 172 - LRB100 12972 RPS 27085 b
(40 ILCS 5/16-106.40 new)
Sec. 16-106.40. Tier 1 member. "Tier 1 member": A member
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.
In the case of a Tier 1 member who elects to participate in
the Tier 3 plan under Section 16-205.5 of this Code, that Tier
1 member shall be deemed a Tier 1 member only with respect to
service performed or established before the effective date of
that election.
(40 ILCS 5/16-106.41 new)
Sec. 16-106.41. Tier 2 member. "Tier 2 member": A member of
the System who first becomes a member under this Article on or
after January 1, 2011 and who is not a Tier 1 member.
In the case of a Tier 2 member who elects to participate in
the Tier 3 plan under Section 16-205.5 of this Code, the Tier 2
member shall be deemed a Tier 2 member only with respect to
service performed or established before the effective date of
that election.
(40 ILCS 5/16-106.42 new)
Sec. 16-106.42. Tier 3 member. "Tier 3 member": A member of
the System who first becomes a member under this Article on or

HB4057 - 173 - LRB100 12972 RPS 27085 b
after July 1, 2018 or a Tier 1 or Tier 2 member who elects to
participate in the Tier 3 plan under Section 16-205.5 of this
Code, but only with respect to service performed on or after
the effective date of that election.
(40 ILCS 5/16-123) (from Ch. 108 1/2, par. 16-123)
Sec. 16-123. Membership of System.
(a) Except as provided in subsection (c), the The
membership of this System shall be composed of all teachers
employed after June 30, 1939 who become members as a condition
of employment on the date they become teachers. Membership
shall continue until the date a member becomes an annuitant,
dies, accepts a single-sum retirement benefit, accepts a
refund, or forfeits the rights to a refund.
(b) This Article does not apply to any person first
employed after June 30, 1979 as a public service employment
program participant under the Federal Comprehensive Employment
and Training Act and whose wages or fringe benefits are paid in
whole or in part by funds provided under such Act.
(c) Notwithstanding any other provision of this Article,
beginning on the effective date of this amendatory Act of the
100th General Assembly, a person is not required, as a
condition of employment or otherwise, to participate in this
System. An active teacher may terminate his or her membership
in this System (including active participation in the Tier 3
plan, if applicable) by notifying the System in writing. An

HB4057 - 174 - LRB100 12972 RPS 27085 b
active teacher terminating his or her membership in this System
under this subsection shall be entitled to a refund of his or
her contributions (other than contributions to the Tier 3 plan
under Section 16-205.5) minus the benefits received prior to
the termination of membership.
(Source: P.A. 87-11.)
(40 ILCS 5/16-127) (from Ch. 108 1/2, par. 16-127)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 16-127. Computation of creditable service.
(a) Each member shall receive regular credit for all
service as a teacher from the date membership begins, for which
satisfactory evidence is supplied and all contributions have
been paid.
(b) The following periods of service shall earn optional
credit and each member shall receive credit for all such
service for which satisfactory evidence is supplied and all
contributions have been paid as of the date specified:
(1) Prior service as a teacher.
(2) Service in a capacity essentially similar or
equivalent to that of a teacher, in the public common
schools in school districts in this State not included
within the provisions of this System, or of any other
State, territory, dependency or possession of the United
States, or in schools operated by or under the auspices of

HB4057 - 175 - LRB100 12972 RPS 27085 b
the United States, or under the auspices of any agency or
department of any other State, and service during any
period of professional speech correction or special
education experience for a public agency within this State
or any other State, territory, dependency or possession of
the United States, and service prior to February 1, 1951 as
a recreation worker for the Illinois Department of Public
Safety, for a period not exceeding the lesser of 2/5 of the
total creditable service of the member or 10 years. The
maximum service of 10 years which is allowable under this
paragraph shall be reduced by the service credit which is
validated by other retirement systems under paragraph (i)
of Section 15-113 and paragraph 1 of Section 17-133. Credit
granted under this paragraph may not be used in
determination of a retirement annuity or disability
benefits unless the member has at least 5 years of
creditable service earned subsequent to this employment
with one or more of the following systems: Teachers'
Retirement System of the State of Illinois, State
Universities Retirement System, and the Public School
Teachers' Pension and Retirement Fund of Chicago. Whenever
such service credit exceeds the maximum allowed for all
purposes of this Article, the first service rendered in
point of time shall be considered. The changes to this
subdivision (b)(2) made by Public Act 86-272 shall apply
not only to persons who on or after its effective date

HB4057 - 176 - LRB100 12972 RPS 27085 b
(August 23, 1989) are in service as a teacher under the
System, but also to persons whose status as such a teacher
terminated prior to such effective date, whether or not
such person is an annuitant on that date.
(3) Any periods immediately following teaching
service, under this System or under Article 17, (or
immediately following service prior to February 1, 1951 as
a recreation worker for the Illinois Department of Public
Safety) spent in active service with the military forces of
the United States; periods spent in educational programs
that prepare for return to teaching sponsored by the
federal government following such active military service;
if a teacher returns to teaching service within one
calendar year after discharge or after the completion of
the educational program, a further period, not exceeding
one calendar year, between time spent in military service
or in such educational programs and the return to
employment as a teacher under this System; and a period of
up to 2 years of active military service not immediately
following employment as a teacher.
The changes to this Section and Section 16-128 relating
to military service made by P.A. 87-794 shall apply not
only to persons who on or after its effective date are in
service as a teacher under the System, but also to persons
whose status as a teacher terminated prior to that date,
whether or not the person is an annuitant on that date. In

HB4057 - 177 - LRB100 12972 RPS 27085 b
the case of an annuitant who applies for credit allowable
under this Section for a period of military service that
did not immediately follow employment, and who has made the
required contributions for such credit, the annuity shall
be recalculated to include the additional service credit,
with the increase taking effect on the date the System
received written notification of the annuitant's intent to
purchase the credit, if payment of all the required
contributions is made within 60 days of such notice, or
else on the first annuity payment date following the date
of payment of the required contributions. In calculating
the automatic annual increase for an annuity that has been
recalculated under this Section, the increase attributable
to the additional service allowable under P.A. 87-794 shall
be included in the calculation of automatic annual
increases accruing after the effective date of the
recalculation.
Credit for military service shall be determined as
follows: if entry occurs during the months of July, August,
or September and the member was a teacher at the end of the
immediately preceding school term, credit shall be granted
from July 1 of the year in which he or she entered service;
if entry occurs during the school term and the teacher was
in teaching service at the beginning of the school term,
credit shall be granted from July 1 of such year. In all
other cases where credit for military service is allowed,

