Bill Text: IL SB2197 | 2017-2018 | 100th General Assembly | Introduced


Bill Title: Amends the State Universities Article of the Illinois Pension Code. Requires the actual employer to contribute an amount equal to the full employer's normal cost of the benefits earned under this System that result from employment by that employer, to be paid to the System on a payroll-by-payroll basis, using the percentage of earnings determined on a system-wide basis and certified by the System to all employers for use in the applicable fiscal year. Requires immediate and annual certification of the applicable percentage rate. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Introduced) 2017-04-28 - Added as Chief Co-Sponsor Sen. Dan McConchie [SB2197 Detail]

Download: Illinois-2017-SB2197-Introduced.html


100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
SB2197

Introduced 4/27/2017, by Sen. Kyle McCarter

SYNOPSIS AS INTRODUCED:
40 ILCS 5/15-155 from Ch. 108 1/2, par. 15-155
40 ILCS 5/15-165 from Ch. 108 1/2, par. 15-165
30 ILCS 805/8.41 new

Amends the State Universities Article of the Illinois Pension Code. Requires the actual employer to contribute an amount equal to the full employer's normal cost of the benefits earned under this System that result from employment by that employer, to be paid to the System on a payroll-by-payroll basis, using the percentage of earnings determined on a system-wide basis and certified by the System to all employers for use in the applicable fiscal year. Requires immediate and annual certification of the applicable percentage rate. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.
LRB100 12259 RPS 24789 b
FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

A BILL FOR

SB2197LRB100 12259 RPS 24789 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
5Sections 15-155 and 15-165 as follows:
6 (40 ILCS 5/15-155) (from Ch. 108 1/2, par. 15-155)
7 Sec. 15-155. Employer contributions.
8 (a) The State of Illinois shall make contributions by
9appropriations of amounts which, together with the other
10employer contributions and other contributions from trust,
11federal, and other funds, employee contributions, income from
12investments, and other income of this System, will be
13sufficient to meet the cost of maintaining and administering
14the System on a 90% funded basis in accordance with actuarial
15recommendations.
16 The Board shall determine the amount of State contributions
17required for each fiscal year on the basis of the actuarial
18tables and other assumptions adopted by the Board and the
19recommendations of the actuary, using the formula in subsection
20(a-1).
21 (a-1) For State fiscal years 2012 through 2045, the minimum
22contribution to the System to be made by the State for each
23fiscal year shall be an amount determined by the System to be

SB2197- 2 -LRB100 12259 RPS 24789 b
1sufficient to bring the total assets of the System up to 90% of
2the total actuarial liabilities of the System by the end of
3State fiscal year 2045. In making these determinations, the
4required State contribution shall be calculated each year as a
5level percentage of payroll over the years remaining to and
6including fiscal year 2045 and shall be determined under the
7projected unit credit actuarial cost method. Beginning
8immediately upon the effective date of this amendatory Act of
9the 100th General Assembly, the required State contribution
10shall take into consideration the amount of the actual-employer
11normal-cost contribution required under subsection (a-5).
12 For State fiscal years 1996 through 2005, the State
13contribution to the System, as a percentage of the applicable
14employee payroll, shall be increased in equal annual increments
15so that by State fiscal year 2011, the State is contributing at
16the rate required under this Section.
17 Notwithstanding any other provision of this Article, the
18total required State contribution for State fiscal year 2006 is
19$166,641,900.
20 Notwithstanding any other provision of this Article, the
21total required State contribution for State fiscal year 2007 is
22$252,064,100.
23 For each of State fiscal years 2008 through 2009, the State
24contribution to the System, as a percentage of the applicable
25employee payroll, shall be increased in equal annual increments
26from the required State contribution for State fiscal year

