Bill Text: IL HB4045 | 2017-2018 | 100th General Assembly | Engrossed

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Bill Title: Amends the Illinois Pension Code. In Articles 2, 14, 15, 16, and 17, requires active Tier 1 employees to elect either (i) to have automatic annual increases in retirement and survivor's annuities delayed and reduced or (ii) to maintain current benefits except for additional limits on pensionable salary; provides additional benefits to persons electing item (i). Makes funding changes, including shifting certain costs to employers under Articles 15 and 16. Restricts participation in the General Assembly Retirement System to persons who became participants before the effective date. In Articles 14, 15, and 16, requires those Systems to offer an optional accelerated benefit payment to certain members in lieu of receiving a pension. Provides separate benefits for certain persons who become participants under Article 14, 15, or 16. Requires those retirement systems to establish a defined contribution plan for certain members; in Articles 7, 8, 9, 10, 11, 12, 13, and 17, establishes similar benefits if the governing body of the unit of local government adopts those benefits. In Article 17, requires the State to contribute $215,200,000 for fiscal year 2017. Provides a continuing appropriation for the Article 17 State contribution and for certain consideration payments. Amends various Acts to make conforming changes. Provides for the transfer of certain amounts to the Pension Stabilization Fund. Amends the Illinois Educational Labor Relations Act and the Illinois Public Labor Relations Act to prohibit bargaining and interest arbitration regarding certain changes made by the amendatory Act; exempts certain existing agreements. Makes other changes. Includes severability provisions. Effective immediately.

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Failed) 2019-01-08 - Session Sine Die [HB4045 Detail]

Download: Illinois-2017-HB4045-Engrossed.html

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HB4045 Engrossed LRB100 12674 RPS 26063 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 Public Labor Relations Act is
amended by changing Sections 10 and 15 and by adding Section
7.6 as follows:
(5 ILCS 315/7.6 new)
Sec. 7.6. No collective bargaining or interest arbitration
regarding certain changes to the Illinois Pension Code.
(a) Notwithstanding any other provision of this Act,
employers shall not be required to bargain over matters
affected by the changes, the impact of the changes, and the
implementation of the changes to Article 14, 15, 16, or 17 of
the Illinois Pension Code made by the addition of Section
14-106.5, 15-132.9, 16-122.9, or 17-115.5 of the Illinois
Pension Code, which are deemed to be prohibited subjects of
bargaining. Notwithstanding any provision of this Act, the
changes, impact of the changes, or implementation of the
changes to Article 14, 15, 16, or 17 of the Illinois Pension
Code made by the addition of Section 14-106.5, 15-132.9,
16-122.9, or 17-115.5 of the Illinois Pension Code shall not be
subject to interest arbitration or any award issued pursuant to
interest arbitration. The provisions of this Section shall not

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apply to an employment contract or collective bargaining
agreement that is in effect on the effective date of this
amendatory Act of the 100th General Assembly. However, any such
contract or agreement that is modified, amended, renewed, or
superseded after the effective date of this amendatory Act of
the 100th General Assembly shall be subject to the provisions
of this Section. Each employer with active employees
participating in a retirement system or pension fund
established under Article 14, 15, 16, or 17 of the Illinois
Pension Code shall comply with and be subject to the provisions
of this amendatory Act of the 100th General Assembly. The
provisions of this Section shall not apply to the ability of
any employer and employee representative to bargain
collectively with regard to the pick up of employee
contributions pursuant to Section 14-133.1, 15-157.1,
16-152.1, 17-130.1, or 17-130.2 of the Illinois Pension Code.
(b) Subject to and except for the matters set forth in
subsection (a) of this Section that are deemed prohibited
subjects of bargaining, nothing in this Section shall be
construed as otherwise limiting any of the obligations and
requirements applicable to employers under any of the
provisions of this Act, including, but not limited to, the
requirement to bargain collectively with regard to policy
matters directly affecting wages, hours, and terms and
conditions of employment as well as the impact thereon upon
request by employee representatives. Subject to and except for

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the matters set forth in subsection (a) of this Section that
are deemed prohibited subjects of bargaining, nothing in this
Section shall be construed as otherwise limiting any of the
rights of employees or employee representatives under the
provisions of this Act.
(c) In case of any conflict between this Section and any
other provisions of this Act or any other law, the provisions
of this Section shall control.
(5 ILCS 315/10) (from Ch. 48, par. 1610)
Sec. 10. Unfair labor practices.
(a) It shall be an unfair labor practice for an employer or
its agents:
(1) to interfere with, restrain or coerce public
employees in the exercise of the rights guaranteed in this
Act or to dominate or interfere with the formation,
existence or administration of any labor organization or
contribute financial or other support to it; provided, an
employer shall not be prohibited from permitting employees
to confer with him during working hours without loss of
time or pay;
(2) to discriminate in regard to hire or tenure of
employment or any term or condition of employment in order
to encourage or discourage membership in or other support
for any labor organization. Nothing in this Act or any
other law precludes a public employer from making an

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agreement with a labor organization to require as a
condition of employment the payment of a fair share under
paragraph (e) of Section 6;
(3) to discharge or otherwise discriminate against a
public employee because he has signed or filed an
affidavit, petition or charge or provided any information
or testimony under this Act;
(4) subject to and except as provided in Section 7.6,
to refuse to bargain collectively in good faith with a
labor organization which is the exclusive representative
of public employees in an appropriate unit, including, but
not limited to, the discussing of grievances with the
exclusive representative; however, no actions of the
employer taken to implement or otherwise comply with the
provisions of subsection (a) of Section 7.6 shall
constitute or give rise to an unfair labor practice under
this Act;
(5) to violate any of the rules and regulations
established by the Board with jurisdiction over them
relating to the conduct of representation elections or the
conduct affecting the representation elections;
(6) to expend or cause the expenditure of public funds
to any external agent, individual, firm, agency,
partnership or association in any attempt to influence the
outcome of representational elections held pursuant to
Section 9 of this Act; provided, that nothing in this

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subsection shall be construed to limit an employer's right
to internally communicate with its employees as provided in
subsection (c) of this Section, to be represented on any
matter pertaining to unit determinations, unfair labor
practice charges or pre-election conferences in any formal
or informal proceeding before the Board, or to seek or
obtain advice from legal counsel. Nothing in this paragraph
shall be construed to prohibit an employer from expending
or causing the expenditure of public funds on, or seeking
or obtaining services or advice from, any organization,
group, or association established by and including public
or educational employers, whether covered by this Act, the
Illinois Educational Labor Relations Act or the public
employment labor relations law of any other state or the
federal government, provided that such services or advice
are generally available to the membership of the
organization, group or association, and are not offered
solely in an attempt to influence the outcome of a
particular representational election; or
(7) to refuse to reduce a collective bargaining
agreement to writing or to refuse to sign such agreement.
(b) It shall be an unfair labor practice for a labor
organization or its agents:
(1) to restrain or coerce public employees in the
exercise of the rights guaranteed in this Act, provided,
(i) that this paragraph shall not impair the right of a

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labor organization to prescribe its own rules with respect
to the acquisition or retention of membership therein or
the determination of fair share payments and (ii) that a
labor organization or its agents shall commit an unfair
labor practice under this paragraph in duty of fair
representation cases only by intentional misconduct in
representing employees under this Act;
(2) to restrain or coerce a public employer in the
selection of his representatives for the purposes of
collective bargaining or the settlement of grievances; or
(3) to cause, or attempt to cause, an employer to
discriminate against an employee in violation of
subsection (a)(2);
(4) to refuse to bargain collectively in good faith
with a public employer, if it has been designated in
accordance with the provisions of this Act as the exclusive
representative of public employees in an appropriate unit;
(5) to violate any of the rules and regulations
established by the boards with jurisdiction over them
relating to the conduct of representation elections or the
conduct affecting the representation elections;
(6) to discriminate against any employee because he has
signed or filed an affidavit, petition or charge or
provided any information or testimony under this Act;
(7) to picket or cause to be picketed, or threaten to
picket or cause to be picketed, any public employer where

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an object thereof is forcing or requiring an employer to
recognize or bargain with a labor organization of the
representative of its employees, or forcing or requiring
the employees of an employer to accept or select such labor
organization as their collective bargaining
representative, unless such labor organization is
currently certified as the representative of such
employees:
(A) where the employer has lawfully recognized in
accordance with this Act any labor organization and a
question concerning representation may not
appropriately be raised under Section 9 of this Act;
(B) where within the preceding 12 months a valid
election under Section 9 of this Act has been
conducted; or
(C) where such picketing has been conducted
without a petition under Section 9 being filed within a
reasonable period of time not to exceed 30 days from
the commencement of such picketing; provided that when
such a petition has been filed the Board shall
forthwith, without regard to the provisions of
subsection (a) of Section 9 or the absence of a showing
of a substantial interest on the part of the labor
organization, direct an election in such unit as the
Board finds to be appropriate and shall certify the
results thereof; provided further, that nothing in

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this subparagraph shall be construed to prohibit any
picketing or other publicity for the purpose of
truthfully advising the public that an employer does
not employ members of, or have a contract with, a labor
organization unless an effect of such picketing is to
induce any individual employed by any other person in
the course of his employment, not to pick up, deliver,
or transport any goods or not to perform any services;
or
(8) to refuse to reduce a collective bargaining
agreement to writing or to refuse to sign such agreement.
(c) The expressing of any views, argument, or opinion or
the dissemination thereof, whether in written, printed,
graphic, or visual form, shall not constitute or be evidence of
an unfair labor practice under any of the provisions of this
Act, if such expression contains no threat of reprisal or force
or promise of benefit.
(Source: P.A. 86-412; 87-736.)
(5 ILCS 315/15) (from Ch. 48, par. 1615)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 15. Act Takes Precedence.
(a) In case of any conflict between the provisions of this
Act and any other law (other than Section 5 of the State
Employees Group Insurance Act of 1971 and other than the

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changes made to the Illinois Pension Code by this amendatory
Act of the 96th General Assembly), executive order or
administrative regulation relating to wages, hours and
conditions of employment and employment relations, the
provisions of this Act or any collective bargaining agreement
negotiated thereunder shall prevail and control. Nothing in
this Act shall be construed to replace or diminish the rights
of employees established by Sections 28 and 28a of the
Metropolitan Transit Authority Act, Sections 2.15 through 2.19
of the Regional Transportation Authority Act. The provisions of
this Act are subject to Section 5 of the State Employees Group
Insurance Act of 1971. Nothing in this Act shall be construed
to replace the necessity of complaints against a sworn peace
officer, as defined in Section 2(a) of the Uniform Peace
Officer Disciplinary Act, from having a complaint supported by
a sworn affidavit.
(b) Except as provided in subsection (a) above, any
collective bargaining contract between a public employer and a
labor organization executed pursuant to this Act shall
supersede any contrary statutes, charters, ordinances, rules
or regulations relating to wages, hours and conditions of
employment and employment relations adopted by the public
employer or its agents. Any collective bargaining agreement
entered into prior to the effective date of this Act shall
remain in full force during its duration.
(c) It is the public policy of this State, pursuant to

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paragraphs (h) and (i) of Section 6 of Article VII of the
Illinois Constitution, that the provisions of this Act are the
exclusive exercise by the State of powers and functions which
might otherwise be exercised by home rule units. Such powers
and functions may not be exercised concurrently, either
directly or indirectly, by any unit of local government,
including any home rule unit, except as otherwise authorized by
this Act.
(d) Notwithstanding any other provision of law, no
collective bargaining agreement entered into, renewed, or
extended after the effective date of this amendatory Act of the
100th General Assembly or any arbitration award issued under
such collective bargaining agreement may violate or conflict
with the changes made by this amendatory Act of the 100th
General Assembly.
(Source: P.A. 95-331, eff. 8-21-07; 96-889, eff. 1-1-11.)
Section 10. The State Employees Group Insurance Act of 1971
is amended by changing Sections 3 and 10 as follows:
(5 ILCS 375/3) (from Ch. 127, par. 523)
Sec. 3. Definitions. Unless the context otherwise
requires, the following words and phrases as used in this Act
shall have the following meanings. The Department may define
these and other words and phrases separately for the purpose of
implementing specific programs providing benefits under this

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Act.
(a) "Administrative service organization" means any
person, firm or corporation experienced in the handling of
claims which is fully qualified, financially sound and capable
of meeting the service requirements of a contract of
administration executed with the Department.
(b) "Annuitant" means (1) an employee who retires, or has
retired, on or after January 1, 1966 on an immediate annuity
under the provisions of Articles 2, 14 (including an employee
who has elected to receive an alternative retirement
cancellation payment under Section 14-108.5 of the Illinois
Pension Code in lieu of an annuity or who meets the criteria
for retirement, but in lieu of receiving an annuity under that
Article has elected to receive an accelerated pension benefit
payment under Section 14-147.5 of that Article), 15 (including
an employee who has retired under the optional retirement
program established under Section 15-158.2 or who meets the
criteria for retirement but in lieu of receiving an annuity
under that Article has elected to receive an accelerated
pension benefit payment under Section 15-185.5 of the Article),
paragraphs (2), (3), or (5) of Section 16-106 (including an
employee who meets the criteria for retirement, but in lieu of
receiving an annuity under that Article has elected to receive
an accelerated pension benefit payment under Section 16-190.5
of the Illinois Pension Code), or Article 18 of the Illinois
Pension Code; (2) any person who was receiving group insurance

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coverage under this Act as of March 31, 1978 by reason of his
status as an annuitant, even though the annuity in relation to
which such coverage was provided is a proportional annuity
based on less than the minimum period of service required for a
retirement annuity in the system involved; (3) any person not
otherwise covered by this Act who has retired as a
participating member under Article 2 of the Illinois Pension
Code but is ineligible for the retirement annuity under Section
2-119 of the Illinois Pension Code; (4) the spouse of any
person who is receiving a retirement annuity under Article 18
of the Illinois Pension Code and who is covered under a group
health insurance program sponsored by a governmental employer
other than the State of Illinois and who has irrevocably
elected to waive his or her coverage under this Act and to have
his or her spouse considered as the "annuitant" under this Act
and not as a "dependent"; or (5) an employee who retires, or
has retired, from a qualified position, as determined according
to rules promulgated by the Director, under a qualified local
government, a qualified rehabilitation facility, a qualified
domestic violence shelter or service, or a qualified child
advocacy center. (For definition of "retired employee", see (p)
post).
(b-5) (Blank).
(b-6) (Blank).
(b-7) (Blank).
(c) "Carrier" means (1) an insurance company, a corporation

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organized under the Limited Health Service Organization Act or
the Voluntary Health Services Plan Act, a partnership, or other
nongovernmental organization, which is authorized to do group
life or group health insurance business in Illinois, or (2) the
State of Illinois as a self-insurer.
(d) "Compensation" means salary or wages payable on a
regular payroll by the State Treasurer on a warrant of the
State Comptroller out of any State, trust or federal fund, or
by the Governor of the State through a disbursing officer of
the State out of a trust or out of federal funds, or by any
Department out of State, trust, federal or other funds held by
the State Treasurer or the Department, to any person for
personal services currently performed, and ordinary or
accidental disability benefits under Articles 2, 14, 15
(including ordinary or accidental disability benefits under
the optional retirement program established under Section
15-158.2), paragraphs (2), (3), or (5) of Section 16-106, or
Article 18 of the Illinois Pension Code, for disability
incurred after January 1, 1966, or benefits payable under the
Workers' Compensation or Occupational Diseases Act or benefits
payable under a sick pay plan established in accordance with
Section 36 of the State Finance Act. "Compensation" also means
salary or wages paid to an employee of any qualified local
government, qualified rehabilitation facility, qualified
domestic violence shelter or service, or qualified child
advocacy center.

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(e) "Commission" means the State Employees Group Insurance
Advisory Commission authorized by this Act. Commencing July 1,
1984, "Commission" as used in this Act means the Commission on
Government Forecasting and Accountability as established by
the Legislative Commission Reorganization Act of 1984.
(f) "Contributory", when referred to as contributory
coverage, shall mean optional coverages or benefits elected by
the member toward the cost of which such member makes
contribution, or which are funded in whole or in part through
the acceptance of a reduction in earnings or the foregoing of
an increase in earnings by an employee, as distinguished from
noncontributory coverage or benefits which are paid entirely by
the State of Illinois without reduction of the member's salary.
(g) "Department" means any department, institution, board,
commission, officer, court or any agency of the State
government receiving appropriations and having power to
certify payrolls to the Comptroller authorizing payments of
salary and wages against such appropriations as are made by the
General Assembly from any State fund, or against trust funds
held by the State Treasurer and includes boards of trustees of
the retirement systems created by Articles 2, 14, 15, 16 and 18
of the Illinois Pension Code. "Department" also includes the
Illinois Comprehensive Health Insurance Board, the Board of
Examiners established under the Illinois Public Accounting
Act, and the Illinois Finance Authority.
(h) "Dependent", when the term is used in the context of

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the health and life plan, means a member's spouse and any child
(1) from birth to age 26 including an adopted child, a child
who lives with the member from the time of the filing of a
petition for adoption until entry of an order of adoption, a
stepchild or adjudicated child, or a child who lives with the
member if such member is a court appointed guardian of the
child or (2) age 19 or over who has a mental or physical
disability from a cause originating prior to the age of 19 (age
26 if enrolled as an adult child dependent). For the health
plan only, the term "dependent" also includes (1) any person
enrolled prior to the effective date of this Section who is
dependent upon the member to the extent that the member may
claim such person as a dependent for income tax deduction
purposes and (2) any person who has received after June 30,
2000 an organ transplant and who is financially dependent upon
the member and eligible to be claimed as a dependent for income
tax purposes. A member requesting to cover any dependent must
provide documentation as requested by the Department of Central
Management Services and file with the Department any and all
forms required by the Department.
(i) "Director" means the Director of the Illinois
Department of Central Management Services.
(j) "Eligibility period" means the period of time a member
has to elect enrollment in programs or to select benefits
without regard to age, sex or health.
(k) "Employee" means and includes each officer or employee

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in the service of a department who (1) receives his
compensation for service rendered to the department on a
warrant issued pursuant to a payroll certified by a department
or on a warrant or check issued and drawn by a department upon
a trust, federal or other fund or on a warrant issued pursuant
to a payroll certified by an elected or duly appointed officer
of the State or who receives payment of the performance of
personal services on a warrant issued pursuant to a payroll
certified by a Department and drawn by the Comptroller upon the
State Treasurer against appropriations made by the General
Assembly from any fund or against trust funds held by the State
Treasurer, and (2) is employed full-time or part-time in a
position normally requiring actual performance of duty during
not less than 1/2 of a normal work period, as established by
the Director in cooperation with each department, except that
persons elected by popular vote will be considered employees
during the entire term for which they are elected regardless of
hours devoted to the service of the State, and (3) except that
"employee" does not include any person who is not eligible by
reason of such person's employment to participate in one of the
State retirement systems under Articles 2, 14, 15 (either the
regular Article 15 system or the optional retirement program
established under Section 15-158.2) or 18, or under paragraph
(2), (3), or (5) of Section 16-106, of the Illinois Pension
Code, but such term does include persons who are employed
during the 6 month qualifying period under Article 14 of the

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Illinois Pension Code. Such term also includes any person who
(1) after January 1, 1966, is receiving ordinary or accidental
disability benefits under Articles 2, 14, 15 (including
ordinary or accidental disability benefits under the optional
retirement program established under Section 15-158.2),
paragraphs (2), (3), or (5) of Section 16-106, or Article 18 of
the Illinois Pension Code, for disability incurred after
January 1, 1966, (2) receives total permanent or total
temporary disability under the Workers' Compensation Act or
Occupational Disease Act as a result of injuries sustained or
illness contracted in the course of employment with the State
of Illinois, or (3) is not otherwise covered under this Act and
has retired as a participating member under Article 2 of the
Illinois Pension Code but is ineligible for the retirement
annuity under Section 2-119 of the Illinois Pension Code.
However, a person who satisfies the criteria of the foregoing
definition of "employee" except that such person is made
ineligible to participate in the State Universities Retirement
System by clause (4) of subsection (a) of Section 15-107 of the
Illinois Pension Code is also an "employee" for the purposes of
this Act. "Employee" also includes any person receiving or
eligible for benefits under a sick pay plan established in
accordance with Section 36 of the State Finance Act. "Employee"
also includes (i) each officer or employee in the service of a
qualified local government, including persons appointed as
trustees of sanitary districts regardless of hours devoted to

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the service of the sanitary district, (ii) each employee in the
service of a qualified rehabilitation facility, (iii) each
full-time employee in the service of a qualified domestic
violence shelter or service, and (iv) each full-time employee
in the service of a qualified child advocacy center, as
determined according to rules promulgated by the Director.
(l) "Member" means an employee, annuitant, retired
employee or survivor. In the case of an annuitant or retired
employee who first becomes an annuitant or retired employee on
or after the effective date of this amendatory Act of the 97th
General Assembly, the individual must meet the minimum vesting
requirements of the applicable retirement system in order to be
eligible for group insurance benefits under that system. In the
case of a survivor who first becomes a survivor on or after the
effective date of this amendatory Act of the 97th General
Assembly, the deceased employee, annuitant, or retired
employee upon whom the annuity is based must have been eligible
to participate in the group insurance system under the
applicable retirement system in order for the survivor to be
eligible for group insurance benefits under that system.
(m) "Optional coverages or benefits" means those coverages
or benefits available to the member on his or her voluntary
election, and at his or her own expense.
(n) "Program" means the group life insurance, health
benefits and other employee benefits designed and contracted
for by the Director under this Act.

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(o) "Health plan" means a health benefits program offered
by the State of Illinois for persons eligible for the plan.
(p) "Retired employee" means any person who would be an
annuitant as that term is defined herein but for the fact that
such person retired prior to January 1, 1966. Such term also
includes any person formerly employed by the University of
Illinois in the Cooperative Extension Service who would be an
annuitant but for the fact that such person was made ineligible
to participate in the State Universities Retirement System by
clause (4) of subsection (a) of Section 15-107 of the Illinois
Pension Code.
(q) "Survivor" means a person receiving an annuity as a
survivor of an employee or of an annuitant. "Survivor" also
includes: (1) the surviving dependent of a person who satisfies
the definition of "employee" except that such person is made
ineligible to participate in the State Universities Retirement
System by clause (4) of subsection (a) of Section 15-107 of the
Illinois Pension Code; (2) the surviving dependent of any
person formerly employed by the University of Illinois in the
Cooperative Extension Service who would be an annuitant except
for the fact that such person was made ineligible to
participate in the State Universities Retirement System by
clause (4) of subsection (a) of Section 15-107 of the Illinois
Pension Code; and (3) the surviving dependent of a person who
was an annuitant under this Act by virtue of receiving an
alternative retirement cancellation payment under Section

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14-108.5 of the Illinois Pension Code.
(q-2) "SERS" means the State Employees' Retirement System
of Illinois, created under Article 14 of the Illinois Pension
Code.
(q-3) "SURS" means the State Universities Retirement
System, created under Article 15 of the Illinois Pension Code.
(q-4) "TRS" means the Teachers' Retirement System of the
State of Illinois, created under Article 16 of the Illinois
Pension Code.
(q-5) (Blank).
(q-6) (Blank).
(q-7) (Blank).
(r) "Medical services" means the services provided within
the scope of their licenses by practitioners in all categories
licensed under the Medical Practice Act of 1987.
(s) "Unit of local government" means any county,
municipality, township, school district (including a
combination of school districts under the Intergovernmental
Cooperation Act), special district or other unit, designated as
a unit of local government by law, which exercises limited
governmental powers or powers in respect to limited
governmental subjects, any not-for-profit association with a
membership that primarily includes townships and township
officials, that has duties that include provision of research
service, dissemination of information, and other acts for the
purpose of improving township government, and that is funded

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wholly or partly in accordance with Section 85-15 of the
Township Code; any not-for-profit corporation or association,
with a membership consisting primarily of municipalities, that
operates its own utility system, and provides research,
training, dissemination of information, or other acts to
promote cooperation between and among municipalities that
provide utility services and for the advancement of the goals
and purposes of its membership; the Southern Illinois
Collegiate Common Market, which is a consortium of higher
education institutions in Southern Illinois; the Illinois
Association of Park Districts; and any hospital provider that
is owned by a county that has 100 or fewer hospital beds and
has not already joined the program. "Qualified local
government" means a unit of local government approved by the
Director and participating in a program created under
subsection (i) of Section 10 of this Act.
(t) "Qualified rehabilitation facility" means any
not-for-profit organization that is accredited by the
Commission on Accreditation of Rehabilitation Facilities or
certified by the Department of Human Services (as successor to
the Department of Mental Health and Developmental
Disabilities) to provide services to persons with disabilities
and which receives funds from the State of Illinois for
providing those services, approved by the Director and
participating in a program created under subsection (j) of
Section 10 of this Act.

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(u) "Qualified domestic violence shelter or service" means
any Illinois domestic violence shelter or service and its
administrative offices funded by the Department of Human
Services (as successor to the Illinois Department of Public
Aid), approved by the Director and participating in a program
created under subsection (k) of Section 10.
(v) "TRS benefit recipient" means a person who:
(1) is not a "member" as defined in this Section; and
(2) is receiving a monthly benefit or retirement
annuity under Article 16 of the Illinois Pension Code; and
(3) either (i) has at least 8 years of creditable
service under Article 16 of the Illinois Pension Code, or
(ii) was enrolled in the health insurance program offered
under that Article on January 1, 1996, or (iii) is the
survivor of a benefit recipient who had at least 8 years of
creditable service under Article 16 of the Illinois Pension
Code or was enrolled in the health insurance program
offered under that Article on the effective date of this
amendatory Act of 1995, or (iv) is a recipient or survivor
of a recipient of a disability benefit under Article 16 of
the Illinois Pension Code.
(w) "TRS dependent beneficiary" means a person who:
(1) is not a "member" or "dependent" as defined in this
Section; and
(2) is a TRS benefit recipient's: (A) spouse, (B)
dependent parent who is receiving at least half of his or

HB4045 Engrossed - 23 - LRB100 12674 RPS 26063 b
her support from the TRS benefit recipient, or (C) natural,
step, adjudicated, or adopted child who is (i) under age
26, (ii) was, on January 1, 1996, participating as a
dependent beneficiary in the health insurance program
offered under Article 16 of the Illinois Pension Code, or
(iii) age 19 or over who has a mental or physical
disability from a cause originating prior to the age of 19
(age 26 if enrolled as an adult child).
"TRS dependent beneficiary" does not include, as indicated
under paragraph (2) of this subsection (w), a dependent of the
survivor of a TRS benefit recipient who first becomes a
dependent of a survivor of a TRS benefit recipient on or after
the effective date of this amendatory Act of the 97th General
Assembly unless that dependent would have been eligible for
coverage as a dependent of the deceased TRS benefit recipient
upon whom the survivor benefit is based.
(x) "Military leave" refers to individuals in basic
training for reserves, special/advanced training, annual
training, emergency call up, activation by the President of the
United States, or any other training or duty in service to the
United States Armed Forces.
(y) (Blank).
(z) "Community college benefit recipient" means a person
who:
(1) is not a "member" as defined in this Section; and
(2) is receiving a monthly survivor's annuity or

HB4045 Engrossed - 24 - LRB100 12674 RPS 26063 b
retirement annuity under Article 15 of the Illinois Pension
Code; and
(3) either (i) was a full-time employee of a community
college district or an association of community college
boards created under the Public Community College Act
(other than an employee whose last employer under Article
15 of the Illinois Pension Code was a community college
district subject to Article VII of the Public Community
College Act) and was eligible to participate in a group
health benefit plan as an employee during the time of
employment with a community college district (other than a
community college district subject to Article VII of the
Public Community College Act) or an association of
community college boards, or (ii) is the survivor of a
person described in item (i).
(aa) "Community college dependent beneficiary" means a
person who:
(1) is not a "member" or "dependent" as defined in this
Section; and
(2) is a community college benefit recipient's: (A)
spouse, (B) dependent parent who is receiving at least half
of his or her support from the community college benefit
recipient, or (C) natural, step, adjudicated, or adopted
child who is (i) under age 26, or (ii) age 19 or over and
has a mental or physical disability from a cause
originating prior to the age of 19 (age 26 if enrolled as

HB4045 Engrossed - 25 - LRB100 12674 RPS 26063 b
an adult child).
"Community college dependent beneficiary" does not
include, as indicated under paragraph (2) of this subsection
(aa), a dependent of the survivor of a community college
benefit recipient who first becomes a dependent of a survivor
of a community college benefit recipient on or after the
effective date of this amendatory Act of the 97th General
Assembly unless that dependent would have been eligible for
coverage as a dependent of the deceased community college
benefit recipient upon whom the survivor annuity is based.
(bb) "Qualified child advocacy center" means any Illinois
child advocacy center and its administrative offices funded by
the Department of Children and Family Services, as defined by
the Children's Advocacy Center Act (55 ILCS 80/), approved by
the Director and participating in a program created under
subsection (n) of Section 10.
(Source: P.A. 98-488, eff. 8-16-13; 99-143, eff. 7-27-15.)
(5 ILCS 375/10) (from Ch. 127, par. 530)
Sec. 10. Contributions by the State and members.
(a) The State shall pay the cost of basic non-contributory
group life insurance and, subject to member paid contributions
set by the Department or required by this Section and except as
provided in this Section, the basic program of group health
benefits on each eligible member, except a member, not
otherwise covered by this Act, who has retired as a

HB4045 Engrossed - 26 - LRB100 12674 RPS 26063 b
participating member under Article 2 of the Illinois Pension
Code but is ineligible for the retirement annuity under Section
2-119 of the Illinois Pension Code, and part of each eligible
member's and retired member's premiums for health insurance
coverage for enrolled dependents as provided by Section 9. The
State shall pay the cost of the basic program of group health
benefits only after benefits are reduced by the amount of
benefits covered by Medicare for all members and dependents who
are eligible for benefits under Social Security or the Railroad
Retirement system or who had sufficient Medicare-covered
government employment, except that such reduction in benefits
shall apply only to those members and dependents who (1) first
become eligible for such Medicare coverage on or after July 1,
1992; or (2) are Medicare-eligible members or dependents of a
local government unit which began participation in the program
on or after July 1, 1992; or (3) remain eligible for, but no
longer receive Medicare coverage which they had been receiving
on or after July 1, 1992. The Department may determine the
aggregate level of the State's contribution on the basis of
actual cost of medical services adjusted for age, sex or
geographic or other demographic characteristics which affect
the costs of such programs.
The cost of participation in the basic program of group
health benefits for the dependent or survivor of a living or
deceased retired employee who was formerly employed by the
University of Illinois in the Cooperative Extension Service and

