Bill Text: IL HB2966 | 2017-2018 | 100th General Assembly | Chaptered

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Bill Title: Amends the Illinois Municipal Retirement Fund (IMRF) Article of the Illinois Pension Code. In a provision that requires an additional contribution from a participating municipality or participating instrumentality for certain increases in reported earnings, changes a reference from "salary" to "reported earnings" and provides that the change is a clarification of existing law and is intended to be retroactive to January 1, 2012 (the effective date of Public Act 97-609). In a provision establishing the board of trustees, provides that no person shall be eligible to become a trustee who does not have the minimum service credit in the Fund to qualify for a pension (instead of at least 8 years of creditable service). Effective immediately.

Spectrum: Moderate Partisan Bill (Democrat 4-1)

Status: (Passed) 2017-08-18 - Public Act . . . . . . . . . 100-0139 [HB2966 Detail]

Download: Illinois-2017-HB2966-Chaptered.html

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Public Act 100-0139
HB2966 Enrolled LRB100 09048 RPS 19197 b
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 7-172 and 7-174 as follows:
(40 ILCS 5/7-172) (from Ch. 108 1/2, par. 7-172)
Sec. 7-172. Contributions by participating municipalities
and participating instrumentalities.
(a) Each participating municipality and each participating
instrumentality shall make payment to the fund as follows:
1. municipality contributions in an amount determined
by applying the municipality contribution rate to each
payment of earnings paid to each of its participating
employees;
2. an amount equal to the employee contributions
provided by paragraph (a) of Section 7-173, whether or not
the employee contributions are withheld as permitted by
that Section;
3. all accounts receivable, together with interest
charged thereon, as provided in Section 7-209, and any
amounts due under subsection (a-5) of Section 7-144;
4. if it has no participating employees with current
earnings, an amount payable which, over a closed period of

20 years for participating municipalities and 10 years for
participating instrumentalities, will amortize, at the
effective rate for that year, any unfunded obligation. The
unfunded obligation shall be computed as provided in
paragraph 2 of subsection (b);
5. if it has fewer than 7 participating employees or a
negative balance in its municipality reserve, the greater
of (A) an amount payable that, over a period of 20 years,
will amortize at the effective rate for that year any
unfunded obligation, computed as provided in paragraph 2 of
subsection (b) or (B) the amount required by paragraph 1 of
this subsection (a).
(b) A separate municipality contribution rate shall be
determined for each calendar year for all participating
municipalities together with all instrumentalities thereof.
The municipality contribution rate shall be determined for
participating instrumentalities as if they were participating
municipalities. The municipality contribution rate shall be
the sum of the following percentages:
1. The percentage of earnings of all the participating
employees of all participating municipalities and
participating instrumentalities which, if paid over the
entire period of their service, will be sufficient when
combined with all employee contributions available for the
payment of benefits, to provide all annuities for
participating employees, and the $3,000 death benefit

payable under Sections 7-158 and 7-164, such percentage to
be known as the normal cost rate.
2. The percentage of earnings of the participating
employees of each participating municipality and
participating instrumentalities necessary to adjust for
the difference between the present value of all benefits,
excluding temporary and total and permanent disability and
death benefits, to be provided for its participating
employees and the sum of its accumulated municipality
contributions and the accumulated employee contributions
and the present value of expected future employee and
municipality contributions pursuant to subparagraph 1 of
this paragraph (b). This adjustment shall be spread over a
period determined by the Board, not to exceed 30 years for
participating municipalities or 10 years for participating
instrumentalities.
3. The percentage of earnings of the participating
employees of all municipalities and participating
instrumentalities necessary to provide the present value
of all temporary and total and permanent disability
benefits granted during the most recent year for which
information is available.
4. The percentage of earnings of the participating
employees of all participating municipalities and
participating instrumentalities necessary to provide the
present value of the net single sum death benefits expected

to become payable from the reserve established under
Section 7-206 during the year for which this rate is fixed.
5. The percentage of earnings necessary to meet any
deficiency arising in the Terminated Municipality Reserve.
(c) A separate municipality contribution rate shall be
computed for each participating municipality or participating
instrumentality for its sheriff's law enforcement employees.
A separate municipality contribution rate shall be
computed for the sheriff's law enforcement employees of each
forest preserve district that elects to have such employees.
For the period from January 1, 1986 to December 31, 1986, such
rate shall be the forest preserve district's regular rate plus
2%.
In the event that the Board determines that there is an
actuarial deficiency in the account of any municipality with
respect to a person who has elected to participate in the Fund
under Section 3-109.1 of this Code, the Board may adjust the
municipality's contribution rate so as to make up that
deficiency over such reasonable period of time as the Board may
determine.
(d) The Board may establish a separate municipality
contribution rate for all employees who are program
participants employed under the federal Comprehensive
Employment Training Act by all of the participating
municipalities and instrumentalities. The Board may also
provide that, in lieu of a separate municipality rate for these