SB2197- 3 -LRB100 12259 RPS 24789 b
12007, so that by State fiscal year 2011, the State is
2contributing at the rate otherwise required under this Section.
3 Notwithstanding any other provision of this Article, the
4total required State contribution for State fiscal year 2010 is
5$702,514,000 and shall be made from the State Pensions Fund and
6proceeds of bonds sold in fiscal year 2010 pursuant to Section
77.2 of the General Obligation Bond Act, less (i) the pro rata
8share of bond sale expenses determined by the System's share of
9total bond proceeds, (ii) any amounts received from the General
10Revenue Fund in fiscal year 2010, (iii) any reduction in bond
11proceeds due to the issuance of discounted bonds, if
12applicable.
13 Notwithstanding any other provision of this Article, the
14total required State contribution for State fiscal year 2011 is
15the amount recertified by the System on or before April 1, 2011
16pursuant to Section 15-165 and shall be made from the State
17Pensions Fund and proceeds of bonds sold in fiscal year 2011
18pursuant to Section 7.2 of the General Obligation Bond Act,
19less (i) the pro rata share of bond sale expenses determined by
20the System's share of total bond proceeds, (ii) any amounts
21received from the General Revenue Fund in fiscal year 2011, and
22(iii) any reduction in bond proceeds due to the issuance of
23discounted bonds, if applicable.
24 Beginning in State fiscal year 2046, the minimum State
25contribution for each fiscal year shall be the amount needed to
26maintain the total assets of the System at 90% of the total

SB2197- 4 -LRB100 12259 RPS 24789 b
1actuarial liabilities of the System.
2 Amounts received by the System pursuant to Section 25 of
3the Budget Stabilization Act or Section 8.12 of the State
4Finance Act in any fiscal year do not reduce and do not
5constitute payment of any portion of the minimum State
6contribution required under this Article in that fiscal year.
7Such amounts shall not reduce, and shall not be included in the
8calculation of, the required State contributions under this
9Article in any future year until the System has reached a
10funding ratio of at least 90%. A reference in this Article to
11the "required State contribution" or any substantially similar
12term does not include or apply to any amounts payable to the
13System under Section 25 of the Budget Stabilization Act.
14 Notwithstanding any other provision of this Section, the
15required State contribution for State fiscal year 2005 and for
16fiscal year 2008 and each fiscal year thereafter, as calculated
17under this Section and certified under Section 15-165, shall
18not exceed an amount equal to (i) the amount of the required
19State contribution that would have been calculated under this
20Section for that fiscal year if the System had not received any
21payments under subsection (d) of Section 7.2 of the General
22Obligation Bond Act, minus (ii) the portion of the State's
23total debt service payments for that fiscal year on the bonds
24issued in fiscal year 2003 for the purposes of that Section
257.2, as determined and certified by the Comptroller, that is
26the same as the System's portion of the total moneys

SB2197- 5 -LRB100 12259 RPS 24789 b
1distributed under subsection (d) of Section 7.2 of the General
2Obligation Bond Act. In determining this maximum for State
3fiscal years 2008 through 2010, however, the amount referred to
4in item (i) shall be increased, as a percentage of the
5applicable employee payroll, in equal increments calculated
6from the sum of the required State contribution for State
7fiscal year 2007 plus the applicable portion of the State's
8total debt service payments for fiscal year 2007 on the bonds
9issued in fiscal year 2003 for the purposes of Section 7.2 of
10the General Obligation Bond Act, so that, by State fiscal year
112011, the State is contributing at the rate otherwise required
12under this Section.
13 (a-5) Beginning immediately upon the effective date of this
14amendatory Act of the 100th General Assembly, the actual
15employer of a participating employee shall contribute an amount
16equal to the full employer's normal cost of the benefits earned
17under this System that result from employment by that employer,
18to be paid to the System on a payroll-by-payroll basis, using
19the percentage of earnings determined on a system-wide basis
20and certified by the System to all employers for use in the
21applicable fiscal year.
22 (b) If an employee is paid from trust or federal funds, the
23employer shall pay to the Board contributions from those funds
24which are sufficient to cover the accruing normal costs on
25behalf of the employee. However, universities having employees
26who are compensated out of local auxiliary funds, income funds,

