Bill Text: IL SB3549 | 2013-2014 | 98th General Assembly | Introduced

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Bill Title: Amends the Illinois Pension Code. With respect to the 5 State-funded retirement systems: Provides a new funding formula for State contributions, with a funding goal of 100% for fiscal years 2016 through 2047 and 90% thereafter. Provides that no additional service credit may be accrued and no automatic increase in a retirement annuity shall be received. Provides that the pensionable salary of an active participant may not exceed that individual's pensionable salary as of the effective date. Provides that State-funded retirement systems shall establish self-directed retirement plans for all active participants and all employees hired on or after the effective date. Provides that all active participants shall have the option of participating in a self-directed retirement plan. Provides that these changes are controlling over any other law. In the Sections that were amended by Public Act 98-599, deletes the changes made by Public Act 98-599.

Sponsorship: Partisan Bill (Republican 1)

Status: (Failed) 2015-01-13 - Session Sine Die [SB3549 Detail]

Download: Illinois-2013-SB3549-Introduced.html

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98TH GENERAL ASSEMBLY State of Illinois 2013 and 2014 SB3549 Introduced 2/14/2014, by Sen. Kyle McCarter SYNOPSIS AS INTRODUCED:
40 ILCS 5/1-161 new
40 ILCS 5/2-124 from Ch. 108 1/2, par. 2-124
40 ILCS 5/14-131
40 ILCS 5/15-155 from Ch. 108 1/2, par. 15-155
40 ILCS 5/16-158 from Ch. 108 1/2, par. 16-158
40 ILCS 5/18-131 from Ch. 108 1/2, par. 18-131
Amends the Illinois Pension Code. With respect to the 5 State-funded retirement systems: Provides a new funding formula for State contributions, with a funding goal of 100% for fiscal years 2016 through 2047 and 90% thereafter. Provides that no additional service credit may be accrued and no automatic increase in a retirement annuity shall be received. Provides that the pensionable salary of an active participant may not exceed that individual's pensionable salary as of the effective date. Provides that State-funded retirement systems shall establish self-directed retirement plans for all active participants and all employees hired on or after the effective date. Provides that all active participants shall have the option of participating in a self-directed retirement plan. Provides that these changes are controlling over any other law. In the Sections that were amended by Public Act 98-599, deletes the changes made by Public Act 98-599.
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FISCAL NOTE ACT MAY APPLY PENSION IMPACT NOTE ACT 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 Illinois Pension Code is amended by changing
Sections 2-124, 14-131, 15-155, 16-158, and 18-131 and by
adding Section 1-161 as follows:
(40 ILCS 5/1-161 new)
Sec. 1-161. Pension benefits, end of service credit;
self-directed retirement plans.
(a) For the purposes of this Section:
"Active participant" means a participant in a
State-funded retirement system who does not receive an
annuity from a State-funded retirement system.
"Annuitant" means a participant in a State-funded
retirement system who receives an annuity from a
State-funded retirement system.
"Automatic increase in retirement annuity" means an
automatic increase in retirement annuity granted under
Section 1-160 or Article 2, 14, 15, 16, or 18 of this Code.
"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

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consumers, United States city average, all items, 1982-84 =
100.
"Pensionable salary" means the amount of salary,
compensation, or earnings used by the applicable
State-funded retirement system to calculate the amount of
an individual's retirement annuity.
"State-funded retirement system" means a retirement
system established under Article 2, 14, 15, 16, or 18 of
this Code.
(b) No active participant may accrue service credit in a
State-funded retirement system on or after the effective date
of this amendatory Act of the 98th General Assembly.
(c) The pensionable salary of an active participant shall
not exceed the pensionable salary of that participant as of the
effective date of this amendatory Act of the 98th General
Assembly.
(d) An annuitant shall not receive an automatic increase in
retirement annuity on or after the effective date of this
Section.
(e) The retirement age of active participants who are
ineligible to retire as of the effective date of this
amendatory Act of the 98th General Assembly shall be increased
according to a schedule developed by the Public Pension
Division of the Department of Insurance as soon as practicable
after the effective date of this amendatory Act of the 98th
General Assembly. The schedule of retirement ages adopted by

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administrative rule of the Division shall, at a minimum, ensure
(i) that persons who first become active participants on or
after the effective date of this amendatory Act of the 98th
General Assembly are not eligible to retire until reaching the
Social Security Normal Retirement Age and (ii) that persons who
are active participants but ineligible to retire as of the
effective date of this amendatory Act of the 98th General
Assembly remain ineligible to retire until reaching age 59. The
Division's schedule shall also provide for the adjustment of
retirement ages using a matrix that accounts for the current
statutory retirement age for various classes of persons and
service credit accrued by those persons as of the effective
date of this amendatory Act of the 98th General Assembly.
(f) As soon as practicable after the effective date of this
amendatory Act of the 98th General Assembly, each State-funded
retirement system shall establish a self-directed retirement
plan that allows individuals who are active participants and
individuals who become active participants on or after the
effective date of this amendatory Act of the 98th General
Assembly the opportunity to accumulate assets for retirement
through a combination of employee and employer contributions
that may be invested in mutual funds, collective investment
funds, or other investment products and used to purchase
annuity contracts, either fixed or variable or a combination
thereof. The plan must be qualified under the Internal Revenue
Code of 1986. Participants in the retirement system established