HB4057 - 178 - LRB100 12972 RPS 27085 b
credit shall be granted from the date of entry into the
service.
The total period of military service for which credit
is granted shall not exceed 5 years for any member unless
the service: (A) is validated before July 1, 1964, and (B)
does not extend beyond July 1, 1963. Credit for military
service shall be granted under this Section only if not
more than 5 years of the military service for which credit
is granted under this Section is used by the member to
qualify for a military retirement allotment from any branch
of the armed forces of the United States. The changes to
this subdivision (b)(3) made by Public Act 86-272 shall
apply not only to persons who on or after its effective
date (August 23, 1989) are in service as a teacher under
the System, but also to persons whose status as such a
teacher terminated prior to such effective date, whether or
not such person is an annuitant on that date.
(4) Any periods served as a member of the General
Assembly.
(5)(i) Any periods for which a teacher, as defined in
Section 16-106, is granted a leave of absence, provided he
or she returns to teaching service creditable under this
System or the State Universities Retirement System
following the leave; (ii) periods during which a teacher is
involuntarily laid off from teaching, provided he or she
returns to teaching following the lay-off; (iii) periods

HB4057 - 179 - LRB100 12972 RPS 27085 b
prior to July 1, 1983 during which a teacher ceased covered
employment due to pregnancy, provided that the teacher
returned to teaching service creditable under this System
or the State Universities Retirement System following the
pregnancy and submits evidence satisfactory to the Board
documenting that the employment ceased due to pregnancy;
and (iv) periods prior to July 1, 1983 during which a
teacher ceased covered employment for the purpose of
adopting an infant under 3 years of age or caring for a
newly adopted infant under 3 years of age, provided that
the teacher returned to teaching service creditable under
this System or the State Universities Retirement System
following the adoption and submits evidence satisfactory
to the Board documenting that the employment ceased for the
purpose of adopting an infant under 3 years of age or
caring for a newly adopted infant under 3 years of age.
However, total credit under this paragraph (5) may not
exceed 3 years.
Any qualified member or annuitant may apply for credit
under item (iii) or (iv) of this paragraph (5) without
regard to whether service was terminated before the
effective date of this amendatory Act of 1997. In the case
of an annuitant who establishes credit under item (iii) or
(iv), the annuity shall be recalculated to include the
additional service credit. The increase in annuity shall
take effect on the date the System receives written

HB4057 - 180 - LRB100 12972 RPS 27085 b
notification of the annuitant's intent to purchase the
credit, if the required evidence is submitted and the
required contribution paid within 60 days of that
notification, otherwise on the first annuity payment date
following the System's receipt of the required evidence and
contribution. The increase in an annuity recalculated
under this provision shall be included in the calculation
of automatic annual increases in the annuity accruing after
the effective date of the recalculation.
Optional credit may be purchased under this subsection
(b)(5) for periods during which a teacher has been granted
a leave of absence pursuant to Section 24-13 of the School
Code. A teacher whose service under this Article terminated
prior to the effective date of P.A. 86-1488 shall be
eligible to purchase such optional credit. If a teacher who
purchases this optional credit is already receiving a
retirement annuity under this Article, the annuity shall be
recalculated as if the annuitant had applied for the leave
of absence credit at the time of retirement. The difference
between the entitled annuity and the actual annuity shall
be credited to the purchase of the optional credit. The
remainder of the purchase cost of the optional credit shall
be paid on or before April 1, 1992.
The change in this paragraph made by Public Act 86-273
shall be applicable to teachers who retire after June 1,
1989, as well as to teachers who are in service on that

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date.
(6) For a person who first becomes a member before the
effective date of this amendatory Act of the 100th General
Assembly, any Any days of unused and uncompensated
accumulated sick leave earned by a teacher. The service
credit granted under this paragraph shall be the ratio of
the number of unused and uncompensated accumulated sick
leave days to 170 days, subject to a maximum of 2 years of
service credit. Prior to the member's retirement, each
former employer shall certify to the System the number of
unused and uncompensated accumulated sick leave days
credited to the member at the time of termination of
service. The period of unused sick leave shall not be
considered in determining the effective date of
retirement. A member is not required to make contributions
in order to obtain service credit for unused sick leave.
Credit for sick leave shall, at retirement, be granted
by the System for any retiring regional or assistant
regional superintendent of schools who first becomes a
member before the effective date of this amendatory Act of
the 100th General Assembly at the rate of 6 days per year
of creditable service or portion thereof established while
serving as such superintendent or assistant
superintendent.
(7) Periods prior to February 1, 1987 served as an
employee of the Illinois Mathematics and Science Academy

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for which credit has not been terminated under Section
15-113.9 of this Code.
(8) Service as a substitute teacher for work performed
prior to July 1, 1990.
(9) Service as a part-time teacher for work performed
prior to July 1, 1990.
(10) Up to 2 years of employment with Southern Illinois
University - Carbondale from September 1, 1959 to August
31, 1961, or with Governors State University from September
1, 1972 to August 31, 1974, for which the teacher has no
credit under Article 15. To receive credit under this item
(10), a teacher must apply in writing to the Board and pay
the required contributions before May 1, 1993 and have at
least 12 years of service credit under this Article.
(b-1) A member may establish optional credit for up to 2
years of service as a teacher or administrator employed by a
private school recognized by the Illinois State Board of
Education, provided that the teacher (i) was certified under
the law governing the certification of teachers at the time the
service was rendered, (ii) applies in writing on or after
August 1, 2009 and on or before August 1, 2012, (iii) supplies
satisfactory evidence of the employment, (iv) completes at
least 10 years of contributing service as a teacher as defined
in Section 16-106, and (v) pays the contribution required in
subsection (d-5) of Section 16-128. The member may apply for
credit under this subsection and pay the required contribution

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before completing the 10 years of contributing service required
under item (iv), but the credit may not be used until the item
(iv) contributing service requirement has been met.
(c) The service credits specified in this Section shall be
granted only if: (1) such service credits are not used for
credit in any other statutory tax-supported public employee
retirement system other than the federal Social Security
program; and (2) the member makes the required contributions as
specified in Section 16-128. Except as provided in subsection
(b-1) of this Section, the service credit shall be effective as
of the date the required contributions are completed.
Any service credits granted under this Section shall
terminate upon cessation of membership for any cause.
Credit may not be granted under this Section covering any
period for which an age retirement or disability retirement
allowance has been paid.
(Source: P.A. 96-546, eff. 8-17-09.)
(40 ILCS 5/16-152.1) (from Ch. 108 1/2, par. 16-152.1)
Sec. 16-152.1. Pickup of contributions.
(a) Each employer may pick up the member contributions
required under Section 16-152 for all salary earned after
December 31, 1981. If an employer decides not to pick up the
member contributions, the amount that would have been picked up
shall continue to be deducted from salary. If contributions are
picked up, they shall be treated as employer contributions in