employees, a portion of the municipality contributions for such
program participants shall be refunded or an extra charge
assessed so that the amount of municipality contributions
retained or received by the fund for all CETA program
participants shall be an amount equal to that which would be
provided by the separate municipality contribution rate for all
such program participants. Refunds shall be made to prime
sponsors of programs upon submission of a claim therefor and
extra charges shall be assessed to participating
municipalities and instrumentalities. In establishing the
municipality contribution rate as provided in paragraph (b) of
this Section, the use of a separate municipality contribution
rate for program participants or the refund of a portion of the
municipality contributions, as the case may be, may be
considered.
(e) Computations of municipality contribution rates for
the following calendar year shall be made prior to the
beginning of each year, from the information available at the
time the computations are made, and on the assumption that the
employees in each participating municipality or participating
instrumentality at such time will continue in service until the
end of such calendar year at their respective rates of earnings
at such time.
(f) Any municipality which is the recipient of State
allocations representing that municipality's contributions for
retirement annuity purposes on behalf of its employees as

provided in Section 12-21.16 of the Illinois Public Aid Code
shall pay the allocations so received to the Board for such
purpose. Estimates of State allocations to be received during
any taxable year shall be considered in the determination of
the municipality's tax rate for that year under Section 7-171.
If a special tax is levied under Section 7-171, none of the
proceeds may be used to reimburse the municipality for the
amount of State allocations received and paid to the Board. Any
multiple-county or consolidated health department which
receives contributions from a county under Section 11.2 of "An
Act in relation to establishment and maintenance of county and
multiple-county health departments", approved July 9, 1943, as
amended, or distributions under Section 3 of the Department of
Public Health Act, shall use these only for municipality
contributions by the health department.
(g) Municipality contributions for the several purposes
specified shall, for township treasurers and employees in the
offices of the township treasurers who meet the qualifying
conditions for coverage hereunder, be allocated among the
several school districts and parts of school districts serviced
by such treasurers and employees in the proportion which the
amount of school funds of each district or part of a district
handled by the treasurer bears to the total amount of all
school funds handled by the treasurer.
From the funds subject to allocation among districts and
parts of districts pursuant to the School Code, the trustees

shall withhold the proportionate share of the liability for
municipality contributions imposed upon such districts by this
Section, in respect to such township treasurers and employees
and remit the same to the Board.
The municipality contribution rate for an educational
service center shall initially be the same rate for each year
as the regional office of education or school district which
serves as its administrative agent. When actuarial data become
available, a separate rate shall be established as provided in
subparagraph (i) of this Section.
The municipality contribution rate for a public agency,
other than a vocational education cooperative, formed under the
Intergovernmental Cooperation Act shall initially be the
average rate for the municipalities which are parties to the
intergovernmental agreement. When actuarial data become
available, a separate rate shall be established as provided in
subparagraph (i) of this Section.
(h) Each participating municipality and participating
instrumentality shall make the contributions in the amounts
provided in this Section in the manner prescribed from time to
time by the Board and all such contributions shall be
obligations of the respective participating municipalities and
participating instrumentalities to this fund. The failure to
deduct any employee contributions shall not relieve the
participating municipality or participating instrumentality of
its obligation to this fund. Delinquent payments of

contributions due under this Section may, with interest, be
recovered by civil action against the participating
municipalities or participating instrumentalities.
Municipality contributions, other than the amount necessary
for employee contributions, for periods of service by employees
from whose earnings no deductions were made for employee
contributions to the fund, may be charged to the municipality
reserve for the municipality or participating instrumentality.
(i) Contributions by participating instrumentalities shall
be determined as provided herein except that the percentage
derived under subparagraph 2 of paragraph (b) of this Section,
and the amount payable under subparagraph 4 of paragraph (a) of
this Section, shall be based on an amortization period of 10
years.
(j) Notwithstanding the other provisions of this Section,
the additional unfunded liability accruing as a result of this
amendatory Act of the 94th General Assembly shall be amortized
over a period of 30 years beginning on January 1 of the second
calendar year following the calendar year in which this
amendatory Act takes effect, except that the employer may
provide for a longer amortization period by adopting a
resolution or ordinance specifying a 35-year or 40-year period
and submitting a certified copy of the ordinance or resolution
to the fund no later than June 1 of the calendar year following
the calendar year in which this amendatory Act takes effect.
(k) If the amount of a participating employee's reported