SB2197- 6 -LRB100 12259 RPS 24789 b
1or service enterprise funds are not required to pay such
2contributions on behalf of those employees. The local auxiliary
3funds, income funds, and service enterprise funds of
4universities shall not be considered trust funds for the
5purpose of this Article, but funds of alumni associations,
6foundations, and athletic associations which are affiliated
7with the universities included as employers under this Article
8and other employers which do not receive State appropriations
9are considered to be trust funds for the purpose of this
10Article.
11 (b-1) The City of Urbana and the City of Champaign shall
12each make employer contributions to this System for their
13respective firefighter employees who participate in this
14System pursuant to subsection (h) of Section 15-107. The rate
15of contributions to be made by those municipalities shall be
16determined annually by the Board on the basis of the actuarial
17assumptions adopted by the Board and the recommendations of the
18actuary, and shall be expressed as a percentage of salary for
19each such employee. The Board shall certify the rate to the
20affected municipalities as soon as may be practical. The
21employer contributions required under this subsection shall be
22remitted by the municipality to the System at the same time and
23in the same manner as employee contributions.
24 (c) Through State fiscal year 1995: The total employer
25contribution shall be apportioned among the various funds of
26the State and other employers, whether trust, federal, or other

SB2197- 7 -LRB100 12259 RPS 24789 b
1funds, in accordance with actuarial procedures approved by the
2Board. State of Illinois contributions for employers receiving
3State appropriations for personal services shall be payable
4from appropriations made to the employers or to the System. The
5contributions for Class I community colleges covering earnings
6other than those paid from trust and federal funds, shall be
7payable solely from appropriations to the Illinois Community
8College Board or the System for employer contributions.
9 (d) Beginning in State fiscal year 1996, the required State
10contributions to the System shall be appropriated directly to
11the System and shall be payable through vouchers issued in
12accordance with subsection (c) of Section 15-165, except as
13provided in subsection (g).
14 (e) The State Comptroller shall draw warrants payable to
15the System upon proper certification by the System or by the
16employer in accordance with the appropriation laws and this
17Code.
18 (f) Normal costs under this Section means liability for
19pensions and other benefits which accrues to the System because
20of the credits earned for service rendered by the participants
21during the fiscal year and expenses of administering the
22System, but shall not include the principal of or any
23redemption premium or interest on any bonds issued by the Board
24or any expenses incurred or deposits required in connection
25therewith.
26 (g) If the amount of a participant's earnings for any

SB2197- 8 -LRB100 12259 RPS 24789 b
1academic year used to determine the final rate of earnings,
2determined on a full-time equivalent basis, exceeds the amount
3of his or her earnings with the same employer for the previous
4academic year, determined on a full-time equivalent basis, by
5more than 6%, the participant's employer shall pay to the
6System, in addition to all other payments required under this
7Section and in accordance with guidelines established by the
8System, the present value of the increase in benefits resulting
9from the portion of the increase in earnings that is in excess
10of 6%. This present value shall be computed by the System on
11the basis of the actuarial assumptions and tables used in the
12most recent actuarial valuation of the System that is available
13at the time of the computation. The System may require the
14employer to provide any pertinent information or
15documentation.
16 Whenever it determines that a payment is or may be required
17under this subsection (g), the System shall calculate the
18amount of the payment and bill the employer for that amount.
19The bill shall specify the calculations used to determine the
20amount due. If the employer disputes the amount of the bill, it
21may, within 30 days after receipt of the bill, apply to the
22System in writing for a recalculation. The application must
23specify in detail the grounds of the dispute and, if the
24employer asserts that the calculation is subject to subsection
25(h) or (i) of this Section, must include an affidavit setting
26forth and attesting to all facts within the employer's