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determining tax treatment under the United States Internal
Revenue Code. The employer shall pay these member contributions
from the same source of funds which is used in paying salary to
the member. The employer may pick up these contributions by a
reduction in the cash salary of the member or by an offset
against a future salary increase or by a combination of a
reduction in salary and offset against a future salary
increase. If member contributions are picked up, they shall be
treated for all purposes of this Article 16 in the same manner
as member contributions made prior to the date the pick up
began.
(b) The State Board of Education shall pick up the
contributions of regional superintendents required under
Section 16-152 for all salary earned for the 1982 calendar year
and thereafter.
(c) Effective July 1, 1983, each employer shall pick up the
member contributions required under Section 16-152 for all
salary earned after such date. Contributions so picked up shall
be treated as employer contributions in determining tax
treatment under the United States Internal Revenue Code. The
employer shall pay these member contributions from the same
source of funds which is used in paying salary to the member.
The employer may pick up these contributions by a reduction in
the cash salary of the member or by an offset against a future
salary increase or by a combination of a reduction in salary
and offset against a future salary increase. Member

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contributions so picked up shall be treated for all purposes of
this Article 16 in the same manner as member contributions made
prior to the date the pick up began.
(d) Subject to the requirements of federal law and the
rules of the board, beginning July 1, 1998 a member who is
employed on a full-time basis may elect to have the employer
pick up optional contributions that the member has elected to
pay to the System, and the contributions so picked up shall be
treated as employer contributions for the purposes of
determining federal tax treatment. The election to have
optional contributions picked up is irrevocable. At the time of
making the election, the member shall execute a binding,
irrevocable payroll deduction authorization. Upon receiving
notice of the election, the employer shall pick up the
contributions by a reduction in the cash salary of the member
and shall pay the contributions from the same source of funds
that is used to pay earnings to the member.
(e) Beginning on the effective date of this amendatory Act
of the 100th General Assembly, no employer shall pay employee
contributions on behalf of an employee, except for the sole
purpose of allowing the employee to make pre-tax contributions
as provided in this Section. The provisions of this subsection
(e) do not apply to an employment contract or collective
bargaining agreement that is in effect on the effective date of
this amendatory Act of the 100th General Assembly. However, any
such contract or agreement that is subsequently modified,

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amended, or renewed shall be subject to the provisions of this
subsection (e).
(Source: P.A. 90-448, eff. 8-16-97.)
(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,

HB4057 - 188 - LRB100 12972 RPS 27085 b
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.
(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

HB4057 - 189 - LRB100 12972 RPS 27085 b
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.
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 2012 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 payroll over the years remaining to and
including fiscal year 2045 and shall be determined under the
projected unit credit actuarial cost method.

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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
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

HB4057 - 191 - LRB100 12972 RPS 27085 b
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
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.

HB4057 - 192 - LRB100 12972 RPS 27085 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 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

HB4057 - 193 - LRB100 12972 RPS 27085 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.
(c) Payment of the required State contributions and of all
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

HB4057 - 194 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 195 - LRB100 12972 RPS 27085 b
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
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,

HB4057 - 196 - LRB100 12972 RPS 27085 b
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
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) If the amount of a teacher's salary for any school year
beginning on or after June 1, 2005 and before July 1, 2018 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

HB4057 - 197 - LRB100 12972 RPS 27085 b
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 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

HB4057 - 198 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 199 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 200 - LRB100 12972 RPS 27085 b
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
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.

HB4057 - 201 - LRB100 12972 RPS 27085 b
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
(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.

HB4057 - 202 - LRB100 12972 RPS 27085 b
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
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

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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:
"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

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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 5/16-203)
(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

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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.
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 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

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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; 95-910, eff. 8-26-08.)
(40 ILCS 5/16-205.5 new)
Sec. 16-205.5. Tier 3 plan.
(a) By July 1, 2018, the System shall prepare and implement

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a Tier 3 plan. The Tier 3 plan developed under this Section
shall be a plan that aggregates State 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. In developing, preparing, and implementing
the Tier 3 plan and adopting rules concerning the Tier 3 plan,
the System shall utilize the framework of the self-managed plan
offered under Article 15 and shall endeavor to adapt the
benefits and structure of the self-managed plan. The System
shall consult with the State Universities Retirement System in
developing the Tier 3 plan.
As used in this Section, "defined benefit plan" means the
retirement plan available under this Article to Tier 1 or Tier
2 members who have not made the election authorized under this
Section.
(1) All persons who begin to participate in this System
on or after July 1, 2018 shall participate in the Tier 3
plan rather than the defined benefit plan.
(2) A participant in the Tier 3 plan shall pay employee
contributions at a rate of 8% of salary.
(3) State contributions shall be paid into the accounts
of all participants in the Tier 3 plan at a rate of 7.6% of
salary, less the amount determined annually by the Board to
cover the cost of offering the defined disability benefits
available to other participants under this Article if the

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Tier 3 plan offers such benefits.
(4) The Tier 3 plan shall require one year of
participation in the Tier 3 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 Tier 3 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 Tier 3 plan account by an amount
determined by the System to cover the cost of offering such
benefits.
(6) The Tier 3 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 Tier 3 plan shall provide a variety of options
for payouts to participants in the Tier 3 plan who are no
longer active in the System 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,
from the Tier 3 plan into other qualified retirement plans.

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(9) The System shall reduce the employee contributions
credited to the member's Tier 3 plan account by an amount
determined by the System to cover the cost of offering
these benefits and any applicable administrative fees.
(b) Under the Tier 3 plan, an active Tier 1 or Tier 2
member of this System may elect, in writing, to cease accruing
benefits in the defined benefit plan and begin accruing
benefits for future service in the Tier 3 plan. An active Tier
1 or Tier 2 member 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 or Tier 2 member making the irrevocable election
provided under this subsection shall not receive interest
accruals to his or her benefit under paragraph (A) of
subsection (a) of Section 16-133 of this Code on or after the
date of his or her election. The election to participate in the
Tier 3 plan is voluntary and irrevocable.
(1) Service credit under the Tier 3 plan may be used
for determining retirement eligibility under the defined
benefit plan.
(2) The System shall make a good faith effort to
contact all active Tier 1 and Tier 2 members who are
eligible to participate in the Tier 3 plan. The System
shall mail information describing the option to join the
Tier 3 plan to each of these employees to his or her last
known address on file with the System. If the employee is

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not responsive to other means of contact, it is sufficient
for the System to publish the details of the option on its
website.
(3) 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
benefits and 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 and
Tier 2 members who are eligible to participate in the Tier
3 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.
(b-5) A Tier 1 or Tier 2 member who elects to participate
in the Tier 3 plan may irrevocably elect to terminate all
participation in the defined benefit plan. Upon that election,
the System shall transfer to the member's individual account an
amount equal to the amount of contribution refund that the
member would be eligible to receive if the member terminated
employment on that date and elected a refund of contributions,