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under Article 15 may participate in the self-managed plan
established under Section 15-158.2 in lieu of participating in
a self-directed retirement plan created under this subsection
(f).
(g) Each active participant in the retirement system
established under Article 14 of this Code who is a noncovered
employee and each active participant in a retirement system
established under Article 15, 16, or 18 of this Code, except
for a participant in the self-managed plan established under
Section 15-158.2, shall participate in the self-directed
retirement plan established under subsection (f) and
contribute 8% of his or her salary, earnings, or compensation,
whichever is applicable, to the plan. The employer of each of
those active participants shall contribute 7% of salary,
earnings, or compensation, whichever is applicable, to that
plan on behalf of the participant.
Each active participant in the retirement system
established under Article 14 who is a covered employee shall
participate in the self-directed retirement plan established
under subsection (f) and shall contribute 3% of compensation to
the plan. The employer of each of those participants shall
contribute 3% of compensation to the self-directed retirement
plan on behalf of the participant.
Each active participant in the retirement system
established under Article 2 of this Code shall have the option
of participating in the self-directed retirement plan

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established under subsection (f) and shall be entitled to
contribute as much to the plan as is authorized by federal law.
However, no employer contribution to the self-directed plan
shall be made on behalf of active participants in the
retirement system established under Article 2 of this Code.
For the purposes of this subsection (g), salary, earnings,
or compensation shall not exceed $110,100. However, that amount
shall be increased on January 1, 2017 and each January 1
thereafter by the lesser of (i) 3% of that amount 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, as
calculated by the Public Pension Division of the Department of
Insurance and made available to the boards of the State-funded
retirement systems by November 1, 2015 and each November 1
thereafter.
(h) The provisions of this amendatory Act of the 98th
General Assembly apply notwithstanding any other law,
including Section 1-160 of this Code. If there is a conflict
between the provisions of this amendatory Act of the 98th
General Assembly and any other law, the provisions of this
Section shall control.
(40 ILCS 5/2-124) (from Ch. 108 1/2, par. 2-124)
Sec. 2-124. Contributions by State.
(a) The State shall make contributions to the System by

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appropriations of amounts which, together with the
contributions of participants, interest earned on investments,
and other income will meet the cost of maintaining and
administering the System on a 100% 90% funded basis in
accordance with actuarial recommendations by the end of State
fiscal year 2044.
(b) The Board shall determine the amount of State
contributions required for each fiscal year on the basis of the
actuarial tables and other assumptions adopted by the Board and
the prescribed rate of interest, using the formula in
subsection (c).
(c) For State fiscal years 2015 through 2044, 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
equal to the sum of (1) the State's portion of the projected
normal cost for that fiscal year, plus (2) an amount sufficient
to bring the total assets of the System up to 100% of the total
actuarial liabilities of the System by the end of State fiscal
year 2044. 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 2044 and shall be determined under the projected
unit cost method for fiscal year 2015 and under the entry age
normal actuarial cost method for fiscal years 2016 through
2044.
For State fiscal years 2012 through 2015 2014, the minimum

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contribution to the System to be made by the State for each
fiscal year shall be an amount determined by the System to be
sufficient to bring the total assets of the System up to 90% of
the total actuarial liabilities of the System by the end of
State fiscal year 2045. In making these determinations, the
required State contribution shall be calculated each year as a
level percentage of payroll over the years remaining to and
including fiscal year 2045 and shall be determined under the
projected unit credit actuarial cost method.
For State fiscal years 2016 through 2047, 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 100%
of the total actuarial liabilities of the System by the end of
State fiscal year 2047. In making these determinations, the
required State contribution shall be calculated each year as a
level dollar amount over the years remaining to and including
fiscal year 2047 and shall be determined under the projected
unit credit actuarial cost method.
For State fiscal years 1996 through 2005, the State
contribution to the System, as a percentage of the applicable
employee payroll, shall be increased in equal annual increments
so that by State fiscal year 2011, the State is contributing at
the rate required under this Section.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2006 is

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$4,157,000.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2007 is
$5,220,300.
For each of State fiscal years 2008 through 2009, the State
contribution to the System, as a percentage of the applicable
employee payroll, shall be increased in equal annual increments
from the required State contribution for State fiscal year
2007, so that by State fiscal year 2011, the State is
contributing at the rate otherwise required under this Section.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2010 is
$10,454,000 and shall be made from the proceeds of bonds sold
in fiscal year 2010 pursuant to Section 7.2 of the General
Obligation Bond Act, less (i) the pro rata share of bond sale
expenses determined by the System's share of total bond
proceeds, (ii) any amounts received from the General Revenue
Fund in fiscal year 2010, and (iii) any reduction in bond
proceeds due to the issuance of discounted bonds, if
applicable.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2011 is
the amount recertified by the System on or before April 1, 2011
pursuant to Section 2-134 and shall be made from the proceeds
of bonds sold in fiscal year 2011 pursuant to Section 7.2 of
the General Obligation Bond Act, less (i) the pro rata share of

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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 2045, the minimum State
contribution for each fiscal year shall be the amount needed to
maintain the total assets of the System at 100% of the total
actuarial liabilities of the System.
Beginning in State fiscal year 2048, 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 100% 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