HB4045 Engrossed - 27 - LRB100 12674 RPS 26063 b
would be an annuitant but for the fact that he or she was made
ineligible to participate in the State Universities Retirement
System by clause (4) of subsection (a) of Section 15-107 of the
Illinois Pension Code shall not be greater than the cost of
participation that would otherwise apply to that dependent or
survivor if he or she were the dependent or survivor of an
annuitant under the State Universities Retirement System.
(a-1) (Blank).
(a-2) (Blank).
(a-3) (Blank).
(a-4) (Blank).
(a-5) (Blank).
(a-6) (Blank).
(a-7) (Blank).
(a-8) Any annuitant, survivor, or retired employee may
waive or terminate coverage in the program of group health
benefits. Any such annuitant, survivor, or retired employee who
has waived or terminated coverage may enroll or re-enroll in
the program of group health benefits only during the annual
benefit choice period, as determined by the Director; except
that in the event of termination of coverage due to nonpayment
of premiums, the annuitant, survivor, or retired employee may
not re-enroll in the program.
(a-8.5) Beginning on the effective date of this amendatory
Act of the 97th General Assembly, the Director of Central
Management Services shall, on an annual basis, determine the

HB4045 Engrossed - 28 - LRB100 12674 RPS 26063 b
amount that the State shall contribute toward the basic program
of group health benefits on behalf of annuitants (including
individuals who (i) participated in the General Assembly
Retirement System, the State Employees' Retirement System of
Illinois, the State Universities Retirement System, the
Teachers' Retirement System of the State of Illinois, or the
Judges Retirement System of Illinois and (ii) qualify as
annuitants under subsection (b) of Section 3 of this Act),
survivors (including individuals who (i) receive an annuity as
a survivor of an individual who participated in the General
Assembly Retirement System, the State Employees' Retirement
System of Illinois, the State Universities Retirement System,
the Teachers' Retirement System of the State of Illinois, or
the Judges Retirement System of Illinois and (ii) qualify as
survivors under subsection (q) of Section 3 of this Act), and
retired employees (as defined in subsection (p) of Section 3 of
this Act). The remainder of the cost of coverage for each
annuitant, survivor, or retired employee, as determined by the
Director of Central Management Services, shall be the
responsibility of that annuitant, survivor, or retired
employee.
Contributions required of annuitants, survivors, and
retired employees shall be the same for all retirement systems
and shall also be based on whether an individual has made an
election under Section 15-135.1 of the Illinois Pension Code.
Contributions may be based on annuitants', survivors', or

HB4045 Engrossed - 29 - LRB100 12674 RPS 26063 b
retired employees' Medicare eligibility, but may not be based
on Social Security eligibility.
(a-9) No later than May 1 of each calendar year, the
Director of Central Management Services shall certify in
writing to the Executive Secretary of the State Employees'
Retirement System of Illinois the amounts of the Medicare
supplement health care premiums and the amounts of the health
care premiums for all other retirees who are not Medicare
eligible.
A separate calculation of the premiums based upon the
actual cost of each health care plan shall be so certified.
The Director of Central Management Services shall provide
to the Executive Secretary of the State Employees' Retirement
System of Illinois such information, statistics, and other data
as he or she may require to review the premium amounts
certified by the Director of Central Management Services.
The Department of Central Management Services, or any
successor agency designated to procure healthcare contracts
pursuant to this Act, is authorized to establish funds,
separate accounts provided by any bank or banks as defined by
the Illinois Banking Act, or separate accounts provided by any
savings and loan association or associations as defined by the
Illinois Savings and Loan Act of 1985 to be held by the
Director, outside the State treasury, for the purpose of
receiving the transfer of moneys from the Local Government
Health Insurance Reserve Fund. The Department may promulgate

HB4045 Engrossed - 30 - LRB100 12674 RPS 26063 b
rules further defining the methodology for the transfers. Any
interest earned by moneys in the funds or accounts shall inure
to the Local Government Health Insurance Reserve Fund. The
transferred moneys, and interest accrued thereon, shall be used
exclusively for transfers to administrative service
organizations or their financial institutions for payments of
claims to claimants and providers under the self-insurance
health plan. The transferred moneys, and interest accrued
thereon, shall not be used for any other purpose including, but
not limited to, reimbursement of administration fees due the
administrative service organization pursuant to its contract
or contracts with the Department.
(a-10) To the extent that participation, benefits, or
premiums under this Act are based on a person's service credit
under an Article of the Illinois Pension Code, service credit
terminated in exchange for an accelerated pension benefit
payment under Section 14-147.5, 15-185.5, or 16-190.5 of that
Code shall be included in determining a person's service credit
for the purposes of this Act.
(b) State employees who become eligible for this program on
or after January 1, 1980 in positions normally requiring actual
performance of duty not less than 1/2 of a normal work period
but not equal to that of a normal work period, shall be given
the option of participating in the available program. If the
employee elects coverage, the State shall contribute on behalf
of such employee to the cost of the employee's benefit and any

HB4045 Engrossed - 31 - LRB100 12674 RPS 26063 b
applicable dependent supplement, that sum which bears the same
percentage as that percentage of time the employee regularly
works when compared to normal work period.
(c) The basic non-contributory coverage from the basic
program of group health benefits shall be continued for each
employee not in pay status or on active service by reason of
(1) leave of absence due to illness or injury, (2) authorized
educational leave of absence or sabbatical leave, or (3)
military leave. This coverage shall continue until expiration
of authorized leave and return to active service, but not to
exceed 24 months for leaves under item (1) or (2). This
24-month limitation and the requirement of returning to active
service shall not apply to persons receiving ordinary or
accidental disability benefits or retirement benefits through
the appropriate State retirement system or benefits under the
Workers' Compensation or Occupational Disease Act.
(d) The basic group life insurance coverage shall continue,
with full State contribution, where such person is (1) absent
from active service by reason of disability arising from any
cause other than self-inflicted, (2) on authorized educational
leave of absence or sabbatical leave, or (3) on military leave.
(e) Where the person is in non-pay status for a period in
excess of 30 days or on leave of absence, other than by reason
of disability, educational or sabbatical leave, or military
leave, such person may continue coverage only by making
personal payment equal to the amount normally contributed by

HB4045 Engrossed - 32 - LRB100 12674 RPS 26063 b
the State on such person's behalf. Such payments and coverage
may be continued: (1) until such time as the person returns to
a status eligible for coverage at State expense, but not to
exceed 24 months or (2) until such person's employment or
annuitant status with the State is terminated (exclusive of any
additional service imposed pursuant to law).
(f) The Department shall establish by rule the extent to
which other employee benefits will continue for persons in
non-pay status or who are not in active service.
(g) The State shall not pay the cost of the basic
non-contributory group life insurance, program of health
benefits and other employee benefits for members who are
survivors as defined by paragraphs (1) and (2) of subsection
(q) of Section 3 of this Act. The costs of benefits for these
survivors shall be paid by the survivors or by the University
of Illinois Cooperative Extension Service, or any combination
thereof. However, the State shall pay the amount of the
reduction in the cost of participation, if any, resulting from
the amendment to subsection (a) made by this amendatory Act of
the 91st General Assembly.
(h) Those persons occupying positions with any department
as a result of emergency appointments pursuant to Section 8b.8
of the Personnel Code who are not considered employees under
this Act shall be given the option of participating in the
programs of group life insurance, health benefits and other
employee benefits. Such persons electing coverage may

HB4045 Engrossed - 33 - LRB100 12674 RPS 26063 b
participate only by making payment equal to the amount normally
contributed by the State for similarly situated employees. Such
amounts shall be determined by the Director. Such payments and
coverage may be continued until such time as the person becomes
an employee pursuant to this Act or such person's appointment
is terminated.
(i) Any unit of local government within the State of
Illinois may apply to the Director to have its employees,
annuitants, and their dependents provided group health
coverage under this Act on a non-insured basis. To participate,
a unit of local government must agree to enroll all of its
employees, who may select coverage under either the State group
health benefits plan or a health maintenance organization that
has contracted with the State to be available as a health care
provider for employees as defined in this Act. A unit of local
government must remit the entire cost of providing coverage
under the State group health benefits plan or, for coverage
under a health maintenance organization, an amount determined
by the Director based on an analysis of the sex, age,
geographic location, or other relevant demographic variables
for its employees, except that the unit of local government
shall not be required to enroll those of its employees who are
covered spouses or dependents under this plan or another group
policy or plan providing health benefits as long as (1) an
appropriate official from the unit of local government attests
that each employee not enrolled is a covered spouse or

HB4045 Engrossed - 34 - LRB100 12674 RPS 26063 b
dependent under this plan or another group policy or plan, and
(2) at least 50% of the employees are enrolled and the unit of
local government remits the entire cost of providing coverage
to those employees, except that a participating school district
must have enrolled at least 50% of its full-time employees who
have not waived coverage under the district's group health plan
by participating in a component of the district's cafeteria
plan. A participating school district is not required to enroll
a full-time employee who has waived coverage under the
district's health plan, provided that an appropriate official
from the participating school district attests that the
full-time employee has waived coverage by participating in a
component of the district's cafeteria plan. For the purposes of
this subsection, "participating school district" includes a
unit of local government whose primary purpose is education as
defined by the Department's rules.
Employees of a participating unit of local government who
are not enrolled due to coverage under another group health
policy or plan may enroll in the event of a qualifying change
in status, special enrollment, special circumstance as defined
by the Director, or during the annual Benefit Choice Period. A
participating unit of local government may also elect to cover
its annuitants. Dependent coverage shall be offered on an
optional basis, with the costs paid by the unit of local
government, its employees, or some combination of the two as
determined by the unit of local government. The unit of local

HB4045 Engrossed - 35 - LRB100 12674 RPS 26063 b
government shall be responsible for timely collection and
transmission of dependent premiums.
The Director shall annually determine monthly rates of
payment, subject to the following constraints:
(1) In the first year of coverage, the rates shall be
equal to the amount normally charged to State employees for
elected optional coverages or for enrolled dependents
coverages or other contributory coverages, or contributed
by the State for basic insurance coverages on behalf of its
employees, adjusted for differences between State
employees and employees of the local government in age,
sex, geographic location or other relevant demographic
variables, plus an amount sufficient to pay for the
additional administrative costs of providing coverage to
employees of the unit of local government and their
dependents.
(2) In subsequent years, a further adjustment shall be
made to reflect the actual prior years' claims experience
of the employees of the unit of local government.
In the case of coverage of local government employees under
a health maintenance organization, the Director shall annually
determine for each participating unit of local government the
maximum monthly amount the unit may contribute toward that
coverage, based on an analysis of (i) the age, sex, geographic
location, and other relevant demographic variables of the
unit's employees and (ii) the cost to cover those employees

HB4045 Engrossed - 36 - LRB100 12674 RPS 26063 b
under the State group health benefits plan. The Director may
similarly determine the maximum monthly amount each unit of
local government may contribute toward coverage of its
employees' dependents under a health maintenance organization.
Monthly payments by the unit of local government or its
employees for group health benefits plan or health maintenance
organization coverage shall be deposited in the Local
Government Health Insurance Reserve Fund.
The Local Government Health Insurance Reserve Fund is
hereby created as a nonappropriated trust fund to be held
outside the State Treasury, with the State Treasurer as
custodian. The Local Government Health Insurance Reserve Fund
shall be a continuing fund not subject to fiscal year
limitations. The Local Government Health Insurance Reserve
Fund is not subject to administrative charges or charge-backs,
including but not limited to those authorized under Section 8h
of the State Finance Act. All revenues arising from the
administration of the health benefits program established
under this Section shall be deposited into the Local Government
Health Insurance Reserve Fund. Any interest earned on moneys in
the Local Government Health Insurance Reserve Fund shall be
deposited into the Fund. All expenditures from this Fund shall
be used for payments for health care benefits for local
government and rehabilitation facility employees, annuitants,
and dependents, and to reimburse the Department or its
administrative service organization for all expenses incurred

HB4045 Engrossed - 37 - LRB100 12674 RPS 26063 b
in the administration of benefits. No other State funds may be
used for these purposes.
A local government employer's participation or desire to
participate in a program created under this subsection shall
not limit that employer's duty to bargain with the
representative of any collective bargaining unit of its
employees.
(j) Any rehabilitation facility within the State of
Illinois may apply to the Director to have its employees,
annuitants, and their eligible dependents provided group
health coverage under this Act on a non-insured basis. To
participate, a rehabilitation facility must agree to enroll all
of its employees and remit the entire cost of providing such
coverage for its employees, except that the rehabilitation
facility shall not be required to enroll those of its employees
who are covered spouses or dependents under this plan or
another group policy or plan providing health benefits as long
as (1) an appropriate official from the rehabilitation facility
attests that each employee not enrolled is a covered spouse or
dependent under this plan or another group policy or plan, and
(2) at least 50% of the employees are enrolled and the
rehabilitation facility remits the entire cost of providing
coverage to those employees. Employees of a participating
rehabilitation facility who are not enrolled due to coverage
under another group health policy or plan may enroll in the
event of a qualifying change in status, special enrollment,

HB4045 Engrossed - 38 - LRB100 12674 RPS 26063 b
special circumstance as defined by the Director, or during the
annual Benefit Choice Period. A participating rehabilitation
facility may also elect to cover its annuitants. Dependent
coverage shall be offered on an optional basis, with the costs
paid by the rehabilitation facility, its employees, or some
combination of the 2 as determined by the rehabilitation
facility. The rehabilitation facility shall be responsible for
timely collection and transmission of dependent premiums.
The Director shall annually determine quarterly rates of
payment, subject to the following constraints:
(1) In the first year of coverage, the rates shall be
equal to the amount normally charged to State employees for
elected optional coverages or for enrolled dependents
coverages or other contributory coverages on behalf of its
employees, adjusted for differences between State
employees and employees of the rehabilitation facility in
age, sex, geographic location or other relevant
demographic variables, plus an amount sufficient to pay for
the additional administrative costs of providing coverage
to employees of the rehabilitation facility and their
dependents.
(2) In subsequent years, a further adjustment shall be
made to reflect the actual prior years' claims experience
of the employees of the rehabilitation facility.
Monthly payments by the rehabilitation facility or its
employees for group health benefits shall be deposited in the

HB4045 Engrossed - 39 - LRB100 12674 RPS 26063 b
Local Government Health Insurance Reserve Fund.
(k) Any domestic violence shelter or service within the
State of Illinois may apply to the Director to have its
employees, annuitants, and their dependents provided group
health coverage under this Act on a non-insured basis. To
participate, a domestic violence shelter or service must agree
to enroll all of its employees and pay the entire cost of
providing such coverage for its employees. The domestic
violence shelter shall not be required to enroll those of its
employees who are covered spouses or dependents under this plan
or another group policy or plan providing health benefits as
long as (1) an appropriate official from the domestic violence
shelter attests that each employee not enrolled is a covered
spouse or dependent under this plan or another group policy or
plan and (2) at least 50% of the employees are enrolled and the
domestic violence shelter remits the entire cost of providing
coverage to those employees. Employees of a participating
domestic violence shelter who are not enrolled due to coverage
under another group health policy or plan may enroll in the
event of a qualifying change in status, special enrollment, or
special circumstance as defined by the Director or during the
annual Benefit Choice Period. A participating domestic
violence shelter may also elect to cover its annuitants.
Dependent coverage shall be offered on an optional basis, with
employees, or some combination of the 2 as determined by the
domestic violence shelter or service. The domestic violence

HB4045 Engrossed - 40 - LRB100 12674 RPS 26063 b
shelter or service shall be responsible for timely collection
and transmission of dependent premiums.
The Director shall annually determine rates of payment,
subject to the following constraints:
(1) In the first year of coverage, the rates shall be
equal to the amount normally charged to State employees for
elected optional coverages or for enrolled dependents
coverages or other contributory coverages on behalf of its
employees, adjusted for differences between State
employees and employees of the domestic violence shelter or
service in age, sex, geographic location or other relevant
demographic variables, plus an amount sufficient to pay for
the additional administrative costs of providing coverage
to employees of the domestic violence shelter or service
and their dependents.
(2) In subsequent years, a further adjustment shall be
made to reflect the actual prior years' claims experience
of the employees of the domestic violence shelter or
service.
Monthly payments by the domestic violence shelter or
service or its employees for group health insurance shall be
deposited in the Local Government Health Insurance Reserve
Fund.
(l) A public community college or entity organized pursuant
to the Public Community College Act may apply to the Director
initially to have only annuitants not covered prior to July 1,

HB4045 Engrossed - 41 - LRB100 12674 RPS 26063 b
1992 by the district's health plan provided health coverage
under this Act on a non-insured basis. The community college
must execute a 2-year contract to participate in the Local
Government Health Plan. Any annuitant may enroll in the event
of a qualifying change in status, special enrollment, special
circumstance as defined by the Director, or during the annual
Benefit Choice Period.
The Director shall annually determine monthly rates of
payment subject to the following constraints: for those
community colleges with annuitants only enrolled, first year
rates shall be equal to the average cost to cover claims for a
State member adjusted for demographics, Medicare
participation, and other factors; and in the second year, a
further adjustment of rates shall be made to reflect the actual
first year's claims experience of the covered annuitants.
(l-5) The provisions of subsection (l) become inoperative
on July 1, 1999.
(m) The Director shall adopt any rules deemed necessary for
implementation of this amendatory Act of 1989 (Public Act
86-978).
(n) Any child advocacy center within the State of Illinois
may apply to the Director to have its employees, annuitants,
and their dependents provided group health coverage under this
Act on a non-insured basis. To participate, a child advocacy
center must agree to enroll all of its employees and pay the
entire cost of providing coverage for its employees. The child

HB4045 Engrossed - 42 - LRB100 12674 RPS 26063 b
advocacy center shall not be required to enroll those of its
employees who are covered spouses or dependents under this plan
or another group policy or plan providing health benefits as
long as (1) an appropriate official from the child advocacy
center attests that each employee not enrolled is a covered
spouse or dependent under this plan or another group policy or
plan and (2) at least 50% of the employees are enrolled and the
child advocacy center remits the entire cost of providing
coverage to those employees. Employees of a participating child
advocacy center who are not enrolled due to coverage under
another group health policy or plan may enroll in the event of
a qualifying change in status, special enrollment, or special
circumstance as defined by the Director or during the annual
Benefit Choice Period. A participating child advocacy center
may also elect to cover its annuitants. Dependent coverage
shall be offered on an optional basis, with the costs paid by
the child advocacy center, its employees, or some combination
of the 2 as determined by the child advocacy center. The child
advocacy center shall be responsible for timely collection and
transmission of dependent premiums.
The Director shall annually determine rates of payment,
subject to the following constraints:
(1) In the first year of coverage, the rates shall be
equal to the amount normally charged to State employees for
elected optional coverages or for enrolled dependents
coverages or other contributory coverages on behalf of its

HB4045 Engrossed - 43 - LRB100 12674 RPS 26063 b
employees, adjusted for differences between State
employees and employees of the child advocacy center in
age, sex, geographic location, or other relevant
demographic variables, plus an amount sufficient to pay for
the additional administrative costs of providing coverage
to employees of the child advocacy center and their
dependents.
(2) In subsequent years, a further adjustment shall be
made to reflect the actual prior years' claims experience
of the employees of the child advocacy center.
Monthly payments by the child advocacy center or its
employees for group health insurance shall be deposited into
the Local Government Health Insurance Reserve Fund.
(Source: P.A. 97-695, eff. 7-1-12; 98-488, eff. 8-16-13.)
Section 15. The Attorney General Act is amended by adding
Section 5 as follows:
(15 ILCS 205/5 new)
Sec. 5. Future increases in income. The Office of the
Attorney General must not pay, offer, or agree to pay any
future increase in income, as that term is defined in Section
14-103.42 of the Illinois Pension Code, to any person in a
manner that violates Section 14-106.5 of the Illinois Pension
Code.

HB4045 Engrossed - 44 - LRB100 12674 RPS 26063 b
Section 20. The Secretary of State Merit Employment Code is
amended by adding Section 13a as follows:
(15 ILCS 310/13a new)
Sec. 13a. Future increases in income. The Office of the
Secretary of State must not pay, offer, or agree to pay any
future increase in income, as that term is defined in Section
14-103.42 of the Illinois Pension Code, to any person in a
manner that violates Section 14-106.5 of the Illinois Pension
Code.
Section 25. The Comptroller Merit Employment Code is
amended by adding Section 13a as follows:
(15 ILCS 410/13a new)
Sec. 13a. Future increases in income. The Office of the
Comptroller must not pay, offer, or agree to pay any future
increase in income, as that term is defined in Section
14-103.42 of the Illinois Pension Code, to any person in a
manner that violates Section 14-106.5 of the Illinois Pension
Code.
Section 30. The State Treasurer Employment Code is amended
by adding Section 12a as follows:
(15 ILCS 510/12a new)

HB4045 Engrossed - 45 - LRB100 12674 RPS 26063 b
Sec. 12a. Future increases in income. The Office of the
State Treasurer must not pay, offer, or agree to pay any future
increase in income, as that term is defined in Section
14-103.42 of the Illinois Pension Code, to any person in a
manner that violates Section 14-106.5 of the Illinois Pension
Code.
Section 35. The Civil Administrative Code of Illinois is
amended by adding Section 5-647 as follows:
(20 ILCS 5/5-647 new)
Sec. 5-647. Future increases in income. A Department must
not pay, offer, or agree to pay any future increase in income,
as that term is defined in Section 14-103.42, 15-112.1, or
16-121.1 of the Illinois Pension Code, to any person in a
manner that violates Section 14-106.5, 15-132.9, or 16-122.9 of
the Illinois Pension Code.
Section 40. The Budget Stabilization Act is amended by
changing Section 20 as follows:
(30 ILCS 122/20)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 20. Pension Stabilization Fund.
(a) The Pension Stabilization Fund is hereby created as a

HB4045 Engrossed - 46 - LRB100 12674 RPS 26063 b
special fund in the State treasury. Moneys in the fund shall be
used for the sole purpose of making payments to the designated
retirement systems as provided in Section 25.
(b) For each fiscal year through State fiscal year 2020,
when the General Assembly's appropriations and transfers or
diversions as required by law from general funds do not exceed
99% of the estimated general funds revenues pursuant to
subsection (a) of Section 10, the Comptroller shall transfer
from the General Revenue Fund as provided by this Section a
total amount equal to 0.5% of the estimated general funds
revenues to the Pension Stabilization Fund.
(c) For each fiscal year through State fiscal year 2020,
when the General Assembly's appropriations and transfers or
diversions as required by law from general funds do not exceed
98% of the estimated general funds revenues pursuant to
subsection (b) of Section 10, the Comptroller shall transfer
from the General Revenue Fund as provided by this Section a
total amount equal to 1.0% of the estimated general funds
revenues to the Pension Stabilization Fund.
(c-5) In addition to any other amounts required to be
transferred under this Section, in State fiscal year 2021 and
each fiscal year thereafter through State fiscal year 2045, or
when each of the designated retirement systems, as defined in
Section 25, has achieved 100% funding, whichever occurs first,
the State Comptroller shall order transferred and the State
Treasurer shall transfer from the General Revenue Fund to the

HB4045 Engrossed - 47 - LRB100 12674 RPS 26063 b
Pension Stabilization Fund an amount equal to (1) the sum of
the amounts certified by the designated retirement systems
under subsection (a-10) of Section 14-135.08, subsection
(a-10) of Section 15-165, and subsection (a-10) of Section
16-158 of this Code for that fiscal year minus (2) the sum of
the required State contributions certified by the retirement
systems under subsection (a-5) of Section 14-135.08,
subsection (a-5) of Section 15-165, and subsection (a-5) of
Section 16-158 of this Code for that fiscal year. The
transferred amount is intended to represent the annual savings
to the State resulting from the enactment of Section 1-161 and
Section 14-155.2, the enactment of subsection (a-2) of Section
15-155 and subsection (b-4) of Section 16-158, and the changes
made to Section 1-160 by this amendatory Act of the 100th
General Assembly.
(d) The Comptroller shall transfer 1/12 of the total amount
to be transferred each fiscal year under this Section into the
Pension Stabilization Fund on the first day of each month of
that fiscal year or as soon thereafter as possible; except that
the final transfer of the fiscal year shall be made as soon as
practical after the August 31 following the end of the fiscal
year.
Until State fiscal year 2021, before Before the final
transfer for a fiscal year is made, the Comptroller shall
reconcile the estimated general funds revenues used in
calculating the other transfers under this Section for that

HB4045 Engrossed - 48 - LRB100 12674 RPS 26063 b
fiscal year with the actual general funds revenues for that
fiscal year. The final transfer for the fiscal year shall be
adjusted so that the total amount transferred under this
Section for that fiscal year is equal to the percentage
specified in subsection (b) or (c) of this Section, whichever
is applicable, of the actual general funds revenues for that
fiscal year. The actual general funds revenues for the fiscal
year shall be calculated in a manner consistent with subsection
(c) of Section 10 of this Act.
(Source: P.A. 94-839, eff. 6-6-06.)
Section 45. The Illinois Pension Code is amended by
changing Sections 1-160, 2-101, 2-105, 2-107, 2-108, 2-119.1,
2-124, 2-126, 2-134, 2-162, 14-103.10, 14-114, 14-131, 14-133,
14-135.08, 14-152.1, 15-108.1, 15-108.2, 15-111, 15-136,
15-155, 15-157, 15-165, 15-198, 16-121, 16-133.1, 16-136.1,
16-152, 16-158, 16-203, 17-116, 17-127, 17-129, 17-130,
18-131, 18-140, 20-121, 20-123, 20-124, and 20-125 and by
adding Sections 1-161, 1-162, 2-105.3, 2-107.9, 2-107.10,
2-110.3, 2-165.1, 2-166.1, 14-103.41, 14-103.42, 14-103.43,
14-106.5, 14-147.5, 14-155.1, 14-155.2, 14-156.1, 15-112.1,
15-112.2, 15-132.9, 15-185.5, 15-200.1, 15-201.1, 16-107.1,
16-121.1, 16-121.2, 16-122.9, 16-190.5, 16-205.1, 16-206.1,
17-106.05, 17-113.4, 17-113.5, 17-113.6, 17-115.5, and
17-119.2 as follows:

HB4045 Engrossed - 49 - LRB100 12674 RPS 26063 b
(40 ILCS 5/1-160)
(Text of Section WITHOUT the changes made by P.A. 98-641,
which has been held unconstitutional)
Sec. 1-160. Provisions applicable to new hires.
(a) The provisions of this Section apply to a person who,
on or after January 1, 2011, first becomes a member or a
participant under any reciprocal retirement system or pension
fund established under this Code, other than a retirement
system or pension fund established under Article 2, 3, 4, 5, 6,
15 or 18 of this Code, notwithstanding any other provision of
this Code to the contrary, but do not apply to any self-managed
plan established under this Code, to any person with respect to
service as a sheriff's law enforcement employee under Article
7, or to any participant of the retirement plan established
under Section 22-101. Notwithstanding anything to the contrary
in this Section, for purposes of this Section, a person who
participated in a retirement system under Article 15 prior to
January 1, 2011 shall be deemed a person who first became a
member or participant prior to January 1, 2011 under any
retirement system or pension fund subject to this Section. The
changes made to this Section by Public Act 98-596 this
amendatory Act of the 98th General Assembly are a clarification
of existing law and are intended to be retroactive to January
1, 2011 (the effective date of Public Act 96-889),
notwithstanding the provisions of Section 1-103.1 of this Code.
This Section does not apply to a person who, on or after 6

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months after the effective date of this amendatory Act of the
100th General Assembly, first becomes a member or participant
under Article 14 or 16, unless that person (i) is a covered
employee under Article 14 who has not elected to participate in
the defined contribution plan under Section 14-155.2 or (ii)
elects under subsection (b) of Section 1-161 to receive the
benefits provided under this Section and the applicable
provisions of the Article under which he or she is a member or
participant. This Section also does not apply to a person who
first becomes a member or participant of an affected pension
fund on or after 6 months after the resolution or ordinance
date, as defined in Section 1-162, unless that person elects
under subsection (c) of Section 1-162 to receive the benefits
provided under this Section and the applicable provisions of
the Article under which he or she is a member or participant.
(b) "Final average salary" means the average monthly (or
annual) salary obtained by dividing the total salary or
earnings calculated under the Article applicable to the member
or participant during the 96 consecutive months (or 8
consecutive years) of service within the last 120 months (or 10
years) of service in which the total salary or earnings
calculated under the applicable Article was the highest by the
number of months (or years) of service in that period. For the
purposes of a person who first becomes a member or participant
of any retirement system or pension fund to which this Section
applies on or after January 1, 2011, in this Code, "final

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average salary" shall be substituted for the following:
(1) In Article 7 (except for service as sheriff's law
enforcement employees), "final rate of earnings".
(2) In Articles 8, 9, 10, 11, and 12, "highest average
annual salary for any 4 consecutive years within the last
10 years of service immediately preceding the date of
withdrawal".
(3) In Article 13, "average final salary".
(4) In Article 14, "final average compensation".
(5) In Article 17, "average salary".
(6) In Section 22-207, "wages or salary received by him
at the date of retirement or discharge".
(b-5) Beginning on January 1, 2011, for all purposes under
this Code (including without limitation the calculation of
benefits and employee contributions), the annual earnings,
salary, or wages (based on the plan year) of a member or
participant to whom this Section applies shall not exceed
$106,800; however, that amount shall annually thereafter be
increased by the lesser of (i) 3% of that amount, including all
previous adjustments, or (ii) one-half the annual unadjusted
percentage increase (but not less than zero) in the consumer
price index-u for the 12 months ending with the September
preceding each November 1, including all previous adjustments.
For the purposes of this Section, "consumer price index-u"
means the index published by the Bureau of Labor Statistics of
the United States Department of Labor that measures the average

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change in prices of goods and services purchased by all urban
consumers, United States city average, all items, 1982-84 =
100. The new amount resulting from each annual adjustment shall
be determined by the Public Pension Division of the Department
of Insurance and made available to the boards of the retirement
systems and pension funds by November 1 of each year.
(c) A member or participant is entitled to a retirement
annuity upon written application if he or she has attained age
67 (beginning January 1, 2015, age 65 with respect to service
under Article 12 of this Code that is subject to this Section)
and has at least 10 years of service credit and is otherwise
eligible under the requirements of the applicable Article.
A member or participant who has attained age 62 (beginning
January 1, 2015, age 60 with respect to service under Article
12 of this Code that is subject to this Section) and has at
least 10 years of service credit and is otherwise eligible
under the requirements of the applicable Article may elect to
receive the lower retirement annuity provided in subsection (d)
of this Section.
(d) The retirement annuity of a member or participant who
is retiring after attaining age 62 (beginning January 1, 2015,
age 60 with respect to service under Article 12 of this Code
that is subject to this Section) with at least 10 years of
service credit shall be reduced by one-half of 1% for each full
month that the member's age is under age 67 (beginning January
1, 2015, age 65 with respect to service under Article 12 of