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including regular interest for the respective years. The System
shall make the transfer as a tax free transfer in accordance
with Internal Revenue Service guidelines, for purposes of
funding the amount credited to the member's individual account.
(c) 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 Tier 3
plan in accordance with this amendatory Act of the 100th
General Assembly to provide information concerning the impact
of the Tier 3 plan set forth in this Section.
(d) Notwithstanding any other provision of this Section, no
person shall begin participating in the Tier 3 plan until it
has attained qualified plan status and received all necessary
approvals from the U.S. Internal Revenue Service.
(e) The System shall report on its progress under this
Section, including the available details of the Tier 3 plan and
the System's plans for informing eligible Tier 1 and Tier 2
members about the plan, to the Governor and the General
Assembly on or before January 15, 2018.
(40 ILCS 5/18-110.1 new)
Sec. 18-110.1. Tier 1 participant. "Tier 1 participant": A
participant who first became a participant of this System
before January 1, 2011.

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In the case of a Tier 1 participant who elects to
participate in the Tier 3 plan under Section 18-121.5 of this
Code, that Tier 1 participant shall be deemed a Tier 1
participant only with respect to service performed or
established before the effective date of that election.
(40 ILCS 5/18-110.2 new)
Sec. 18-110.2. Tier 2 participant. "Tier 2 participant": A
participant who first becomes a participant of this System on
or after January 1, 2011.
In the case of a Tier 2 participant who elects to
participate in the Tier 3 plan under Section 18-121.5 of this
Code, that Tier 2 participant shall be deemed a Tier 2
participant only with respect to service performed or
established before the effective date of that election.
(40 ILCS 5/18-110.3 new)
Sec. 18-110.3. Tier 3 participant. "Tier 3 participant": A
participant who first becomes a participant of this System on
or after July 1, 2018 or a Tier 1 or Tier 2 participant who
elects to participate in the Tier 3 plan under Section 18-121.5
of this Code, but only with respect to service performed on or
after the effective date of that election.
(40 ILCS 5/18-120) (from Ch. 108 1/2, par. 18-120)
Sec. 18-120. Employee participation.

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(a) Except as provided in subsection (b), an An eligible
judge who is not a participant shall become a participant
beginning on the date he or she becomes an eligible judge,
unless the judge files with the board a written notice of
election not to participate within 30 days of the date of being
notified of the option.
A person electing not to participate shall thereafter be
ineligible to become a participant unless the election is
revoked as provided in Section 18-121.
(b) Notwithstanding any other provision of this Article, an
active participant may terminate his or her participation in
this System (including active participation in the Tier 3 plan,
if applicable) by notifying the System in writing. An active
participant terminating participation in this System under
this subsection shall be entitled to a refund of his or her
contributions (other than contributions to the Tier 3 plan
under Section 18-121.5) minus the benefits received prior to
the termination of participation.
(Source: P.A. 83-1440.)
(40 ILCS 5/18-121.5 new)
Sec. 18-121.5. Tier 3 plan.
(a) By July 1, 2018, the System shall prepare and implement
a Tier 3 plan. The Tier 3 plan developed under this Section
shall be a plan that aggregates State and employee
contributions in individual participant accounts which, after

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meeting any other requirements, are used for payouts after
retirement in accordance with this Section and any other
applicable laws. In developing, preparing, and implementing
the Tier 3 plan and adopting rules concerning the Tier 3 plan,
the System shall utilize the framework of the self-managed plan
offered under Article 15 and shall endeavor to adapt the
benefits and structure of the self-managed plan. The System
shall consult with the State Universities Retirement System in
developing the Tier 3 plan.
As used in this Section, "defined benefit plan" means the
retirement plan available under this Article to Tier 1 or Tier
2 participants who have not made the election authorized under
this Section.
(1) All persons who begin to participate in this System
on or after July 1, 2018 shall participate in the Tier 3
plan rather than the defined benefit plan.
(2) A participant in the Tier 3 plan shall pay employee
contributions at a rate of 8% of salary.
(3) State contributions shall be paid into the accounts
of all participants in the Tier 3 plan at a rate of 7.6% of
salary, less the amount determined annually by the Board to
cover the cost of offering the defined disability benefits
available to other participants under this Article if the
Tier 3 plan offers such benefits.
(4) The Tier 3 plan shall require one year of
participation in the Tier 3 plan before vesting in State

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contributions. If the participant fails to vest in them,
the State contributions, and the earnings thereon, shall be
forfeited.
(5) The Tier 3 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 Tier 3 plan account by an
amount determined by the System to cover the cost of
offering such benefits.
(6) The Tier 3 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 Tier 3 plan shall provide a variety of options
for payouts to participants in the Tier 3 plan who are no
longer active in the System 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 participant's Tier 3 plan account by an
amount determined by the System to cover the cost of
offering these benefits and any applicable administrative
fees.

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(b) Under the Tier 3 plan, an active Tier 1 or Tier 2
participant of this System may elect, in writing, to cease
accruing benefits in the defined benefit plan and begin
accruing benefits for future service in the Tier 3 plan. The
election to participate in the Tier 3 plan is voluntary and
irrevocable.
(1) Service credit under the Tier 3 plan may be used
for determining retirement eligibility under the defined
benefit plan.
(2) The System shall make a good faith effort to
contact all active Tier 1 and Tier 2 participants who are
eligible to participate in the Tier 3 plan. The System
shall mail information describing the option to join the
Tier 3 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.
(3) 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
benefits and 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

HB4057 - 219 - LRB100 12972 RPS 27085 b
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 and
Tier 2 participants who are eligible to participate in the
Tier 3 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 private
counsel and financial advisors.
(b-5) A Tier 1 or Tier 2 participant who elects to
participate in the Tier 3 plan may irrevocably elect to
terminate all participation in the defined benefit plan. Upon
that election, the System shall transfer to the participant's
individual account an amount equal to the amount of
contribution refund that the participant would be eligible to
receive if the participant terminated employment on that date
and elected a refund of contributions, including interest at
the prescribed rate of interest for the respective years. The
System shall make the transfer as a tax free transfer in
accordance with Internal Revenue Service guidelines, for
purposes of funding the amount credited to the participant's
individual account.
(c) 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 Tier 3