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required State contribution for State fiscal year 2005 and for
fiscal year 2008 and each fiscal year thereafter through State
fiscal year 2014, as calculated under this Section and
certified under Section 2-134, shall not exceed an amount equal
to (i) the amount of the required State contribution that would
have been calculated under this Section for that fiscal year if
the System had not received any payments under subsection (d)
of Section 7.2 of the General Obligation Bond Act, minus (ii)
the portion of the State's total debt service payments for that
fiscal year on the bonds issued in fiscal year 2003 for the
purposes of that Section 7.2, as determined and certified by
the Comptroller, that is the same as the System's portion of
the total moneys distributed under subsection (d) of Section
7.2 of the General Obligation Bond Act. In determining this
maximum for State fiscal years 2008 through 2010, however, the
amount referred to in item (i) shall be increased, as a
percentage of the applicable employee payroll, in equal
increments calculated from the sum of the required State
contribution for State fiscal year 2007 plus the applicable
portion of the State's total debt service payments for fiscal
year 2007 on the bonds issued in fiscal year 2003 for the
purposes of Section 7.2 of the General Obligation Bond Act, so
that, by State fiscal year 2011, the State is contributing at
the rate otherwise required under this Section.
(d) For purposes of determining the required State
contribution to the System, the value of the System's assets

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shall be equal to the actuarial value of the System's assets,
which shall be calculated as follows:
As of June 30, 2008, the actuarial value of the System's
assets shall be equal to the market value of the assets as of
that date. In determining the actuarial value of the System's
assets for fiscal years after June 30, 2008, any actuarial
gains or losses from investment return incurred in a fiscal
year shall be recognized in equal annual amounts over the
5-year period following that fiscal year.
(e) For purposes of determining the required State
contribution to the system for a particular year, the actuarial
value of assets shall be assumed to earn a rate of return equal
to the system's actuarially assumed rate of return.
(Source: P.A. 96-43, eff. 7-15-09; 96-1497, eff. 1-14-11;
96-1511, eff. 1-27-11; 96-1554, eff. 3-18-11; 97-813, eff.
7-13-12; 98-599, eff. 6-1-14.)
(40 ILCS 5/14-131)
Sec. 14-131. Contributions by State.
(a) The State shall make contributions to the System by
appropriations of amounts which, together with other employer
contributions from trust, federal, and other funds, employee
contributions, investment income, and other income, will be
sufficient to meet the cost of maintaining and administering
the System on a 100% 90% funded basis in accordance with
actuarial recommendations by the end of State fiscal year 2044.

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For the purposes of this Section and Section 14-135.08,
references to State contributions refer only to employer
contributions and do not include employee contributions that
are picked up or otherwise paid by the State or a department on
behalf of the employee.
(b) The Board shall determine the total amount of State
contributions required for each fiscal year on the basis of the
actuarial tables and other assumptions adopted by the Board,
using the formula in subsection (e).
The Board shall also determine a State contribution rate
for each fiscal year, expressed as a percentage of payroll,
based on the total required State contribution for that fiscal
year (less the amount received by the System from
appropriations under Section 8.12 of the State Finance Act and
Section 1 of the State Pension Funds Continuing Appropriation
Act, if any, for the fiscal year ending on the June 30
immediately preceding the applicable November 15 certification
deadline), the estimated payroll (including all forms of
compensation) for personal services rendered by eligible
employees, and the recommendations of the actuary.
For the purposes of this Section and Section 14.1 of the
State Finance Act, the term "eligible employees" includes
employees who participate in the System, persons who may elect
to participate in the System but have not so elected, persons
who are serving a qualifying period that is required for
participation, and annuitants employed by a department as

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described in subdivision (a)(1) or (a)(2) of Section 14-111.
(c) Contributions shall be made by the several departments
for each pay period by warrants drawn by the State Comptroller
against their respective funds or appropriations based upon
vouchers stating the amount to be so contributed. These amounts
shall be based on the full rate certified by the Board under
Section 14-135.08 for that fiscal year. From the effective date
of this amendatory Act of the 93rd General Assembly through the
payment of the final payroll from fiscal year 2004
appropriations, the several departments shall not make
contributions for the remainder of fiscal year 2004 but shall
instead make payments as required under subsection (a-1) of
Section 14.1 of the State Finance Act. The several departments
shall resume those contributions at the commencement of fiscal
year 2005.
(c-1) Notwithstanding subsection (c) of this Section, for
fiscal years 2010, 2012, 2013, and 2014 only, contributions by
the several departments are not required to be made for General
Revenue Funds payrolls processed by the Comptroller. Payrolls
paid by the several departments from all other State funds must
continue to be processed pursuant to subsection (c) of this
Section.
(c-2) For State fiscal years 2010, 2012, 2013, and 2014
only, on or as soon as possible after the 15th day of each
month, the Board shall submit vouchers for payment of State
contributions to the System, in a total monthly amount of

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one-twelfth of the fiscal year General Revenue Fund
contribution as certified by the System pursuant to Section
14-135.08 of the Illinois Pension Code.
(d) If an employee is paid from trust funds or federal
funds, the department or other employer shall pay employer
contributions from those funds to the System at the certified
rate, unless the terms of the trust or the federal-State
agreement preclude the use of the funds for that purpose, in
which case the required employer contributions shall be paid by
the State. From the effective date of this amendatory Act of
the 93rd General Assembly through the payment of the final
payroll from fiscal year 2004 appropriations, the department or
other employer shall not pay contributions for the remainder of
fiscal year 2004 but shall instead make payments as required
under subsection (a-1) of Section 14.1 of the State Finance
Act. The department or other employer shall resume payment of
contributions at the commencement of fiscal year 2005.
(e) For State fiscal years 2015 through 2044, 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
equal to the sum of (1) the State's portion of the projected
normal cost for that fiscal year, plus (2) an amount sufficient
to bring the total assets of the System up to 100% of the total
actuarial liabilities of the System by the end of State fiscal
year 2044. In making these determinations, the required State
contribution shall be calculated each year as a level