HB4045 Engrossed - 53 - LRB100 12674 RPS 26063 b
this Code that is subject to this Section).
(e) Any retirement annuity or supplemental annuity shall be
subject to annual increases on the January 1 occurring either
on or after the attainment of age 67 (beginning January 1,
2015, age 65 with respect to service under Article 12 of this
Code that is subject to this Section) or the first anniversary
of the annuity start date, whichever is later. Each annual
increase shall be calculated at 3% or one-half the annual
unadjusted percentage increase (but not less than zero) in the
consumer price index-u for the 12 months ending with the
September preceding each November 1, whichever is less, of the
originally granted retirement annuity. If the annual
unadjusted percentage change in the consumer price index-u for
the 12 months ending with the September preceding each November
1 is zero or there is a decrease, then the annuity shall not be
increased.
(f) The initial survivor's or widow's annuity of an
otherwise eligible survivor or widow of a retired member or
participant who first became a member or participant on or
after January 1, 2011 shall be in the amount of 66 2/3% of the
retired member's or participant's retirement annuity at the
date of death. In the case of the death of a member or
participant who has not retired and who first became a member
or participant on or after January 1, 2011, eligibility for a
survivor's or widow's annuity shall be determined by the
applicable Article of this Code. The initial benefit shall be

HB4045 Engrossed - 54 - LRB100 12674 RPS 26063 b
66 2/3% of the earned annuity without a reduction due to age. A
child's annuity of an otherwise eligible child shall be in the
amount prescribed under each Article if applicable. Any
survivor's or widow's annuity shall be increased (1) on each
January 1 occurring on or after the commencement of the annuity
if the deceased member died while receiving a retirement
annuity or (2) in other cases, on each January 1 occurring
after the first anniversary of the commencement of the annuity.
Each annual increase shall be calculated at 3% or one-half the
annual unadjusted percentage increase (but not less than zero)
in the consumer price index-u for the 12 months ending with the
September preceding each November 1, whichever is less, of the
originally granted survivor's annuity. If the annual
unadjusted percentage change in the consumer price index-u for
the 12 months ending with the September preceding each November
1 is zero or there is a decrease, then the annuity shall not be
increased.
(g) The benefits in Section 14-110 apply only if the person
is a State policeman, a fire fighter in the fire protection
service of a department, or a security employee of the
Department of Corrections or the Department of Juvenile
Justice, as those terms are defined in subsection (b) of
Section 14-110. A person who meets the requirements of this
Section is entitled to an annuity calculated under the
provisions of Section 14-110, in lieu of the regular or minimum
retirement annuity, only if the person has withdrawn from

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service with not less than 20 years of eligible creditable
service and has attained age 60, regardless of whether the
attainment of age 60 occurs while the person is still in
service.
(h) If a person who first becomes a member or a participant
of a retirement system or pension fund subject to this Section
on or after January 1, 2011 is receiving a retirement annuity
or retirement pension under that system or fund and becomes a
member or participant under any other system or fund created by
this Code and is employed on a full-time basis, except for
those members or participants exempted from the provisions of
this Section under subsection (a) of this Section, then the
person's retirement annuity or retirement pension under that
system or fund shall be suspended during that employment. Upon
termination of that employment, the person's retirement
annuity or retirement pension payments shall resume and be
recalculated if recalculation is provided for under the
applicable Article of this Code.
If a person who first becomes a member of a retirement
system or pension fund subject to this Section on or after
January 1, 2012 and is receiving a retirement annuity or
retirement pension under that system or fund and accepts on a
contractual basis a position to provide services to a
governmental entity from which he or she has retired, then that
person's annuity or retirement pension earned as an active
employee of the employer shall be suspended during that

HB4045 Engrossed - 56 - LRB100 12674 RPS 26063 b
contractual service. A person receiving an annuity or
retirement pension under this Code shall notify the pension
fund or retirement system from which he or she is receiving an
annuity or retirement pension, as well as his or her
contractual employer, of his or her retirement status before
accepting contractual employment. A person who fails to submit
such notification shall be guilty of a Class A misdemeanor and
required to pay a fine of $1,000. Upon termination of that
contractual employment, the person's retirement annuity or
retirement pension payments shall resume and, if appropriate,
be recalculated under the applicable provisions of this Code.
(i) (Blank).
(j) Except for Sections 1-161 and 1-162, in In the case of
a conflict between the provisions of this Section and any other
provision of this Code, the provisions of this Section shall
control.
(Source: P.A. 97-609, eff. 1-1-12; 98-92, eff. 7-16-13; 98-596,
eff. 11-19-13; 98-622, eff. 6-1-14; revised 3-24-16.)
(40 ILCS 5/1-161 new)
Sec. 1-161. Optional benefits for certain Tier 2 members
under Articles 14, 15, and 16.
(a) Notwithstanding any other provision of this Code to the
contrary, the provisions of this Section apply to a person who,
on or after 6 months after the effective date of this
amendatory Act of the 100th General Assembly, first becomes a

HB4045 Engrossed - 57 - LRB100 12674 RPS 26063 b
member or a participant under Article 14, 15, or 16 and who
does not make the election under subsection (b) or (c),
whichever is applicable. The provisions of this Section do not
apply to any participant in a self-managed plan or to a covered
employee under Article 14.
(b) In lieu of the benefits provided under this Section, a
member or participant, except for a participant under Article
15, may irrevocably elect the benefits under Section 1-160 and
the benefits otherwise applicable to that member or
participant. The election must be made within 30 days after
becoming a member or participant. Each retirement system shall
establish procedures for making this election.
(c) A participant under Article 15 may irrevocably elect
the benefits otherwise provided to a Tier 2 participant under
Article 15. The election must be made within 30 days after
becoming a participant. The retirement system under Article 15
shall establish procedures for making this election.
(d) "Final average salary" means the average monthly (or
annual) salary obtained by dividing the total salary or
earnings calculated under the Article applicable to the member
or participant during the last 120 months (or 10 years) of
service in which the total salary or earnings calculated under
the applicable Article was the highest by the number of months
(or years) of service in that period. For the purposes of a
person who first becomes a member or participant of any
retirement system to which this Section applies on or after 6

HB4045 Engrossed - 58 - LRB100 12674 RPS 26063 b
months after the effective date of this amendatory Act of the
100th General Assembly, in this Code, "final average salary"
shall be substituted for "final average compensation" in
Article 14.
(e) Beginning 6 months after the effective date of this
amendatory Act of the 100th General Assembly, for all purposes
under this Code (including without limitation the calculation
of benefits and employee contributions), the annual earnings,
salary, or wages (based on the plan year) of a member or
participant to whom this Section applies shall not at any time
exceed the federal Social Security Wage Base then in effect.
(f) A member or participant is entitled to a retirement
annuity upon written application if he or she has attained the
normal retirement age determined by the Social Security
Administration for that member or participant's year of birth,
but no earlier than 67 years of age, and has at least 10 years
of service credit and is otherwise eligible under the
requirements of the applicable Article.
(g) The amount of the retirement annuity to which a member
or participant is entitled shall be computed by multiplying
1.25% for each year of service credit by his or her final
average salary.
(h) Any retirement annuity or supplemental annuity shall be
subject to annual increases on the first anniversary of the
annuity start date. Each annual increase shall be one-half the
annual unadjusted percentage increase (but not less than zero)

HB4045 Engrossed - 59 - LRB100 12674 RPS 26063 b
in the consumer price index-w for the 12 months ending with the
September preceding each November 1 of the originally granted
retirement annuity. If the annual unadjusted percentage change
in the consumer price index-w for the 12 months ending with the
September preceding each November 1 is zero or there is a
decrease, then the annuity shall not be increased.
For the purposes of this Section, "consumer price index-w"
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 Urban Wage
Earners and Clerical Workers, United States city average, all
items, 1982-84 = 100. The new amount resulting from each annual
adjustment shall be determined by the Public Pension Division
of the Department of Insurance and made available to the boards
of the retirement systems and pension funds by November 1 of
each year.
(i) The initial survivor's or widow's annuity of an
otherwise eligible survivor or widow of a retired member or
participant who first became a member or participant on or
after 6 months after the effective date of this amendatory Act
of the 100th General Assembly shall be in the amount of 66 2/3%
of the retired member's or participant's retirement annuity at
the date of death. In the case of the death of a member or
participant who has not retired and who first became a member
or participant on or after 6 months after the effective date of
this amendatory Act of the 100th General Assembly, eligibility

HB4045 Engrossed - 60 - LRB100 12674 RPS 26063 b
for a survivor's or widow's annuity shall be determined by the
applicable Article of this Code. The benefit shall be 66 2/3%
of the earned annuity without a reduction due to age. A child's
annuity of an otherwise eligible child shall be in the amount
prescribed under each Article if applicable.
(j) In lieu of any other employee contributions, except for
the contribution to the defined contribution plan under
subsection (k) of this Section, each employee shall contribute
6.2% of his her or salary to the retirement system. However,
the employee contribution under this subsection shall not
exceed the amount of the normal cost of the benefits under this
Section (except for the defined contribution plan under
subsection (k) of this Section), expressed as a percentage of
payroll and determined on or before November 1 of each year by
the board of trustees of the retirement system. If the board of
trustees of the retirement system determines that the 6.2%
employee contribution rate exceeds the normal cost of the
benefits under this Section (except for the defined
contribution plan under subsection (k) of this Section), then
on or before December 1 of that year, the board of trustees
shall certify the amount of the normal cost of the benefits
under this Section (except for the defined contribution plan
under subsection (k) of this Section), expressed as a
percentage of payroll, to the State Actuary and the Commission
on Government Forecasting and Accountability, and the employee
contribution under this subsection shall be reduced to that

HB4045 Engrossed - 61 - LRB100 12674 RPS 26063 b
amount beginning January 1 of the following year. Thereafter,
if the normal cost of the benefits under this Section (except
for the defined contribution plan under subsection (k) of this
Section), expressed as a percentage of payroll and determined
on or before November 1 of each year by the board of trustees
of the retirement system, exceeds 6.2% of salary, then on or
before December 1 of that year, the board of trustees shall
certify the normal cost to the State Actuary and the Commission
on Government Forecasting and Accountability, and the employee
contributions shall revert back to 6.2% of salary beginning
January 1 of the following year.
(k) No later than 5 months after the effective date of this
amendatory Act of the 100th General Assembly, each retirement
system under Article 14, 15, or 16 shall prepare and implement
a defined contribution plan for members or participants who are
subject to this Section. The defined contribution plan
developed under this subsection shall be a plan that aggregates
employer and employee contributions in individual participant
accounts which, after meeting any other requirements, are used
for payouts after retirement in accordance with this subsection
and any other applicable laws.
(1) Each member or participant shall contribute a
minimum of 4% of his or her salary to the defined
contribution plan.
(2) For each participant in the defined contribution
plan who has been employed with the same employer for at

HB4045 Engrossed - 62 - LRB100 12674 RPS 26063 b
least one year, employer contributions shall be paid into
that participant's accounts at a rate expressed as a
percentage of salary. This rate may be set for individual
employees, but shall be no higher than 6% of salary and
shall be no lower than 2% of salary.
(3) Employer contributions shall vest when those
contributions are paid into a member's or participant's
account.
(4) The defined contribution plan shall provide a
variety of options for investments. These options shall
include investments handled by the Illinois State Board of
Investment as well as private sector investment options.
(5) The defined contribution plan shall provide a
variety of options for payouts to retirees and their
survivors.
(6) To the extent authorized under federal law and as
authorized by the retirement system, the defined
contribution plan shall allow former participants in the
plan to transfer or roll over employee and employer
contributions, and the earnings thereon, into other
qualified retirement plans.
(7) Each retirement system shall reduce the employee
contributions credited to the member's defined
contribution plan account by an amount determined by that
retirement system to cover the cost of offering the
benefits under this subsection and any applicable

HB4045 Engrossed - 63 - LRB100 12674 RPS 26063 b
administrative fees.
(8) No person shall begin participating in the defined
contribution plan until it has attained qualified plan
status and received all necessary approvals from the U.S.
Internal Revenue Service.
(l) By accepting the benefits under this Section, a member
or participant acknowledges and consents that benefits once
earned may not be diminished, but that future benefits may be
modified, including, but not limited to, changes in the
retirement age at which a member or participant becomes
eligible to receive future benefits, changes in the amount of
the automatic annual increase for those future benefits, or the
amount of the retirement annuity. Any increase in benefits
under this Section applicable to persons under Article 15 or 16
does not apply unless it is approved by resolution or ordinance
of the governing body of the unit of local government with
regard to the members or participants under that unit of local
government.
(m) In the case of a conflict between the provisions of
this Section and any other provision of this Code, the
provisions of this Section shall control.
(40 ILCS 5/1-162 new)
Sec. 1-162. Optional benefits for certain Tier 2 members of
pension funds under Articles 7, 8, 9, 10, 11, 12, 13, and 17.
(a) As used in this Section:

HB4045 Engrossed - 64 - LRB100 12674 RPS 26063 b
"Affected pension fund" means a pension fund established
under Article 7, 8, 9, 10, 11, 12, 13, or 17 that the governing
body of the unit of local government has designated as an
affected pension fund by adoption of a resolution or ordinance.
"Resolution or ordinance date" means the date on which the
governing body of the unit of local government designates a
pension fund under Article 7, 8, 9, 10, 11, 12, 13, or 17 as an
affected pension fund by adoption of a resolution or ordinance.
(b) Notwithstanding any other provision of this Code to the
contrary, the provisions of this Section apply to a person who
first becomes a member or a participant in an affected pension
fund on or after 6 months after the resolution or ordinance
date and who does not make the election under subsection (c).
The provisions of this Section do not apply to a sheriff's law
enforcement employee under Article 7.
(c) In lieu of the benefits provided under this Section, a
member or participant may irrevocably elect the benefits under
Section 1-160 and the benefits otherwise applicable to that
member or participant. The election must be made within 30 days
after becoming a member or participant. Each affected pension
fund shall establish procedures for making this election.
(d) "Final average salary" means the average monthly (or
annual) salary obtained by dividing the total salary or
earnings calculated under the Article applicable to the member
or participant during the last 120 months (or 10 years) of
service in which the total salary or earnings calculated under

HB4045 Engrossed - 65 - LRB100 12674 RPS 26063 b
the applicable Article was the highest by the number of months
(or years) of service in that period. For the purposes of a
person who first becomes a member or participant of an affected
pension fund on or after 6 months after the ordinance or
resolution date, in this Code, "final average salary" shall be
substituted for the following:
(1) In Article 7, (except for service as sheriff's law
enforcement employees), "final rate of earnings".
(2) In Articles 8, 9, 10, 11, and 12, "highest average
annual salary for any 4 consecutive years within the last
10 years of service immediately preceding the date of
withdrawal".
(3) In Article 13, "average final salary".
(4) In Article 17, "average salary".
(e) Beginning 6 months after the resolution or ordinance
date, for all purposes under this Code (including without
limitation the calculation of benefits and employee
contributions), the annual earnings, salary, or wages (based on
the plan year) of a member or participant to whom this Section
applies shall not at any time exceed the federal Social
Security Wage Base then in effect.
(f) A member or participant is entitled to a retirement
annuity upon written application if he or she has attained the
normal retirement age determined by the Social Security
Administration for that member or participant's year of birth,
but no earlier than 67 years of age, and has at least 10 years

HB4045 Engrossed - 66 - LRB100 12674 RPS 26063 b
of service credit and is otherwise eligible under the
requirements of the applicable Article.
(g) The amount of the retirement annuity to which a member
or participant is entitled shall be computed by multiplying
1.25% for each year of service credit by his or her final
average salary.
(h) Any retirement annuity or supplemental annuity shall be
subject to annual increases on the first anniversary of the
annuity start date. Each annual increase shall be one-half the
annual unadjusted percentage increase (but not less than zero)
in the consumer price index-w for the 12 months ending with the
September preceding each November 1 of the originally granted
retirement annuity. If the annual unadjusted percentage change
in the consumer price index-w for the 12 months ending with the
September preceding each November 1 is zero or there is a
decrease, then the annuity shall not be increased.
For the purposes of this Section, "consumer price index-w"
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 Urban Wage
Earners and Clerical Workers, United States city average, all
items, 1982-84 = 100. The new amount resulting from each annual
adjustment shall be determined by the Public Pension Division
of the Department of Insurance and made available to the boards
of the retirement systems and pension funds by November 1 of
each year.

HB4045 Engrossed - 67 - LRB100 12674 RPS 26063 b
(i) The initial survivor's or widow's annuity of an
otherwise eligible survivor or widow of a retired member or
participant who first became a member or participant on or
after 6 months after the resolution or ordinance date shall be
in the amount of 66 2/3% of the retired member's or
participant's retirement annuity at the date of death. In the
case of the death of a member or participant who has not
retired and who first became a member or participant on or
after 6 months after the resolution or ordinance date,
eligibility for a survivor's or widow's annuity shall be
determined by the applicable Article of this Code. The benefit
shall be 66 2/3% of the earned annuity without a reduction due
to age. A child's annuity of an otherwise eligible child shall
be in the amount prescribed under each Article if applicable.
(j) In lieu of any other employee contributions, except for
the contribution to the defined contribution plan under
subsection (k) of this Section, each employee shall contribute
6.2% of his her or salary to the affected pension fund.
However, the employee contribution under this subsection shall
not exceed the amount of the normal cost of the benefits under
this Section (except for the defined contribution plan under
subsection (k) of this Section), expressed as a percentage of
payroll and determined on or before November 1 of each year by
the board of trustees of the affected pension fund. If the
board of trustees of the affected pension fund determines that
the 6.2% employee contribution rate exceeds the normal cost of

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the benefits under this Section (except for the defined
contribution plan under subsection (k) of this Section), then
on or before December 1 of that year, the board of trustees
shall certify the amount of the normal cost of the benefits
under this Section (except for the defined contribution plan
under subsection (k) of this Section), expressed as a
percentage of payroll, to the State Actuary and the Commission
on Government Forecasting and Accountability, and the employee
contribution under this subsection shall be reduced to that
amount beginning January 1 of the following year. Thereafter,
if the normal cost of the benefits under this Section (except
for the defined contribution plan under subsection (k) of this
Section), expressed as a percentage of payroll and determined
on or before November 1 of each year by the board of trustees
of the affected pension fund, exceeds 6.2% of salary, then on
or before December 1 of that year, the board of trustees shall
certify the normal cost to the State Actuary and the Commission
on Government Forecasting and Accountability, and the employee
contributions shall revert back to 6.2% of salary beginning
January 1 of the following year.
(k) No later than 5 months after the resolution or
ordinance date, an affected pension fund shall prepare and
implement a defined contribution plan for members or
participants who are subject to this Section. The defined
contribution plan developed under this subsection shall be a
plan that aggregates employer and employee contributions in

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individual participant accounts which, after meeting any other
requirements, are used for payouts after retirement in
accordance with this subsection and any other applicable laws.
(1) Each member or participant shall contribute a
minimum of 4% of his or her salary to the defined
contribution plan.
(2) For each participant in the defined contribution
plan who has been employed with the same employer for at
least one year, employer contributions shall be paid into
that participant's accounts at a rate expressed as a
percentage of salary. This rate may be set for individual
employees, but shall be no higher than 6% of salary and
shall be no lower than 2% of salary.
(3) Employer contributions shall vest when those
contributions are paid into a member's or participant's
account.
(4) The defined contribution plan shall provide a
variety of options for investments. These options shall
include investments handled by the Illinois State Board of
Investment as well as private sector investment options.
(5) The defined contribution plan shall provide a
variety of options for payouts to retirees and their
survivors.
(6) To the extent authorized under federal law and as
authorized by the affected pension fund, the defined
contribution plan shall allow former participants in the

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plan to transfer or roll over employee and employer
contributions, and the earnings thereon, into other
qualified retirement plans.
(7) Each affected pension fund shall reduce the
employee contributions credited to the member's defined
contribution plan account by an amount determined by that
affected pension fund to cover the cost of offering the
benefits under this subsection and any applicable
administrative fees.
(8) No person shall begin participating in the defined
contribution plan until it has attained qualified plan
status and received all necessary approvals from the U.S.
Internal Revenue Service.
(l) By accepting the benefits under this Section, a member
or participant acknowledges and consents that benefits once
earned may not be diminished, but that future benefits may be
modified, including, but not limited to, changes in the
retirement age at which a member or participant becomes
eligible to receive future benefits, changes in the amount of
the automatic annual increase for those future benefits, or the
amount of the retirement annuity. Any increase in benefits
under this Section does not apply unless it is approved by
resolution or ordinance of the governing body of the unit of
local government with regard to the members or participants
under that unit of local government.
(m) In the case of a conflict between the provisions of

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this Section and any other provision of this Code, the
provisions of this Section shall control.
(40 ILCS 5/2-101) (from Ch. 108 1/2, par. 2-101)
Sec. 2-101. Creation of system. A retirement system is
created to provide retirement annuities, survivor's annuities
and other benefits for certain members of the General Assembly,
certain elected state officials, and their beneficiaries.
The system shall be known as the "General Assembly
Retirement System". All its funds and property shall be a trust
separate from all other entities, maintained for the purpose of
securing payment of annuities and benefits under this Article.
Participation in the retirement system created under this
Article is restricted to persons who became participants before
the effective date of this amendatory Act of the 100th General
Assembly. Beginning on that date, the System shall not accept
any new participants.
(Source: P.A. 83-1440.)
(40 ILCS 5/2-105) (from Ch. 108 1/2, par. 2-105)
Sec. 2-105. Member. "Member": Members of the General
Assembly of this State, including persons who enter military
service while a member of the General Assembly, and any person
serving as Governor, Lieutenant Governor, Secretary of State,
Treasurer, Comptroller, or Attorney General for the period of
service in such office.

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Any person who has served for 10 or more years as Clerk or
Assistant Clerk of the House of Representatives, Secretary or
Assistant Secretary of the Senate, or any combination thereof,
may elect to become a member of this system while thenceforth
engaged in such service by filing a written election with the
board. Any person so electing shall be deemed an active member
of the General Assembly for the purpose of validating and
transferring any service credits earned under any of the funds
and systems established under Articles 3 through 18 of this
Code.
However, notwithstanding any other provision of this
Article, a person shall not be deemed a member for the purposes
of this Article unless he or she became a participant of the
System before the effective date of this amendatory Act of the
100th General Assembly.
(Source: P.A. 85-1008.)
(40 ILCS 5/2-105.3 new)
Sec. 2-105.3. Tier 1 employee. "Tier 1 employee": A
participant who first became a participant before January 1,
2011.
(40 ILCS 5/2-107) (from Ch. 108 1/2, par. 2-107)
Sec. 2-107. Participant. "Participant": Any member who
elects to participate; and any former member who elects to
continue participation under Section 2-117.1, for the duration

HB4045 Engrossed - 73 - LRB100 12674 RPS 26063 b
of such continued participation. However, notwithstanding any
other provision of this Article, a person shall not be deemed a
participant for the purposes of this Article unless he or she
became a participant of the System before the effective date of
this amendatory Act of the 100th General Assembly.
(Source: P.A. 86-1488.)
(40 ILCS 5/2-107.9 new)
Sec. 2-107.9. Future increase in income. "Future increase
in income" means an increase to a Tier 1 employee's base pay
that is offered to the Tier 1 employee for service under this
Article after June 30, 2018 that qualifies as "salary", as
defined in Section 2-108, or would qualify as "salary" but for
the fact that it was offered to and accepted by the Tier 1
employee under the condition set forth in subsection (c) of
Section 2-110.3.
(40 ILCS 5/2-107.10 new)
Sec. 2-107.10. Base pay. As used in Section 2-107.9 of
this Code, "base pay" means the Tier 1 employee's annualized
rate of salary as of June 30, 2018. For a person returning to
active service as a Tier 1 employee after June 30, 2018,
however, "base pay" means the employee's annualized rate of
salary as of the employee's last date of service prior to July
1, 2018. The System shall calculate the base pay of each Tier 1
employee pursuant to this Section.

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(40 ILCS 5/2-108) (from Ch. 108 1/2, par. 2-108)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 2-108. Salary. "Salary":
(1) For members of the General Assembly, the total
compensation paid to the member by the State for one year of
service, including the additional amounts, if any, paid to the
member as an officer pursuant to Section 1 of "An Act in
relation to the compensation and emoluments of the members of
the General Assembly", approved December 6, 1907, as now or
hereafter amended.
(2) For the State executive officers specified in Section
2-105, the total compensation paid to the member for one year
of service.
(3) For members of the System who are participants under
Section 2-117.1, or who are serving as Clerk or Assistant Clerk
of the House of Representatives or Secretary or Assistant
Secretary of the Senate, the total compensation paid to the
member for one year of service, but not to exceed the salary of
the highest salaried officer of the General Assembly.
However, in the event that federal law results in any
participant receiving imputed income based on the value of
group term life insurance provided by the State, such imputed
income shall not be included in salary for the purposes of this
Article.

HB4045 Engrossed - 75 - LRB100 12674 RPS 26063 b
Notwithstanding any other provision of this Section,
"salary" does not include any future increase in income that is
offered for service to a Tier 1 employee under this Article
pursuant to the condition set forth in subsection (c) of
Section 2-110.3 and accepted under that condition by a Tier 1
employee who has made the election under paragraph (2) of
subsection (a) of Section 2-110.3.
Notwithstanding any other provision of this Section,
"salary" does not include any consideration payment made to a
Tier 1 employee.
(Source: P.A. 86-27; 86-273; 86-1028; 86-1488.)
(40 ILCS 5/2-110.3 new)
Sec. 2-110.3. Election by Tier 1 employees.
(a) Each active Tier 1 employee shall make an irrevocable
election either:
(1) to agree to delay his or her eligibility for
automatic annual increases in retirement annuity as
provided in subsection (a-1) of Section 2-119.1 and to have
the amount of the automatic annual increases in his or her
retirement annuity and survivor's annuity that are
otherwise provided for in this Article calculated,
instead, as provided in subsection (a-1) of Section
2-119.1; or
(2) to not agree to paragraph (1) of this subsection.
The election required under this subsection (a) shall be

HB4045 Engrossed - 76 - LRB100 12674 RPS 26063 b
made by each active Tier 1 employee no earlier than January 1,
2018 and no later than March 31, 2018, except that a person who
returns to active service as a Tier 1 employee under this
Article on or after January 1, 2018 and has not yet made an
election under this Section must make the election under this
subsection (a) within 60 days after returning to active service
as a Tier 1 employee.
If a Tier 1 employee fails for any reason to make a
required election under this subsection within the time
specified, then the employee shall be deemed to have made the
election under paragraph (2) of this subsection.
(a-5) If this Section is enjoined or stayed by an Illinois
court or a court of competent jurisdiction pending the entry of
a final and unappealable decision, and this Section is
determined to be constitutional or otherwise valid by a final
unappealable decision of an Illinois court or a court of
competent jurisdiction, then the election procedure set forth
in subsection (a) of this Section shall commence on the 180th
calendar day after the date of the issuance of the final
unappealable decision and shall conclude at the end of the
270th calendar day after that date.
(a-10) All elections under subsection (a) that are made or
deemed to be made before July 1, 2018 shall take effect on July
1, 2018. Elections that are made or deemed to be made on or
after July 1, 2018 shall take effect on the first day of the
month following the month in which the election is made or

HB4045 Engrossed - 77 - LRB100 12674 RPS 26063 b
deemed to be made.
(b) As adequate and legal consideration provided under this
amendatory Act of the 100th General Assembly for making an
election under paragraph (1) of subsection (a) of this Section,
the State of Illinois shall be expressly and irrevocably
prohibited from offering any future increases in income to a
Tier 1 employee who has made an election under paragraph (1) of
subsection (a) of this Section on the condition of not
constituting salary under Section 2-108.
As adequate and legal consideration provided under this
amendatory Act of the 100th General Assembly for making an
election under paragraph (1) of subsection (a) of this Section,
each Tier 1 employee who has made an election under paragraph
(1) of subsection (a) of this Section shall receive a
consideration payment equal to 10% of the contributions made by
or on behalf of the employee under Section 2-126 before the
effective date of that election. The State Comptroller shall
pay the consideration payment to the Tier 1 employee out of
funds appropriated for that purpose under Section 1.9 of the
State Pension Funds Continuing Appropriation Act. The System
shall calculate the amount of each consideration payment and,
by July 1, 2018, shall certify to the State Comptroller the
amount of the consideration payment, together with the name,
address, and any other available payment information of the
Tier 1 employee as found in the records of the System. The
System shall make additional calculations and certifications

HB4045 Engrossed - 78 - LRB100 12674 RPS 26063 b
of consideration payments to the State Comptroller as the
System deems necessary.
(c) A Tier 1 employee who makes the election under
paragraph (2) of subsection (a) of this Section shall not be
subject to paragraph (1) of subsection (a) of this Section.
However, each future increase in income offered for service as
a member under this Article to a Tier 1 employee who has made
the election under paragraph (2) of subsection (a) of this
Section shall be offered expressly and irrevocably on the
condition of not constituting salary under Section 2-108 and
that the Tier 1 employee's acceptance of the offered future
increase in income shall constitute his or her agreement to
that condition.
(d) The System shall make a good faith effort to contact
each Tier 1 employee subject to this Section. The System shall
mail information describing the required election to each Tier
1 employee by United States Postal Service mail to his or her
last known address on file with the System. If the Tier 1
employee is not responsive to other means of contact, it is
sufficient for the System to publish the details of any
required elections on its website or to publish those details
in a regularly published newsletter or other existing public
forum.
Tier 1 employees who are subject to this Section shall be
provided with an election packet containing information
regarding their options, as well as the forms necessary to make

HB4045 Engrossed - 79 - LRB100 12674 RPS 26063 b
the required election. Upon request, the System shall offer
Tier 1 employees an opportunity to receive information from the
System before making the required election. The information may
be provided through video materials, group presentations,
individual consultation with a member or authorized
representative of the System in person or by telephone or other
electronic means, or any combination of those methods. The
System shall not provide advice or counseling with respect to
which election a Tier 1 employee should make or specific to the
legal or tax circumstances of or consequences to the Tier 1
employee.
The System shall inform Tier 1 employees in the election
packet required under this subsection that the Tier 1 employee
may also wish to obtain information and counsel relating to the
election required under this Section from any other available
source, including, but not limited to, labor organizations and
private counsel.
In no event shall the System, its staff, or the Board be
held liable for any information given to a member regarding the
elections under this Section. The System shall coordinate with
the Illinois Department of Central Management Services and each
other retirement system administering an election in
accordance with this amendatory Act of the 100th General
Assembly to provide information concerning the impact of the
election set forth in this Section.
(e) Notwithstanding any other provision of law, each future

HB4045 Engrossed - 80 - LRB100 12674 RPS 26063 b
increase in income offered by the State of Illinois for service
as a member must be offered expressly and irrevocably on the
condition of not constituting "salary" under Section 2-108 to
any Tier 1 employee who has made an election under paragraph
(2) of subsection (a) of this Section. The offer shall also
provide that the Tier 1 employee's acceptance of the offered
future increase in income shall constitute his or her agreement
to the condition set forth in this subsection.
For purposes of legislative intent, the condition set forth
in this subsection shall be construed in a manner that ensures
that the condition is not violated or circumvented through any
contrivance of any kind.
(f) A member's election under this Section is not a
prohibited election under subdivision (j)(1) of Section 1-119
of this Code.
(g) No provision of this Section shall be interpreted in a
way that would cause the System to cease to be a qualified plan
under Section 401(a) of the Internal Revenue Code of 1986. The
provisions of this Section shall be subject to and implemented
in a manner that complies with Section 11 of Article IV of the
Illinois Constitution.
(h) If an election created by this amendatory Act in any
other Article of this Code or any change deriving from that
election is determined to be unconstitutional or otherwise
invalid by a final unappealable decision of an Illinois court
or a court of competent jurisdiction, the invalidity of that

HB4045 Engrossed - 81 - LRB100 12674 RPS 26063 b
provision shall not in any way affect the validity of this
Section or the changes deriving from the election required
under this Section.
(40 ILCS 5/2-119.1) (from Ch. 108 1/2, par. 2-119.1)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 2-119.1. Automatic increase in retirement annuity.
(a) Except as provided in subsection (a-1), a A participant
who retires after June 30, 1967, and who has not received an
initial increase under this Section before the effective date
of this amendatory Act of 1991, shall, in January or July next
following the first anniversary of retirement, whichever
occurs first, and in the same month of each year thereafter,
but in no event prior to age 60, have the amount of the
originally granted retirement annuity increased as follows:
for each year through 1971, 1 1/2%; for each year from 1972
through 1979, 2%; and for 1980 and each year thereafter, 3%.
Annuitants who have received an initial increase under this
subsection prior to the effective date of this amendatory Act
of 1991 shall continue to receive their annual increases in the
same month as the initial increase.
(a-1) Notwithstanding any other provision of this Article,
for a Tier 1 employee who made the election under paragraph (1)
of subsection (a) of Section 2-110.3:
(1) The initial increase in retirement annuity under

HB4045 Engrossed - 82 - LRB100 12674 RPS 26063 b
this Section shall occur on the January 1 occurring either
on or after the attainment of age 67 or the fifth
anniversary of the annuity start date, whichever is
earlier.
(2) The amount of each automatic annual increase in
retirement annuity or survivor's annuity occurring on or
after the effective date of that election shall be
calculated as a percentage of the originally granted
retirement annuity or survivor's annuity, equal to 3% or
one-half the annual unadjusted percentage increase (but
not less than zero) in the consumer price index-u for the
12 months ending with the September preceding each November
1, whichever is less. If the annual unadjusted percentage
change in the consumer price index-u for the 12 months
ending with the September preceding each November 1 is zero
or there is a decrease, then the annuity shall not be
increased.
For the purposes of this Section, "consumer price index-u"
means the index published by the Bureau of Labor Statistics of
the United States Department of Labor that measures the average
change in prices of goods and services purchased by all urban
consumers, United States city average, all items, 1982-84 =
100. The new amount resulting from each annual adjustment shall
be determined by the Public Pension Division of the Department
of Insurance and made available to the board of the retirement
system by November 1 of each year.