HB4057 - 220 - LRB100 12972 RPS 27085 b
plan in accordance with this amendatory Act of the 100th
General Assembly to provide information concerning the impact
of the Tier 3 plan set forth in this Section.
(d) Notwithstanding any other provision of this Section, no
person shall begin participating in the Tier 3 plan until it
has attained qualified plan status and received all necessary
approvals from the U.S. Internal Revenue Service.
(e) The System shall report on its progress under this
Section, including the available details of the Tier 3 plan and
the System's plans for informing eligible Tier 1 and Tier 2
participants about the plan, to the Governor and the General
Assembly on or before January 15, 2018.
(f) The Illinois State Board of Investment shall be the
plan sponsor for the Tier 3 plan established under this
Section.
(40 ILCS 5/18-124) (from Ch. 108 1/2, par. 18-124)
Sec. 18-124. Retirement annuities - conditions for
eligibility.
(a) This subsection (a) applies to a Tier 1 participant who
first serves as a judge before the effective date of this
amendatory Act of the 96th General Assembly.
A participant whose employment as a judge is terminated,
regardless of age or cause is entitled to a retirement annuity
beginning on the date specified in a written application
subject to the following:

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(1) the date the annuity begins is subsequent to the
date of final termination of employment, or the date 30
days prior to the receipt of the application by the board
for annuities based on disability, or one year before the
receipt of the application by the board for annuities based
on attained age;
(2) the participant is at least age 55, or has become
permanently disabled and as a consequence is unable to
perform the duties of his or her office;
(3) the participant has at least 10 years of service
credit except that a participant terminating service after
June 30 1975, with at least 6 years of service credit,
shall be entitled to a retirement annuity at age 62 or
over;
(4) the participant is not receiving or entitled to
receive, at the date of retirement, any salary from an
employer for service currently performed.
(b) This subsection (b) applies to a Tier 2 participant who
first serves as a judge on or after the effective date of this
amendatory Act of the 96th General Assembly.
A participant who has at least 8 years of creditable
service is entitled to a retirement annuity when he or she has
attained age 67.
A member who has attained age 62 and has at least 8 years
of service credit may elect to receive the lower retirement
annuity provided in subsection (d) of Section 18-125 of this

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Code.
(Source: P.A. 96-889, eff. 1-1-11.)
(40 ILCS 5/18-125) (from Ch. 108 1/2, par. 18-125)
Sec. 18-125. Retirement annuity amount.
(a) The annual retirement annuity for a participant who
terminated service as a judge prior to July 1, 1971 shall be
based on the law in effect at the time of termination of
service.
(b) Except as provided in subsection (b-5), effective July
1, 1971, the retirement annuity for any participant in service
on or after such date shall be 3 1/2% of final average salary,
as defined in this Section, for each of the first 10 years of
service, and 5% of such final average salary for each year of
service in on excess of 10.
For purposes of this Section, final average salary for a
Tier 1 participant who first serves as a judge before August
10, 2009 (the effective date of Public Act 96-207) shall be:
(1) the average salary for the last 4 years of credited
service as a judge for a participant who terminates service
before July 1, 1975.
(2) for a participant who terminates service after June
30, 1975 and before July 1, 1982, the salary on the last
day of employment as a judge.
(3) for any participant who terminates service after
June 30, 1982 and before January 1, 1990, the average

HB4057 - 223 - LRB100 12972 RPS 27085 b
salary for the final year of service as a judge.
(4) for a participant who terminates service on or
after January 1, 1990 but before July 14, 1995 (the
effective date of Public Act 89-136) this amendatory Act of
1995, the salary on the last day of employment as a judge.
(5) for a participant who terminates service on or
after July 14, 1995 (the effective date of Public Act
89-136) this amendatory Act of 1995, the salary on the last
day of employment as a judge, or the highest salary
received by the participant for employment as a judge in a
position held by the participant for at least 4 consecutive
years, whichever is greater.
However, in the case of a participant who elects to
discontinue contributions as provided in subdivision (a)(2) of
Section 18-133, the time of such election shall be considered
the last day of employment in the determination of final
average salary under this subsection.
For a Tier 1 participant who first serves as a judge on or
after August 10, 2009 (the effective date of Public Act 96-207)
and before January 1, 2011 (the effective date of Public Act
96-889), final average salary shall be the average monthly
salary obtained by dividing the total salary of the participant
during the period of: (1) the 48 consecutive months of service
within the last 120 months of service in which the total
compensation was the highest, or (2) the total period of
service, if less than 48 months, by the number of months of

HB4057 - 224 - LRB100 12972 RPS 27085 b
service in that period.
The maximum retirement annuity for any participant shall be
85% of final average salary.
(b-5) Notwithstanding any other provision of this Article,
for a Tier 2 participant who first serves as a judge on or
after January 1, 2011 (the effective date of Public Act
96-889), the annual retirement annuity is 3% of the
participant's final average salary for each year of service.
The maximum retirement annuity payable shall be 60% of the
participant's final average salary.
For a Tier 2 participant who first serves as a judge on or
after January 1, 2011 (the effective date of Public Act
96-889), final average salary shall be the average monthly
salary obtained by dividing the total salary of the judge
during the 96 consecutive months of service within the last 120
months of service in which the total salary was the highest by
the number of months of service in that period; however,
beginning January 1, 2011, the annual salary may not exceed
$106,800, except that that amount shall annually thereafter be
increased by the lesser of (i) 3% of that amount, including all
previous adjustments, or (ii) 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. "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

HB4057 - 225 - LRB100 12972 RPS 27085 b
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 Board by November 1st of each year.
(c) The retirement annuity for a participant who retires
prior to age 60 with less than 28 years of service in the
System shall be reduced 1/2 of 1% for each month that the
participant's age is under 60 years at the time the annuity
commences. However, for a participant who retires on or after
December 10, 1999 (the effective date of Public Act 91-653)
this amendatory Act of the 91st General Assembly, the
percentage reduction in retirement annuity imposed under this
subsection shall be reduced by 5/12 of 1% for every month of
service in this System in excess of 20 years, and therefore a
participant with at least 26 years of service in this System
may retire at age 55 without any reduction in annuity.
The reduction in retirement annuity imposed by this
subsection shall not apply in the case of retirement on account
of disability.
(d) Notwithstanding any other provision of this Article,
for a Tier 2 participant who first serves as a judge on or
after January 1, 2011 (the effective date of Public Act 96-889)
and who is retiring after attaining age 62, the retirement
annuity shall be reduced by 1/2 of 1% for each month that the
participant's age is under age 67 at the time the annuity

