Bill Text: IL HB4078 | 2019-2020 | 101st General Assembly | Introduced


Bill Title: Amends the Illinois Municipal Retirement Fund (IMRF) Article of the Illinois Pension Code. Provides that for fiscal years 2022 through 2040, a municipality is not required to contribute at a rate greater than the rate sufficient to bring the total actuarial assets of the Fund to 80% of the total actuarial liabilities of the Fund by the end of fiscal year 2040. Provides that for fiscal year 2041 and each fiscal year thereafter, a municipality is not required to contribute at a rate greater than the rate sufficient to the bring the total actuarial assets of the Fund to 80% of the total actuarial liabilities of the Fund by the end of that fiscal year. Excludes the payment of employee contributions by the municipality from the provisions. Amends the State Mandates Act to require implementation without reimbursement. Effective January 1, 2022.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2020-01-28 - Assigned to Executive Committee [HB4078 Detail]

Download: Illinois-2019-HB4078-Introduced.html


101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB4078

Introduced , by Rep. La Shawn K. Ford

SYNOPSIS AS INTRODUCED:
40 ILCS 5/7-172 from Ch. 108 1/2, par. 7-172
30 ILCS 805/8.44 new

Amends the Illinois Municipal Retirement Fund (IMRF) Article of the Illinois Pension Code. Provides that for fiscal years 2022 through 2040, a municipality is not required to contribute at a rate greater than the rate sufficient to bring the total actuarial assets of the Fund to 80% of the total actuarial liabilities of the Fund by the end of fiscal year 2040. Provides that for fiscal year 2041 and each fiscal year thereafter, a municipality is not required to contribute at a rate greater than the rate sufficient to the bring the total actuarial assets of the Fund to 80% of the total actuarial liabilities of the Fund by the end of that fiscal year. Excludes the payment of employee contributions by the municipality from the provisions. Amends the State Mandates Act to require implementation without reimbursement. Effective January 1, 2022.
LRB101 16489 RPS 65870 b
FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

A BILL FOR

HB4078LRB101 16489 RPS 65870 b
1 AN ACT concerning public employee benefits.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4 Section 5. The Illinois Pension Code is amended by changing
5Section 7-172 as follows:
6 (40 ILCS 5/7-172) (from Ch. 108 1/2, par. 7-172)
7 Sec. 7-172. Contributions by participating municipalities
8and participating instrumentalities.
9 (a) Each participating municipality and each participating
10instrumentality shall make payment to the fund as follows:
11 1. except as provided in subsection (d-5),
12 municipality contributions in an amount determined by
13 applying the municipality contribution rate to each
14 payment of earnings paid to each of its participating
15 employees;
16 2. an amount equal to the employee contributions
17 provided by paragraph (a) of Section 7-173, whether or not
18 the employee contributions are withheld as permitted by
19 that Section;
20 3. all accounts receivable, together with interest
21 charged thereon, as provided in Section 7-209, and any
22 amounts due under subsection (a-5) of Section 7-144;
23 4. if it has no participating employees with current

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1 earnings, an amount payable which, over a closed period of
2 20 years for participating municipalities and 10 years for
3 participating instrumentalities, will amortize, at the
4 effective rate for that year, any unfunded obligation. The
5 unfunded obligation shall be computed as provided in
6 paragraph 2 of subsection (b);
7 5. if it has fewer than 7 participating employees or a
8 negative balance in its municipality reserve, the greater
9 of (A) an amount payable that, over a period of 20 years,
10 will amortize at the effective rate for that year any
11 unfunded obligation, computed as provided in paragraph 2 of
12 subsection (b) or (B) the amount required by paragraph 1 of
13 this subsection (a).
14 (b) A separate municipality contribution rate shall be
15determined for each calendar year for all participating
16municipalities together with all instrumentalities thereof.
17The municipality contribution rate shall be determined for
18participating instrumentalities as if they were participating
19municipalities. The municipality contribution rate shall be
20the sum of the following percentages:
21 1. The percentage of earnings of all the participating
22 employees of all participating municipalities and
23 participating instrumentalities which, if paid over the
24 entire period of their service, will be sufficient when
25 combined with all employee contributions available for the
26 payment of benefits, to provide all annuities for