HB4045 Engrossed - 83 - LRB100 12674 RPS 26063 b
(b) Beginning January 1, 1990, for eligible participants
who remain in service after attaining 20 years of creditable
service, the 3% increases provided under subsection (a) shall
begin to accrue on the January 1 next following the date upon
which the participant (1) attains age 55, or (2) attains 20
years of creditable service, whichever occurs later, and shall
continue to accrue while the participant remains in service;
such increases shall become payable on January 1 or July 1,
whichever occurs first, next following the first anniversary of
retirement. For any person who has service credit in the System
for the entire period from January 15, 1969 through December
31, 1992, regardless of the date of termination of service, the
reference to age 55 in clause (1) of this subsection (b) shall
be deemed to mean age 50.
This subsection (b) does not apply to any person who first
becomes a member of the System after August 8, 2003 (the
effective date of Public Act 93-494) this amendatory Act of the
93rd General Assembly.
(b-5) Notwithstanding any other provision of this Article,
a participant who first becomes a participant on or after
January 1, 2011 (the effective date of Public Act 96-889)
shall, in January or July next following the first anniversary
of retirement, whichever occurs first, and in the same month of
each year thereafter, but in no event prior to age 67, have the
amount of the retirement annuity then being paid increased by
3% or the annual unadjusted percentage increase in the Consumer

HB4045 Engrossed - 84 - LRB100 12674 RPS 26063 b
Price Index for All Urban Consumers as determined by the Public
Pension Division of the Department of Insurance under
subsection (a) of Section 2-108.1, whichever is less.
(c) The foregoing provisions relating to automatic
increases are not applicable to a participant who retires
before having made contributions (at the rate prescribed in
Section 2-126) for automatic increases for less than the
equivalent of one full year. However, in order to be eligible
for the automatic increases, such a participant may make
arrangements to pay to the system the amount required to bring
the total contributions for the automatic increase to the
equivalent of one year's contributions based upon his or her
last salary.
(d) A participant who terminated service prior to July 1,
1967, with at least 14 years of service is entitled to an
increase in retirement annuity beginning January, 1976, and to
additional increases in January of each year thereafter.
The initial increase shall be 1 1/2% of the originally
granted retirement annuity multiplied by the number of full
years that the annuitant was in receipt of such annuity prior
to January 1, 1972, plus 2% of the originally granted
retirement annuity for each year after that date. The
subsequent annual increases shall be at the rate of 2% of the
originally granted retirement annuity for each year through
1979 and at the rate of 3% for 1980 and thereafter.
(e) Beginning January 1, 1990, and except as provided in

HB4045 Engrossed - 85 - LRB100 12674 RPS 26063 b
subsection (a-1), all automatic annual increases payable under
this Section shall be calculated as a percentage of the total
annuity payable at the time of the increase, including previous
increases granted under this Article.
(Source: P.A. 96-889, eff. 1-1-11; 96-1490, eff. 1-1-11.)
(40 ILCS 5/2-124) (from Ch. 108 1/2, par. 2-124)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 2-124. Contributions by State.
(a) The State shall make contributions to the System by
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 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 2018 through 2045 (except as
otherwise provided for fiscal year 2019), 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

HB4045 Engrossed - 86 - LRB100 12674 RPS 26063 b
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 total payroll, including payroll that is
not deemed pensionable, but excluding payroll attributable to
participants in the defined contribution plan under Section
2-165.1, 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 year 2019:
(1) The initial calculation and certification shall be
based on the amount determined above.
(2) For purposes of the recertification due on or
before May 1, 2018, the recalculation of the required State
contribution for fiscal year 2019 shall take into account
the effect on the System's liabilities of the elections
made under Section 2-110.3.
(3) For purposes of the recertification due on or
before October 1, 2018, the total required State
contribution for fiscal year 2019 shall be reduced by the
amount of the consideration payments made to Tier 1
employees who made the election under paragraph (1) of
subsection (a) of Section 2-110.3.
Beginning in State fiscal year 2018, any increase or
decrease in State contribution over the prior fiscal year due
exclusively to changes in actuarial or investment assumptions

HB4045 Engrossed - 87 - LRB100 12674 RPS 26063 b
adopted by the Board shall be included in the State
contribution to the System, as a percentage of the applicable
employee payroll, and shall be increased in equal annual
increments so that by the State fiscal year occurring 5 years
after the adoption of the actuarial or investment assumptions,
the State is contributing at the rate otherwise required under
this Section.
If Section 2-110.3 is determined to be unconstitutional or
otherwise invalid by a final unappealable decision of an
Illinois court or a court of competent jurisdiction, then the
changes made to this Section by this amendatory Act of the
100th General Assembly shall not take effect and are repealed
by operation of law.
For State fiscal years 2012 through 2017 2045, the minimum
contribution to the System to be made by the State for each
fiscal year shall be an amount determined by the System to be
sufficient to bring the total assets of the System up to 90% of
the total actuarial liabilities of the System by the end of
State fiscal year 2045. In making these determinations, the
required State contribution shall be calculated each year as a
level percentage of payroll over the years remaining to and
including fiscal year 2045 and shall be determined under the
projected unit credit actuarial cost method.
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

HB4045 Engrossed - 88 - LRB100 12674 RPS 26063 b
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
$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

HB4045 Engrossed - 89 - LRB100 12674 RPS 26063 b
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
bond sale expenses determined by the System's share of total
bond proceeds, (ii) any amounts received from the General
Revenue Fund in fiscal year 2011, and (iii) any reduction in
bond proceeds due to the issuance of discounted bonds, if
applicable.
Beginning in State fiscal year 2046, the minimum State
contribution for each fiscal year shall be the amount needed to
maintain the total assets of the System at 90% of the total
actuarial liabilities of the System.
Amounts received by the System pursuant to Section 25 of
the Budget Stabilization Act or Section 8.12 of the State
Finance Act in any fiscal year do not reduce and do not
constitute payment of any portion of the minimum State
contribution required under this Article in that fiscal year.
Such amounts shall not reduce, and shall not be included in the
calculation of, the required State contributions under this
Article in any future year until the System has reached a
funding ratio of at least 90%. A reference in this Article to
the "required State contribution" or any substantially similar
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

HB4045 Engrossed - 90 - LRB100 12674 RPS 26063 b
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 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

HB4045 Engrossed - 91 - LRB100 12674 RPS 26063 b
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.)
(40 ILCS 5/2-126) (from Ch. 108 1/2, par. 2-126)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 2-126. Contributions by participants.
(a) Each participant shall contribute toward the cost of
his or her retirement annuity a percentage of each payment of
salary received by him or her for service as a member as
follows: for service between October 31, 1947 and January 1,
1959, 5%; for service between January 1, 1959 and June 30,

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1969, 6%; for service between July 1, 1969 and January 10,
1973, 6 1/2%; for service after January 10, 1973, 7%; for
service after December 31, 1981, 8 1/2%.
(b) Beginning August 2, 1949, each male participant, and
from July 1, 1971, each female participant shall contribute
towards the cost of the survivor's annuity 2% of salary.
A participant who has no eligible survivor's annuity
beneficiary may elect to cease making contributions for
survivor's annuity under this subsection. A survivor's annuity
shall not be payable upon the death of a person who has made
this election, unless prior to that death the election has been
revoked and the amount of the contributions that would have
been paid under this subsection in the absence of the election
is paid to the System, together with interest at the rate of 4%
per year from the date the contributions would have been made
to the date of payment.
(c) Beginning July 1, 1967, each participant shall
contribute 1% of salary towards the cost of automatic increase
in annuity provided in Section 2-119.1. These contributions
shall be made concurrently with contributions for retirement
annuity purposes.
(d) In addition, each participant serving as an officer of
the General Assembly shall contribute, for the same purposes
and at the same rates as are required of a regular participant,
on each additional payment received as an officer. If the
participant serves as an officer for at least 2 but less than 4

HB4045 Engrossed - 93 - LRB100 12674 RPS 26063 b
years, he or she shall contribute an amount equal to the amount
that would have been contributed had the participant served as
an officer for 4 years. Persons who serve as officers in the
87th General Assembly but cannot receive the additional payment
to officers because of the ban on increases in salary during
their terms may nonetheless make contributions based on those
additional payments for the purpose of having the additional
payments included in their highest salary for annuity purposes;
however, persons electing to make these additional
contributions must also pay an amount representing the
corresponding employer contributions, as calculated by the
System.
(e) Notwithstanding any other provision of this Article,
the required contribution of a participant who first becomes a
participant on or after January 1, 2011 shall not exceed the
contribution that would be due under this Article if that
participant's highest salary for annuity purposes were
$106,800, plus any increases in that amount under Section
2-108.1.
(f) Beginning July 1, 2018 or the effective date of the
Tier 1 employee's election under paragraph (1) of subsection
(a) of Section 2-110.3, whichever is later, in lieu of the
contributions otherwise required under this Section, each Tier
1 employee who made the election under paragraph (1) of
subsection (a) of Section 2-110.3 shall contribute 8.5% of each
payment of salary toward the cost of his or her retirement

HB4045 Engrossed - 94 - LRB100 12674 RPS 26063 b
annuity and 1.85% of each payment of salary toward the cost of
the survivor's annuity.
(g) Notwithstanding subsection (f) of this Section,
beginning July 1, 2018 or the effective date of the Tier 1
employee's election under paragraph (1) of subsection (a) of
Section 2-110.3, whichever is later, in lieu of the
contributions otherwise required under this Section, each Tier
1 employee who made the election under paragraph (1) of
subsection (a) of Section 2-110.3 and has elected to cease
making contributions for survivor's annuity under subsection
(b) of this Section, shall contribute 8.55% of each payment of
salary toward the cost of his or her retirement annuity.
(Source: P.A. 96-1490, eff. 1-1-11.)
(40 ILCS 5/2-134) (from Ch. 108 1/2, par. 2-134)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 2-134. To certify required State contributions and
submit vouchers.
(a) The Board shall certify to the Governor on or before
December 15 of each year until December 15, 2011 the amount of
the required State contribution to the System for the next
fiscal year and shall specifically identify the System's
projected State normal cost for that fiscal year. The
certification shall include a copy of the actuarial
recommendations upon which it is based and shall specifically

HB4045 Engrossed - 95 - LRB100 12674 RPS 26063 b
identify the System's projected State normal cost for that
fiscal year.
On or before November 1 of each year, beginning November 1,
2012, the Board shall submit to the State Actuary, the
Governor, and the General Assembly a proposed certification of
the amount of the required State contribution to the System for
the next fiscal year, along with all of the actuarial
assumptions, calculations, and data upon which that proposed
certification is based. On or before January 1 of each year
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 every January 15 thereafter, the Board
shall certify to the Governor and the General Assembly the
amount of the required State contribution for the next fiscal
year. The Board's certification must note any deviations from
the State Actuary's recommended changes, the reason or reasons
for not following the State Actuary's recommended changes, and
the fiscal impact of not following the State Actuary's
recommended changes on the required State contribution.
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

HB4045 Engrossed - 96 - LRB100 12674 RPS 26063 b
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.
As soon as practical after the effective date of this
amendatory Act of the 100th General Assembly, the Board shall
recalculate and recertify to the State Actuary, the Governor,
and the General Assembly the amount of the State contribution
to the System for State fiscal year 2018, taking into account
the changes in required State contributions made by this
amendatory Act of the 100th General Assembly. The State Actuary
shall review the assumptions and valuations underlying the
Board's revised certification and issue a preliminary report
concerning the proposed recertification and identifying, if
necessary, recommended changes in actuarial assumptions that
the Board must consider before finalizing its certification of
the required State contributions. The Board's final

HB4045 Engrossed - 97 - LRB100 12674 RPS 26063 b
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.
On or before May 1, 2018, the Board shall recalculate and
recertify to the Governor and the General Assembly the amount
of the required State contribution to the System for State
fiscal year 2019, taking into account the effect on the
System's liabilities of the elections made under Section
2-110.3.
On or before October 1, 2018, the Board shall recalculate
and recertify to the Governor and the General Assembly the
amount of the required State contribution to the System for
State fiscal year 2019, taking into account the reduction
specified under item (3) of subsection (c) of Section 2-124.
(b) Beginning in State fiscal year 1996, 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 one-twelfth of the
required annual State contribution certified under subsection
(a). 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

HB4045 Engrossed - 98 - LRB100 12674 RPS 26063 b
the transfer to the System under subsection (d) 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 Section, the difference shall be
paid from the General Revenue Fund under the continuing
appropriation authority provided in Section 1.1 of the State
Pension Funds Continuing Appropriation Act.
(c) The full amount of any annual appropriation for the
System for State fiscal year 1995 shall be transferred and made
available to the System at the beginning of that fiscal year at
the request of the Board. Any excess funds remaining at the end
of any fiscal year from appropriations shall be retained by the
System as a general reserve to meet the System's accrued
liabilities.
(Source: P.A. 96-1497, eff. 1-14-11; 96-1511, eff. 1-27-11;
97-694, eff. 6-18-12.)
(40 ILCS 5/2-162)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)

HB4045 Engrossed - 99 - LRB100 12674 RPS 26063 b
Sec. 2-162. Application and expiration of new benefit
increases.
(a) As used in this Section, "new benefit increase" means
an increase in the amount of any benefit provided under this
Article, or an expansion of the conditions of eligibility for
any benefit under this Article, that results from an amendment
to this Code that takes effect after the effective date of this
amendatory Act of the 94th General Assembly. "New benefit
increase", however, does not include any benefit increase
resulting from the changes made to this Article by this
amendatory Act of the 100th General Assembly.
(b) Notwithstanding any other provision of this Code or any
subsequent amendment to this Code, every new benefit increase
is subject to this Section and shall be deemed to be granted
only in conformance with and contingent upon compliance with
the provisions of this Section.
(c) The Public Act enacting a new benefit increase must
identify and provide for payment to the System of additional
funding at least sufficient to fund the resulting annual
increase in cost to the System as it accrues.
Every new benefit increase is contingent upon the General
Assembly providing the additional funding required under this
subsection. The Commission on Government Forecasting and
Accountability shall analyze whether adequate additional
funding has been provided for the new benefit increase and
shall report its analysis to the Public Pension Division of the

HB4045 Engrossed - 100 - LRB100 12674 RPS 26063 b
Department of Insurance Financial and Professional Regulation.
A new benefit increase created by a Public Act that does not
include the additional funding required under this subsection
is null and void. If the Public Pension Division determines
that the additional funding provided for a new benefit increase
under this subsection is or has become inadequate, it may so
certify to the Governor and the State Comptroller and, in the
absence of corrective action by the General Assembly, the new
benefit increase shall expire at the end of the fiscal year in
which the certification is made.
(d) Every new benefit increase shall expire 5 years after
its effective date or on such earlier date as may be specified
in the language enacting the new benefit increase or provided
under subsection (c). This does not prevent the General
Assembly from extending or re-creating a new benefit increase
by law.
(e) Except as otherwise provided in the language creating
the new benefit increase, a new benefit increase that expires
under this Section continues to apply to persons who applied
and qualified for the affected benefit while the new benefit
increase was in effect and to the affected beneficiaries and
alternate payees of such persons, but does not apply to any
other person, including without limitation a person who
continues in service after the expiration date and did not
apply and qualify for the affected benefit while the new
benefit increase was in effect.

HB4045 Engrossed - 101 - LRB100 12674 RPS 26063 b
(Source: P.A. 94-4, eff. 6-1-05.)
(40 ILCS 5/2-165.1 new)
Sec. 2-165.1. Defined contribution plan.
(a) By July 1, 2018, the System shall prepare and implement
a voluntary defined contribution plan for up to 5% of eligible
active Tier 1 employees. The System shall determine the 5% cap
by the number of active Tier 1 employees on the effective date
of this Section. The defined contribution plan developed under
this Section shall be a plan that aggregates employer and
employee contributions in individual participant accounts
which, after meeting any other requirements, are used for
payouts after retirement in accordance with this Section and
any other applicable laws.
As used in this Section, "defined benefit plan" means the
retirement plan available under this Article to Tier 1
employees who have not made the election authorized under this
Section.
(1) Under the defined contribution plan, an active Tier
1 employee of this System could elect to cease accruing
benefits in the defined benefit plan under this Article and
begin accruing benefits for future service in the defined
contribution plan. Service credit under the defined
contribution plan may be used for determining retirement
eligibility under the defined benefit plan.
(2) Participants in the defined contribution plan

HB4045 Engrossed - 102 - LRB100 12674 RPS 26063 b
shall pay employee contributions at the same rate as Tier 1
employees in this System who do not participate in the
defined contribution plan.
(3) State contributions shall be paid into the accounts
of all participants in the defined contribution plan at a
uniform rate, expressed as a percentage of compensation and
determined for each year. This rate shall be no higher than
the employer's normal cost for Tier 1 employees in the
defined benefit plan for that year, as determined by the
System and expressed as a percentage of compensation, and
shall be no lower than 3% of compensation. The State shall
adjust this rate annually.
(4) The defined contribution plan shall require 5 years
of participation in the defined contribution plan before
vesting in State contributions. If the participant fails to
vest in them, the State contributions, and the earnings
thereon, shall be forfeited.
(5) The defined contribution plan may provide for
participants in the plan to be eligible for defined
disability benefits. If it does, the System shall reduce
the employee contributions credited to the participant's
defined contribution plan account by an amount determined
by the System to cover the cost of offering such benefits.
(6) The defined contribution plan shall provide a
variety of options for investments. These options shall
include investments handled by the Illinois State Board of

HB4045 Engrossed - 103 - LRB100 12674 RPS 26063 b
Investment as well as private sector investment options.
(7) The defined contribution plan shall provide a
variety of options for payouts to retirees and their
survivors.
(8) To the extent authorized under federal law and as
authorized by the System, the plan shall allow former
participants in the plan to transfer or roll over employee
and vested State contributions, and the earnings thereon,
into other qualified retirement plans.
(9) The System shall reduce the employee contributions
credited to the participant's defined contribution plan
account by an amount determined by the System to cover the
cost of offering these benefits and any applicable
administrative fees.
(b) Only persons who are active Tier 1 employees of the
System on the effective date of this Section are eligible to
participate in the defined contribution plan. Participation in
the defined contribution plan shall be limited to the first 5%
of eligible persons who elect to participate. The election to
participate in the defined contribution plan is voluntary and
irrevocable.
(c) An eligible active Tier 1 employee may irrevocably
elect to participate in the defined contribution plan by filing
with the System a written application to participate that is
received by the System prior to its determination that 5% of
eligible persons have elected to participate in the defined

HB4045 Engrossed - 104 - LRB100 12674 RPS 26063 b
contribution plan.
When the System first determines that 5% of eligible
persons have elected to participate in the defined contribution
plan, the System shall provide notice to previously eligible
employees that the plan is no longer available and shall cease
accepting applications to participate.
(d) The System shall make a good faith effort to contact
each active Tier 1 employee who is eligible to participate in
the defined contribution plan. The System shall mail
information describing the option to join the defined
contribution plan to each of these employees to his or her last
known address on file with the System. If the employee is not
responsive to other means of contact, it is sufficient for the
System to publish the details of the option on its website.
Upon request for further information describing the
option, the System shall provide employees with information
from the System before exercising the option to join the plan,
including information on the impact to their vested benefits or
non-vested service. The individual consultation shall include
projections of the participant's defined benefits at
retirement or earlier termination of service and the value of
the participant's account at retirement or earlier termination
of service. The System shall not provide advice or counseling
with respect to whether the employee should exercise the
option. The System shall inform Tier 1 employees who are
eligible to participate in the defined contribution plan that

HB4045 Engrossed - 105 - LRB100 12674 RPS 26063 b
they may also wish to obtain information and counsel relating
to their option from any other available source, including but
not limited to labor organizations, private counsel, and
financial advisors.
(e) In no event shall the System, its staff, its authorized
representatives, or the Board be liable for any information
given to an employee under this Section. The System may
coordinate with the Illinois Department of Central Management
Services and other retirement systems administering a defined
contribution plan in accordance with this amendatory Act of the
100th General Assembly to provide information concerning the
impact of the option set forth in this Section.
(f) Notwithstanding any other provision of this Section, no
person shall begin participating in the defined contribution
plan until it has attained qualified plan status and received
all necessary approvals from the U.S. Internal Revenue Service.
(g) The System shall report on its progress under this
Section, including the available details of the defined
contribution plan and the System's plans for informing eligible
Tier 1 employees about the plan, to the Governor and the
General Assembly on or before January 15, 2018.
(h) The Illinois State Board of Investments shall be the
plan sponsor for the defined contribution plan established
under this Section.
(i) The intent of this amendatory Act of the 100th General
Assembly is to ensure that the State's normal cost of

HB4045 Engrossed - 106 - LRB100 12674 RPS 26063 b
participation in the defined contribution plan is similar, and
if possible equal, to the State's normal cost of participation
in the defined benefit plan, unless a lower State's normal cost
is necessary to ensure cost neutrality.
(40 ILCS 5/2-166.1 new)
Sec. 2-166.1. Defined contribution plan; termination. If
the defined contribution plan is terminated or becomes
inoperative pursuant to law, then each participant in the plan
shall automatically be deemed to have been a contributing Tier
1 employee in the System's defined benefit plan during the time
in which he or she participated in the defined contribution
plan, and for that purpose the System shall be entitled to
recover the amounts in the participant's defined contribution
accounts.
(40 ILCS 5/14-103.10) (from Ch. 108 1/2, par. 14-103.10)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 14-103.10. Compensation.
(a) For periods of service prior to January 1, 1978, the
full rate of salary or wages payable to an employee for
personal services performed if he worked the full normal
working period for his position, subject to the following
maximum amounts: (1) prior to July 1, 1951, $400 per month or
$4,800 per year; (2) between July 1, 1951 and June 30, 1957

HB4045 Engrossed - 107 - LRB100 12674 RPS 26063 b
inclusive, $625 per month or $7,500 per year; (3) beginning
July 1, 1957, no limitation.
In the case of service of an employee in a position
involving part-time employment, compensation shall be
determined according to the employees' earnings record.
(b) For periods of service on and after January 1, 1978,
all remuneration for personal services performed defined as
"wages" under the Social Security Enabling Act, including that
part of such remuneration which is in excess of any maximum
limitation provided in such Act, and including any benefits
received by an employee under a sick pay plan in effect before
January 1, 1981, but excluding lump sum salary payments:
(1) for vacation,
(2) for accumulated unused sick leave,
(3) upon discharge or dismissal,
(4) for approved holidays.
(c) For periods of service on or after December 16, 1978,
compensation also includes any benefits, other than lump sum
salary payments made at termination of employment, which an
employee receives or is eligible to receive under a sick pay
plan authorized by law.
(d) For periods of service after September 30, 1985,
compensation also includes any remuneration for personal
services not included as "wages" under the Social Security
Enabling Act, which is deducted for purposes of participation
in a program established pursuant to Section 125 of the

HB4045 Engrossed - 108 - LRB100 12674 RPS 26063 b
Internal Revenue Code or its successor laws.
(e) For members for which Section 1-160 applies for periods
of service on and after January 1, 2011, all remuneration for
personal services performed defined as "wages" under the Social
Security Enabling Act, excluding remuneration that is in excess
of the annual earnings, salary, or wages of a member or
participant, as provided in subsection (b-5) of Section 1-160,
but including any benefits received by an employee under a sick
pay plan in effect before January 1, 1981. Compensation shall
exclude lump sum salary payments:
(1) for vacation;
(2) for accumulated unused sick leave;
(3) upon discharge or dismissal; and
(4) for approved holidays.
(f) Notwithstanding the other provisions of this Section,
for service on or after July 1, 2013, "compensation" does not
include any stipend payable to an employee for service on a
board or commission.
(g) Notwithstanding any other provision of this Section,
"compensation" does not include any future increase in income
that is offered for service by a department to a Tier 1
employee under this Article pursuant to the condition set forth
in subsection (c) of Section 14-106.5 and accepted under that
condition by a Tier 1 employee who has made the election under
paragraph (2) of subsection (a) of Section 14-106.5.
(h) Notwithstanding any other provision of this Section,

HB4045 Engrossed - 109 - LRB100 12674 RPS 26063 b
"compensation" does not include any consideration payment made
to a Tier 1 employee.
(Source: P.A. 98-449, eff. 8-16-13.)
(40 ILCS 5/14-103.41 new)
Sec. 14-103.41. Tier 1 employee. "Tier 1 employee": An
employee under this Article who first became a member or
participant before January 1, 2011 under any reciprocal
retirement system or pension fund established under this Code
other than a retirement system or pension fund established
under Article 2, 3, 4, 5, 6, or 18 of this Code.
(40 ILCS 5/14-103.42 new)
Sec. 14-103.42. Future increase in income. "Future
increase in income" means an increase to a Tier 1 employee's
base pay that is offered by a department to the Tier 1 employee
for service under this Article after June 30, 2019 that
qualifies as "compensation", as defined in Section 14-103.10,
or would qualify as "compensation" but for the fact that it was
offered to and accepted by the Tier 1 employee under the
condition set forth in subsection (c) of Section 14-106.5. The
term "future increase in income" includes an increase to a Tier
1 employee's base pay that is paid to the Tier 1 employee
pursuant to an extension, amendment, or renewal of any
employment contract or collective bargaining agreement after
the effective date of this Section.