SB2197- 9 -LRB100 12259 RPS 24789 b
1knowledge that are pertinent to the applicability of subsection
2(h) or (i). Upon receiving a timely application for
3recalculation, the System shall review the application and, if
4appropriate, recalculate the amount due.
5 The employer contributions required under this subsection
6(g) may be paid in the form of a lump sum within 90 days after
7receipt of the bill. If the employer contributions are not paid
8within 90 days after receipt of the bill, then interest will be
9charged at a rate equal to the System's annual actuarially
10assumed rate of return on investment compounded annually from
11the 91st day after receipt of the bill. Payments must be
12concluded within 3 years after the employer's receipt of the
13bill.
14 When assessing payment for any amount due under this
15subsection (g), the System shall include earnings, to the
16extent not established by a participant under Section 15-113.11
17or 15-113.12, that would have been paid to the participant had
18the participant not taken (i) periods of voluntary or
19involuntary furlough occurring on or after July 1, 2015 and on
20or before June 30, 2017 or (ii) periods of voluntary pay
21reduction in lieu of furlough occurring on or after July 1,
222015 and on or before June 30, 2017. Determining earnings that
23would have been paid to a participant had the participant not
24taken periods of voluntary or involuntary furlough or periods
25of voluntary pay reduction shall be the responsibility of the
26employer, and shall be reported in a manner prescribed by the

SB2197- 10 -LRB100 12259 RPS 24789 b
1System.
2 (h) This subsection (h) applies only to payments made or
3salary increases given on or after June 1, 2005 but before July
41, 2011. The changes made by Public Act 94-1057 shall not
5require the System to refund any payments received before July
631, 2006 (the effective date of Public Act 94-1057).
7 When assessing payment for any amount due under subsection
8(g), the System shall exclude earnings increases paid to
9participants under contracts or collective bargaining
10agreements entered into, amended, or renewed before June 1,
112005.
12 When assessing payment for any amount due under subsection
13(g), the System shall exclude earnings increases paid to a
14participant at a time when the participant is 10 or more years
15from retirement eligibility under Section 15-135.
16 When assessing payment for any amount due under subsection
17(g), the System shall exclude earnings increases resulting from
18overload work, including a contract for summer teaching, or
19overtime when the employer has certified to the System, and the
20System has approved the certification, that: (i) in the case of
21overloads (A) the overload work is for the sole purpose of
22academic instruction in excess of the standard number of
23instruction hours for a full-time employee occurring during the
24academic year that the overload is paid and (B) the earnings
25increases are equal to or less than the rate of pay for
26academic instruction computed using the participant's current

SB2197- 11 -LRB100 12259 RPS 24789 b
1salary rate and work schedule; and (ii) in the case of
2overtime, the overtime was necessary for the educational
3mission.
4 When assessing payment for any amount due under subsection
5(g), the System shall exclude any earnings increase resulting
6from (i) a promotion for which the employee moves from one
7classification to a higher classification under the State
8Universities Civil Service System, (ii) a promotion in academic
9rank for a tenured or tenure-track faculty position, or (iii) a
10promotion that the Illinois Community College Board has
11recommended in accordance with subsection (k) of this Section.
12These earnings increases shall be excluded only if the
13promotion is to a position that has existed and been filled by
14a member for no less than one complete academic year and the
15earnings increase as a result of the promotion is an increase
16that results in an amount no greater than the average salary
17paid for other similar positions.
18 (i) When assessing payment for any amount due under
19subsection (g), the System shall exclude any salary increase
20described in subsection (h) of this Section given on or after
21July 1, 2011 but before July 1, 2014 under a contract or
22collective bargaining agreement entered into, amended, or
23renewed on or after June 1, 2005 but before July 1, 2011.
24Notwithstanding any other provision of this Section, any
25payments made or salary increases given after June 30, 2014
26shall be used in assessing payment for any amount due under

SB2197- 12 -LRB100 12259 RPS 24789 b
1subsection (g) of this Section.
2 (j) The System shall prepare a report and file copies of
3the report with the Governor and the General Assembly by
4January 1, 2007 that contains all of the following information:
5 (1) The number of recalculations required by the
6 changes made to this Section by Public Act 94-1057 for each
7 employer.
8 (2) The dollar amount by which each employer's
9 contribution to the System was changed due to
10 recalculations required by Public Act 94-1057.
11 (3) The total amount the System received from each
12 employer as a result of the changes made to this Section by
13 Public Act 94-4.
14 (4) The increase in the required State contribution
15 resulting from the changes made to this Section by Public
16 Act 94-1057.
17 (k) The Illinois Community College Board shall adopt rules
18for recommending lists of promotional positions submitted to
19the Board by community colleges and for reviewing the
20promotional lists on an annual basis. When recommending
21promotional lists, the Board shall consider the similarity of
22the positions submitted to those positions recognized for State
23universities by the State Universities Civil Service System.
24The Illinois Community College Board shall file a copy of its
25findings with the System. The System shall consider the
26findings of the Illinois Community College Board when making