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percentage of payroll over the years remaining to and including
fiscal year 2044 and shall be determined under the projected
unit cost method for fiscal year 2015 and under the entry age
normal actuarial cost method for fiscal years 2016 through
2044.
For State fiscal years 2012 through 2015 2014, the minimum
contribution to the System to be made by the State for each
fiscal year shall be an amount determined by the System to be
sufficient to bring the total assets of the System up to 90% of
the total actuarial liabilities of the System by the end of
State fiscal year 2045. In making these determinations, the
required State contribution shall be calculated each year as a
level percentage of payroll over the years remaining to and
including fiscal year 2045 and shall be determined under the
projected unit credit actuarial cost method.
For State fiscal years 2016 through 2047, 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 100%
of the total actuarial liabilities of the System by the end of
State fiscal year 2047. In making these determinations, the
required State contribution shall be calculated each year as a
level dollar amount over the years remaining to and including
fiscal year 2047 and shall be determined under the projected
unit credit actuarial cost method.
For State fiscal years 1996 through 2005, the State

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

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employee payroll, shall be increased in equal annual increments
from the required State contribution for State fiscal year
2007, so that by State fiscal year 2011, the State is
contributing at the rate otherwise required under this Section.
Notwithstanding any other provision of this Article, the
total required State General Revenue Fund contribution for
State fiscal year 2010 is $723,703,100 and shall be made from
the proceeds of bonds sold in fiscal year 2010 pursuant to
Section 7.2 of the General Obligation Bond Act, less (i) the
pro rata share of bond sale expenses determined by the System's
share of total bond proceeds, (ii) any amounts received from
the General Revenue Fund in fiscal year 2010, and (iii) any
reduction in bond proceeds due to the issuance of discounted
bonds, if applicable.
Notwithstanding any other provision of this Article, the
total required State General Revenue Fund contribution for
State fiscal year 2011 is the amount recertified by the System
on or before April 1, 2011 pursuant to Section 14-135.08 and
shall be made from the proceeds of bonds sold in fiscal year
2011 pursuant to Section 7.2 of the General Obligation Bond
Act, less (i) the pro rata share of bond sale expenses
determined by the System's share of total bond proceeds, (ii)
any amounts received from the General Revenue Fund in fiscal
year 2011, and (iii) any reduction in bond proceeds due to the
issuance of discounted bonds, if applicable.
Beginning in State fiscal year 2045, the minimum State

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contribution for each fiscal year shall be the amount needed to
maintain the total assets of the System at 100% of the total
actuarial liabilities of the System.
Beginning in State fiscal year 2048, 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 100% 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 through State
fiscal year 2014, as calculated under this Section and
certified under Section 14-135.08, shall not exceed an amount
equal to (i) the amount of the required State contribution that
would have been calculated under this Section for that fiscal

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

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determine the amount due to the System based on the full rate
certified by the Board under Section 14-135.08 for fiscal year
2004 in order to meet the State's obligation under this
Section. The System shall compare this amount due to the amount
received by the System in fiscal year 2004 through payments
under this Section and under Section 6z-61 of the State Finance
Act. If the amount due is more than the amount received, the
difference shall be termed the "Fiscal Year 2004 Shortfall" for
purposes of this Section, and the Fiscal Year 2004 Shortfall
shall be satisfied under Section 1.2 of the State Pension Funds
Continuing Appropriation Act. If the amount due is less than
the amount received, the difference shall be termed the "Fiscal
Year 2004 Overpayment" for purposes of this Section, and the
Fiscal Year 2004 Overpayment shall be repaid by the System to
the Pension Contribution Fund as soon as practicable after the
certification.
(g) For purposes of determining the required State
contribution to the System, the value of the System's assets
shall be equal to the actuarial value of the System's assets,
which shall be calculated as follows:
As of June 30, 2008, the actuarial value of the System's
assets shall be equal to the market value of the assets as of
that date. In determining the actuarial value of the System's
assets for fiscal years after June 30, 2008, any actuarial
gains or losses from investment return incurred in a fiscal
year shall be recognized in equal annual amounts over the

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

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2010 Overpayment shall be repaid by the System to the General
Revenue Fund as soon as practicable after the certification.
(j) After the submission of all payments for eligible
employees from personal services line items paid from the
General Revenue Fund in fiscal year 2011 have been made, the
Comptroller shall provide to the System a certification of the
sum of all fiscal year 2011 expenditures for personal services
that would have been covered by payments to the System under
this Section if the provisions of this amendatory Act of the
96th General Assembly had not been enacted. Upon receipt of the
certification, the System shall determine the amount due to the
System based on the full rate certified by the Board under
Section 14-135.08 for fiscal year 2011 in order to meet the
State's obligation under this Section. The System shall compare
this amount due to the amount received by the System in fiscal
year 2011 through payments under this Section. If the amount
due is more than the amount received, the difference shall be
termed the "Fiscal Year 2011 Shortfall" for purposes of this
Section, and the Fiscal Year 2011 Shortfall shall be satisfied
under Section 1.2 of the State Pension Funds Continuing
Appropriation Act. If the amount due is less than the amount
received, the difference shall be termed the "Fiscal Year 2011
Overpayment" for purposes of this Section, and the Fiscal Year
2011 Overpayment shall be repaid by the System to the General
Revenue Fund as soon as practicable after the certification.
(k) For fiscal years 2012 through 2014 only, after the