HB4045 Engrossed - 110 - LRB100 12674 RPS 26063 b
(40 ILCS 5/14-103.43 new)
Sec. 14-103.43. Base pay. As used in Section 14-103.42 of
this Code, "base pay" means the greater of either (i) the Tier
1 employee's annualized rate of compensation as of June 30,
2019, or (ii) the Tier 1 employee's annualized rate of
compensation immediately preceding the expiration, renewal, or
amendment of an employment contract or collective bargaining
agreement in effect on the effective date of this Section. For
a person returning to active service as a Tier 1 employee after
June 30, 2019, however, "base pay" means the employee's
annualized rate of compensation as of the employee's last date
of service prior to July 1, 2019. The System shall calculate
the base pay of each Tier 1 employee pursuant to this Section.
(40 ILCS 5/14-106.5 new)
Sec. 14-106.5. Election by Tier 1 employees.
(a) Each active Tier 1 employee shall make an irrevocable
election either:
(1) to agree to delay his or her eligibility for
automatic annual increases in retirement annuity as
provided in subsection (a-1) of Section 14-114 and to have
the amount of the automatic annual increases in his or her
retirement annuity and survivors or widow's annuity that
are otherwise provided for in this Article calculated,
instead, as provided in subsection (a-1) of Section 14-114;

HB4045 Engrossed - 111 - LRB100 12674 RPS 26063 b
or
(2) to not agree to paragraph (1) of this subsection.
The election required under this subsection (a) shall be
made by each active Tier 1 employee no earlier than January 1,
2019 and no later than March 31, 2019, except that:
(i) a person who becomes a Tier 1 employee under this
Article on or after January 1, 2019 must make the election
under this subsection (a) within 60 days after becoming a
Tier 1 employee; and
(ii) a person who returns to active service as a Tier 1
employee under this Article on or after January 1, 2019 and
has not yet made an election under this Section must make
the election under this subsection (a) within 60 days after
returning to active service as a Tier 1 employee.
If a Tier 1 employee fails for any reason to make a
required election under this subsection within the time
specified, then the employee shall be deemed to have made the
election under paragraph (2) of this subsection.
(a-5) If this Section is enjoined or stayed by an Illinois
court or a court of competent jurisdiction pending the entry of
a final and unappealable decision, and this Section is
determined to be constitutional or otherwise valid by a final
unappealable decision of an Illinois court or a court of
competent jurisdiction, then the election procedure set forth
in subsection (a) of this Section shall commence on the 180th
calendar day after the date of the issuance of the final

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unappealable decision and shall conclude at the end of the
270th calendar day after that date.
(a-10) All elections under subsection (a) that are made or
deemed to be made before July 1, 2019 shall take effect on July
1, 2019. Elections that are made or deemed to be made on or
after July 1, 2019 shall take effect on the first day of the
month following the month in which the election is made or
deemed to be made.
(b) As adequate and legal consideration provided under this
amendatory Act of the 100th General Assembly for making an
election under paragraph (1) of subsection (a) of this Section,
the department shall be expressly and irrevocably prohibited
from offering any future increases in income to a Tier 1
employee who has made an election under paragraph (1) of
subsection (a) of this Section on the condition of not
constituting compensation under Section 14-103.10.
As adequate and legal consideration provided under this
amendatory Act of the 100th General Assembly for making an
election under paragraph (1) of subsection (a) of this Section,
each Tier 1 employee who has made an election under paragraph
(1) of subsection (a) of this Section shall receive a
consideration payment equal to 10% of the contributions made by
or on behalf of the employee before the effective date of that
election. The State Comptroller shall pay the consideration
payment to the Tier 1 employee out of funds appropriated for
that purpose under Section 1.9 of the State Pension Funds

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Continuing Appropriation Act. The System shall calculate the
amount of each consideration payment and, by July 1, 2019,
shall certify to the State Comptroller the amount of the
consideration payment, together with the name, address, and any
other available payment information of the Tier 1 employee as
found in the records of the System. The System shall make
additional calculations and certifications of consideration
payments to the State Comptroller as it deems necessary.
(c) A Tier 1 employee who makes the election under
paragraph (2) of subsection (a) of this Section shall not be
subject to paragraph (1) of subsection (a) of this Section.
However, each future increase in income offered by a department
under this Article to a Tier 1 employee who has made the
election under paragraph (2) of subsection (a) of this Section
shall be offered by the department expressly and irrevocably on
the condition of not constituting compensation under Section
14-103.10 and that the Tier 1 employee's acceptance of the
offered future increase in income shall constitute his or her
agreement to that condition.
(d) The System shall make a good faith effort to contact
each Tier 1 employee subject to this Section. The System shall
mail information describing the required election to each Tier
1 employee by United States Postal Service mail to his or her
last known address on file with the System. If the Tier 1
employee is not responsive to other means of contact, it is
sufficient for the System to publish the details of any

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required elections on its website or to publish those details
in a regularly published newsletter or other existing public
forum.
Tier 1 employees who are subject to this Section shall be
provided with an election packet containing information
regarding their options, as well as the forms necessary to make
the required election. Upon request, the System shall offer
Tier 1 employees an opportunity to receive information from the
System before making the required election. The information may
consist of video materials, group presentations, individual
consultation with a member or authorized representative of the
System in person or by telephone or other electronic means, or
any combination of those methods. The System shall not provide
advice or counseling with respect to which election a Tier 1
employee should make or specific to the legal or tax
circumstances of or consequences to the Tier 1 employee.
The System shall inform Tier 1 employees in the election
packet required under this subsection that the Tier 1 employee
may also wish to obtain information and counsel relating to the
election required under this Section from any other available
source, including, but not limited to, labor organizations and
private counsel.
In no event shall the System, its staff, or the Board be
held liable for any information given to a member regarding the
elections under this Section. The System shall coordinate with
the Illinois Department of Central Management Services and each

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other retirement system administering an election in
accordance with this amendatory Act of the 100th General
Assembly to provide information concerning the impact of the
election set forth in this Section.
(e) Notwithstanding any other provision of law, a
department under this Article is required to offer each future
increase in income expressly and irrevocably on the condition
of not constituting "compensation" under Section 14-103.10 to
any Tier 1 employee who has made an election under paragraph
(2) of subsection (a) of this Section. The offer shall also
provide that the Tier 1 employee's acceptance of the offered
future increase in income shall constitute his or her agreement
to the condition set forth in this subsection.
For purposes of legislative intent, the condition set forth
in this subsection shall be construed in a manner that ensures
that the condition is not violated or circumvented through any
contrivance of any kind.
(f) A member's election under this Section is not a
prohibited election under subdivision (j)(1) of Section 1-119
of this Code.
(g) No provision of this Section shall be interpreted in a
way that would cause the System to cease to be a qualified plan
under Section 401(a) of the Internal Revenue Code of 1986. The
provisions of this Section shall be subject to and implemented
in a manner that complies with Section 21 of Article V of the
Illinois Constitution.

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(h) If an election created by this amendatory Act in any
other Article of this Code or any change deriving from that
election is determined to be unconstitutional or otherwise
invalid by a final unappealable decision of an Illinois court
or a court of competent jurisdiction, the invalidity of that
provision shall not in any way affect the validity of this
Section or the changes deriving from the election required
under this Section.
(40 ILCS 5/14-114) (from Ch. 108 1/2, par. 14-114)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 14-114. Automatic increase in retirement annuity.
(a) Subject to the provisions of subsections (a-1), any Any
person receiving a retirement annuity under this Article who
retires having attained age 60, or who retires before age 60
having at least 35 years of creditable service, or who retires
on or after January 1, 2001 at an age which, when added to the
number of years of his or her creditable service, equals at
least 85, shall, on January 1 next following the first full
year of retirement, have the amount of the then fixed and
payable monthly retirement annuity increased 3%. Any person
receiving a retirement annuity under this Article who retires
before attainment of age 60 and with less than (i) 35 years of
creditable service if retirement is before January 1, 2001, or
(ii) the number of years of creditable service which, when

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added to the member's age, would equal 85, if retirement is on
or after January 1, 2001, shall have the amount of the fixed
and payable retirement annuity increased by 3% on the January 1
occurring on or next following (1) attainment of age 60, or (2)
the first anniversary of retirement, whichever occurs later.
However, for persons who receive the alternative retirement
annuity under Section 14-110, references in this subsection (a)
to attainment of age 60 shall be deemed to refer to attainment
of age 55. For a person receiving early retirement incentives
under Section 14-108.3 whose retirement annuity began after
January 1, 1992 pursuant to an extension granted under
subsection (e) of that Section, the first anniversary of
retirement shall be deemed to be January 1, 1993. For a person
who retires on or after June 28, 2001 and on or before October
1, 2001, and whose retirement annuity is calculated, in whole
or in part, under Section 14-110 or subsection (g) or (h) of
Section 14-108, the first anniversary of retirement shall be
deemed to be January 1, 2002.
On each January 1 following the date of the initial
increase under this subsection, the employee's monthly
retirement annuity shall be increased by an additional 3%.
Beginning January 1, 1990, and except as provided in
subsection (a-1), all automatic annual increases payable under
this Section shall be calculated as a percentage of the total
annuity payable at the time of the increase, including previous
increases granted under this Article.

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(a-1) Notwithstanding any other provision of this Article,
for a Tier 1 employee who made the election under paragraph (1)
of subsection (a) of Section 14-106.5:
(1) The initial increase in retirement annuity under
this Section shall occur on the January 1 occurring either
on or after the attainment of age 67 or the fifth
anniversary of the annuity start date, whichever is
earlier.
(2) The amount of each automatic annual increase in
retirement annuity or survivors or widow's annuity
occurring on or after the effective date of that election
shall be calculated as a percentage of the originally
granted retirement annuity or survivors or widow's
annuity, equal to 3% or one-half the annual unadjusted
percentage increase (but not less than zero) in the
consumer price index-u for the 12 months ending with the
September preceding each November 1, whichever is less. If
the annual unadjusted percentage change in the consumer
price index-u for the 12 months ending with the September
preceding each November 1 is zero or there is a decrease,
then the annuity shall not be increased.
For the purposes of this Section, "consumer price index-u"
means the index published by the Bureau of Labor Statistics of
the United States Department of Labor that measures the average
change in prices of goods and services purchased by all urban
consumers, United States city average, all items, 1982-84 =

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100. The new amount resulting from each annual adjustment shall
be determined by the Public Pension Division of the Department
of Insurance and made available to the board of the retirement
system by November 1 of each year.
(b) The provisions of subsection (a) of this Section shall
be applicable to an employee only if the employee makes the
additional contributions required after December 31, 1969 for
the purpose of the automatic increases for not less than the
equivalent of one full year. If an employee becomes an
annuitant before his additional contributions equal one full
year's contributions based on his salary at the date of
retirement, the employee may pay the necessary balance of the
contributions to the system, without interest, and be eligible
for the increasing annuity authorized by this Section.
(c) The provisions of subsection (a) of this Section shall
not be applicable to any annuitant who is on retirement on
December 31, 1969, and thereafter returns to State service,
unless the member has established at least one year of
additional creditable service following reentry into service.
(d) In addition to other increases which may be provided by
this Section, on January 1, 1981 any annuitant who was
receiving a retirement annuity on or before January 1, 1971
shall have his retirement annuity then being paid increased $1
per month for each year of creditable service. On January 1,
1982, any annuitant who began receiving a retirement annuity on
or before January 1, 1977, shall have his retirement annuity

HB4045 Engrossed - 120 - LRB100 12674 RPS 26063 b
then being paid increased $1 per month for each year of
creditable service.
On January 1, 1987, any annuitant who began receiving a
retirement annuity on or before January 1, 1977, shall have the
monthly retirement annuity increased by an amount equal to 8¢
per year of creditable service times the number of years that
have elapsed since the annuity began.
(e) Every person who receives the alternative retirement
annuity under Section 14-110 and who is eligible to receive the
3% increase under subsection (a) on January 1, 1986, shall also
receive on that date a one-time increase in retirement annuity
equal to the difference between (1) his actual retirement
annuity on that date, including any increases received under
subsection (a), and (2) the amount of retirement annuity he
would have received on that date if the amendments to
subsection (a) made by Public Act 84-162 had been in effect
since the date of his retirement.
(Source: P.A. 91-927, eff. 12-14-00; 92-14, eff. 6-28-01;
92-651, eff. 7-11-02.)
(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

HB4045 Engrossed - 121 - LRB100 12674 RPS 26063 b
sufficient to meet the cost of maintaining and administering
the System on a 90% funded basis in accordance with actuarial
recommendations.
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

HB4045 Engrossed - 122 - LRB100 12674 RPS 26063 b
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
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, 2014, 2015, 2016, and 2017 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, 2014, 2015,

HB4045 Engrossed - 123 - LRB100 12674 RPS 26063 b
2016, and 2017 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 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 2018 through 2045 (except as
otherwise provided for fiscal year 2020), 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

HB4045 Engrossed - 124 - LRB100 12674 RPS 26063 b
State fiscal year 2045. In making these determinations, the
required State contribution shall be calculated each year as a
level percentage of total payroll, including payroll that is
not deemed pensionable, 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 year 2020:
(1) The initial calculation and certification shall be
based on the amount determined above.
(2) For purposes of the recertification due on or
before May 1, 2019, the recalculation of the required State
contribution for fiscal year 2020 shall take into account
the effect on the System's liabilities of the elections
made under Section 14-106.5.
(3) For purposes of the recertification due on or
before October 1, 2019, the total required State
contribution for fiscal year 2020 shall be reduced by the
amount of the consideration payments made to Tier 1
employees who made the election under paragraph (1) of
subsection (a) of Section 14-106.5.
Beginning in State fiscal year 2018, any increase or
decrease in State contribution over the prior fiscal year due
exclusively to changes in actuarial or investment assumptions
adopted by the Board shall be included in the State
contribution to the System, as a percentage of the applicable
employee payroll, and shall be increased in equal annual

HB4045 Engrossed - 125 - LRB100 12674 RPS 26063 b
increments so that by the State fiscal year occurring 5 years
after the adoption of the actuarial or investment assumptions,
the State is contributing at the rate otherwise required under
this Section.
For State fiscal years 2012 through 2017 2045, the minimum
contribution to the System to be made by the State for each
fiscal year shall be an amount determined by the System to be
sufficient to bring the total assets of the System up to 90% of
the total actuarial liabilities of the System by the end of
State fiscal year 2045. In making these determinations, the
required State contribution shall be calculated each year as a
level percentage of payroll over the years remaining to and
including fiscal year 2045 and shall be determined under the
projected unit credit actuarial cost method.
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 (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

HB4045 Engrossed - 126 - LRB100 12674 RPS 26063 b
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
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

HB4045 Engrossed - 127 - LRB100 12674 RPS 26063 b
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 2046, the minimum State
contribution for each fiscal year shall be the amount needed to
maintain the total assets of the System at 90% of the total
actuarial liabilities of the System.
Amounts received by the System pursuant to Section 25 of
the Budget Stabilization Act or Section 8.12 of the State
Finance Act in any fiscal year do not reduce and do not
constitute payment of any portion of the minimum State
contribution required under this Article in that fiscal year.
Such amounts shall not reduce, and shall not be included in the
calculation of, the required State contributions under this
Article in any future year until the System has reached a

HB4045 Engrossed - 128 - LRB100 12674 RPS 26063 b
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 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 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

HB4045 Engrossed - 129 - LRB100 12674 RPS 26063 b
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
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

HB4045 Engrossed - 130 - LRB100 12674 RPS 26063 b
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
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

HB4045 Engrossed - 131 - LRB100 12674 RPS 26063 b
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
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

HB4045 Engrossed - 132 - LRB100 12674 RPS 26063 b
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 2017 only, after the
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

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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. 98-24, eff. 6-19-13; 98-674, eff. 6-30-14; 99-8,
eff. 7-9-15; 99-523, eff. 6-30-16.)
(40 ILCS 5/14-133) (from Ch. 108 1/2, par. 14-133)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 14-133. Contributions on behalf of members.
(a) Except as provided in subsection (a-5), each Each
participating employee shall make contributions to the System,
based on the employee's compensation, as follows:
(1) Covered employees, except as indicated below, 3.5%
for retirement annuity, and 0.5% for a widow or survivors
annuity;
(2) Noncovered employees, except as indicated below,
7% for retirement annuity and 1% for a widow or survivors
annuity;
(3) Noncovered employees serving in a position in which
"eligible creditable service" as defined in Section 14-110
may be earned, 1% for a widow or survivors annuity plus the
following amount for retirement annuity: 8.5% through
December 31, 2001; 9.5% in 2002; 10.5% in 2003; and 11.5%

HB4045 Engrossed - 134 - LRB100 12674 RPS 26063 b
in 2004 and thereafter;
(4) Covered employees serving in a position in which
"eligible creditable service" as defined in Section 14-110
may be earned, 0.5% for a widow or survivors annuity plus
the following amount for retirement annuity: 5% through
December 31, 2001; 6% in 2002; 7% in 2003; and 8% in 2004
and thereafter;
(5) Each security employee of the Department of
Corrections or of the Department of Human Services who is a
covered employee, 0.5% for a widow or survivors annuity
plus the following amount for retirement annuity: 5%
through December 31, 2001; 6% in 2002; 7% in 2003; and 8%
in 2004 and thereafter;
(6) Each security employee of the Department of
Corrections or of the Department of Human Services who is
not a covered employee, 1% for a widow or survivors annuity
plus the following amount for retirement annuity: 8.5%
through December 31, 2001; 9.5% in 2002; 10.5% in 2003; and
11.5% in 2004 and thereafter.
(a-5) Beginning July 1, 2019 or the effective date of the
Tier 1 employee's election under paragraph (1) of subsection
(a) of Section 14-106.5, whichever is later, in lieu of the
contributions otherwise required under subsection (a), each
Tier 1 employee who made the election under paragraph (1) of
subsection (a) of Section 14-106.5 who is a participating
employee shall make contributions to the System, based on his

HB4045 Engrossed - 135 - LRB100 12674 RPS 26063 b
or her compensation, as follows:
(1) Covered employees, except as indicated below,
3.15% for retirement annuity, and 0.45% for a widow or
survivors annuity;
(2) Noncovered employees, except as indicated below,
6.3% for retirement annuity and 0.9% for a widow or
survivors annuity;
(3) Noncovered employees serving in a position in which
"eligible creditable service" as defined in Section 14-110
may be earned, 10.35% for retirement annuity and 0.9% for a
widow or survivors annuity;
(4) Covered employees serving in a position in which
"eligible creditable service" as defined in Section 14-110
may be earned, 7.2% for retirement annuity and 0.45% for a
widow or survivors annuity;
(5) Each security employee of the Department of
Corrections or of the Department of Human Services who is a
covered employee, 10.8% for retirement annuity and 0.45%
for a widow or survivors annuity;
(6) Each security employee of the Department of
Corrections or of the Department of Human Services who is
not a covered employee, 10.35% for retirement annuity and
0.9% for a widow or survivors annuity.
(b) Contributions shall be in the form of a deduction from
compensation and shall be made notwithstanding that the
compensation paid in cash to the employee shall be reduced

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thereby below the minimum prescribed by law or regulation. Each
member is deemed to consent and agree to the deductions from
compensation provided for in this Article, and shall receipt in
full for salary or compensation.
(Source: P.A. 92-14, eff. 6-28-01.)
(40 ILCS 5/14-135.08) (from Ch. 108 1/2, par. 14-135.08)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 14-135.08. To certify required State contributions.
(a) To certify to the Governor and to each department, on
or before November 15 of each year until November 15, 2011, the
required rate for State contributions to the System for the
next State fiscal year, as determined under subsection (b) of
Section 14-131. The certification to the Governor under this
subsection (a) shall include a copy of the actuarial
recommendations upon which the rate is based and shall
specifically identify the System's projected State normal cost
for that fiscal year.
(a-5) On or before November 1 of each year, beginning
November 1, 2012, the Board shall submit to the State Actuary,
the Governor, and the General Assembly a proposed certification
of the amount of the required State contribution to the System
for the next fiscal year, along with all of the actuarial
assumptions, calculations, and data upon which that proposed
certification is based. On or before January 1 of each year

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beginning January 1, 2013, the State Actuary shall issue a
preliminary report concerning the proposed certification and
identifying, if necessary, recommended changes in actuarial
assumptions that the Board must consider before finalizing its
certification of the required State contributions. On or before
January 15, 2013 and each January 15 thereafter, the Board
shall certify to the Governor and the General Assembly the
amount of the required State contribution for the next fiscal
year. The Board's certification must note any deviations from
the State Actuary's recommended changes, the reason or reasons
for not following the State Actuary's recommended changes, and
the fiscal impact of not following the State Actuary's
recommended changes on the required State contribution.
(a-10) For purposes of subsection (c-5) of Section 20 of
the Budget Stabilization Act, on or before November 1 of each
year beginning November 1, 2019, the Board shall determine the
amount of the State contribution to the System that would have
been required for the next fiscal year if Section 1-161,
Section 14-155.2, and the changes made to Section 1-160 by this
amendatory Act of the 100th General Assembly had not taken
effect, using the best and most recent available data but based
on the law in effect on May 31, 2019. 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, 2020 and every

HB4045 Engrossed - 138 - LRB100 12674 RPS 26063 b
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, 2020 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 Section 1-161, Section 14-155.2, and the changes made to
Section 1-160 by this amendatory Act of the 100th General
Assembly had not taken effect, using the best and most recent
available data but based on the law in effect on May 31, 2019.
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) The certifications under subsections (a) and (a-5)
shall include an additional amount necessary to pay all
principal of and interest on those general obligation bonds due
the next fiscal year authorized by Section 7.2(a) of the
General Obligation Bond Act and issued to provide the proceeds
deposited by the State with the System in July 2003,
representing deposits other than amounts reserved under
Section 7.2(c) of the General Obligation Bond Act. For State
fiscal year 2005, the Board shall make a supplemental

HB4045 Engrossed - 139 - LRB100 12674 RPS 26063 b
certification of the additional amount necessary to pay all
principal of and interest on those general obligation bonds due
in State fiscal years 2004 and 2005 authorized by Section
7.2(a) of the General Obligation Bond Act and issued to provide
the proceeds deposited by the State with the System in July
2003, representing deposits other than amounts reserved under
Section 7.2(c) of the General Obligation Bond Act, as soon as
practical after the effective date of this amendatory Act of
the 93rd General Assembly.
On or before May 1, 2004, the Board shall recalculate and
recertify to the Governor and to each department the amount of
the required State contribution to the System and the required
rates for State contributions 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 and to each department the amount of
the required State contribution to the System and the required
rates for State contributions 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 and to each department the amount of
the required State contribution to the System for State fiscal

HB4045 Engrossed - 140 - LRB100 12674 RPS 26063 b
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.
As soon as practical after the effective date of this
amendatory Act of the 100th General Assembly, the Board shall
recalculate and recertify to the State Actuary, the Governor,
and the General Assembly the amount of the State contribution
to the System for State fiscal year 2018, taking into account
the changes in required State contributions made by this
amendatory Act of the 100th General Assembly. The State Actuary
shall review the assumptions and valuations underlying the
Board's revised certification and issue a preliminary report
concerning the proposed recertification and identifying, if
necessary, recommended changes in actuarial assumptions that
the Board must consider before finalizing its certification of
the required State contributions. The Board's final
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.
On or before May 1, 2019, the Board shall recalculate and
recertify to the Governor and the General Assembly the amount
of the required State contribution to the System for State
fiscal year 2020, taking into account the effect on the
System's liabilities of the elections made under Section

HB4045 Engrossed - 141 - LRB100 12674 RPS 26063 b
14-106.5.
On or before October 1, 2019, the Board shall recalculate
and recertify to the Governor and the General Assembly the
amount of the required State contribution to the System for
State fiscal year 2020, taking into account the reduction
specified under item (3) of subsection (e) of Section 14-131.
(Source: P.A. 96-1497, eff. 1-14-11; 96-1511, eff. 1-27-11;
97-694, eff. 6-18-12.)
(40 ILCS 5/14-147.5 new)
Sec. 14-147.5. Accelerated pension benefit payment.
(a) As used in this Section:
"Eligible person" means a person who:
(1) has terminated service;
(2) has accrued sufficient service credit to be
eligible to receive a retirement annuity under this
Article;
(3) has not received any retirement annuity under this
Article; and
(4) does not have a QILDRO in effect against him or her
under this Article.
"Pension benefit" means the benefits under this Article, or
Article 1 as it relates to those benefits, including any
anticipated annual increases, that an eligible person is
entitled to upon attainment of the applicable retirement age.
"Pension benefit" also includes applicable survivor's or

HB4045 Engrossed - 142 - LRB100 12674 RPS 26063 b
disability benefits.
(b) Before January 1, 2019, and annually thereafter, the
System shall calculate, using actuarial tables and other
assumptions adopted by the Board, the net present value of
pension benefits for each eligible person and shall offer each
eligible person the opportunity to irrevocably elect to receive
an amount determined by the System to be equal to 70% of the
net present value of his or her pension benefits in lieu of
receiving any pension benefit. The offer shall specify the
dollar amount that the eligible person will receive if he or
she so elects and shall expire when a subsequent offer is made
to an eligible person or when the System determines that 10% of
eligible persons in that year have made the election under this
subsection, whichever occurs first. The System shall make a
good faith effort to contact every eligible person to notify
him or her of the election and of the amount of the accelerated
pension benefit payment.
Until the System determines that 10% of eligible persons in
that year have made the election under this subsection, an
eligible person may irrevocably elect to receive an accelerated
pension benefit payment in the amount that the System offers
under this subsection in lieu of receiving any pension benefit.
A person who elects to receive an accelerated pension benefit
payment under this Section may not elect to proceed under the
Retirement Systems Reciprocal Act with respect to service under
this Article.

HB4045 Engrossed - 143 - LRB100 12674 RPS 26063 b
(c) A person's credits and creditable service under this
Article shall be terminated upon the person's receipt of an
accelerated pension benefit payment under this Section, and no
other benefit shall be paid under this Article based on those
terminated credits and creditable service, including any
retirement, survivor, or other benefit; except that to the
extent that participation, benefits, or premiums under the
State Employees Group Insurance Act of 1971 are based on the
amount of service credit, the terminated service credit shall
be used for that purpose.
(d) If a person who has received an accelerated pension
benefit payment under this Section returns to active service
under this Article, then:
(1) Any benefits under the System earned as a result of
that return to active service shall be based solely on the
person's credits and creditable service arising from the
return to active service.
(2) The accelerated pension benefit payment may not be
repaid to the System, and the terminated credits and
creditable service may not under any circumstances be
reinstated.
(e) As a condition of receiving an accelerated pension
benefit payment, an eligible person must have another
retirement plan or account qualified under the Internal Revenue
Code of 1986, as amended, for the accelerated pension benefit
payment to be rolled into. The accelerated pension benefit

HB4045 Engrossed - 144 - LRB100 12674 RPS 26063 b
payment under this Section may be subject to withholding or
payment of applicable taxes, but to the extent permitted by
federal law, a person who receives an accelerated pension
benefit payment under this Section must direct the System to
pay all of that payment as a rollover into another retirement
plan or account qualified under the Internal Revenue Code of
1986, as amended.
(f) Before January 1, 2020 and every January 1 thereafter,
the Board shall certify to the Illinois Finance Authority and
the General Assembly the amount by which the total amount of
accelerated pension benefit payments made under this Section
exceed the amount appropriated to the System for the purpose of
making those payments.
(g) The Board shall adopt any rules necessary to implement
this Section.
(h) No provision of this Section shall be interpreted in a
way that would cause the applicable System to cease to be a
qualified plan under the Internal Revenue Code of 1986.
(i) Notwithstanding any other provision of this Section, in
no case shall the total amount of accelerated pension benefit
payments paid under this Section, Section 15-185.5, and Section
16-190.5 cause the Illinois Finance Authority to issue more
than the $250,000,000 of State Pension Obligation Acceleration
Bonds authorized in subsection (c-5) of Section 801-40 of the
Illinois Finance Authority Act.

HB4045 Engrossed - 145 - LRB100 12674 RPS 26063 b
(40 ILCS 5/14-152.1)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 14-152.1. Application and expiration of new benefit
increases.
(a) As used in this Section, "new benefit increase" means
an increase in the amount of any benefit provided under this
Article, or an expansion of the conditions of eligibility for
any benefit under this Article, that results from an amendment
to this Code that takes effect after June 1, 2005 (the
effective date of Public Act 94-4). "New benefit increase",
however, does not include any benefit increase resulting from
the changes made to this Article by Public Act 96-37 or by this
amendatory Act of the 100th General Assembly this amendatory
Act of the 96th General Assembly.
(b) Notwithstanding any other provision of this Code or any
subsequent amendment to this Code, every new benefit increase
is subject to this Section and shall be deemed to be granted
only in conformance with and contingent upon compliance with
the provisions of this Section.
(c) The Public Act enacting a new benefit increase must
identify and provide for payment to the System of additional
funding at least sufficient to fund the resulting annual
increase in cost to the System as it accrues.
Every new benefit increase is contingent upon the General
Assembly providing the additional funding required under this

HB4045 Engrossed - 146 - LRB100 12674 RPS 26063 b
subsection. The Commission on Government Forecasting and
Accountability shall analyze whether adequate additional
funding has been provided for the new benefit increase and
shall report its analysis to the Public Pension Division of the
Department of Insurance Financial and Professional Regulation.
A new benefit increase created by a Public Act that does not
include the additional funding required under this subsection
is null and void. If the Public Pension Division determines
that the additional funding provided for a new benefit increase
under this subsection is or has become inadequate, it may so
certify to the Governor and the State Comptroller and, in the
absence of corrective action by the General Assembly, the new
benefit increase shall expire at the end of the fiscal year in
which the certification is made.
(d) Every new benefit increase shall expire 5 years after
its effective date or on such earlier date as may be specified
in the language enacting the new benefit increase or provided
under subsection (c). This does not prevent the General
Assembly from extending or re-creating a new benefit increase
by law.
(e) Except as otherwise provided in the language creating
the new benefit increase, a new benefit increase that expires
under this Section continues to apply to persons who applied
and qualified for the affected benefit while the new benefit
increase was in effect and to the affected beneficiaries and
alternate payees of such persons, but does not apply to any

HB4045 Engrossed - 147 - LRB100 12674 RPS 26063 b
other person, including without limitation a person who
continues in service after the expiration date and did not
apply and qualify for the affected benefit while the new
benefit increase was in effect.
(Source: P.A. 96-37, eff. 7-13-09.)
(40 ILCS 5/14-155.1 new)
Sec. 14-155.1. Defined contribution plan.
(a) By July 1, 2019, the System shall prepare and implement
a voluntary defined contribution plan for up to 5% of eligible
active Tier 1 employees. The System shall determine the 5% cap
by the number of active Tier 1 employees on the effective date
of this Section. The defined contribution plan developed under
this Section shall be a plan that aggregates employer and
employee contributions in individual participant accounts
which, after meeting any other requirements, are used for
payouts after retirement in accordance with this Section and
any other applicable laws.
As used in this Section, "defined benefit plan" means the
retirement plan available under this Article to Tier 1
employees who have not made the election authorized under this
Section.
(1) Under the defined contribution plan, an active Tier
1 employee of this System could elect to cease accruing
benefits in the defined benefit plan under this Article and
begin accruing benefits for future service in the defined

HB4045 Engrossed - 148 - LRB100 12674 RPS 26063 b
contribution plan. Service credit under the defined
contribution plan may be used for determining retirement
eligibility under the defined benefit plan.
(2) Participants in the defined contribution plan
shall pay employee contributions at the same rate as Tier 1
employees in this System who do not participate in the
defined contribution plan.
(3) State contributions shall be paid into the accounts
of all participants in the defined contribution plan at a
uniform rate, expressed as a percentage of compensation and
determined for each year. This rate shall be no higher than
the employer's normal cost for Tier 1 employees in the
defined benefit plan for that year, as determined by the
System and expressed as a percentage of compensation, and
shall be no lower than 3% of compensation. The State shall
adjust this rate annually.
(4) The defined contribution plan shall require 5 years
of participation in the defined contribution plan before
vesting in State contributions. If the participant fails to
vest in them, the State contributions, and the earnings
thereon, shall be forfeited.
(5) The defined contribution plan may provide for
participants in the plan to be eligible for the defined
disability benefits available to other participants under
this Article. If it does, the System shall reduce the
employee contributions credited to the member's defined

HB4045 Engrossed - 149 - LRB100 12674 RPS 26063 b
contribution plan account by an amount determined by the
System to cover the cost of offering such benefits.
(6) The defined contribution plan shall provide a
variety of options for investments. These options shall
include investments handled by the Illinois State Board of
Investment as well as private sector investment options.
(7) The defined contribution plan shall provide a
variety of options for payouts to retirees and their
survivors.
(8) To the extent authorized under federal law and as
authorized by the System, the plan shall allow former
participants in the plan to transfer or roll over employee
and vested State contributions, and the earnings thereon,
into other qualified retirement plans.
(9) The System shall reduce the employee contributions
credited to the member's defined contribution plan account
by an amount determined by the System to cover the cost of
offering these benefits and any applicable administrative
fees.
(b) Only persons who are active Tier 1 employees of the
System on the effective date of this Section are eligible to
participate in the defined contribution plan. Participation in
the defined contribution plan shall be limited to the first 5%
of eligible persons who elect to participate. The election to
participate in the defined contribution plan is voluntary and
irrevocable.