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commences.
(Source: P.A. 96-207, eff. 8-10-09; 96-889, eff. 1-1-11;
96-1000, eff. 7-2-10; 96-1490, eff. 1-1-11; revised 9-9-16.)
(40 ILCS 5/18-125.1) (from Ch. 108 1/2, par. 18-125.1)
Sec. 18-125.1. Automatic increase in retirement annuity. A
participant who retires from service after June 30, 1969,
shall, in January of the year next following the year in which
the first anniversary of retirement occurs, and in January of
each year thereafter, have the amount of his or her originally
granted retirement annuity increased as follows: for each year
up to and including 1971, 1 1/2%; for each year from 1972
through 1979 inclusive, 2%; and for 1980 and each year
thereafter, 3%.
Notwithstanding any other provision of this Article, a
retirement annuity for a Tier 2 participant who first serves as
a judge on or after January 1, 2011 (the effective date of
Public Act 96-889) shall be increased in January of the year
next following the year in which the first anniversary of
retirement occurs, but in no event prior to age 67, and in
January of each year thereafter, by an amount equal to 3% or
the annual percentage increase in the consumer price index-u as
determined by the Public Pension Division of the Department of
Insurance under subsection (b-5) of Section 18-125, whichever
is less, of the retirement annuity then being paid.
This Section is not applicable to a participant who retires

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before he or she has made contributions at the rate prescribed
in Section 18-133 for automatic increases for not less than the
equivalent of one full year, unless such a participant arranges
to pay the system the amount required to bring the total
contributions for the automatic increase to the equivalent of
one year's contribution based upon his or her last year's
salary.
This Section is applicable to all participants (other than
Tier 3 participants who do not have any service credit as a
Tier 1 or Tier 2 participant) in service after June 30, 1969
unless a participant has elected, prior to September 1, 1969,
in a written direction filed with the board not to be subject
to the provisions of this Section. Any participant in service
on or after July 1, 1992 shall have the option of electing
prior to April 1, 1993, in a written direction filed with the
board, to be covered by the provisions of the 1969 amendatory
Act. Such participant shall be required to make the aforesaid
additional contributions with compound interest at 4% per
annum.
Any participant who has become eligible to receive the
maximum rate of annuity and who resumes service as a judge
after receiving a retirement annuity under this Article shall
have the amount of his or her retirement annuity increased by
3% of the originally granted annuity amount for each year of
such resumed service, beginning in January of the year next
following the date of such resumed service, upon subsequent

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termination of such resumed service.
Beginning January 1, 1990, all automatic annual increases
payable under this Section shall be calculated as a percentage
of the total annuity payable at the time of the increase,
including previous increases granted under this Article.
(Source: P.A. 96-889, eff. 1-1-11; 96-1490, eff. 1-1-11.)
(40 ILCS 5/18-127) (from Ch. 108 1/2, par. 18-127)
Sec. 18-127. Retirement annuity - suspension on
reemployment.
(a) A participant receiving a retirement annuity who is
regularly employed for compensation by an employer other than a
county, in any capacity, shall have his or her retirement
annuity payments suspended during such employment. Upon
termination of such employment, retirement annuity payments at
the previous rate shall be resumed.
If such a participant resumes service as a judge, he or she
shall receive credit for any additional service. Upon
subsequent retirement, his or her retirement annuity shall be
the amount previously granted, plus the amount earned by the
additional judicial service under the provisions in effect
during the period of such additional service. However, if the
participant was receiving the maximum rate of annuity at the
time of re-employment, he or she may elect, in a written
direction filed with the board, not to receive any additional
service credit during the period of re-employment. In such

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case, contributions shall not be required during the period of
re-employment. Any such election shall be irrevocable.
(b) Beginning January 1, 1991, any participant receiving a
retirement annuity who accepts temporary employment from an
employer other than a county for a period not exceeding 75
working days in any calendar year shall not be deemed to be
regularly employed for compensation or to have resumed service
as a judge for the purposes of this Article. A day shall be
considered a working day if the annuitant performs on it any of
his duties under the temporary employment agreement.
(c) Except as provided in subsection (a), beginning January
1, 1993, retirement annuities shall not be subject to
suspension upon resumption of employment for an employer, and
any retirement annuity that is then so suspended shall be
reinstated on that date.
(d) The changes made in this Section by this amendatory Act
of 1993 shall apply to judges no longer in service on its
effective date, as well as to judges serving on or after that
date.
(e) A participant receiving a retirement annuity under this
Article who serves as a part-time employee in any of the
following positions: Legislative Inspector General, Special
Legislative Inspector General, employee of the Office of the
Legislative Inspector General, Executive Director of the
Legislative Ethics Commission, or staff of the Legislative
Ethics Commission, but has not elected to participate in the

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Article 14 System with respect to that service, shall not be
deemed to be regularly employed for compensation by an employer
other than a county, nor to have resumed service as a judge, on
the basis of that service, and the retirement annuity payments
and other benefits of that person under this Code shall not be
suspended, diminished, or otherwise impaired solely as a
consequence of that service. This subsection (e) applies
without regard to whether the person is in service as a judge
under this Article on or after the effective date of this
amendatory Act of the 93rd General Assembly. In this
subsection, a "part-time employee" is a person who is not
required to work at least 35 hours per week.
(f) A participant receiving a retirement annuity under this
Article who has made an election under Section 1-123 and who is
serving either as legal counsel in the Office of the Governor
or as Chief Deputy Attorney General shall not be deemed to be
regularly employed for compensation by an employer other than a
county, nor to have resumed service as a judge, on the basis of
that service, and the retirement annuity payments and other
benefits of that person under this Code shall not be suspended,
diminished, or otherwise impaired solely as a consequence of
that service. This subsection (f) applies without regard to
whether the person is in service as a judge under this Article
on or after the effective date of this amendatory Act of the
93rd General Assembly.
(g) Notwithstanding any other provision of this Article, if

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a Tier 2 participant person who first becomes a participant
under this System on or after January 1, 2011 (the effective
date of this amendatory Act of the 96th General Assembly) is
receiving a retirement annuity under this Article and becomes a
member or participant under this Article or any other Article
of this Code and is employed on a full-time basis, then the
person's retirement annuity under this System shall be
suspended during that employment. Upon termination of that
employment, the person's retirement annuity shall resume and,
if appropriate, be recalculated under the applicable
provisions of this Article.
(Source: P.A. 96-889, eff. 1-1-11; 96-1490, eff. 1-1-11.)
(40 ILCS 5/18-128.01) (from Ch. 108 1/2, par. 18-128.01)
Sec. 18-128.01. Amount of survivor's annuity.
(a) Upon the death of an annuitant, his or her surviving
spouse shall be entitled to a survivor's annuity of 66 2/3% of
the annuity the annuitant was receiving immediately prior to
his or her death, inclusive of annual increases in the
retirement annuity to the date of death.
(b) Upon the death of an active participant, his or her
surviving spouse shall receive a survivor's annuity of 66 2/3%
of the annuity earned by the participant as of the date of his
or her death, determined without regard to whether the
participant had attained age 60 as of that time, or 7 1/2% of
the last salary of the decedent, whichever is greater.