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submission of all payments for eligible employees from personal
services line items paid from the General Revenue Fund in the
fiscal year have been made, the Comptroller shall provide to
the System a certification of the sum of all expenditures in
the fiscal year for personal services. Upon receipt of the
certification, the System shall determine the amount due to the
System based on the full rate certified by the Board under
Section 14-135.08 for the fiscal year in order to meet the
State's obligation under this Section. The System shall compare
this amount due to the amount received by the System for the
fiscal year. If the amount due is more than the amount
received, the difference shall be termed the "Prior Fiscal Year
Shortfall" for purposes of this Section, and the Prior Fiscal
Year Shortfall shall be satisfied under Section 1.2 of the
State Pension Funds Continuing Appropriation Act. If the amount
due is less than the amount received, the difference shall be
termed the "Prior Fiscal Year Overpayment" for purposes of this
Section, and the Prior Fiscal Year Overpayment shall be repaid
by the System to the General Revenue Fund as soon as
practicable after the certification.
(Source: P.A. 97-72, eff. 7-1-11; 97-732, eff. 6-30-12; 98-24,
eff. 6-19-13; 98-599, eff. 6-1-14.)
(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

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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 100% 90% funded
basis in accordance with actuarial recommendations by the end
of State fiscal year 2044.
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 2015 through 2044, 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
equal to the sum of (1) the State's portion of the projected
normal cost for that fiscal year, plus (2) an amount sufficient
to bring the total assets of the System up to 100% of the total
actuarial liabilities of the System by the end of the State
fiscal year 2044. 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 2044 and shall be determined under the projected
unit cost method for fiscal year 2015 and under the entry age
normal actuarial cost method for fiscal years 2016 through
2044.

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For State fiscal years 2012 through 2015 2014, the minimum
contribution to the System to be made by the State for each
fiscal year shall be an amount determined by the System to be
sufficient to bring the total assets of the System up to 90% of
the total actuarial liabilities of the System by the end of
State fiscal year 2045. In making these determinations, the
required State contribution shall be calculated each year as a
level percentage of payroll over the years remaining to and
including fiscal year 2045 and shall be determined under the
projected unit credit actuarial cost method.
For State fiscal years 2016 through 2047, 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 100%
of the total actuarial liabilities of the System by the end of
State fiscal year 2047. In making these determinations, the
required State contribution shall be calculated each year as a
level dollar amount over the years remaining to and including
fiscal year 2047 and shall be determined under the projected
unit credit actuarial cost method.
For State fiscal years 1996 through 2005, the State
contribution to the System, as a percentage of the applicable
employee payroll, shall be increased in equal annual increments
so that by State fiscal year 2011, the State is contributing at
the rate required under this Section.
Notwithstanding any other provision of this Article, the

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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
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

SB3549 - 27 - LRB098 15297 RPM 50321 b
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 2045, the minimum
contribution for each fiscal year shall be the amount needed to
maintain the total assets of the System at 100% of the total
liabilities of the System.
Beginning in State fiscal year 2048, 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 100% 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.

SB3549 - 28 - LRB098 15297 RPM 50321 b
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 through State
fiscal year 2014, 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 under this Section.
(b) If an employee is paid from trust or federal funds, the

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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
employer contributions required under this subsection shall be
remitted by the municipality to the System at the same time and

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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
during the fiscal year and expenses of administering the
System, but shall not include the principal of or any

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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 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
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

SB3549 - 32 - LRB098 15297 RPM 50321 b
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.
(h) This subsection (h) applies only to payments made or
salary increases given on or after June 1, 2005 but before July
1, 2011. The changes made by Public Act 94-1057 shall not
require the System to refund any payments received before July
31, 2006 (the effective date of Public Act 94-1057).
When assessing payment for any amount due under subsection
(g), the System shall exclude earnings increases paid to
participants under contracts or collective bargaining
agreements entered into, amended, or renewed before June 1,

SB3549 - 33 - LRB098 15297 RPM 50321 b
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
rank for a tenured or tenure-track faculty position, or (iii) a
promotion that the Illinois Community College Board has

SB3549 - 34 - LRB098 15297 RPM 50321 b
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
contribution to the System was changed due to
recalculations required by Public Act 94-1057.

SB3549 - 35 - LRB098 15297 RPM 50321 b
(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,
which shall be calculated as follows:
As of June 30, 2008, the actuarial value of the System's

SB3549 - 36 - LRB098 15297 RPM 50321 b
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. 97-813, eff. 7-13-12; 98-92, eff. 7-16-13;
98-463, eff. 8-16-13; 98-599, eff. 6-1-14.)
(40 ILCS 5/16-158) (from Ch. 108 1/2, par. 16-158)
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 100% 90% funded
basis in accordance with actuarial recommendations by the end
of State fiscal year 2044.
The Board shall determine the amount of State contributions
required for each fiscal year on the basis of the actuarial

SB3549 - 37 - LRB098 15297 RPM 50321 b
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 through 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.
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