HB4045 Engrossed - 150 - LRB100 12674 RPS 26063 b
(c) An eligible Tier 1 employee may irrevocably elect to
participate in the defined contribution plan by filing with the
System a written application to participate that is received by
the System prior to its determination that 5% of eligible
persons have elected to participate in the defined contribution
plan.
When the System first determines that 5% of eligible
persons have elected to participate in the defined contribution
plan, the System shall provide notice to previously eligible
employees that the plan is no longer available and shall cease
accepting applications to participate.
(d) The System shall make a good faith effort to contact
each active Tier 1 employee who is eligible to participate in
the defined contribution plan. The System shall mail
information describing the option to join the defined
contribution plan to each of these employees to his or her last
known address on file with the System. If the employee is not
responsive to other means of contact, it is sufficient for the
System to publish the details of the option on its website.
Upon request for further information describing the
option, the System shall provide employees with information
from the System before exercising the option to join the plan,
including information on the impact to their vested benefits or
non-vested service. The individual consultation shall include
projections of the member's defined benefits at retirement or
earlier termination of service and the value of the member's

HB4045 Engrossed - 151 - LRB100 12674 RPS 26063 b
account at retirement or earlier termination of service. The
System shall not provide advice or counseling with respect to
whether the employee should exercise the option. The System
shall inform Tier 1 employees who are eligible to participate
in the defined contribution plan that they may also wish to
obtain information and counsel relating to their option from
any other available source, including, but not limited to,
labor organizations, private counsel, and financial advisors.
(e) In no event shall the System, its staff, its authorized
representatives, or the Board be liable for any information
given to an employee under this Section. The System may
coordinate with the Illinois Department of Central Management
Services and other retirement systems administering a defined
contribution plan in accordance with this amendatory Act of the
100th General Assembly to provide information concerning the
impact of the option set forth in this Section.
(f) Notwithstanding any other provision of this Section, no
person shall begin participating in the defined contribution
plan until it has attained qualified plan status and received
all necessary approvals from the U.S. Internal Revenue Service.
(g) The System shall report on its progress under this
Section, including the available details of the defined
contribution plan and the System's plans for informing eligible
Tier 1 employees about the plan, to the Governor and the
General Assembly on or before January 15, 2019.
(h) The Illinois State Board of Investment shall be the

HB4045 Engrossed - 152 - LRB100 12674 RPS 26063 b
plan sponsor for the defined contribution plan established
under this Section.
(i) The intent of this amendatory Act of the 100th General
Assembly is to ensure that the State's normal cost of
participation in the defined contribution plan is similar, and
if possible equal, to the State's normal cost of participation
in the defined benefit plan, unless a lower State's normal cost
is necessary to ensure cost neutrality.
(40 ILCS 5/14-155.2 new)
Sec. 14-155.2. Defined contribution plan for certain
covered employees.
(a) As used in this Section:
"Defined benefit plan" means the retirement plan available
under this Article and Section 1-160 to eligible covered
employees who do not make the election authorized under this
Section.
"Eligible covered employee" means a covered employee who
first becomes a participant under this Article on or after 6
months after the effective date of this amendatory Act of the
100th General Assembly.
(b) In lieu of the defined benefit plan, an eligible
covered employee may irrevocably elect to participate in the
defined contribution plan under this Section. The election to
participate in the defined contribution plan must be made
within 30 days after becoming an eligible covered employee. The

HB4045 Engrossed - 153 - LRB100 12674 RPS 26063 b
election to participate in the defined contribution plan under
this Section is voluntary and irrevocable.
(c) No later than 5 months after the effective date of this
amendatory Act of the 100th General Assembly, the System shall
prepare and implement a voluntary defined contribution plan for
eligible covered employees. The defined contribution plan
developed under this Section shall be a plan that aggregates
employer and employee contributions in individual participant
accounts which, after meeting any other requirements, are used
for payouts after retirement in accordance with this Section
and any other applicable laws.
(1) A participant in the defined contribution plan
shall contribute a minimum of 3% of his or her compensation
to the defined contribution plan.
(2) For persons who participate in the defined
contribution plan for at least one year, employer
contributions shall be paid into the accounts of those
participants at a rate of 3% of compensation.
(3) Employer contributions shall vest when those
contributions are paid into a participant's account.
(4) The defined contribution plan shall provide a
variety of options for investments. These options shall
include investments handled by the Illinois State Board of
Investment as well as private sector investment options.
(5) The defined contribution plan shall provide a
variety of options for payouts to retirees and their

HB4045 Engrossed - 154 - LRB100 12674 RPS 26063 b
survivors.
(6) To the extent authorized under federal law and as
authorized by the affected pension fund, the defined
contribution plan shall allow former participants in the
plan to transfer or roll over employee and employer
contributions, and the earnings thereon, into other
qualified retirement plans.
(7) The System shall reduce the employee contributions
credited to the participant's defined contribution plan
account by an amount determined by the System to cover the
cost of offering the benefits under this Section and any
applicable administrative fees.
(40 ILCS 5/14-156.1 new)
Sec. 14-156.1. Defined contribution plan; termination. If
the defined contribution plan under Section 14-155.1 is
terminated or becomes inoperative pursuant to law, then each
participant in the plan shall automatically be deemed to have
been a contributing Tier 1 employee in the System's defined
benefit plan during the time in which he or she participated in
the defined contribution plan, and for that purpose the System
shall be entitled to recover the amounts in the participant's
defined contribution accounts.
(40 ILCS 5/15-108.1)
Sec. 15-108.1. Tier 1 member; Tier 1 employee.

HB4045 Engrossed - 155 - LRB100 12674 RPS 26063 b
"Tier 1 member": A participant or an annuitant of a
retirement annuity under this Article, other than a participant
in the self-managed plan under Section 15-158.2, who first
became a participant or member before January 1, 2011 under any
reciprocal retirement system or pension fund established under
this Code, other than a retirement system or pension fund
established under Articles 2, 3, 4, 5, 6, or 18 of this Code.
"Tier 1 member" includes a person who first became a
participant under this System before January 1, 2011 and who
accepts a refund and is subsequently reemployed by an employer
on or after January 1, 2011.
"Tier 1 employee": A Tier 1 member who is a participating
employee, unless he or she is a disability benefit recipient
under Section 15-150. However, for the purposes of the election
under Section 15-132.9, "Tier 1 employee" does not include an
individual who has made an irrevocable election on or before
June 1, 2017 to retire from service pursuant to the terms of an
employment contract or a collective bargaining agreement in
effect on June 1, 2017, excluding any extension, amendment, or
renewal of that agreement on or after that date, and has
notified the System of that election.
(Source: P.A. 98-92, eff. 7-16-13.)
(40 ILCS 5/15-108.2)
Sec. 15-108.2. Tier 2 member. "Tier 2 member": A person who
first becomes a participant under this Article on or after

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January 1, 2011 and before 6 months after the effective date of
this amendatory Act of the 100th General Assembly, other than a
person in the self-managed plan established under Section
15-158.2 or a person who makes the election under subsection
(c) of Section 1-161, unless the person is otherwise a Tier 1
member. The changes made to this Section by this amendatory Act
of the 98th General Assembly are a correction of existing law
and are intended to be retroactive to the effective date of
Public Act 96-889, notwithstanding the provisions of Section
1-103.1 of this Code.
(Source: P.A. 98-92, eff. 7-16-13; 98-596, eff. 11-19-13.)
(40 ILCS 5/15-111) (from Ch. 108 1/2, par. 15-111)
Sec. 15-111. Earnings.
(a) "Earnings": Subject to Section 15-111.5, an amount paid
for personal services equal to the sum of the basic
compensation plus extra compensation for summer teaching,
overtime or other extra service. For periods for which an
employee receives service credit under subsection (c) of
Section 15-113.1 or Section 15-113.2, earnings are equal to the
basic compensation on which contributions are paid by the
employee during such periods. Compensation for employment
which is irregular, intermittent and temporary shall not be
considered earnings, unless the participant is also receiving
earnings from the employer as an employee under Section 15-107.
With respect to transition pay paid by the University of

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Illinois to a person who was a participating employee employed
in the fire department of the University of Illinois's
Champaign-Urbana campus immediately prior to the elimination
of that fire department:
(1) "Earnings" includes transition pay paid to the
employee on or after the effective date of this amendatory
Act of the 91st General Assembly.
(2) "Earnings" includes transition pay paid to the
employee before the effective date of this amendatory Act
of the 91st General Assembly only if (i) employee
contributions under Section 15-157 have been withheld from
that transition pay or (ii) the employee pays to the System
before January 1, 2001 an amount representing employee
contributions under Section 15-157 on that transition pay.
Employee contributions under item (ii) may be paid in a
lump sum, by withholding from additional transition pay
accruing before January 1, 2001, or in any other manner
approved by the System. Upon payment of the employee
contributions on transition pay, the corresponding
employer contributions become an obligation of the State.
(a-5) Notwithstanding any other provision of this Section,
"earnings" does not include any future increase in income that
is offered for service by an employer to a Tier 1 employee
under this Article pursuant to the condition set forth in
subsection (c) of Section 15-132.9 and accepted under that
condition by a Tier 1 employee who has made the election under

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paragraph (2) of subsection (a) of Section 15-132.9.
(a-10) Notwithstanding any other provision of this
Section, "earnings" does not include any consideration payment
made to a Tier 1 employee.
(b) For a Tier 2 member, the annual earnings shall not
exceed $106,800; however, that amount shall annually
thereafter be increased by the lesser of (i) 3% of that amount,
including all previous adjustments, or (ii) one half the annual
unadjusted percentage increase (but not less than zero) in the
consumer price index-u for the 12 months ending with the
September preceding each November 1, including all previous
adjustments.
For the purposes of this Section, "consumer price index u"
means the index published by the Bureau of Labor Statistics of
the United States Department of Labor that measures the average
change in prices of goods and services purchased by all urban
consumers, United States city average, all items, 1982-84 =
100. The new amount resulting from each annual adjustment shall
be determined by the Public Pension Division of the Department
of Insurance and made available to the boards of the retirement
systems and pension funds by November 1 of each year.
(c) With each submission of payroll information in the
manner prescribed by the System, the employer shall certify
that the payroll information is correct and complies with all
applicable State and federal laws.
(Source: P.A. 98-92, eff. 7-16-13; 99-897, eff. 1-1-17.)

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(40 ILCS 5/15-112.1 new)
Sec. 15-112.1. Future increase in income. "Future increase
in income" means an increase to a Tier 1 employee's base pay
that is offered by an employer to the Tier 1 employee for
service under this Article after June 30, 2018 that qualifies
as "earnings", as defined in Section 15-111, or would qualify
as "earnings" but for the fact that it was offered to and
accepted by the Tier 1 employee under the condition set forth
in subsection (c) of Section 15-132.9. The term "future
increase in income" includes an increase to a Tier 1 employee's
base pay that is paid to the Tier 1 employee pursuant to an
extension, amendment, or renewal of any such employment
contract or collective bargaining agreement after the
effective date of this Section.
(40 ILCS 5/15-112.2 new)
Sec. 15-112.2. Base pay. As used in Section 15-112.1 of
this Code, "base pay" means the greater of either (i) the Tier
1 employee's annualized rate of earnings as of June 30, 2018,
or (ii) the Tier 1 employee's annualized rate of earnings
immediately preceding the expiration, renewal, or amendment of
an employment contract or collective bargaining agreement in
effect on the effective date of this Section. For a person
returning to participating employee status as a Tier 1 employee
after June 30, 2018, however, "base pay" means the employee's

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annualized rate of earnings as of the employee's last date of
service prior to July 1, 2018. The System shall calculate the
base pay of each Tier 1 employee pursuant to this Section.
(40 ILCS 5/15-132.9 new)
Sec. 15-132.9. Election by Tier 1 employees.
(a) Each Tier 1 employee shall make an irrevocable election
either:
(1) to agree to delay his or her eligibility for
automatic annual increases in retirement annuity as
provided in subsection (d-1) of Section 15-136 and to have
the amount of the automatic annual increases in his or her
retirement annuity and survivor annuity that are otherwise
provided for in this Article calculated, instead, as
provided in subsection (d-1) of Section 15-136; or
(2) to not agree to the provisions of paragraph (1) of
this subsection.
The election required under this subsection (a) shall be
made by each Tier 1 employee no earlier than January 1, 2018
and no later than March 31, 2018, except that:
(i) a person who becomes a Tier 1 employee under this
Article on or after January 1, 2018 must make the election
under this subsection (a) within 60 days after becoming a
Tier 1 employee;
(ii) a person who returns to participating employee
status as a Tier 1 employee under this Article on or after

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January 1, 2018 and has not yet made an election under this
Section must make the election under this subsection (a)
within 60 days after returning to participating employee
status as a Tier 1 employee; and
(iii) a person who returns to participating employee
status as a Tier 1 employee under this Article but who has
not made an election under Section 15-134.5 must make the
election under this subsection (a) at the same time as the
election under Section 15-134.5 and within the timeframes
required by that Section.
If a Tier 1 employee fails for any reason to make a
required election under this subsection within the time
specified, then the employee shall be deemed to have made the
election under paragraph (2) of this subsection.
(a-5) If this Section is enjoined or stayed by an Illinois
court or a court of competent jurisdiction pending the entry of
a final and unappealable decision, and this Section is
determined to be constitutional or otherwise valid by a final
unappealable decision of an Illinois court or a court of
competent jurisdiction, then the election procedure set forth
in subsection (a) of this Section shall commence on the 180th
calendar day after the date of the issuance of the final
unappealable decision and shall conclude at the end of the
270th calendar day after that date.
(a-10) All elections under subsection (a) that are made or
deemed to be made before July 1, 2018 shall take effect on July

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1, 2018. Elections that are made or deemed to be made on or
after July 1, 2018 shall take effect on the first day of the
month following the month in which the election is made or
deemed to be made.
(b) As adequate and legal consideration provided under this
amendatory Act of the 100th General Assembly for making an
election under paragraph (1) of subsection (a) of this Section,
the employer shall be expressly and irrevocably prohibited from
offering any future increases in income to a Tier 1 employee
who has made an election under paragraph (1) of subsection (a)
of this Section on the condition of not constituting earnings
under Section 15-111.
As adequate and legal consideration provided under this
amendatory Act of the 100th General Assembly for making an
election under paragraph (1) of subsection (a) of this Section,
each Tier 1 employee who has made an election under paragraph
(1) of subsection (a) of this Section shall receive a
consideration payment equal to 10% of the contributions made by
or on behalf of the employee under Section 15-157 before the
effective date of that election. The State Comptroller shall
pay the consideration payment to the Tier 1 employee out of
funds appropriated for that purpose under Section 1.9 of the
State Pension Funds Continuing Appropriation Act. The System
shall calculate the amount of each consideration payment and,
by July 1, 2018, shall certify to the State Comptroller the
amount of the consideration payment, together with the name,

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address, and any other available payment information of the
Tier 1 employee as found in the records of the System. The
System shall make additional calculations and certifications
of consideration payments to the State Comptroller as the
System deems necessary.
(c) A Tier 1 employee who makes the election under
paragraph (2) of subsection (a) of this Section shall not be
subject to paragraph (1) of subsection (a) of this Section.
However, each future increase in income offered by an employer
under this Article to a Tier 1 employee who has made the
election under paragraph (2) of subsection (a) of this Section
shall be offered by the employer expressly and irrevocably on
the condition of not constituting earnings under Section 15-111
and that the Tier 1 employee's acceptance of the offered future
increase in income shall constitute his or her agreement to
that condition.
(d) The System shall make a good faith effort to contact
each Tier 1 employee subject to this Section. The System shall
mail information describing the required election to each Tier
1 employee by United States Postal Service mail to his or her
last known address on file with the System. If the Tier 1
employee is not responsive to other means of contact, it is
sufficient for the System to publish the details of any
required elections on its website or to publish those details
in a regularly published newsletter or other existing public
forum.

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Tier 1 employees who are subject to this Section shall be
provided with an election packet containing information
regarding their options, as well as the forms necessary to make
the required election. Upon request, the System shall offer
Tier 1 employees an opportunity to receive information from the
System before making the required election. The information may
consist of video materials, benefit estimators, group
presentations, individual consultation with a member or
authorized representative of the System in person or by
telephone or other electronic means, or any combination of
these methods. The System shall not provide advice or
counseling with respect to which election a Tier 1 employee
should make or specific to the legal or tax circumstances of or
consequences to the Tier 1 employee.
The System shall inform Tier 1 employees in the election
packet required under this subsection that the Tier 1 employee
may also wish to obtain information and counsel relating to the
election required under this Section from any other available
source, including, but not limited to, labor organizations and
private counsel.
In no event shall the System, its staff, or the Board be
held liable for any information given to a member regarding the
elections under this Section. The System shall coordinate with
the Illinois Department of Central Management Services and each
other retirement system administering an election in
accordance with this amendatory Act of the 100th General

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Assembly to provide information concerning the impact of the
election set forth in this Section.
(e) Notwithstanding any other provision of law, an employer
under this Article is required to offer each future increase in
income expressly and irrevocably on the condition of not
constituting "earnings" under Section 15-111 to any Tier 1
employee who has made an election under paragraph (2) of
subsection (a) of this Section. The offer shall also provide
that the Tier 1 employee's acceptance of the offered future
increase in income shall constitute his or her agreement to the
condition set forth in this subsection.
For purposes of legislative intent, the condition set forth
in this subsection shall be construed in a manner that ensures
that the condition is not violated or circumvented through any
contrivance of any kind.
(f) A member's election under this Section is not a
prohibited election under subdivision (j)(1) of Section 1-119
of this Code.
(g) No provision of this Section shall be interpreted in a
way that would cause the System to cease to be a qualified plan
under Section 401(a) of the Internal Revenue Code of 1986.
(h) If an election created by this amendatory Act in any
other Article of this Code or any change deriving from that
election is determined to be unconstitutional or otherwise
invalid by a final unappealable decision of an Illinois court
or a court of competent jurisdiction, the invalidity of that

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provision shall not in any way affect the validity of this
Section or the changes deriving from the election required
under this Section.
(40 ILCS 5/15-136) (from Ch. 108 1/2, par. 15-136)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 15-136. Retirement annuities - Amount. The provisions
of this Section 15-136 apply only to those participants who are
participating in the traditional benefit package or the
portable benefit package and do not apply to participants who
are participating in the self-managed plan.
(a) The amount of a participant's retirement annuity,
expressed in the form of a single-life annuity, shall be
determined by whichever of the following rules is applicable
and provides the largest annuity:
Rule 1: The retirement annuity shall be 1.67% of final rate
of earnings for each of the first 10 years of service, 1.90%
for each of the next 10 years of service, 2.10% for each year
of service in excess of 20 but not exceeding 30, and 2.30% for
each year in excess of 30; or for persons who retire on or
after January 1, 1998, 2.2% of the final rate of earnings for
each year of service.
Rule 2: The retirement annuity shall be the sum of the
following, determined from amounts credited to the participant
in accordance with the actuarial tables and the effective rate

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of interest in effect at the time the retirement annuity
begins:
(i) the normal annuity which can be provided on an
actuarially equivalent basis, by the accumulated normal
contributions as of the date the annuity begins;
(ii) an annuity from employer contributions of an
amount equal to that which can be provided on an
actuarially equivalent basis from the accumulated normal
contributions made by the participant under Section
15-113.6 and Section 15-113.7 plus 1.4 times all other
accumulated normal contributions made by the participant;
and
(iii) the annuity that can be provided on an
actuarially equivalent basis from the entire contribution
made by the participant under Section 15-113.3.
With respect to a police officer or firefighter who retires
on or after August 14, 1998, the accumulated normal
contributions taken into account under clauses (i) and (ii) of
this Rule 2 shall include the additional normal contributions
made by the police officer or firefighter under Section
15-157(a).
The amount of a retirement annuity calculated under this
Rule 2 shall be computed solely on the basis of the
participant's accumulated normal contributions, as specified
in this Rule and defined in Section 15-116. Neither an employee
or employer contribution for early retirement under Section

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15-136.2 nor any other employer contribution shall be used in
the calculation of the amount of a retirement annuity under
this Rule 2.
This amendatory Act of the 91st General Assembly is a
clarification of existing law and applies to every participant
and annuitant without regard to whether status as an employee
terminates before the effective date of this amendatory Act.
This Rule 2 does not apply to a person who first becomes an
employee under this Article on or after July 1, 2005.
Rule 3: The retirement annuity of a participant who is
employed at least one-half time during the period on which his
or her final rate of earnings is based, shall be equal to the
participant's years of service not to exceed 30, multiplied by
(1) $96 if the participant's final rate of earnings is less
than $3,500, (2) $108 if the final rate of earnings is at least
$3,500 but less than $4,500, (3) $120 if the final rate of
earnings is at least $4,500 but less than $5,500, (4) $132 if
the final rate of earnings is at least $5,500 but less than
$6,500, (5) $144 if the final rate of earnings is at least
$6,500 but less than $7,500, (6) $156 if the final rate of
earnings is at least $7,500 but less than $8,500, (7) $168 if
the final rate of earnings is at least $8,500 but less than
$9,500, and (8) $180 if the final rate of earnings is $9,500 or
more, except that the annuity for those persons having made an
election under Section 15-154(a-1) shall be calculated and
payable under the portable retirement benefit program pursuant

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to the provisions of Section 15-136.4.
Rule 4: A participant who is at least age 50 and has 25 or
more years of service as a police officer or firefighter, and a
participant who is age 55 or over and has at least 20 but less
than 25 years of service as a police officer or firefighter,
shall be entitled to a retirement annuity of 2 1/4% of the
final rate of earnings for each of the first 10 years of
service as a police officer or firefighter, 2 1/2% for each of
the next 10 years of service as a police officer or
firefighter, and 2 3/4% for each year of service as a police
officer or firefighter in excess of 20. The retirement annuity
for all other service shall be computed under Rule 1. A Tier 2
member is eligible for a retirement annuity calculated under
Rule 4 only if that Tier 2 member meets the service
requirements for that benefit calculation as prescribed under
this Rule 4 in addition to the applicable age requirement under
subsection (a-5) of Section 15-135.
For purposes of this Rule 4, a participant's service as a
firefighter shall also include the following:
(i) service that is performed while the person is an
employee under subsection (h) of Section 15-107; and
(ii) in the case of an individual who was a
participating employee employed in the fire department of
the University of Illinois's Champaign-Urbana campus
immediately prior to the elimination of that fire
department and who immediately after the elimination of

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that fire department transferred to another job with the
University of Illinois, service performed as an employee of
the University of Illinois in a position other than police
officer or firefighter, from the date of that transfer
until the employee's next termination of service with the
University of Illinois.
(b) For a Tier 1 member, the retirement annuity provided
under Rules 1 and 3 above shall be reduced by 1/2 of 1% for each
month the participant is under age 60 at the time of
retirement. However, this reduction shall not apply in the
following cases:
(1) For a disabled participant whose disability
benefits have been discontinued because he or she has
exhausted eligibility for disability benefits under clause
(6) of Section 15-152;
(2) For a participant who has at least the number of
years of service required to retire at any age under
subsection (a) of Section 15-135; or
(3) For that portion of a retirement annuity which has
been provided on account of service of the participant
during periods when he or she performed the duties of a
police officer or firefighter, if these duties were
performed for at least 5 years immediately preceding the
date the retirement annuity is to begin.
(b-5) The retirement annuity of a Tier 2 member who is
retiring after attaining age 62 with at least 10 years of

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service credit shall be reduced by 1/2 of 1% for each full
month that the member's age is under age 67.
(c) The maximum retirement annuity provided under Rules 1,
2, 4, and 5 shall be the lesser of (1) the annual limit of
benefits as specified in Section 415 of the Internal Revenue
Code of 1986, as such Section may be amended from time to time
and as such benefit limits shall be adjusted by the
Commissioner of Internal Revenue, and (2) 80% of final rate of
earnings.
(d) Subject to the provisions of subsection (d-1), a A Tier
1 member whose status as an employee terminates after August
14, 1969 shall receive automatic increases in his or her
retirement annuity as follows:
Effective January 1 immediately following the date the
retirement annuity begins, the annuitant shall receive an
increase in his or her monthly retirement annuity of 0.125% of
the monthly retirement annuity provided under Rule 1, Rule 2,
Rule 3, or Rule 4 contained in this Section, multiplied by the
number of full months which elapsed from the date the
retirement annuity payments began to January 1, 1972, plus
0.1667% of such annuity, multiplied by the number of full
months which elapsed from January 1, 1972, or the date the
retirement annuity payments began, whichever is later, to
January 1, 1978, plus 0.25% of such annuity multiplied by the
number of full months which elapsed from January 1, 1978, or
the date the retirement annuity payments began, whichever is

HB4045 Engrossed - 172 - LRB100 12674 RPS 26063 b
later, to the effective date of the increase.
The annuitant shall receive an increase in his or her
monthly retirement annuity on each January 1 thereafter during
the annuitant's life of 3% of the monthly annuity provided
under Rule 1, Rule 2, Rule 3, or Rule 4 contained in this
Section. The change made under this subsection by P.A. 81-970
is effective January 1, 1980 and applies to each annuitant
whose status as an employee terminates before or after that
date.
Beginning January 1, 1990, and except as provided in
subsection (d-1), all automatic annual increases payable under
this Section shall be calculated as a percentage of the total
annuity payable at the time of the increase, including all
increases previously granted under this Article.
The change made in this subsection by P.A. 85-1008 is
effective January 26, 1988, and is applicable without regard to
whether status as an employee terminated before that date.
(d-1) Notwithstanding any other provision of this Article,
for a Tier 1 employee who made the election under paragraph (1)
of subsection (a) of Section 15-132.9:
(1) The initial increase in retirement annuity under
this Section shall occur on the January 1 occurring either
on or after the attainment of age 67 or the fifth
anniversary of the annuity start date, whichever is
earlier.
(2) The amount of each automatic annual increase in

HB4045 Engrossed - 173 - LRB100 12674 RPS 26063 b
retirement annuity or survivor annuity occurring on or
after the effective date of that election shall be
calculated as a percentage of the originally granted
retirement annuity or survivor annuity, equal to 3% or
one-half the annual unadjusted percentage increase (but
not less than zero) in the consumer price index-u for the
12 months ending with the September preceding each November
1, whichever is less. If the annual unadjusted percentage
change in the consumer price index-u for the 12 months
ending with the September preceding each November 1 is zero
or there is a decrease, then the annuity shall not be
increased.
For the purposes of this Section, "consumer price index-u"
means the index published by the Bureau of Labor Statistics of
the United States Department of Labor that measures the average
change in prices of goods and services purchased by all urban
consumers, United States city average, all items, 1982-84 =
100. The new amount resulting from each annual adjustment shall
be determined by the Public Pension Division of the Department
of Insurance and made available to the board of the retirement
system by November 1 of each year.
(d-5) A retirement annuity of a Tier 2 member shall receive
annual increases on the January 1 occurring either on or after
the attainment of age 67 or the first anniversary of the
annuity start date, whichever is later. Each annual increase
shall be calculated at 3% or one half the annual unadjusted

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percentage increase (but not less than zero) in the consumer
price index-u for the 12 months ending with the September
preceding each November 1, whichever is less, of the originally
granted retirement annuity. If the annual unadjusted
percentage change in the consumer price index-u for the 12
months ending with the September preceding each November 1 is
zero or there is a decrease, then the annuity shall not be
increased.
(e) If, on January 1, 1987, or the date the retirement
annuity payment period begins, whichever is later, the sum of
the retirement annuity provided under Rule 1 or Rule 2 of this
Section and the automatic annual increases provided under the
preceding subsection or Section 15-136.1, amounts to less than
the retirement annuity which would be provided by Rule 3, the
retirement annuity shall be increased as of January 1, 1987, or
the date the retirement annuity payment period begins,
whichever is later, to the amount which would be provided by
Rule 3 of this Section. Such increased amount shall be
considered as the retirement annuity in determining benefits
provided under other Sections of this Article. This paragraph
applies without regard to whether status as an employee
terminated before the effective date of this amendatory Act of
1987, provided that the annuitant was employed at least
one-half time during the period on which the final rate of
earnings was based.
(f) A participant is entitled to such additional annuity as

HB4045 Engrossed - 175 - LRB100 12674 RPS 26063 b
may be provided on an actuarially equivalent basis, by any
accumulated additional contributions to his or her credit.
However, the additional contributions made by the participant
toward the automatic increases in annuity provided under this
Section shall not be taken into account in determining the
amount of such additional annuity.
(g) If, (1) by law, a function of a governmental unit, as
defined by Section 20-107 of this Code, is transferred in whole
or in part to an employer, and (2) a participant transfers
employment from such governmental unit to such employer within
6 months after the transfer of the function, and (3) the sum of
(A) the annuity payable to the participant under Rule 1, 2, or
3 of this Section (B) all proportional annuities payable to the
participant by all other retirement systems covered by Article
20, and (C) the initial primary insurance amount to which the
participant is entitled under the Social Security Act, is less
than the retirement annuity which would have been payable if
all of the participant's pension credits validated under
Section 20-109 had been validated under this system, a
supplemental annuity equal to the difference in such amounts
shall be payable to the participant.
(h) On January 1, 1981, an annuitant who was receiving a
retirement annuity on or before January 1, 1971 shall have his
or her retirement annuity then being paid increased $1 per
month for each year of creditable service. On January 1, 1982,
an annuitant whose retirement annuity began on or before

HB4045 Engrossed - 176 - LRB100 12674 RPS 26063 b
January 1, 1977, shall have his or her retirement annuity then
being paid increased $1 per month for each year of creditable
service.
(i) On January 1, 1987, any annuitant whose retirement
annuity began on or before January 1, 1977, shall have the
monthly retirement annuity increased by an amount equal to 8¢
per year of creditable service times the number of years that
have elapsed since the annuity began.
(Source: P.A. 97-933, eff. 8-10-12; 97-968, eff. 8-16-12;
98-92, eff. 7-16-13.)
(40 ILCS 5/15-155) (from Ch. 108 1/2, par. 15-155)
Sec. 15-155. Employer contributions.
(a) The State of Illinois shall make contributions by
appropriations of amounts which, together with the other
employer contributions from trust, federal, and other funds,
employee contributions, income from investments, and other
income of this System, will be sufficient to meet the cost of
maintaining and administering the System on a 90% funded basis
in accordance with actuarial recommendations.
The Board shall determine the amount of State contributions
required for each fiscal year on the basis of the actuarial
tables and other assumptions adopted by the Board and the
recommendations of the actuary, using the formula in subsection
(a-1).
(a-1) For State fiscal years 2018 through 2045 (except as

HB4045 Engrossed - 177 - LRB100 12674 RPS 26063 b
otherwise provided for fiscal year 2019), 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 total payroll, including payroll that is
not deemed pensionable, but excluding payroll attributable to
participants in the defined contribution plan under Section
15-200.1, 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 year 2019:
(1) The initial calculation and certification shall be
based on the amount determined above.
(2) For purposes of the recertification due on or
before May 1, 2018, the recalculation of the required State
contribution for fiscal year 2019 shall take into account
the effect on the System's liabilities of the elections
made under Section 15-132.9.
(3) For purposes of the recertification due on or
before October 1, 2018, the total required State
contribution for fiscal year 2019 shall be reduced by the
amount of the consideration payments made to Tier 1
employees who made the election under paragraph (1) of

HB4045 Engrossed - 178 - LRB100 12674 RPS 26063 b
subsection (a) of Section 15-132.9.
Beginning in State fiscal year 2018, any increase or
decrease in State contribution over the prior fiscal year due
exclusively to changes in actuarial or investment assumptions
adopted by the Board shall be included in the State
contribution to the System, as a percentage of the applicable
employee payroll, and shall be increased in equal annual
increments so that by the State fiscal year occurring 5 years
after the adoption of the actuarial or investment assumptions,
the State is contributing at the rate otherwise required under
this Section.
For State fiscal years 2012 through 2017 2045, the minimum
contribution to the System to be made by the State for each
fiscal year shall be an amount determined by the System to be
sufficient to bring the total assets of the System up to 90% of
the total actuarial liabilities of the System by the end of
State fiscal year 2045. In making these determinations, the
required State contribution shall be calculated each year as a
level percentage of payroll over the years remaining to and
including fiscal year 2045 and shall be determined under the
projected unit credit actuarial cost method.
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.