SB2197- 13 -LRB100 12259 RPS 24789 b
1determinations under this Section. The System shall not exclude
2any earnings increases resulting from a promotion when the
3promotion was not submitted by a community college. Nothing in
4this subsection (k) shall require any community college to
5submit any information to the Community College Board.
6 (l) For purposes of determining the required State
7contribution to the System, the value of the System's assets
8shall be equal to the actuarial value of the System's assets,
9which shall be calculated as follows:
10 As of June 30, 2008, the actuarial value of the System's
11assets shall be equal to the market value of the assets as of
12that date. In determining the actuarial value of the System's
13assets for fiscal years after June 30, 2008, any actuarial
14gains or losses from investment return incurred in a fiscal
15year shall be recognized in equal annual amounts over the
165-year period following that fiscal year.
17 (m) For purposes of determining the required State
18contribution to the system for a particular year, the actuarial
19value of assets shall be assumed to earn a rate of return equal
20to the system's actuarially assumed rate of return.
21(Source: P.A. 98-92, eff. 7-16-13; 98-463, eff. 8-16-13;
2299-897, eff. 1-1-17.)
23 (40 ILCS 5/15-165) (from Ch. 108 1/2, par. 15-165)
24 (Text of Section WITHOUT the changes made by P.A. 98-599,
25which has been held unconstitutional)

SB2197- 14 -LRB100 12259 RPS 24789 b
1 Sec. 15-165. To certify amounts and submit vouchers.
2 (a) The Board shall certify to the Governor on or before
3November 15 of each year until November 15, 2011 the
4appropriation required from State funds for the purposes of
5this System for the following fiscal year. The certification
6under this subsection (a) shall include a copy of the actuarial
7recommendations upon which it is based and shall specifically
8identify the System's projected State normal cost for that
9fiscal year and the projected State cost for the self-managed
10plan for that fiscal year.
11 On or before May 1, 2004, the Board shall recalculate and
12recertify to the Governor the amount of the required State
13contribution to the System for State fiscal year 2005, taking
14into account the amounts appropriated to and received by the
15System under subsection (d) of Section 7.2 of the General
16Obligation Bond Act.
17 On or before July 1, 2005, the Board shall recalculate and
18recertify to the Governor the amount of the required State
19contribution to the System for State fiscal year 2006, taking
20into account the changes in required State contributions made
21by this amendatory Act of the 94th General Assembly.
22 On or before April 1, 2011, the Board shall recalculate and
23recertify to the Governor the amount of the required State
24contribution to the System for State fiscal year 2011, applying
25the changes made by Public Act 96-889 to the System's assets
26and liabilities as of June 30, 2009 as though Public Act 96-889

SB2197- 15 -LRB100 12259 RPS 24789 b
1was approved on that date.
2 (a-5) On or before November 1 of each year, beginning
3November 1, 2012, the Board shall submit to the State Actuary,
4the Governor, and the General Assembly a proposed certification
5of the amount of the required State contribution to the System
6for the next fiscal year, along with all of the actuarial
7assumptions, calculations, and data upon which that proposed
8certification is based. On or before January 1 of each year,
9beginning January 1, 2013, the State Actuary shall issue a
10preliminary report concerning the proposed certification and
11identifying, if necessary, recommended changes in actuarial
12assumptions that the Board must consider before finalizing its
13certification of the required State contributions. On or before
14January 15, 2013 and each January 15 thereafter, the Board
15shall certify to the Governor and the General Assembly the
16amount of the required State contribution for the next fiscal
17year. The Board's certification must note, in a written
18response to the State Actuary, any deviations from the State
19Actuary's recommended changes, the reason or reasons for not
20following the State Actuary's recommended changes, and the
21fiscal impact of not following the State Actuary's recommended
22changes on the required State contribution.
23 (a-10) As soon as possible, the Board shall recalculate and
24recertify to the State Actuary, the Governor, and the General
25Assembly the projected amount of the required State
26contribution to the System for the current State fiscal year,