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1 participating employees, and the $3,000 death benefit
2 payable under Sections 7-158 and 7-164, such percentage to
3 be known as the normal cost rate.
4 2. The percentage of earnings of the participating
5 employees of each participating municipality and
6 participating instrumentalities necessary to adjust for
7 the difference between the present value of all benefits,
8 excluding temporary and total and permanent disability and
9 death benefits, to be provided for its participating
10 employees and the sum of its accumulated municipality
11 contributions and the accumulated employee contributions
12 and the present value of expected future employee and
13 municipality contributions pursuant to subparagraph 1 of
14 this paragraph (b). This adjustment shall be spread over a
15 period determined by the Board, not to exceed 30 years for
16 participating municipalities or 10 years for participating
17 instrumentalities.
18 3. The percentage of earnings of the participating
19 employees of all municipalities and participating
20 instrumentalities necessary to provide the present value
21 of all temporary and total and permanent disability
22 benefits granted during the most recent year for which
23 information is available.
24 4. The percentage of earnings of the participating
25 employees of all participating municipalities and
26 participating instrumentalities necessary to provide the

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1 present value of the net single sum death benefits expected
2 to become payable from the reserve established under
3 Section 7-206 during the year for which this rate is fixed.
4 5. The percentage of earnings necessary to meet any
5 deficiency arising in the Terminated Municipality Reserve.
6 (c) A separate municipality contribution rate shall be
7computed for each participating municipality or participating
8instrumentality for its sheriff's law enforcement employees.
9 A separate municipality contribution rate shall be
10computed for the sheriff's law enforcement employees of each
11forest preserve district that elects to have such employees.
12For the period from January 1, 1986 to December 31, 1986, such
13rate shall be the forest preserve district's regular rate plus
142%.
15 In the event that the Board determines that there is an
16actuarial deficiency in the account of any municipality with
17respect to a person who has elected to participate in the Fund
18under Section 3-109.1 of this Code, the Board may adjust the
19municipality's contribution rate so as to make up that
20deficiency over such reasonable period of time as the Board may
21determine.
22 (d) The Board may establish a separate municipality
23contribution rate for all employees who are program
24participants employed under the federal Comprehensive
25Employment Training Act by all of the participating
26municipalities and instrumentalities. The Board may also

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1provide that, in lieu of a separate municipality rate for these
2employees, a portion of the municipality contributions for such
3program participants shall be refunded or an extra charge
4assessed so that the amount of municipality contributions
5retained or received by the fund for all CETA program
6participants shall be an amount equal to that which would be
7provided by the separate municipality contribution rate for all
8such program participants. Refunds shall be made to prime
9sponsors of programs upon submission of a claim therefor and
10extra charges shall be assessed to participating
11municipalities and instrumentalities. In establishing the
12municipality contribution rate as provided in paragraph (b) of
13this Section, the use of a separate municipality contribution
14rate for program participants or the refund of a portion of the
15municipality contributions, as the case may be, may be
16considered.
17 (d-5) Notwithstanding any other provision of law, for
18fiscal years 2022 through 2040, a municipality is not required
19to contribute at a rate greater than the rate sufficient to
20bring the total actuarial assets of the Fund to 80% of the
21total actuarial liabilities of the Fund by the end of fiscal
22year 2040.
23 Notwithstanding any other provision of law, for fiscal year
242041 and each fiscal year thereafter, a municipality is not
25required to contribute at a rate greater than the rate
26sufficient to the bring the total actuarial assets of the Fund