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Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2006 is
$166,641,900.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2007 is
$252,064,100.
For each of State fiscal years 2008 through 2009, the State
contribution to the System, as a percentage of the applicable
employee payroll, shall be increased in equal annual increments
from the required State contribution for State fiscal year
2007, so that by State fiscal year 2011, the State is
contributing at the rate otherwise required under this Section.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2010 is
$702,514,000 and shall be made from the State Pensions Fund and
proceeds of bonds sold in fiscal year 2010 pursuant to Section
7.2 of the General Obligation Bond Act, less (i) the pro rata
share of bond sale expenses determined by the System's share of
total bond proceeds, (ii) any amounts received from the General
Revenue Fund in fiscal year 2010, (iii) any reduction in bond
proceeds due to the issuance of discounted bonds, if
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

HB4045 Engrossed - 180 - LRB100 12674 RPS 26063 b
Pensions Fund and proceeds of bonds sold in fiscal year 2011
pursuant to Section 7.2 of the General Obligation Bond Act,
less (i) the pro rata share of bond sale expenses determined by
the System's share of total bond proceeds, (ii) any amounts
received from the General Revenue Fund in fiscal year 2011, and
(iii) any reduction in bond proceeds due to the issuance of
discounted bonds, if applicable.
Beginning in State fiscal year 2046, the minimum State
contribution for each fiscal year shall be the amount needed to
maintain the total assets of the System at 90% of the total
actuarial liabilities of the System.
Amounts received by the System pursuant to Section 25 of
the Budget Stabilization Act or Section 8.12 of the State
Finance Act in any fiscal year do not reduce and do not
constitute payment of any portion of the minimum State
contribution required under this Article in that fiscal year.
Such amounts shall not reduce, and shall not be included in the
calculation of, the required State contributions under this
Article in any future year until the System has reached a
funding ratio of at least 90%. A reference in this Article to
the "required State contribution" or any substantially similar
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

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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.
(a-2) For employees first hired on or after 6 months after
the effective date of this amendatory Act of the 100th General
Assembly who have elected the benefits under Section 1-161 of
this Code, the employer shall annually contribute an amount,

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expressed as a percentage of payroll, equal to the defined
benefit normal cost of the defined benefit plan, less the
employee contribution, plus 2%. On an annual basis, the System
shall certify to each employer the amount of unfunded liability
accrued in the employer's account to be paid by the employer so
that the System is 90% funded by the end of State fiscal year
2045. The contributions shall be divided equally over a
12-month period and made monthly. The employer shall also
contribute an amount equal to the employer defined
contribution, as set on an individual employee basis, under
paragraph (2) of subsection (k) of Section 1-161 during each
pay period. The System shall have the authority to adopt rules
regarding implementation of employer contributions.
(b) If an employee is paid from trust or federal funds, the
employer shall pay to the Board contributions from those funds
which are sufficient to cover the accruing normal costs on
behalf of the employee. However, universities having employees
who are compensated out of local auxiliary funds, income funds,
or service enterprise funds are not required to pay such
contributions on behalf of those employees. The local auxiliary
funds, income funds, and service enterprise funds of
universities shall not be considered trust funds for the
purpose of this Article, but funds of alumni associations,
foundations, and athletic associations which are affiliated
with the universities included as employers under this Article
and other employers which do not receive State appropriations

HB4045 Engrossed - 183 - LRB100 12674 RPS 26063 b
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
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.

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(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
redemption premium or interest on any bonds issued by the Board
or any expenses incurred or deposits required in connection
therewith.
(g) For academic years beginning on or after June 1, 2005
and before July 1, 2018, if 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

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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
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

HB4045 Engrossed - 186 - LRB100 12674 RPS 26063 b
within 90 days after receipt of the bill, then interest will be
charged at a rate equal to the System's annual actuarially
assumed rate of return on investment compounded annually from
the 91st day after receipt of the bill. Payments must be
concluded within 3 years after the employer's receipt of the
bill.
When assessing payment for any amount due under this
subsection (g), the System shall include earnings, to the
extent not established by a participant under Section 15-113.11
or 15-113.12, that would have been paid to the participant had
the participant not taken (i) periods of voluntary or
involuntary furlough occurring on or after July 1, 2015 and on
or before June 30, 2017 or (ii) periods of voluntary pay
reduction in lieu of furlough occurring on or after July 1,
2015 and on or before June 30, 2017. Determining earnings that
would have been paid to a participant had the participant not
taken periods of voluntary or involuntary furlough or periods
of voluntary pay reduction shall be the responsibility of the
employer, and shall be reported in a manner prescribed by the
System.
(g-1) For academic years beginning on or after July 1,
2018, 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

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more than the unadjusted percentage increase in the consumer
price index-u for the calendar year immediately preceding the
beginning of the academic year, published by the Public Pension
Division of the Department of Insurance by November 1 of each
year, then 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
the unadjusted percentage increase in the consumer price
index-u for the applicable calendar year. 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-1), the System shall calculate the
amount of the payment and bill the employer for that amount.
The bill shall specify the calculations used to determine the
amount due. If the employer disputes the amount of the bill, it
may, within 30 days after receipt of the bill, apply to the
System in writing for a recalculation. The application must
specify in detail the grounds of the dispute and, if the
employer asserts that the calculation is subject to subsection
(i-1) of this Section, must include an affidavit setting forth

HB4045 Engrossed - 188 - LRB100 12674 RPS 26063 b
and attesting to all facts within the employer's knowledge that
are pertinent to the applicability of subsection (i-1). Upon
receiving a timely application for recalculation, the System
shall review the application and, if appropriate, recalculate
the amount due.
The employer contributions required under this subsection
(g-1) may be paid in the form of a lump sum within 90 days after
receipt of the bill. If the employer contributions are not paid
within 90 days after receipt of the bill, then interest shall
be charged at a rate equal to the System's annual actuarially
assumed rate of return on investment compounded annually from
the 91st day after receipt of the bill. Payments must be
concluded within 3 years after the employer's receipt of the
bill.
For the purposes of this Section, "consumer price index-u"
means the index published by the Bureau of Labor Statistics of
the United States Department of Labor that measures the average
change in prices of goods and services purchased by all urban
consumers, United States city average, all items, 1982-84 =
100. The new amount resulting from each annual adjustment shall
be determined by the Public Pension Division of the Department
of Insurance and made available to the boards of the retirement
systems and pension funds by November 1 of each year.
(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

HB4045 Engrossed - 189 - LRB100 12674 RPS 26063 b
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,
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

HB4045 Engrossed - 190 - LRB100 12674 RPS 26063 b
(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
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.
(i-1) When assessing payment for any amount due under
subsection (g-1), the System shall exclude salary increases
paid to participants under contracts or collective bargaining

HB4045 Engrossed - 191 - LRB100 12674 RPS 26063 b
agreements entered into, amended, or renewed before the
effective date of this amendatory Act of the 100th General
Assembly.
(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.
(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-5) For academic years beginning on or after July 1,
2018, if the amount of a participant's earnings for any
academic year, determined on a full-time equivalent basis,
exceeds $140,000, 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 amount of the earnings that exceed $140,000
multiplied by the level percentage of payroll used in that

HB4045 Engrossed - 192 - LRB100 12674 RPS 26063 b
fiscal year, as 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. This amount 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, the System shall calculate the amount of
the payment and bill the employer for that amount. The bill
shall specify the calculations used to determine the amount
due. If the employer disputes the amount of the bill, it may,
within 30 days after receipt of the bill, apply to the System
in writing for a recalculation. The application must specify in
detail the grounds of the dispute. Upon receiving a timely
application for recalculation, the System shall review the
application and, if appropriate, recalculate the amount due.
The employer contributions required under this subsection
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

HB4045 Engrossed - 193 - LRB100 12674 RPS 26063 b
concluded within 3 years after the employer's receipt of the
bill.
(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
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

HB4045 Engrossed - 194 - LRB100 12674 RPS 26063 b
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.
(n) If Section 15-132.9 is determined to be
unconstitutional or otherwise invalid by a final unappealable
decision of an Illinois court or a court of competent
jurisdiction, then the changes made to this Section by this
amendatory Act of the 100th General Assembly shall not take
effect and are repealed by operation of law.
(Source: P.A. 98-92, eff. 7-16-13; 98-463, eff. 8-16-13;
99-897, eff. 1-1-17.)
(40 ILCS 5/15-157) (from Ch. 108 1/2, par. 15-157)
Sec. 15-157. Employee Contributions.
(a) Each participating employee shall make contributions
towards the retirement benefits payable under the retirement
program applicable to the employee from each payment of
earnings applicable to employment under this system on and
after the date of becoming a participant as follows: Prior to
September 1, 1949, 3 1/2% of earnings; from September 1, 1949
to August 31, 1955, 5%; from September 1, 1955 to August 31,
1969, 6%; from September 1, 1969, 6 1/2%. These contributions
are to be considered as normal contributions for purposes of

HB4045 Engrossed - 195 - LRB100 12674 RPS 26063 b
this Article.
Each participant who is a police officer or firefighter
shall make normal contributions of 8% of each payment of
earnings applicable to employment as a police officer or
firefighter under this system on or after September 1, 1981,
unless he or she files with the board within 60 days after the
effective date of this amendatory Act of 1991 or 60 days after
the board receives notice that he or she is employed as a
police officer or firefighter, whichever is later, a written
notice waiving the retirement formula provided by Rule 4 of
Section 15-136. This waiver shall be irrevocable. If a
participant had met the conditions set forth in Section
15-132.1 prior to the effective date of this amendatory Act of
1991 but failed to make the additional normal contributions
required by this paragraph, he or she may elect to pay the
additional contributions plus compound interest at the
effective rate. If such payment is received by the board, the
service shall be considered as police officer service in
calculating the retirement annuity under Rule 4 of Section
15-136. While performing service described in clause (i) or
(ii) of Rule 4 of Section 15-136, a participating employee
shall be deemed to be employed as a firefighter for the purpose
of determining the rate of employee contributions under this
Section.
(b) Starting September 1, 1969, each participating
employee shall make additional contributions of 1/2 of 1% of

HB4045 Engrossed - 196 - LRB100 12674 RPS 26063 b
earnings to finance a portion of the cost of the annual
increases in retirement annuity provided under Section 15-136,
except that with respect to participants in the self-managed
plan this additional contribution shall be used to finance the
benefits obtained under that retirement program. Beginning
July 1, 2018 or the effective date of the Tier 1 employee's
election under paragraph (1) of subsection (a) of Section
15-132.9, whichever is later, each Tier 1 employee who made the
election under paragraph (1) of subsection (a) of Section
15-132.9 is no longer required to make contributions under this
subsection.
(c) Except as provided in subsection (c-5), in In addition
to the amounts described in subsections (a) and (b) of this
Section, each participating employee shall make contributions
of 1% of earnings applicable under this system on and after
August 1, 1959. The contributions made under this subsection
(c) shall be considered as survivor's insurance contributions
for purposes of this Article if the employee is covered under
the traditional benefit package, and such contributions shall
be considered as additional contributions for purposes of this
Article if the employee is participating in the self-managed
plan or has elected to participate in the portable benefit
package and has completed the applicable one-year waiting
period. Contributions in excess of $80 during any fiscal year
beginning before August 31, 1969 and in excess of $120 during
any fiscal year thereafter until September 1, 1971 shall be

HB4045 Engrossed - 197 - LRB100 12674 RPS 26063 b
considered as additional contributions for purposes of this
Article.
(c-5) Beginning July 1, 2018 or the effective date of the
Tier 1 employee's election under paragraph (1) of subsection
(a) of Section 15-132.9, whichever is later, in lieu of the
contributions otherwise required under subsection (c), each
Tier 1 employee who made the election under paragraph (1) of
subsection (a) of Section 15-132.9 shall make contributions of
0.7% of earnings applicable under this System and each Tier 1
employee who is a police officer or firefighter who makes
normal contributions of 8% of each payment of earnings
applicable to employment as a police officer or firefighter
under this System and who made the election under paragraph (1)
of subsection (a) of Section 15-132.9 shall make contributions
of 0.55% of earnings applicable under this System. The
contributions made under this subsection (c-5) shall be
considered as survivor's insurance contributions for purposes
of this Article and such contributions shall be considered as
additional contributions for purposes of this Article if the
employee has elected to participate in the portable benefit
package and has completed the applicable one-year waiting
period.
(d) If the board by board rule so permits and subject to
such conditions and limitations as may be specified in its
rules, a participant may make other additional contributions of
such percentage of earnings or amounts as the participant shall

HB4045 Engrossed - 198 - LRB100 12674 RPS 26063 b
elect in a written notice thereof received by the board.
(e) That fraction of a participant's total accumulated
normal contributions, the numerator of which is equal to the
number of years of service in excess of that which is required
to qualify for the maximum retirement annuity, and the
denominator of which is equal to the total service of the
participant, shall be considered as accumulated additional
contributions. The determination of the applicable maximum
annuity and the adjustment in contributions required by this
provision shall be made as of the date of the participant's
retirement.
(f) Notwithstanding the foregoing, a participating
employee shall not be required to make contributions under this
Section after the date upon which continuance of such
contributions would otherwise cause his or her retirement
annuity to exceed the maximum retirement annuity as specified
in clause (1) of subsection (c) of Section 15-136.
(g) A participant may make contributions for the purchase
of service credit under this Article; however, only a
participating employee may make optional contributions under
subsection (b) of Section 15-157.1 of this Article.
(h) A Tier 2 member shall not make contributions on
earnings that exceed the limitation as prescribed under
subsection (b) of Section 15-111 of this Article.
(Source: P.A. 98-92, eff. 7-16-13; 99-450, eff. 8-24-15.)

HB4045 Engrossed - 199 - LRB100 12674 RPS 26063 b
(40 ILCS 5/15-165) (from Ch. 108 1/2, par. 15-165)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 15-165. To certify amounts and submit vouchers.
(a) The Board shall certify to the Governor on or before
November 15 of each year until November 15, 2011 the
appropriation required from State funds for the purposes of
this System for the following fiscal year. The certification
under this subsection (a) 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 and the projected State cost for the self-managed
plan for that fiscal year.
On or before May 1, 2004, the Board shall recalculate and
recertify to the Governor the amount of the required State
contribution to the System for State fiscal year 2005, taking
into account the amounts appropriated to and received by the
System under subsection (d) of Section 7.2 of the General
Obligation Bond Act.
On or before July 1, 2005, the Board shall recalculate and
recertify to the Governor the amount of the required State
contribution to the System for State fiscal year 2006, taking
into account the changes in required State contributions made
by this amendatory Act of the 94th General Assembly.
On or before April 1, 2011, the Board shall recalculate and
recertify to the Governor the amount of the required State

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contribution to the System for State fiscal year 2011, applying
the changes made by Public Act 96-889 to the System's assets
and liabilities as of June 30, 2009 as though Public Act 96-889
was approved on that date.
(a-5) On or before November 1 of each year, beginning
November 1, 2012, the Board shall submit to the State Actuary,
the Governor, and the General Assembly a proposed certification
of the amount of the required State contribution to the System
for the next fiscal year, along with all of the actuarial
assumptions, calculations, and data upon which that proposed
certification is based. On or before January 1 of each year,
beginning January 1, 2013, the State Actuary shall issue a
preliminary report concerning the proposed certification and
identifying, if necessary, recommended changes in actuarial
assumptions that the Board must consider before finalizing its
certification of the required State contributions. On or before
January 15, 2013 and each January 15 thereafter, the Board
shall certify to the Governor and the General Assembly the
amount of the required State contribution for the next fiscal
year. The Board's certification must note, in a written
response to the State Actuary, 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.
On or before May 1, 2018, the Board shall recalculate and

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recertify to the Governor and the General Assembly the amount
of the required State contribution to the System for State
fiscal year 2019, taking into account the effect on the
System's liabilities of the elections made under Section
15-132.9.
On or before October 1, 2018, the Board shall recalculate
and recertify to the Governor and the General Assembly the
amount of the required State contribution to the System for
State fiscal year 2019, taking into account the reduction
specified under item (3) of subsection (a-1) of Section 15-155.
(a-10) For purposes of subsection (c-5) of Section 20 of
the Budget Stabilization Act, on or before November 1 of each
year beginning November 1, 2019, the Board shall determine the
amount of the State contribution to the System that would have
been required for the next fiscal year if Section 1-161,
subsection (a-2) of Section 15-155, and the changes made to
Section 1-160 by this amendatory Act of the 100th General
Assembly had not taken effect, using the best and most recent
available data but based on the law in effect on May 31, 2019.
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,
2020 and every January 1 thereafter, the State Actuary shall
issue a preliminary report concerning the proposed
certification and identifying, if necessary, recommended

HB4045 Engrossed - 202 - LRB100 12674 RPS 26063 b
changes in actuarial assumptions that the Board must consider
before finalizing its certification. On or before January 15,
2020 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 Section 1-161, subsection (a-2) of
Section 15-155, and the changes made to Section 1-160 by this
amendatory Act of the 100th General Assembly had not taken
effect, using the best and most recent available data but based
on the law in effect on May 31, 2019. 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.
(a-15) As soon as practical after the effective date of
this amendatory Act of the 100th General Assembly, the Board
shall recalculate and recertify to the State Actuary, the
Governor, and the General Assembly the amount of the State
contribution to the System for State fiscal year 2018, taking
into account the changes in required State contributions made
by this amendatory Act of the 100th General Assembly. The State
Actuary shall review the assumptions and valuations underlying
the Board's revised certification and issue a preliminary
report concerning the proposed recertification and
identifying, if necessary, recommended changes in actuarial
assumptions that the Board must consider before finalizing its

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certification of the required State contributions. The Board's
final certification must note any deviations from the State
Actuary's recommended changes, the reason or reasons for not
following the State Actuary's recommended changes, and the
fiscal impact of not following the State Actuary's recommended
changes on the required State contribution.
(b) The Board shall certify to the State Comptroller or
employer, as the case may be, from time to time, by its
chairperson and secretary, with its seal attached, the amounts
payable to the System from the various funds.
(c) Beginning in State fiscal year 1996, 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 one-twelfth of the
required annual State contribution certified under subsection
(a). 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 (b) 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

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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 Section, the difference
shall be paid from the General Revenue Fund under the
continuing appropriation authority provided in Section 1.1 of
the State Pension Funds Continuing Appropriation Act.
(d) So long as the payments received are the full amount
lawfully vouchered under this Section, payments received by the
System under this Section shall be applied first toward the
employer contribution to the self-managed plan established
under Section 15-158.2. Payments shall be applied second toward
the employer's portion of the normal costs of the System, as
defined in subsection (f) of Section 15-155. The balance shall
be applied toward the unfunded actuarial liabilities of the
System.
(e) In the event that the System does not receive, as a
result of legislative enactment or otherwise, payments
sufficient to fully fund the employer contribution to the
self-managed plan established under Section 15-158.2 and to
fully fund that portion of the employer's portion of the normal
costs of the System, as calculated in accordance with Section
15-155(a-1), then any payments received shall be applied
proportionately to the optional retirement program established
under Section 15-158.2 and to the employer's portion of the
normal costs of the System, as calculated in accordance with

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Section 15-155(a-1).
(Source: P.A. 97-694, eff. 6-18-12; 98-92, eff. 7-16-13.)
(40 ILCS 5/15-185.5 new)
Sec. 15-185.5. Accelerated pension benefit payment.
(a) As used in this Section:
"Eligible person" means a person who:
(1) has terminated service;
(2) has accrued sufficient service credit to be
eligible to receive a retirement annuity under this
Article;
(3) has not received any retirement annuity under this
Article;
(4) does not have a QILDRO in effect against him or her
under this Article; and
(5) is not a participant in the self-managed plan under
Section 15-158.2.
"Pension benefit" means the benefits under this Article, or
Article 1 as it relates to those benefits, including any
anticipated annual increases, that an eligible person is
entitled to upon attainment of the applicable retirement age.
"Pension benefit" also includes applicable survivor's or
disability benefits.
(b) Before January 1, 2018, and annually thereafter, the
System shall calculate, using actuarial tables and other
assumptions adopted by the Board, the net present value of

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pension benefits for each eligible person and shall offer each
eligible person the opportunity to irrevocably elect to receive
an amount determined by the System to be equal to 70% of the
net present value of his or her pension benefits in lieu of
receiving any pension benefit. The offer shall specify the
dollar amount that the eligible person will receive if he or
she so elects and shall expire when a subsequent offer is made
to an eligible person or when the System determines that 10% of
eligible persons in that year have made the election under this
subsection, whichever occurs first. The System shall make a
good faith effort to contact every eligible person to notify
him or her of the election and of the amount of the accelerated
pension benefit payment.
Until the System determines that 10% of eligible persons in
that year have made the election under this subsection, an
eligible person may irrevocably elect to receive an accelerated
pension benefit payment in the amount that the System offers
under this subsection in lieu of receiving any pension benefit.
A person who elects to receive an accelerated pension benefit
payment under this Section may not elect to proceed under the
Retirement Systems Reciprocal Act with respect to service under
this Article.
(c) A person's credits and creditable service under this
Article shall be terminated upon the person's receipt of an
accelerated pension benefit payment under this Section, and no
other benefit shall be paid under this Article based on those

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terminated credits and creditable service, including any
retirement, survivor, or other benefit; except that to the
extent that participation, benefits, or premiums under the
State Employees Group Insurance Act of 1971 are based on the
amount of service credit, the terminated service credit shall
be used for that purpose.
(d) If a person who has received an accelerated pension
benefit payment under this Section returns to participating
employee status under this Article, then:
(1) Any benefits under the System earned as a result of
that return to participating employee status shall be based
solely on the person's credits and creditable service
arising from the return to participating employee status.
(2) The accelerated pension benefit payment may not be
repaid to the System, and the terminated credits and
creditable service may not under any circumstances be
reinstated.
(e) As a condition of receiving an accelerated pension
benefit payment, an eligible person must have another
retirement plan or account qualified under the Internal Revenue
Code of 1986, as amended, for the accelerated pension benefit
payment to be rolled into. The accelerated pension benefit
payment under this Section may be subject to withholding or
payment of applicable taxes, but to the extent permitted by
federal law, a person who receives an accelerated pension
benefit payment under this Section must direct the System to

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pay all of that payment as a rollover into another retirement
plan or account qualified under the Internal Revenue Code of
1986, as amended.
(f) Before January 1, 2019 and every January 1 thereafter,
the Board shall certify to the Illinois Finance Authority and
the General Assembly the amount by which the total amount of
accelerated pension benefit payments made under this Section
exceed the amount appropriated to the System for the purpose of
making those payments.
(g) The Board shall adopt any rules necessary to implement
this Section.
(h) No provision of this Section shall be interpreted in a
way that would cause the applicable System to cease to be a
qualified plan under the Internal Revenue Code of 1986.
(i) Notwithstanding any other provision of this Section, in
no case shall the total amount of accelerated pension benefit
payments paid under this Section, Section 14-147.5, and Section
16-190.5 cause the Illinois Finance Authority to issue more
than the $250,000,000 of State Pension Obligation Acceleration
Bonds authorized in subsection (c-5) of Section 801-40 of the
Illinois Finance Authority Act.
(40 ILCS 5/15-198)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 15-198. Application and expiration of new benefit

HB4045 Engrossed - 209 - LRB100 12674 RPS 26063 b
increases.
(a) As used in this Section, "new benefit increase" means
an increase in the amount of any benefit provided under this
Article, or an expansion of the conditions of eligibility for
any benefit under this Article, that results from an amendment
to this Code that takes effect after the effective date of this
amendatory Act of the 94th General Assembly. "New benefit
increase", however, does not include any benefit increase
resulting from the changes made to this Article by this
amendatory Act of the 100th General Assembly.
(b) Notwithstanding any other provision of this Code or any
subsequent amendment to this Code, every new benefit increase
is subject to this Section and shall be deemed to be granted
only in conformance with and contingent upon compliance with
the provisions of this Section.
(c) The Public Act enacting a new benefit increase must
identify and provide for payment to the System of additional
funding at least sufficient to fund the resulting annual
increase in cost to the System as it accrues.
Every new benefit increase is contingent upon the General
Assembly providing the additional funding required under this
subsection. The Commission on Government Forecasting and
Accountability shall analyze whether adequate additional
funding has been provided for the new benefit increase and
shall report its analysis to the Public Pension Division of the
Department of Insurance Financial and Professional Regulation.

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A new benefit increase created by a Public Act that does not
include the additional funding required under this subsection
is null and void. If the Public Pension Division determines
that the additional funding provided for a new benefit increase
under this subsection is or has become inadequate, it may so
certify to the Governor and the State Comptroller and, in the
absence of corrective action by the General Assembly, the new
benefit increase shall expire at the end of the fiscal year in
which the certification is made.
(d) Every new benefit increase shall expire 5 years after
its effective date or on such earlier date as may be specified
in the language enacting the new benefit increase or provided
under subsection (c). This does not prevent the General
Assembly from extending or re-creating a new benefit increase
by law.
(e) Except as otherwise provided in the language creating
the new benefit increase, a new benefit increase that expires
under this Section continues to apply to persons who applied
and qualified for the affected benefit while the new benefit
increase was in effect and to the affected beneficiaries and
alternate payees of such persons, but does not apply to any
other person, including without limitation a person who
continues in service after the expiration date and did not
apply and qualify for the affected benefit while the new
benefit increase was in effect.
(Source: P.A. 94-4, eff. 6-1-05.)

HB4045 Engrossed - 211 - LRB100 12674 RPS 26063 b
(40 ILCS 5/15-200.1 new)
Sec. 15-200.1. Defined contribution plan.
(a) By July 1, 2018, the System shall prepare and implement
a voluntary defined contribution plan for up to 5% of eligible
Tier 1 employees. The System shall determine the 5% cap by the
number of Tier 1 employees on the effective date of this
Section. The defined contribution plan developed under this
Section shall be a plan that aggregates employer and employee
contributions in individual participant accounts which, after
meeting any other requirements, are used for payouts after
retirement in accordance with this Section and any other
applicable laws.
As used in this Section, "defined benefit plan" means the
retirement plan available under this Article to Tier 1
employees who have not made the election authorized under this
Section.
(1) Under the defined contribution plan, a Tier 1
employee of this System could elect to cease accruing
benefits in the defined benefit plan under this Article and
begin accruing benefits for future service in the defined
contribution plan. Service credit under the defined
contribution plan may be used for determining retirement
eligibility under the defined benefit plan. A Tier 1
employee who elects to cease accruing benefits in his or
her defined benefit plan shall be prohibited from

HB4045 Engrossed - 212 - LRB100 12674 RPS 26063 b
purchasing service credit on or after the date of his or
her election. A Tier 1 employee making the irrevocable
election provided under this Section shall not receive
interest accruals to his or her Rule 2 benefit on or after
the date of his or her election.
(2) Participants in the defined contribution plan
shall pay employee contributions at the same rate as other
participants under this Article as determined by the
System.
(3) State contributions shall be paid into the accounts
of all participants in the defined contribution plan at a
uniform rate, expressed as a percentage of earnings and
determined for each year. This rate shall be no higher than
the employer's normal cost for Tier 1 employees in the
defined benefit plan for that year, as determined by the
System and expressed as a percentage of earnings, and shall
be no lower than 3% of earnings. The State shall adjust
this rate annually.
(4) The defined contribution plan shall require 5 years
of participation in the defined contribution plan before
vesting in State contributions. If the participant fails to
vest in them, the State contributions, and the earnings
thereon, shall be forfeited.
(5) The defined contribution plan may provide for
participants in the plan to be eligible for the defined
disability benefits available to other participants under

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this Article. If it does, the System shall reduce the
employee contributions credited to the member's defined
contribution plan account by an amount determined by the
System to cover the cost of offering such benefits.
(6) The defined contribution plan shall provide a
variety of options for investments. These options shall
include investments handled by the System as well as
private sector investment options.
(7) The defined contribution plan shall provide a
variety of options for payouts to retirees and their
survivors.
(8) To the extent authorized under federal law and as
authorized by the System, the plan shall allow former
participants in the plan to transfer or roll over employee
and vested State contributions, and the earnings thereon,
into other qualified retirement plans.
(9) The System shall reduce the employee contributions
credited to the member's defined contribution plan account
by an amount determined by the System to cover the cost of
offering these benefits and any applicable administrative
fees.
(b) Only persons who are Tier 1 employees of the System on
the effective date of this Section are eligible to participate
in the defined contribution plan. Participation in the defined
contribution plan shall be limited to the first 5% of eligible
persons who elect to participate. The election to participate

HB4045 Engrossed - 214 - LRB100 12674 RPS 26063 b
in the defined contribution plan is voluntary and irrevocable.
(c) An eligible Tier 1 employee may irrevocably elect to
participate in the defined contribution plan by filing with the
System a written application to participate that is received by
the System prior to its determination that 5% of eligible
persons have elected to participate in the defined contribution
plan.
When the System first determines that 5% of eligible
persons have elected to participate in the defined contribution
plan, the System shall provide notice to previously eligible
employees that the plan is no longer available and shall cease
accepting applications to participate.
(d) The System shall make a good faith effort to contact
each Tier 1 employee who is eligible to participate in the
defined contribution plan. The System shall mail information
describing the option to join the defined contribution plan to
each of these employees to his or her last known address on
file with the System. If the employee is not responsive to
other means of contact, it is sufficient for the System to
publish the details of the option on its website.
Upon request for further information describing the
option, the System shall provide employees with information
from the System before exercising the option to join the plan,
including information on the impact to their vested benefits or
non-vested service. The individual consultation shall include
projections of the member's defined benefits at retirement or

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earlier termination of service and the value of the member's
account at retirement or earlier termination of service. The
System shall not provide advice or counseling with respect to
whether the employee should exercise the option. The System
shall inform Tier 1 employees who are eligible to participate
in the defined contribution plan that they may also wish to
obtain information and counsel relating to their option from
any other available source, including but not limited to labor
organizations, private counsel, and financial advisors.
(e) In no event shall the System, its staff, its authorized
representatives, or the Board be liable for any information
given to an employee under this Section. The System may
coordinate with the Illinois Department of Central Management
Services and other retirement systems administering a defined
contribution plan in accordance with this amendatory Act of the
100th General Assembly to provide information concerning the
impact of the option set forth in this Section.
(f) Notwithstanding any other provision of this Section, no
person shall begin participating in the defined contribution
plan until it has attained qualified plan status and received
all necessary approvals from the U.S. Internal Revenue Service.
(g) The System shall report on its progress under this
Section, including the available details of the defined
contribution plan and the System's plans for informing eligible
Tier 1 employees about the plan, to the Governor and the
General Assembly on or before January 15, 2018.