SB2197- 16 -LRB100 12259 RPS 24789 b
1taking into account the actual-employer normal-cost
2contributions required by this amendatory Act of the 100th
3General Assembly.
4 (a-15) As soon as possible after the effective date of this
5amendatory act of the 100th General Assembly, the Board shall
6calculate and certify to the State Actuary, the Governor, the
7General Assembly, and each employer under this Article the rate
8of the actual-employer normal-cost contribution to the System
9for the current fiscal year, expressed as a percentage of
10earnings and determined on a system-wide basis, for use in the
11remaining portion of the applicable fiscal year.
12 On or before November 1 of each year, the Board shall
13calculate and certify to the State Actuary, the Governor, and
14the General Assembly, and to each employer under this Article
15(i) the rate of the actual-employer normal-cost contribution to
16the System for the next fiscal year, expressed as a percentage
17of earnings and determined on an annual, system-wide basis, and
18(ii) the projected amount of each employer's contribution for
19that fiscal year.
20 (b) The Board shall certify to the State Comptroller or
21employer, as the case may be, from time to time, by its
22chairperson and secretary, with its seal attached, the amounts
23payable to the System from the various funds.
24 (c) Beginning in State fiscal year 1996, on or as soon as
25possible after the 15th day of each month the Board shall
26submit vouchers for payment of State contributions to the

SB2197- 17 -LRB100 12259 RPS 24789 b
1System, in a total monthly amount of one-twelfth of the
2required annual State contribution certified under subsection
3(a). From the effective date of this amendatory Act of the 93rd
4General Assembly through June 30, 2004, the Board shall not
5submit vouchers for the remainder of fiscal year 2004 in excess
6of the fiscal year 2004 certified contribution amount
7determined under this Section after taking into consideration
8the transfer to the System under subsection (b) of Section
96z-61 of the State Finance Act. These vouchers shall be paid by
10the State Comptroller and Treasurer by warrants drawn on the
11funds appropriated to the System for that fiscal year.
12 If in any month the amount remaining unexpended from all
13other appropriations to the System for the applicable fiscal
14year (including the appropriations to the System under Section
158.12 of the State Finance Act and Section 1 of the State
16Pension Funds Continuing Appropriation Act) is less than the
17amount lawfully vouchered under this Section, the difference
18shall be paid from the General Revenue Fund under the
19continuing appropriation authority provided in Section 1.1 of
20the State Pension Funds Continuing Appropriation Act.
21 (d) So long as the payments received are the full amount
22lawfully vouchered under this Section, payments received by the
23System under this Section shall be applied first toward the
24employer contribution to the self-managed plan established
25under Section 15-158.2. Payments shall be applied second toward
26the employer's portion of the normal costs of the System, as

SB2197- 18 -LRB100 12259 RPS 24789 b
1defined in subsection (f) of Section 15-155. The balance shall
2be applied toward the unfunded actuarial liabilities of the
3System.
4 (e) In the event that the System does not receive, as a
5result of legislative enactment or otherwise, payments
6sufficient to fully fund the employer contribution to the
7self-managed plan established under Section 15-158.2 and to
8fully fund that portion of the employer's portion of the normal
9costs of the System, as calculated in accordance with Section
1015-155(a-1), then any payments received shall be applied
11proportionately to the optional retirement program established
12under Section 15-158.2 and to the employer's portion of the
13normal costs of the System, as calculated in accordance with
14Section 15-155(a-1).
15(Source: P.A. 97-694, eff. 6-18-12; 98-92, eff. 7-16-13.)
16 Section 90. The State Mandates Act is amended by adding
17Section 8.41 as follows:
18 (30 ILCS 805/8.41 new)
19 Sec. 8.41. Exempt mandate. Notwithstanding Sections 6 and 8
20of this Act, no reimbursement by the State is required for the
21implementation of any mandate created by this amendatory Act of
22the 100th General Assembly.
23 Section 99. Effective date. This Act takes effect upon
24becoming law.
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