SB3549 - 38 - LRB098 15297 RPM 50321 b
November 1, 2012, the Board shall submit to the State Actuary,
the Governor, and the General Assembly a proposed certification
of the amount of the required State contribution to the System
for the next fiscal year, along with all of the actuarial
assumptions, calculations, and data upon which that proposed
certification is based. On or before January 1 of each year,
beginning January 1, 2013, the State Actuary shall issue a
preliminary report concerning the proposed certification and
identifying, if necessary, recommended changes in actuarial
assumptions that the Board must consider before finalizing its
certification of the required State contributions.
On or before January 15, 2013 and each January 15
thereafter, the Board shall certify to the Governor and the
General Assembly the amount of the required State contribution
for the next fiscal year. The certification shall include a
copy of the actuarial recommendations upon which it is based
and shall specifically identify the System's projected State
normal cost for that fiscal year. The Board's certification
must note any deviations from the State Actuary's recommended
changes, the reason or reasons for not following the State
Actuary's recommended changes, and the fiscal impact of not
following the State Actuary's recommended changes on the
required State contribution.
(a-10) For purposes of Section (c-5) of Section 20 of the
Budget Stabilization Act, on or before November 1 of each year
beginning November 1, 2014, the Board shall determine the

SB3549 - 39 - LRB098 15297 RPM 50321 b
amount of the State contribution to the System that would have
been required for the next fiscal year if this amendatory Act
of the 98th General Assembly had not taken effect, using the
best and most recent available data but based on the law in
effect on May 31, 2014. The Board shall submit to the State
Actuary, the Governor, and the General Assembly a proposed
certification, along with the relevant law, actuarial
assumptions, calculations, and data upon which that
certification is based. On or before January 1, 2015 and every
January 1 thereafter, the State Actuary shall issue a
preliminary report concerning the proposed certification and
identifying, if necessary, recommended changes in actuarial
assumptions that the Board must consider before finalizing its
certification. On or before January 15, 2015 and every January
1 thereafter, the Board shall certify to the Governor and the
General Assembly the amount of the State contribution to the
System that would have been required for the next fiscal year
if this amendatory Act of the 98th General Assembly had not
taken effect, using the best and most recent available data but
based on the law in effect on May 31, 2014. The Board's
certification must note any deviations from the State Actuary's
recommended changes, the reason or reasons for not following
the State Actuary's recommended changes, and the impact of not
following the State Actuary's recommended changes.
(b) Through State fiscal year 1995, the State contributions
shall be paid to the System in accordance with Section 18-7 of

SB3549 - 40 - LRB098 15297 RPM 50321 b
the School Code.
(b-1) Beginning in State fiscal year 1996, on the 15th day
of each month, or as soon thereafter as may be practicable, the
Board shall submit vouchers for payment of State contributions
to the System, in a total monthly amount of one-twelfth of the
required annual State contribution certified under subsection
(a-1). From the effective date of this amendatory Act of the
93rd General Assembly through June 30, 2004, the Board shall
not submit vouchers for the remainder of fiscal year 2004 in
excess of the fiscal year 2004 certified contribution amount
determined under this Section after taking into consideration
the transfer to the System under subsection (a) of Section
6z-61 of the State Finance Act. These vouchers shall be paid by
the State Comptroller and Treasurer by warrants drawn on the
funds appropriated to the System for that fiscal year.
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

SB3549 - 41 - LRB098 15297 RPM 50321 b
diminished or affected by the provisions of this Article.
(b-3) For State fiscal years 2015 through 2044, 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
equal to the sum of (1) the State's portion of the projected
normal cost for that fiscal year, plus (2) an amount sufficient
to bring the total assets of the System up to 100% of the total
actuarial liabilities of the System by the end of State fiscal
year 2044. 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 2044 and shall be determined under the projected
unit cost method for fiscal year 2015 and under the entry age
normal actuarial cost method for fiscal years 2016 through
2044.
For State fiscal years 2012 through 2015 2014, the minimum
contribution to the System to be made by the State for each
fiscal year shall be an amount determined by the System to be
sufficient to bring the total assets of the System up to 90% of
the total actuarial liabilities of the System by the end of
State fiscal year 2045. In making these determinations, the
required State contribution shall be calculated each year as a
level percentage of payroll over the years remaining to and
including fiscal year 2045 and shall be determined under the
projected unit credit actuarial cost method.
For State fiscal years 2016 through 2047, the minimum

SB3549 - 42 - LRB098 15297 RPM 50321 b
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 100%
of the total actuarial liabilities of the System by the end of
State fiscal year 2047. In making these determinations, the
required State contribution shall be calculated each year as a
level dollar amount over the years remaining to and including
fiscal year 2047 and shall be determined under the projected
unit credit actuarial cost method.
For State fiscal years 1996 through 2005, the State
contribution to the System, as a percentage of the applicable
employee payroll, shall be increased in equal annual increments
so that by State fiscal year 2011, the State is contributing at
the rate required under this Section; except that in the
following specified State fiscal years, the State contribution
to the System shall not be less than the following indicated
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

SB3549 - 43 - LRB098 15297 RPM 50321 b
$534,627,700.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2007 is
$738,014,500.
For each of State fiscal years 2008 through 2009, the State
contribution to the System, as a percentage of the applicable
employee payroll, shall be increased in equal annual increments
from the required State contribution for State fiscal year
2007, so that by State fiscal year 2011, the State is
contributing at the rate otherwise required under this Section.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2010 is
$2,089,268,000 and shall be made from the proceeds of bonds
sold in fiscal year 2010 pursuant to Section 7.2 of the General
Obligation Bond Act, less (i) the pro rata share of bond sale
expenses determined by the System's share of total bond
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