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(c) Upon the death of a participant who had terminated
service with at least 10 years of service, his or her surviving
spouse shall be entitled to a survivor's annuity of 66 2/3% of
the annuity earned by the deceased participant at the date of
death.
(d) Upon the death of an annuitant, active participant, or
participant who had terminated service with at least 10 years
of service, each surviving child under the age of 18 or
disabled as defined in Section 18-128 shall be entitled to a
child's annuity in an amount equal to 5% of the decedent's
final salary, not to exceed in total for all such children the
greater of 20% of the decedent's last salary or 66 2/3% of the
annuity received or earned by the decedent as provided under
subsections (a) and (b) of this Section. This child's annuity
shall be paid whether or not a survivor's annuity was elected
under Section 18-123.
(e) The changes made in the survivor's annuity provisions
by Public Act 82-306 shall apply to the survivors of a deceased
participant or annuitant whose death occurs on or after August
21, 1981.
(f) Beginning January 1, 1990, every survivor'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 annuity, or (2) in other cases, on
each January 1 occurring on or after the first anniversary of
the commencement of the annuity, by an amount equal to 3% of

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the current amount of the annuity, including any previous
increases under this Article. Such increases shall apply
without regard to whether the deceased member was in service on
or after the effective date of this amendatory Act of 1991, but
shall not accrue for any period prior to January 1, 1990.
(g) Notwithstanding any other provision of this Article,
the initial survivor's annuity for a survivor of a Tier 2
participant who first serves as a judge after January 1, 2011
(the effective date of Public Act 96-889) shall be in the
amount of 66 2/3% of the annuity received or earned by the
decedent, and shall be increased (1) on each January 1
occurring on or after the commencement of the annuity if the
deceased participant died while receiving a retirement
annuity, or (2) in other cases, on each January 1 occurring on
or after the first anniversary of the commencement of the
annuity, but in no event prior to age 67, by an amount equal to
3% or the annual unadjusted percentage increase in the consumer
price index-u as determined by the Public Pension Division of
the Department of Insurance under subsection (b-5) of Section
18-125, whichever is less, of the survivor's annuity then being
paid.
(Source: P.A. 96-889, eff. 1-1-11; 96-1490, eff. 1-1-11.)
(40 ILCS 5/18-133) (from Ch. 108 1/2, par. 18-133)
Sec. 18-133. Financing; employee contributions.
(a) Effective July 1, 1967, each participant is required to

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contribute 7 1/2% of each payment of salary toward the
retirement annuity. Such contributions shall continue during
the entire time the participant is in service, with the
following exceptions:
(1) Contributions for the retirement annuity are not
required on salary received after 18 years of service by
persons who were participants before January 2, 1954.
(2) A participant who continues to serve as a judge
after becoming eligible to receive the maximum rate of
annuity may elect, through a written direction filed with
the Board, to discontinue contributing to the System. Any
such option elected by a judge shall be irrevocable unless
prior to January 1, 2000, and while continuing to serve as
judge, the judge (A) files with the Board a letter
cancelling the direction to discontinue contributing to
the System and requesting that such contributing resume,
and (B) pays into the System an amount equal to the total
of the discontinued contributions plus interest thereon at
5% per annum. Service credits earned in any other
"participating system" as defined in Article 20 of this
Code shall be considered for purposes of determining a
judge's eligibility to discontinue contributions under
this subdivision (a)(2).
(3) A participant who (i) has attained age 60, (ii)
continues to serve as a judge after becoming eligible to
receive the maximum rate of annuity, and (iii) has not

HB4057 - 235 - LRB100 12972 RPS 27085 b
elected to discontinue contributing to the System under
subdivision (a)(2) of this Section (or has revoked any such
election) may elect, through a written direction filed with
the Board, to make contributions to the System based only
on the amount of the increases in salary received by the
judge on or after the date of the election, rather than the
total salary received. If a judge who is making
contributions to the System on the effective date of this
amendatory Act of the 91st General Assembly makes an
election to limit contributions under this subdivision
(a)(3) within 90 days after that effective date, the
election shall be deemed to become effective on that
effective date and the judge shall be entitled to receive a
refund of any excess contributions paid to the System
during that 90-day period; any other election under this
subdivision (a)(3) becomes effective on the first of the
month following the date of the election. An election to
limit contributions under this subdivision (a)(3) is
irrevocable. Service credits earned in any other
participating system as defined in Article 20 of this Code
shall be considered for purposes of determining a judge's
eligibility to make an election under this subdivision
(a)(3).
(b) Beginning July 1, 1969, each participant is required to
contribute 1% of each payment of salary towards the automatic
increase in annuity provided in Section 18-125.1. However, such

HB4057 - 236 - LRB100 12972 RPS 27085 b
contributions need not be made by any participant who has
elected prior to September 15, 1969, not to be subject to the
automatic increase in annuity provisions.
(c) Effective July 13, 1953, each married participant
subject to the survivor's annuity provisions is required to
contribute 2 1/2% of each payment of salary, whether or not he
or she is required to make any other contributions under this
Section. Such contributions shall be made concurrently with the
contributions made for annuity purposes.
(d) Notwithstanding any other provision of this Article,
the required contributions for a Tier 2 participant who first
becomes a participant on or after January 1, 2011 shall not
exceed the contributions that would be due under this Article
if that participant's highest salary for annuity purposes were
$106,800, plus any increase in that amount under Section
18-125.
(Source: P.A. 96-1490, eff. 1-1-11.)
(40 ILCS 5/18-161.5 new)
Sec. 18-161.5. 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;

HB4057 - 237 - LRB100 12972 RPS 27085 b
(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
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

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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
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.

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(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
qualified plan under the Internal Revenue Code of 1986.
(40 ILCS 5/18-169)
Sec. 18-169. Application and expiration of new benefit
increases.

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(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 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 Financial and Professional Regulation. A new
benefit increase created by a Public Act that does not include

HB4057 - 241 - LRB100 12972 RPS 27085 b
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.)

HB4057 - 242 - LRB100 12972 RPS 27085 b
(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 depends solely
on the value of the participant's vested account balances and
is not subject to any proportional adjustment under this
Section.
(a-5) For persons who participate in a Tier 3 plan
established under Article 2, 14, 15, 16, or 18 of this Code to
whom the provisions of this Article apply, the pension credits
established under the Tier 3 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.