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1to 80% of the total actuarial liabilities of the Fund by the
2end of that fiscal year.
3 This subsection does not apply to the payment of employee
4contributions by the municipality.
5 (e) Computations of municipality contribution rates for
6the following calendar year shall be made prior to the
7beginning of each year, from the information available at the
8time the computations are made, and on the assumption that the
9employees in each participating municipality or participating
10instrumentality at such time will continue in service until the
11end of such calendar year at their respective rates of earnings
12at such time.
13 (f) Any municipality which is the recipient of State
14allocations representing that municipality's contributions for
15retirement annuity purposes on behalf of its employees as
16provided in Section 12-21.16 of the Illinois Public Aid Code
17shall pay the allocations so received to the Board for such
18purpose. Estimates of State allocations to be received during
19any taxable year shall be considered in the determination of
20the municipality's tax rate for that year under Section 7-171.
21If a special tax is levied under Section 7-171, none of the
22proceeds may be used to reimburse the municipality for the
23amount of State allocations received and paid to the Board. Any
24multiple-county or consolidated health department which
25receives contributions from a county under Section 11.2 of "An
26Act in relation to establishment and maintenance of county and

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1multiple-county health departments", approved July 9, 1943, as
2amended, or distributions under Section 3 of the Department of
3Public Health Act, shall use these only for municipality
4contributions by the health department.
5 (g) Municipality contributions for the several purposes
6specified shall, for township treasurers and employees in the
7offices of the township treasurers who meet the qualifying
8conditions for coverage hereunder, be allocated among the
9several school districts and parts of school districts serviced
10by such treasurers and employees in the proportion which the
11amount of school funds of each district or part of a district
12handled by the treasurer bears to the total amount of all
13school funds handled by the treasurer.
14 From the funds subject to allocation among districts and
15parts of districts pursuant to the School Code, the trustees
16shall withhold the proportionate share of the liability for
17municipality contributions imposed upon such districts by this
18Section, in respect to such township treasurers and employees
19and remit the same to the Board.
20 The municipality contribution rate for an educational
21service center shall initially be the same rate for each year
22as the regional office of education or school district which
23serves as its administrative agent. When actuarial data become
24available, a separate rate shall be established as provided in
25subparagraph (i) of this Section.
26 The municipality contribution rate for a public agency,

HB4078- 8 -LRB101 16489 RPS 65870 b
1other than a vocational education cooperative, formed under the
2Intergovernmental Cooperation Act shall initially be the
3average rate for the municipalities which are parties to the
4intergovernmental agreement. When actuarial data become
5available, a separate rate shall be established as provided in
6subparagraph (i) of this Section.
7 (h) Each participating municipality and participating
8instrumentality shall make the contributions in the amounts
9provided in this Section in the manner prescribed from time to
10time by the Board and all such contributions shall be
11obligations of the respective participating municipalities and
12participating instrumentalities to this fund. The failure to
13deduct any employee contributions shall not relieve the
14participating municipality or participating instrumentality of
15its obligation to this fund. Delinquent payments of
16contributions due under this Section may, with interest, be
17recovered by civil action against the participating
18municipalities or participating instrumentalities.
19Municipality contributions, other than the amount necessary
20for employee contributions, for periods of service by employees
21from whose earnings no deductions were made for employee
22contributions to the fund, may be charged to the municipality
23reserve for the municipality or participating instrumentality.
24 (i) Contributions by participating instrumentalities shall
25be determined as provided herein except that the percentage
26derived under subparagraph 2 of paragraph (b) of this Section,

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1and the amount payable under subparagraph 4 of paragraph (a) of
2this Section, shall be based on an amortization period of 10
3years.
4 (j) Notwithstanding the other provisions of this Section,
5the additional unfunded liability accruing as a result of
6Public Act 94-712 shall be amortized over a period of 30 years
7beginning on January 1 of the second calendar year following
8the calendar year in which Public Act 94-712 takes effect,
9except that the employer may provide for a longer amortization
10period by adopting a resolution or ordinance specifying a
1135-year or 40-year period and submitting a certified copy of
12the ordinance or resolution to the fund no later than June 1 of
13the calendar year following the calendar year in which Public
14Act 94-712 takes effect.
15 (k) If the amount of a participating employee's reported
16earnings for any of the 12-month periods used to determine the
17final rate of earnings exceeds the employee's 12-month reported
18earnings with the same employer for the previous year by the
19greater of 6% or 1.5 times the annual increase in the Consumer
20Price Index-U, as established by the United States Department
21of Labor for the preceding September, the participating
22municipality or participating instrumentality that paid those
23earnings shall pay to the Fund, in addition to any other
24contributions required under this Article, the present value of
25the increase in the pension resulting from the portion of the
26increase in reported earnings that is in excess of the greater