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share of total bond proceeds, (ii) any amounts received from
the Common School Fund in fiscal year 2011, and (iii) any
reduction in bond proceeds due to the issuance of discounted
bonds, if applicable. This amount shall include, in addition to
the amount certified by the System, an amount necessary to meet
employer contributions required by the State as an employer
under paragraph (e) of this Section, which may also be used by
the System for contributions required by paragraph (a) of
Section 16-127.
Beginning in State fiscal year 2045, the minimum State
contribution for each fiscal year shall be the amount needed to
maintain the total assets of the System at 100% of the total
actuarial liabilities of the System.
Beginning in State fiscal year 2048, 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 100% 90%. A reference in this Article

SB3549 - 45 - LRB098 15297 RPM 50321 b
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 through State
fiscal year 2014, as calculated under this Section and
certified under subsection (a-1), shall not exceed an amount
equal to (i) the amount of the required State contribution that
would have been calculated under this Section for that fiscal
year if the System had not received any payments under
subsection (d) of Section 7.2 of the General Obligation Bond
Act, minus (ii) the portion of the State's total debt service
payments for that fiscal year on the bonds issued in fiscal
year 2003 for the purposes of that Section 7.2, as determined
and certified by the Comptroller, that is the same as the
System's portion of the total moneys distributed under
subsection (d) of Section 7.2 of the General Obligation Bond
Act. In determining this maximum for State fiscal years 2008
through 2010, however, the amount referred to in item (i) shall
be increased, as a percentage of the 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

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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, as determined by the System. 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.
(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)

SB3549 - 47 - LRB098 15297 RPM 50321 b
of Section 16-106, the employer's contribution shall be 12%
(rather than 20%) of the member's highest annual salary rate
for each year of creditable service granted, and the employer
shall also pay the required employee contribution on behalf of
the teacher. For the purposes of Sections 16-133.4 and
16-133.5, a teacher as defined in paragraph (8) of Section
16-106 who is serving in that capacity while on leave of
absence from another employer under this Article shall not be
considered an employee of the employer from which the teacher
is on leave.
(e) Beginning July 1, 1998, every employer of a teacher
shall pay to the System an employer contribution computed as
follows:
(1) Beginning July 1, 1998 through June 30, 1999, the
employer contribution shall be equal to 0.3% of each
teacher's salary.
(2) Beginning July 1, 1999 and thereafter, the employer
contribution shall be equal to 0.58% of each teacher's
salary.
The school district or other employing unit may pay these
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

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retirement benefits resulting from this amendatory Act of 1998.
Each employer of teachers is entitled to a credit against
the contributions required under this subsection (e) with
respect to salaries paid to teachers for the period January 1,
2002 through June 30, 2003, equal to the amount paid by that
employer under subsection (a-5) of Section 6.6 of the State
Employees Group Insurance Act of 1971 with respect to salaries
paid to teachers for that period.
The additional 1% employee contribution required under
Section 16-152 by this amendatory Act of 1998 is the
responsibility of the teacher and not the teacher's employer,
unless the employer agrees, through collective bargaining or
otherwise, to make the contribution on behalf of the teacher.
If an employer is required by a contract in effect on May
1, 1998 between the employer and an employee organization to
pay, on behalf of all its full-time employees covered by this
Article, all mandatory employee contributions required under
this Article, then the employer shall be excused from paying
the employer contribution required under this subsection (e)
for the balance of the term of that contract. The employer and
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

SB3549 - 49 - LRB098 15297 RPM 50321 b
used to determine final average salary exceeds the member's
annual full-time salary rate with the same employer for the
previous school year by more than 6%, the teacher's employer
shall pay to the System, in addition to all other payments
required under this Section and in accordance with guidelines
established by the System, the present value of the increase in
benefits resulting from the portion of the increase in salary
that is in excess of 6%. This present value shall be computed
by the System on the basis of the actuarial assumptions and
tables used in the most recent actuarial valuation of the
System that is available at the time of the computation. If a
teacher's salary for the 2005-2006 school year is used to
determine final average salary under this subsection (f), then
the changes made to this subsection (f) by Public Act 94-1057
shall apply in calculating whether the increase in his or her
salary is in excess of 6%. For the purposes of this Section,
change in employment under Section 10-21.12 of the School Code
on or after June 1, 2005 shall constitute a change in employer.
The System may require the 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

SB3549 - 50 - LRB098 15297 RPM 50321 b
shall specify the calculations used to determine the amount
due. If the employer disputes the amount of the bill, it may,
within 30 days after receipt of the bill, apply to the System
in writing for a recalculation. The application must specify in
detail the grounds of the dispute and, if the employer asserts
that the calculation is subject to subsection (g) or (h) of
this Section, must include an affidavit setting forth and
attesting to all facts within the employer's knowledge that are
pertinent to the applicability of that subsection. Upon
receiving a timely application for recalculation, the System
shall review the application and, if appropriate, recalculate
the amount due.
The employer contributions required under this subsection
(f) may be paid in the form of a lump sum within 90 days after
receipt of the bill. If the employer contributions are not paid
within 90 days after receipt of the bill, then interest will be
charged at a rate equal to the System's annual actuarially
assumed rate of return on investment compounded annually from
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).

SB3549 - 51 - LRB098 15297 RPM 50321 b
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.
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

SB3549 - 52 - LRB098 15297 RPM 50321 b
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.
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

SB3549 - 53 - LRB098 15297 RPM 50321 b
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
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.