earnings for any of the 12-month periods used to determine the
final rate of earnings exceeds the employee's 12 month reported
earnings with the same employer for the previous year by the
greater of 6% or 1.5 times the annual increase in the Consumer
Price Index-U, as established by the United States Department
of Labor for the preceding September, the participating
municipality or participating instrumentality that paid those
earnings shall pay to the Fund, in addition to any other
contributions required under this Article, the present value of
the increase in the pension resulting from the portion of the
increase in reported earnings salary that is in excess of the
greater of 6% or 1.5 times the annual increase in the Consumer
Price Index-U, as determined by the Fund. This present value
shall be computed on the basis of the actuarial assumptions and
tables used in the most recent actuarial valuation of the Fund
that is available at the time of the computation.
Whenever it determines that a payment is or may be required
under this subsection (k), the fund shall calculate the amount
of the payment and bill the participating municipality or
participating instrumentality for that amount. The bill shall
specify the calculations used to determine the amount due. If
the participating municipality or participating
instrumentality disputes the amount of the bill, it may, within
30 days after receipt of the bill, apply to the fund in writing
for a recalculation. The application must specify in detail the
grounds of the dispute. Upon receiving a timely application for

recalculation, the fund shall review the application and, if
appropriate, recalculate the amount due. The participating
municipality and participating instrumentality contributions
required under this subsection (k) may be paid in the form of a
lump sum within 90 days after receipt of the bill. If the
participating municipality and participating instrumentality
contributions are not paid within 90 days after receipt of the
bill, then interest will be charged at a rate equal to the
fund'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 receipt
of the bill by the participating municipality or participating
instrumentality.
When assessing payment for any amount due under this
subsection (k), the fund shall exclude earnings increases
resulting from overload or overtime earnings.
When assessing payment for any amount due under this
subsection (k), the fund shall also exclude earnings increases
attributable to standard employment promotions resulting in
increased responsibility and workload.
This subsection (k) does not apply to earnings increases
paid to individuals under contracts or collective bargaining
agreements entered into, amended, or renewed before January 1,
2012 (the effective date of Public Act 97-609), earnings
increases paid to members who are 10 years or more from
retirement eligibility, or earnings increases resulting from

an increase in the number of hours required to be worked.
When assessing payment for any amount due under this
subsection (k), the fund shall also exclude earnings
attributable to personnel policies adopted before January 1,
2012 (the effective date of Public Act 97-609) as long as those
policies are not applicable to employees who begin service on
or after January 1, 2012 (the effective date of Public Act
97-609).
The change made to this Section by this amendatory Act of
the 100th General Assembly is a clarification of existing law
and is intended to be retroactive to January 1, 2012 (the
effective date of Public Act 97-609).
(Source: P.A. 98-218, eff. 8-9-13; 99-745, eff. 8-5-16.)
(40 ILCS 5/7-174) (from Ch. 108 1/2, par. 7-174)
Sec. 7-174. Board created.
(a) A board of 8 members shall constitute a board of
trustees authorized to carry out the provisions of this
Article. Each trustee shall be a participating employee of a
participating municipality or participating instrumentality or
an annuitant of the Fund and no person shall be eligible to
become a trustee after January 1, 1979 who does not have the
minimum service credit in this Fund to qualify for a pension at
least 8 years of creditable service.
(b) The board shall consist of representatives of various
groups as follows:

1. 4 trustees shall be a chief executive officer, chief
finance officer, or other officer, executive or department
head of a participating municipality or participating
instrumentality, and each such trustee shall be designated
as an executive trustee.
2. 3 trustees shall be employees of a participating
municipality or participating instrumentality and each
such trustee shall be designated as an employee trustee.
3. One trustee shall be an annuitant of the Fund, who
shall be designated the annuitant trustee.
(c) A person elected as a trustee shall qualify as a
trustee, after declaration by the board that he has been duly
elected, upon taking and subscribing to the constitutional oath
of office and filing same in the office of the Fund.
(d) The term of office of each trustee shall begin upon
January 1 of the year following the year in which he is elected
and shall continue for a period of 5 years and until a
successor has been elected and qualified, or until prior
resignation, death, incapacity or disqualification.
(e) Any elected trustee (other than the annuitant trustee)
shall be disqualified immediately upon termination of
employment with all participating municipalities and
instrumentalities thereof or upon any change in status which
removes any such trustee from all employments within the group
he represents. The annuitant trustee shall be disqualified upon
termination of his or her annuity.

(f) The trustees shall fill any vacancy in the board by
appointment, for the period until the next election of
trustees, or, if the remaining term is less than 2 years, for
the remainder of the term, and until his successor has been
elected and qualified.
(g) Trustees shall serve without compensation, but shall be
reimbursed for any reasonable expenses incurred in attending
meetings of the board and in performing duties on behalf of the
Fund and for the amount of any earnings withheld by any
employing municipality or participating instrumentality
because of attendance at any board meeting.
(h) Each trustee shall be entitled to one vote on any and
all actions before the board. At least 5 concurring votes shall
be necessary for every decision or action by the board at any
of its meetings. No decision or action shall become effective
unless presented and so approved at a regular or duly called
special meeting of the board.
(Source: P.A. 95-890, eff. 8-22-08.)
Section 99. Effective date. This Act takes effect upon
becoming law.