HB4078- 10 -LRB101 16489 RPS 65870 b
1of 6% or 1.5 times the annual increase in the Consumer Price
2Index-U, as determined by the Fund. This present value shall be
3computed on the basis of the actuarial assumptions and tables
4used in the most recent actuarial valuation of the Fund that is
5available at the time of the computation.
6 Whenever it determines that a payment is or may be required
7under this subsection (k), the fund shall calculate the amount
8of the payment and bill the participating municipality or
9participating instrumentality for that amount. The bill shall
10specify the calculations used to determine the amount due. If
11the participating municipality or participating
12instrumentality disputes the amount of the bill, it may, within
1330 days after receipt of the bill, apply to the fund in writing
14for a recalculation. The application must specify in detail the
15grounds of the dispute. Upon receiving a timely application for
16recalculation, the fund shall review the application and, if
17appropriate, recalculate the amount due. The participating
18municipality and participating instrumentality contributions
19required under this subsection (k) may be paid in the form of a
20lump sum within 90 days after receipt of the bill. If the
21participating municipality and participating instrumentality
22contributions are not paid within 90 days after receipt of the
23bill, then interest will be charged at a rate equal to the
24fund's annual actuarially assumed rate of return on investment
25compounded annually from the 91st day after receipt of the
26bill. Payments must be concluded within 3 years after receipt

HB4078- 11 -LRB101 16489 RPS 65870 b
1of the bill by the participating municipality or participating
2instrumentality.
3 When assessing payment for any amount due under this
4subsection (k), the fund shall exclude earnings increases
5resulting from overload or overtime earnings.
6 When assessing payment for any amount due under this
7subsection (k), the fund shall exclude earnings increases
8resulting from payments for unused vacation time, but only for
9payments for unused vacation time made in the final 3 months of
10the final rate of earnings period.
11 When assessing payment for any amount due under this
12subsection (k), the fund shall also exclude earnings increases
13attributable to standard employment promotions resulting in
14increased responsibility and workload.
15 This subsection (k) does not apply to earnings increases
16paid to individuals under contracts or collective bargaining
17agreements entered into, amended, or renewed before January 1,
182012 (the effective date of Public Act 97-609), earnings
19increases paid to members who are 10 years or more from
20retirement eligibility, or earnings increases resulting from
21an increase in the number of hours required to be worked.
22 When assessing payment for any amount due under this
23subsection (k), the fund shall also exclude earnings
24attributable to personnel policies adopted before January 1,
252012 (the effective date of Public Act 97-609) as long as those
26policies are not applicable to employees who begin service on

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1or after January 1, 2012 (the effective date of Public Act
297-609).
3 The change made to this Section by Public Act 100-139 is a
4clarification of existing law and is intended to be retroactive
5to January 1, 2012 (the effective date of Public Act 97-609).
6(Source: P.A. 99-745, eff. 8-5-16; 100-139, eff. 8-18-17;
7100-411, eff. 8-25-17; 100-863, eff. 8-14-18.)
8 Section 90. The State Mandates Act is amended by adding
9Section 8.44 as follows:
10 (30 ILCS 805/8.44 new)
11 Sec. 8.44. Exempt mandate. Notwithstanding Sections 6 and 8
12of this Act, no reimbursement by the State is required for the
13implementation of any mandate created by this amendatory Act of
14the 101st General Assembly.
15 Section 99. Effective date. This Act takes effect January
161, 2022.
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