SB3549 - 54 - LRB098 15297 RPM 50321 b
(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; 98-599, eff. 6-1-14.)
(40 ILCS 5/18-131) (from Ch. 108 1/2, par. 18-131)
Sec. 18-131. Financing; employer contributions.
(a) The State of Illinois shall make contributions to this
System by appropriations of the amounts which, together with
the contributions of participants, net earnings on
investments, and other income, will meet the costs of
maintaining and administering this System on a 90% funded basis
in accordance with actuarial recommendations.
(b) The Board shall determine the amount of State
contributions required for each fiscal year on the basis of the
actuarial tables and other assumptions adopted by the Board and
the prescribed rate of interest, using the formula in
subsection (c).
(c) For State fiscal years 2012 through 2015 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

SB3549 - 55 - LRB098 15297 RPM 50321 b
projected unit credit actuarial cost method.
For State fiscal years 2016 through 2047, 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 100%
of the total actuarial liabilities of the System by the end of
State fiscal year 2047. In making these determinations, the
required State contribution shall be calculated each year as a
level dollar amount over the years remaining to and including
fiscal year 2047 and shall be determined under the projected
unit credit actuarial cost method.
For State fiscal years 1996 through 2005, the State
contribution to the System, as a percentage of the applicable
employee payroll, shall be increased in equal annual increments
so that by State fiscal year 2011, the State is contributing at
the rate required under this Section.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2006 is
$29,189,400.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2007 is
$35,236,800.
For each of State fiscal years 2008 through 2009, the State
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

SB3549 - 56 - LRB098 15297 RPM 50321 b
2007, so that by State fiscal year 2011, the State is
contributing at the rate otherwise required under this Section.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2010 is
$78,832,000 and shall be made from the proceeds of bonds sold
in fiscal year 2010 pursuant to Section 7.2 of the General
Obligation Bond Act, less (i) the pro rata share of bond sale
expenses determined by the System's share of total bond
proceeds, (ii) any amounts received from the General Revenue
Fund in fiscal year 2010, and (iii) any reduction in bond
proceeds due to the issuance of discounted bonds, if
applicable.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2011 is
the amount recertified by the System on or before April 1, 2011
pursuant to Section 18-140 and shall be made from the proceeds
of bonds sold in fiscal year 2011 pursuant to Section 7.2 of
the General Obligation Bond Act, less (i) the pro rata share of
bond sale expenses determined by the System's share of total
bond proceeds, (ii) any amounts received from the General
Revenue Fund in fiscal year 2011, and (iii) any reduction in
bond proceeds due to the issuance of discounted bonds, if
applicable.
Beginning in State fiscal year 2048 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

SB3549 - 57 - LRB098 15297 RPM 50321 b
actuarial liabilities of the System.
Amounts received by the System pursuant to Section 25 of
the Budget Stabilization Act or Section 8.12 of the State
Finance Act in any fiscal year do not reduce and do not
constitute payment of any portion of the minimum State
contribution required under this Article in that fiscal year.
Such amounts shall not reduce, and shall not be included in the
calculation of, the required State contributions under this
Article in any future year until the System has reached a
funding ratio of at least 90%. A reference in this Article to
the "required State contribution" or any substantially similar
term does not include or apply to any amounts payable to the
System under Section 25 of the Budget Stabilization Act.
Notwithstanding any other provision of this Section, the
required State contribution for State fiscal year 2005 and for
fiscal year 2008 and each fiscal year thereafter, as calculated
under this Section and certified under Section 18-140, shall
not exceed an amount equal to (i) the amount of the required
State contribution that would have been calculated under this
Section for that fiscal year if the System had not received any
payments under subsection (d) of Section 7.2 of the General
Obligation Bond Act, minus (ii) the portion of the State's
total debt service payments for that fiscal year on the bonds
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

SB3549 - 58 - LRB098 15297 RPM 50321 b
distributed under subsection (d) of Section 7.2 of the General
Obligation Bond Act. In determining this maximum for State
fiscal years 2008 through 2010, however, the amount referred to
in item (i) shall be increased, as a percentage of the
applicable employee payroll, in equal increments calculated
from the sum of the required State contribution for State
fiscal year 2007 plus the applicable portion of the State's
total debt service payments for fiscal year 2007 on the bonds
issued in fiscal year 2003 for the purposes of Section 7.2 of
the General Obligation Bond Act, so that, by State fiscal year
2011, the State is contributing at the rate otherwise required
under this Section.
(d) For purposes of determining the required State
contribution to the System, the value of the System's assets
shall be equal to the actuarial value of the System's assets,
which shall be calculated as follows:
As of June 30, 2008, the actuarial value of the System's
assets shall be equal to the market value of the assets as of
that date. In determining the actuarial value of the System's
assets for fiscal years after June 30, 2008, any actuarial
gains or losses from investment return incurred in a fiscal
year shall be recognized in equal annual amounts over the
5-year period following that fiscal year.
(e) For purposes of determining the required State
contribution to the system for a particular year, the actuarial
value of assets shall be assumed to earn a rate of return equal

SB3549 - 59 - LRB098 15297 RPM 50321 b
to the system's actuarially assumed rate of return.
(Source: P.A. 96-43, eff. 7-15-09; 96-1497, eff. 1-14-11;
96-1511, eff. 1-27-11; 96-1554, eff. 3-18-11; 97-813, eff.
7-13-12.)