HB4057 - 243 - LRB100 12972 RPS 27085 b
(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 Tier 3 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.)
(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

HB4057 - 244 - LRB100 12972 RPS 27085 b
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 Tier 3 plan established
under Article 2, 14, 15, 16, or 18 of this Code to whom the
provisions of this Article apply, the pension credits
established under the Tier 3 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 Tier 3 plan, which

HB4057 - 245 - LRB100 12972 RPS 27085 b
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
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

HB4057 - 246 - LRB100 12972 RPS 27085 b
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 Tier 3 plan
established under Article 2, 14, 15, 16, or 18 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 defined benefit retirement annuity, any benefit
payable under the Tier 3 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

HB4057 - 247 - LRB100 12972 RPS 27085 b
payable under the Tier 3 plan shall not be considered.
(iii) Benefits payable under a Tier 3 plan established
under Article 2, 14, 15, 16, or 18 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
any distributions payable under the self-managed plan
established under Section 15-158.2 of this Code or under a Tier
3 plan established under Article 2, 14, 15, 16, or 18 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

HB4057 - 248 - LRB100 12972 RPS 27085 b
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 5/16-106.4 rep.)
(40 ILCS 5/16-205 rep.)
(40 ILCS 5/16-206 rep.)
Section 25. The Illinois Pension Code is amended by
repealing Sections 2-165, 2-166, 14-155, 14-156, 15-200,
15-201, 16-106.4, 16-205, and 16-206.
Section 30. 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

HB4057 - 249 - LRB100 12972 RPS 27085 b
constitute a continuing appropriation of all amounts necessary
for those purposes.
Section 35. The Illinois Educational Labor Relations Act is
amended by changing Sections 4 and 17 and by adding Section
10.6 as follows:
(115 ILCS 5/4) (from Ch. 48, par. 1704)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 4. Employer rights. Employers shall not be required to
bargain over matters of inherent managerial policy, which shall
include such areas of discretion or policy as the functions of
the employer, standards of services, its overall budget, the
organizational structure and selection of new employees and
direction of employees. Employers, however, shall be required
to bargain collectively with regard to policy matters directly
affecting wages, hours and terms and conditions of employment
as well as the impact thereon upon request by employee
representatives, except as provided in Section 10.6. To
preserve the rights of employers and exclusive representatives
which have established collective bargaining relationships or
negotiated collective bargaining agreements prior to the
effective date of this Act, employers shall be required to
bargain collectively with regard to any matter concerning
wages, hours or conditions of employment about which they have

HB4057 - 250 - LRB100 12972 RPS 27085 b
bargained for and agreed to in a collective bargaining
agreement prior to the effective date of this Act, except as
provided in Section 10.6.
(Source: P.A. 83-1014.)
(115 ILCS 5/10.6 new)
Sec. 10.6. Bargaining regarding pension contributions on
behalf of employees; prohibited.
(a) Notwithstanding any other provision of this Act,
beginning on the effective date of this amendatory Act of the
100th General Assembly, employers shall not bargain over
matters prohibited by subsection (e) of Section 16-152.1 of the
Illinois Pension Code, which concerns employers paying pension
contributions on behalf of employees.
(b) In case of any conflict between this Section and any
other provisions of this Act or any other law, the provisions
of this Section shall control.
(115 ILCS 5/17) (from Ch. 48, par. 1717)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 17. Effect on other laws. Except as provided in
Section 10.6, in In case of any conflict between the provisions
of this Act and any other law, executive order or
administrative regulation, the provisions of this Act shall
prevail and control. Nothing in this Act shall be construed to

HB4057 - 251 - LRB100 12972 RPS 27085 b
replace or diminish the rights of employees established by
Section 36d of "An Act to create the State Universities Civil
Service System", approved May 11, 1905, as amended or modified.
(Source: P.A. 83-1014.)
Section 90. 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 99. Effective date. This Act takes effect upon
becoming law.
HB4057 - 252 - LRB100 12972 RPS 27085 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 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 5/2-101 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 5/2-117 from Ch. 108 1/2, par. 2-117
40 ILCS 5/2-154.5 new
40 ILCS 5/2-162
40 ILCS 5/2-165.5 new
40 ILCS 5/7-114 from Ch. 108 1/2, par. 7-114
40 ILCS 5/7-116 from Ch. 108 1/2, par. 7-116
40 ILCS 5/7-139 from Ch. 108 1/2, par. 7-139
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40 ILCS 5/14-103.05 from Ch. 108 1/2, par. 14-103.05
40 ILCS 5/14-103.10 from Ch. 108 1/2, par. 14-103.10
40 ILCS 5/14-103.41 new
40 ILCS 5/14-103.42 new
40 ILCS 5/14-103.43 new
40 ILCS 5/14-104.3 from Ch. 108 1/2, par. 14-104.3
40 ILCS 5/14-106 from Ch. 108 1/2, par. 14-106
40 ILCS 5/14-147.5 new
40 ILCS 5/14-152.1
40 ILCS 5/14-155.5 new
40 ILCS 5/15-108.1
40 ILCS 5/15-108.2
40 ILCS 5/15-108.3 new
40 ILCS 5/15-112 from Ch. 108 1/2, par. 15-112
40 ILCS 5/15-113.4 from Ch. 108 1/2, par. 15-113.4
40 ILCS 5/15-134 from Ch. 108 1/2, par. 15-134
40 ILCS 5/15-155 from Ch. 108 1/2, par. 15-155
40 ILCS 5/15-185.5 new
40 ILCS 5/15-198
40 ILCS 5/15-200.5 new
40 ILCS 5/16-106.40 new
40 ILCS 5/16-106.41 new
40 ILCS 5/16-106.42 new
40 ILCS 5/16-123 from Ch. 108 1/2, par. 16-123
40 ILCS 5/16-127 from Ch. 108 1/2, par. 16-127
40 ILCS 5/16-152.1 from Ch. 108 1/2, par. 16-152.1
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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 5/16-205.5 new
40 ILCS 5/18-110.1 new
40 ILCS 5/18-110.2 new
40 ILCS 5/18-110.3 new
40 ILCS 5/18-120 from Ch. 108 1/2, par. 18-120
40 ILCS 5/18-121.5 new
40 ILCS 5/18-124 from Ch. 108 1/2, par. 18-124
40 ILCS 5/18-125 from Ch. 108 1/2, par. 18-125
40 ILCS 5/18-125.1 from Ch. 108 1/2, par. 18-125.1
40 ILCS 5/18-127 from Ch. 108 1/2, par. 18-127
40 ILCS 5/18-128.01 from Ch. 108 1/2, par. 18-128.01
40 ILCS 5/18-133 from Ch. 108 1/2, par. 18-133
40 ILCS 5/18-161.5 new
40 ILCS 5/18-169
40 ILCS 5/20-121 from Ch. 108 1/2, par. 20-121
40 ILCS 5/20-123 from Ch. 108 1/2, par. 20-123
40 ILCS 5/20-124 from Ch. 108 1/2, par. 20-124
40 ILCS 5/20-125 from Ch. 108 1/2, par. 20-125
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.
HB4057 - 255 - LRB100 12972 RPS 27085 b