HB4045 Engrossed - 216 - LRB100 12674 RPS 26063 b
(h) If a Tier 1 employee has not made an election under
Section 15-134.5 of this Code, then the plan prescribed under
this Section shall not apply to that Tier 1 employee and that
Tier 1 employee shall remain eligible to make the election
prescribed under Section 15-134.5.
(i) The intent of this amendatory Act of the 100th General
Assembly is to ensure that the State's normal cost of
participation in the defined contribution plan is similar, and
if possible equal, to the State's normal cost of participation
in the defined benefit plan, unless a lower State's normal cost
is necessary to ensure cost neutrality.
(40 ILCS 5/15-201.1 new)
Sec. 15-201.1. Defined contribution plan; termination. If
the defined contribution plan is terminated or becomes
inoperative pursuant to law, then each participant in the plan
shall automatically be deemed to have been a contributing Tier
1 employee participating in the System's defined benefit plan
during the time in which he or she participated in the defined
contribution plan, and for that purpose the System shall be
entitled to recover the amounts in the participant's defined
contribution accounts.
(40 ILCS 5/16-107.1 new)
Sec. 16-107.1. Tier 1 employee. "Tier 1 employee": A
teacher under this Article who first became a member or

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participant before January 1, 2011 under any reciprocal
retirement system or pension fund established under this Code
other than a retirement system or pension fund established
under Article 2, 3, 4, 5, 6, or 18 of this Code. However, for
the purposes of the election under Section 16-122.9, "Tier 1
employee" does not include a teacher under this Article who
would qualify as a Tier 1 employee but who has made an
irrevocable election on or before June 1, 2017 to retire from
service pursuant to the terms of an employment contract or a
collective bargaining agreement in effect on June 1, 2017,
excluding any extension, amendment, or renewal of that
agreement after that date, and has notified the System of that
election.
(40 ILCS 5/16-121) (from Ch. 108 1/2, par. 16-121)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 16-121. Salary. "Salary": The actual compensation
received by a teacher during any school year and recognized by
the system in accordance with rules of the board. For purposes
of this Section, "school year" includes the regular school term
plus any additional period for which a teacher is compensated
and such compensation is recognized by the rules of the board.
Notwithstanding any other provision of this Section,
"salary" does not include any future increase in income that is
offered by an employer for service as a Tier 1 employee under

HB4045 Engrossed - 218 - LRB100 12674 RPS 26063 b
this Article pursuant to the condition set forth in subsection
(c) of Section 16-122.9 and accepted under that condition by a
Tier 1 employee who has made the election under paragraph (2)
of subsection (a) of Section 16-122.9.
Notwithstanding any other provision of this Section,
"salary" does not include any consideration payment made to a
Tier 1 employee.
(Source: P.A. 84-1028.)
(40 ILCS 5/16-121.1 new)
Sec. 16-121.1. Future increase in income. "Future increase
in income" means an increase to a Tier 1 employee's base pay
that is offered by an employer to the Tier 1 employee for
service under this Article after June 30, 2018 that qualifies
as "salary", as defined in Section 16-121, or would qualify as
"salary" but for the fact that it was offered to and accepted
by the Tier 1 employee under the condition set forth in
subsection (c) of Section 16-122.9. The term "future increase
in income" includes an increase to a Tier 1 employee's base pay
that is paid to the Tier 1 employee pursuant to an extension,
amendment, or renewal of any such employment contract or
collective bargaining agreement after the effective date of
this Section.
(40 ILCS 5/16-121.2 new)
Sec. 16-121.2. Base pay. As used in Section 16-121.1 of

HB4045 Engrossed - 219 - LRB100 12674 RPS 26063 b
this Code, "base pay" means the greater of either (i) the Tier
1 employee's annualized rate of salary as of June 30, 2018, or
(ii) the Tier 1 employee's annualized rate of salary
immediately preceding the expiration, renewal, or amendment of
an employment contract or collective bargaining agreement in
effect on the effective date of this Section. For a person
returning to active service as a Tier 1 employee after June 30,
2018, however, "base pay" means the employee's annualized rate
of salary as of the employee's last date of service prior to
July 1, 2018. The System shall calculate the base pay of each
Tier 1 employee pursuant to this Section.
(40 ILCS 5/16-122.9 new)
Sec. 16-122.9. Election by Tier 1 employees.
(a) Each active Tier 1 employee shall make an irrevocable
election either:
(1) to agree to delay his or her eligibility for
automatic annual increases in retirement annuity as
provided in subsection (a-1) of Section 16-133.1 or
subsection (b-1) of Section 16-136.1, whichever is
applicable, and to have the amount of the automatic annual
increases in his or her retirement annuity and survivor
benefit that are otherwise provided for in this Article
calculated, instead, as provided in subsection (a-1) of
Section 16-133.1 or subsection (b-1) of Section 16-136.1,
whichever is applicable; or

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(2) to not agree to paragraph (1) of this subsection.
The election required under this subsection (a) shall be
made by each active Tier 1 employee no earlier than January 1,
2018 and no later than March 31, 2018, except that:
(i) a person who becomes a Tier 1 employee under this
Article on or after February 1, 2018 must make the election
under this subsection (a) within 60 days after becoming a
Tier 1 employee; and
(ii) a person who returns to active service as a Tier 1
employee under this Article on or after February 1, 2018
and has not yet made an election under this Section must
make the election under this subsection (a) within 60 days
after returning to active service as a Tier 1 employee.
If a Tier 1 employee fails for any reason to make a
required election under this subsection within the time
specified, then the employee shall be deemed to have made the
election under paragraph (2) of this subsection.
(a-5) If this Section is enjoined or stayed by an Illinois
court or a court of competent jurisdiction pending the entry of
a final and unappealable decision, and this Section is
determined to be constitutional or otherwise valid by a final
unappealable decision of an Illinois court or a court of
competent jurisdiction, then the election procedure set forth
in subsection (a) of this Section shall commence on the 180th
calendar day after the date of the issuance of the final
unappealable decision and shall conclude at the end of the

HB4045 Engrossed - 221 - LRB100 12674 RPS 26063 b
270th calendar day after that date.
(a-10) All elections under subsection (a) that are made or
deemed to be made before July 1, 2018 shall take effect on July
1, 2018. Elections that are made or deemed to be made on or
after July 1, 2018 shall take effect on the first day of the
month following the month in which the election is made or
deemed to be made.
(b) As adequate and legal consideration provided under this
amendatory Act of the 100th General Assembly for making an
election under paragraph (1) of subsection (a) of this Section,
an employer shall be expressly and irrevocably prohibited from
offering any future increases in income to a Tier 1 employee
who has made an election under paragraph (1) of subsection (a)
of this Section on the condition of not constituting salary
under Section 16-121.
As adequate and legal consideration provided under this
amendatory Act of the 100th General Assembly for making an
election under paragraph (1) of subsection (a) of this Section,
each Tier 1 employee who has made an election under paragraph
(1) of subsection (a) of this Section shall receive a
consideration payment equal to 10% of the contributions made by
or on behalf of the employee under paragraphs (1), (2), and (3)
of subsection (a) of Section 16-152 before the effective date
of that election. The State Comptroller shall pay the
consideration payment to the Tier 1 employee out of funds
appropriated for that purpose under Section 1.9 of the State

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Pension Funds Continuing Appropriation Act. The System shall
calculate the amount of each consideration payment and, by July
1, 2018, shall certify to the State Comptroller the amount of
the consideration payment, together with the name, address, and
any other available payment information of the Tier 1 employee
as found in the records of the System. The System shall make
additional calculations and certifications of consideration
payments to the State Comptroller as the System deems
necessary.
(c) A Tier 1 employee who makes the election under
paragraph (2) of subsection (a) of this Section shall not be
subject to paragraph (1) of subsection (a) of this Section.
However, each future increase in income offered by an employer
under this Article to a Tier 1 employee who has made the
election under paragraph (2) of subsection (a) of this Section
shall be offered by the employer expressly and irrevocably on
the condition of not constituting salary under Section 16-121
and that the Tier 1 employee's acceptance of the offered future
increase in income shall constitute his or her agreement to
that condition.
(d) The System shall make a good faith effort to contact
each Tier 1 employee subject to this Section. The System shall
mail information describing the required election to each Tier
1 employee by United States Postal Service mail to his or her
last known address on file with the System. If the Tier 1
employee is not responsive to other means of contact, it is

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sufficient for the System to publish the details of any
required elections on its website or to publish those details
in a regularly published newsletter or other existing public
forum.
Tier 1 employees who are subject to this Section shall be
provided with an election packet containing information
regarding their options, as well as the forms necessary to make
the required election. Upon request, the System shall offer
Tier 1 employees an opportunity to receive information from the
System before making the required election. The information may
consist of video materials, group presentations, individual
consultation with a member or authorized representative of the
System in person or by telephone or other electronic means, or
any combination of those methods. The System shall not provide
advice or counseling with respect to which election a Tier 1
employee should make or specific to the legal or tax
circumstances of or consequences to the Tier 1 employee.
The System shall inform Tier 1 employees in the election
packet required under this subsection that the Tier 1 employee
may also wish to obtain information and counsel relating to the
election required under this Section from any other available
source, including, but not limited to, labor organizations and
private counsel.
In no event shall the System, its staff, or the Board be
held liable for any information given to a member regarding the
elections under this Section. The System shall coordinate with

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the Illinois Department of Central Management Services and each
other retirement system administering an election in
accordance with this amendatory Act of the 100th General
Assembly to provide information concerning the impact of the
election set forth in this Section.
(e) Notwithstanding any other provision of law, an employer
under this Article is required to offer each future increase in
income expressly and irrevocably on the condition of not
constituting "salary" under Section 16-121 to any Tier 1
employee who has made an election under paragraph (2) of
subsection (a) of this Section. The offer shall also provide
that the Tier 1 employee's acceptance of the offered future
increase in income shall constitute his or her agreement to the
condition set forth in this subsection.
For purposes of legislative intent, the condition set forth
in this subsection shall be construed in a manner that ensures
that the condition is not violated or circumvented through any
contrivance of any kind.
(f) A member's election under this Section is not a
prohibited election under subdivision (j)(1) of Section 1-119
of this Code.
(g) No provision of this Section shall be interpreted in a
way that would cause the System to cease to be a qualified plan
under Section 401(a) of the Internal Revenue Code of 1986.
(h) If an election created by this amendatory Act in any
other Article of this Code or any change deriving from that

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election is determined to be unconstitutional or otherwise
invalid by a final unappealable decision of an Illinois court
or a court of competent jurisdiction, the invalidity of that
provision shall not in any way affect the validity of this
Section or the changes deriving from the election required
under this Section.
(40 ILCS 5/16-133.1) (from Ch. 108 1/2, par. 16-133.1)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 16-133.1. Automatic annual increase in annuity.
(a) Each member with creditable service and retiring on or
after August 26, 1969 is entitled to the automatic annual
increases in annuity provided under this Section while
receiving a retirement annuity or disability retirement
annuity from the system.
Except as otherwise provided in subsection (a-1), an An
annuitant shall first be entitled to an initial increase under
this Section on the January 1 next following the first
anniversary of retirement, or January 1 of the year next
following attainment of age 61, whichever is later. At such
time, the system shall pay an initial increase determined as
follows:
(1) 1.5% of the originally granted retirement annuity
or disability retirement annuity multiplied by the number
of years elapsed, if any, from the date of retirement until

HB4045 Engrossed - 226 - LRB100 12674 RPS 26063 b
January 1, 1972, plus
(2) 2% of the originally granted annuity multiplied by
the number of years elapsed, if any, from the date of
retirement or January 1, 1972, whichever is later, until
January 1, 1978, plus
(3) 3% of the originally granted annuity multiplied by
the number of years elapsed from the date of retirement or
January 1, 1978, whichever is later, until the effective
date of the initial increase.
However, the initial annual increase calculated under this
Section for the recipient of a disability retirement annuity
granted under Section 16-149.2 shall be reduced by an amount
equal to the total of all increases in that annuity received
under Section 16-149.5 (but not exceeding 100% of the amount of
the initial increase otherwise provided under this Section).
Except as otherwise provided in subsection (a-1),
following Following the initial increase, automatic annual
increases in annuity shall be payable on each January 1
thereafter during the lifetime of the annuitant, determined as
a percentage of the originally granted retirement annuity or
disability retirement annuity for increases granted prior to
January 1, 1990, and calculated as a percentage of the total
amount of annuity, including previous increases under this
Section, for increases granted on or after January 1, 1990, as
follows: 1.5% for periods prior to January 1, 1972, 2% for
periods after December 31, 1971 and prior to January 1, 1978,

HB4045 Engrossed - 227 - LRB100 12674 RPS 26063 b
and 3% for periods after December 31, 1977.
(a-1) Notwithstanding any other provision of this Article,
for a Tier 1 employee who made the election under paragraph (1)
of subsection (a) of Section 16-122.9:
(1) The initial increase in retirement annuity under
this Section shall occur on the January 1 occurring either
on or after the attainment of age 67 or the fifth
anniversary of the annuity start date, whichever is
earlier.
(2) The amount of each automatic annual increase in
retirement annuity and survivor benefit occurring on or
after the effective date of that election shall be
calculated as a percentage of the originally granted
retirement annuity or survivor benefit, equal to 3% or
one-half the annual unadjusted percentage increase (but
not less than zero) in the consumer price index-u for the
12 months ending with the September preceding each November
1, whichever is less. If the annual unadjusted percentage
change in the consumer price index-u for the 12 months
ending with the September preceding each November 1 is zero
or there is a decrease, then the annuity shall not be
increased.
For the purposes of this Section, "consumer price index-u"
means the index published by the Bureau of Labor Statistics of
the United States Department of Labor that measures the average
change in prices of goods and services purchased by all urban

HB4045 Engrossed - 228 - LRB100 12674 RPS 26063 b
consumers, United States city average, all items, 1982-84 =
100. The new amount resulting from each annual adjustment shall
be determined by the Public Pension Division of the Department
of Insurance and made available to the board of the retirement
system by November 1 of each year.
(b) The automatic annual increases in annuity provided
under this Section shall not be applicable unless a member has
made contributions toward such increases for a period
equivalent to one full year of creditable service. If a member
contributes for service performed after August 26, 1969 but the
member becomes an annuitant before such contributions amount to
one full year's contributions based on the salary at the date
of retirement, he or she may pay the necessary balance of the
contributions to the system and be eligible for the automatic
annual increases in annuity provided under this Section.
(c) Each member shall make contributions toward the cost of
the automatic annual increases in annuity as provided under
Section 16-152.
(d) An annuitant receiving a retirement annuity or
disability retirement annuity on July 1, 1969, who subsequently
re-enters service as a teacher is eligible for the automatic
annual increases in annuity provided under this Section if he
or she renders at least one year of creditable service
following the latest re-entry.
(e) In addition to the automatic annual increases in
annuity provided under this Section, an annuitant who meets the

HB4045 Engrossed - 229 - LRB100 12674 RPS 26063 b
service requirements of this Section and whose retirement
annuity or disability retirement annuity began on or before
January 1, 1971 shall receive, on January 1, 1981, an increase
in the annuity then being paid of one dollar per month for each
year of creditable service. On January 1, 1982, an annuitant
whose retirement annuity or disability retirement annuity
began on or before January 1, 1977 shall receive an increase in
the annuity then being paid of one dollar per month for each
year of creditable service.
On January 1, 1987, any annuitant whose retirement annuity
began on or before January 1, 1977, shall receive an increase
in the monthly retirement annuity equal to 8¢ per year of
creditable service times the number of years that have elapsed
since the annuity began.
(Source: P.A. 91-927, eff. 12-14-00.)
(40 ILCS 5/16-136.1) (from Ch. 108 1/2, par. 16-136.1)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 16-136.1. Annual increase for certain annuitants.
(a) Any annuitant receiving a retirement annuity on June
30, 1969 and any member retiring after June 30, 1969 shall be
eligible for the annual increases provided under this Section
provided the annuitant is ineligible for the automatic annual
increase in annuity provided under Section 16-133.1, and
provided further that (1) retirement occurred at age 55 or over

HB4045 Engrossed - 230 - LRB100 12674 RPS 26063 b
and was based on 5 or more years of creditable service or (2)
if retirement occurred prior to age 55, the retirement annuity
was based on 20 or more years of creditable service.
(b) Except as otherwise provided in subsection (b-1), an An
annuitant entitled to increases under this Section shall be
entitled to the initial increase as of the later of: (1)
January 1 following attainment of age 65, (2) January 1
following the first anniversary of retirement, or (3) the first
day of the month following receipt of the required qualifying
contribution from the annuitant. The initial monthly increase
shall be computed on the basis of the period elapsed between
the later of the date of last retirement or attainment of age
50 and the date of qualification for the initial increase, at
the rate of 1 1/2% of the original monthly retirement annuity
per year for periods prior to September 1, 1971, and at the
rate of 2% per year for periods between September 1, 1971 and
September 1, 1978, and at the rate of 3% per year for periods
thereafter.
Except as otherwise provided in subsection (b-1), if
applicable, an An annuitant who has received an initial
increase under this Section, shall be entitled, on each January
1 following the granting of the initial increase, to an
increase of 3% of the original monthly retirement annuity for
increases granted prior to January 1, 1990, and equal to 3% of
the total annuity, including previous increases under this
Section, for increases granted on or after January 1, 1990. The

HB4045 Engrossed - 231 - LRB100 12674 RPS 26063 b
original monthly retirement annuity for computations under
this subsection (b) shall be considered to be $83.34 for any
annuitant entitled to benefits under Section 16-134. The
minimum original disability retirement annuity for
computations under this subsection (b) shall be considered to
be $33.34 per month for any annuitant retired on account of
disability.
(b-1) Notwithstanding any other provision of this Article,
for a Tier 1 employee who made the election under paragraph (1)
of subsection (a) of Section 16-122.9:
(1) The initial increase in retirement annuity under
this Section shall occur on the January 1 occurring either
on or after the attainment of age 67 or the fifth
anniversary of the annuity start date, whichever is
earlier.
(2) The amount of each automatic annual increase in
retirement annuity or survivor benefit occurring on or
after the effective date of that election shall be
calculated as a percentage of the originally granted
retirement annuity or survivor benefit, equal to 3% or
one-half the annual unadjusted percentage increase (but
not less than zero) in the consumer price index-u for the
12 months ending with the September preceding each November
1, whichever is less. If the annual unadjusted percentage
change in the consumer price index-u for the 12 months
ending with the September preceding each November 1 is zero

HB4045 Engrossed - 232 - LRB100 12674 RPS 26063 b
or there is a decrease, then the annuity shall not be
increased.
For the purposes of this Section, "consumer price index-u"
means the index published by the Bureau of Labor Statistics of
the United States Department of Labor that measures the average
change in prices of goods and services purchased by all urban
consumers, United States city average, all items, 1982-84 =
100. The new amount resulting from each annual adjustment shall
be determined by the Public Pension Division of the Department
of Insurance and made available to the board of the retirement
system by November 1 of each year.
(c) An annuitant who otherwise qualifies for annual
increases under this Section must make a one-time payment of 1%
of the monthly final average salary for each full year of the
creditable service forming the basis of the retirement annuity
or, if the retirement annuity was not computed using final
average salary, 1% of the original monthly retirement annuity
for each full year of service forming the basis of the
retirement annuity.
(d) In addition to other increases which may be provided by
this Section, regardless of creditable service, annuitants not
meeting the service requirements of Section 16-133.1 and whose
retirement annuity began on or before January 1, 1971 shall
receive, on January 1, 1981, an increase in the retirement
annuity then being paid of one dollar per month for each year
of creditable service forming the basis of the retirement

HB4045 Engrossed - 233 - LRB100 12674 RPS 26063 b
allowance. On January 1, 1982, annuitants whose retirement
annuity began on or before January 1, 1977, shall receive an
increase in the retirement annuity then being paid of one
dollar per month for each year of creditable service.
On January 1, 1987, any annuitant whose retirement annuity
began on or before January 1, 1977, shall receive an increase
in the monthly retirement annuity equal to 8¢ per year of
creditable service times the number of years that have elapsed
since the annuity began.
(Source: P.A. 86-273.)
(40 ILCS 5/16-152) (from Ch. 108 1/2, par. 16-152)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 16-152. Contributions by members.
(a) Except as otherwise provided in subsection (a-5), each
Each member shall make contributions for membership service to
this System as follows:
(1) Effective July 1, 1998, contributions of 7.50% of
salary towards the cost of the retirement annuity. Such
contributions shall be deemed "normal contributions".
(2) Effective July 1, 1969, contributions of 1/2 of 1%
of salary toward the cost of the automatic annual increase
in retirement annuity provided under Section 16-133.1.
(3) Effective July 24, 1959, contributions of 1% of
salary towards the cost of survivor benefits. Such

HB4045 Engrossed - 234 - LRB100 12674 RPS 26063 b
contributions shall not be credited to the individual
account of the member and shall not be subject to refund
except as provided under Section 16-143.2.
(4) Effective July 1, 2005, contributions of 0.40% of
salary toward the cost of the early retirement without
discount option provided under Section 16-133.2. This
contribution shall cease upon termination of the early
retirement without discount option as provided in Section
16-133.2.
(a-5) Beginning July 1, 2018 or the effective date of the
Tier 1 employee's election under paragraph (1) of subsection
(a) of Section 16-122.9, whichever is later, in lieu of the
contributions otherwise required under subsection (a), each
Tier 1 employee who made the election under paragraph (1) of
subsection (a) of Section 16-122.9 shall make contributions as
follows:
(1) Contributions of 7.50% of salary towards the cost
of the retirement annuity. Such contributions shall be
deemed "normal contributions".
(2) Contributions of 0.60% towards the cost of survivor
benefits. Such contributions shall not be credited to the
individual account of the member and shall not be subject
to refund except as provided in Section 16-143.2.
(3) Contributions of 0.40% of salary toward the cost of
the early retirement without discount option provided
under Section 16-133.2. This contribution shall cease upon

HB4045 Engrossed - 235 - LRB100 12674 RPS 26063 b
termination of the early retirement without discount
option as provided in Section 16-133.2.
(b) The minimum required contribution for any year of
full-time teaching service shall be $192.
(c) Contributions shall not be required of any annuitant
receiving a retirement annuity who is given employment as
permitted under Section 16-118 or 16-150.1.
(d) A person who (i) was a member before July 1, 1998, (ii)
retires with more than 34 years of creditable service, and
(iii) does not elect to qualify for the augmented rate under
Section 16-129.1 shall be entitled, at the time of retirement,
to receive a partial refund of contributions made under this
Section for service occurring after the later of June 30, 1998
or attainment of 34 years of creditable service, in an amount
equal to 1.00% of the salary upon which those contributions
were based.
(e) A member's contributions toward the cost of early
retirement without discount made under item (a)(4) of this
Section shall not be refunded if the member has elected early
retirement without discount under Section 16-133.2 and has
begun to receive a retirement annuity under this Article
calculated in accordance with that election. Otherwise, a
member's contributions toward the cost of early retirement
without discount made under item (a)(4) of this Section shall
be refunded according to whichever one of the following
circumstances occurs first:

HB4045 Engrossed - 236 - LRB100 12674 RPS 26063 b
(1) The contributions shall be refunded to the member,
without interest, within 120 days after the member's
retirement annuity commences, if the member does not elect
early retirement without discount under Section 16-133.2.
(2) The contributions shall be included, without
interest, in any refund claimed by the member under Section
16-151.
(3) The contributions shall be refunded to the member's
designated beneficiary (or if there is no beneficiary, to
the member's estate), without interest, if the member dies
without having begun to receive a retirement annuity under
this Article.
(4) The contributions shall be refunded to the member,
without interest, if the early retirement without discount
option provided under subsection (d) of Section 16-133.2 is
terminated. In that event, the System shall provide to the
member, within 120 days after the option is terminated, an
application for a refund of those contributions.
(Source: P.A. 98-42, eff. 6-28-13; 98-92, eff. 7-16-13; 99-642,
eff. 7-28-16.)
(40 ILCS 5/16-158) (from Ch. 108 1/2, par. 16-158)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 16-158. Contributions by State and other employing
units.

HB4045 Engrossed - 237 - LRB100 12674 RPS 26063 b
(a) The State shall make contributions to the System by
means of appropriations from the Common School Fund and other
State funds of amounts which, together with other employer
contributions, employee contributions, investment income, and
other income, will be sufficient to meet the cost of
maintaining and administering the System on a 90% funded basis
in accordance with actuarial recommendations.
The Board shall determine the amount of State contributions
required for each fiscal year on the basis of the actuarial
tables and other assumptions adopted by the Board and the
recommendations of the actuary, using the formula in subsection
(b-3).
(a-1) Annually, on or before November 15 until November 15,
2011, the Board shall certify to the Governor the amount of the
required State contribution for the coming fiscal year. The
certification under this subsection (a-1) shall include a copy
of the actuarial recommendations upon which it is based and
shall specifically identify the System's projected State
normal cost for that fiscal year.
On or before May 1, 2004, the Board shall recalculate and
recertify to the Governor the amount of the required State
contribution to the System for State fiscal year 2005, taking
into account the amounts appropriated to and received by the
System under subsection (d) of Section 7.2 of the General
Obligation Bond Act.
On or before July 1, 2005, the Board shall recalculate and

HB4045 Engrossed - 238 - LRB100 12674 RPS 26063 b
recertify to the Governor the amount of the required State
contribution to the System for State fiscal year 2006, taking
into account the changes in required State contributions made
by this amendatory Act of the 94th General Assembly.
On or before April 1, 2011, the Board shall recalculate and
recertify to the Governor the amount of the required State
contribution to the System for State fiscal year 2011, applying
the changes made by Public Act 96-889 to the System's assets
and liabilities as of June 30, 2009 as though Public Act 96-889
was approved on that date.
(a-5) On or before November 1 of each year, beginning
November 1, 2012, the Board shall submit to the State Actuary,
the Governor, and the General Assembly a proposed certification
of the amount of the required State contribution to the System
for the next fiscal year, along with all of the actuarial
assumptions, calculations, and data upon which that proposed
certification is based. On or before January 1 of each year,
beginning January 1, 2013, the State Actuary shall issue a
preliminary report concerning the proposed certification and
identifying, if necessary, recommended changes in actuarial
assumptions that the Board must consider before finalizing its
certification of the required State contributions. On or before
January 15, 2013 and each January 15 thereafter, the Board
shall certify to the Governor and the General Assembly the
amount of the required State contribution for the next fiscal
year. The Board's certification must note any deviations from

HB4045 Engrossed - 239 - LRB100 12674 RPS 26063 b
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.
On or before May 1, 2018, the Board shall recalculate and
recertify to the Governor and the General Assembly the amount
of the required State contribution to the System for State
fiscal year 2019, taking into account the effect on the
System's liabilities of the elections made under Section
16-122.9.
On or before October 1, 2018, the Board shall recalculate
and recertify to the Governor and the General Assembly the
amount of the required State contribution to the System for
State fiscal year 2019, taking into account the reduction
specified under item (3) of subsection (b-3) of this Section.
(a-10) For purposes of subsection (c-5) of Section 20 of
the Budget Stabilization Act, on or before November 1 of each
year beginning November 1, 2019, the Board shall determine the
amount of the State contribution to the System that would have
been required for the next fiscal year if Section 1-161,
subsection (b-4) of Section 16-158, and the changes made to
Section 1-160 by this amendatory Act of the 100th General
Assembly had not taken effect, using the best and most recent
available data but based on the law in effect on May 31, 2019.
The Board shall submit to the State Actuary, the Governor, and
the General Assembly a proposed certification, along with the

HB4045 Engrossed - 240 - LRB100 12674 RPS 26063 b
relevant law, actuarial assumptions, calculations, and data
upon which that certification is based. On or before January 1,
2020 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,
2020 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 if Section 1-161, subsection (b-4) of
Section 16-158, and the changes made to Section 1-160 by this
amendatory Act of the 100th General Assembly had not taken
effect, using the best and most recent available data but based
on the law in effect on May 31, 2019. 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.
(a-15) As soon as practical after the effective date of
this amendatory Act of the 100th General Assembly, the Board
shall recalculate and recertify to the State Actuary, the
Governor, and the General Assembly the amount of the State
contribution to the System for State fiscal year 2018, taking
into account the changes in required State contributions made
by this amendatory Act of the 100th General Assembly. The State

HB4045 Engrossed - 241 - LRB100 12674 RPS 26063 b
Actuary shall review the assumptions and valuations underlying
the Board's revised certification and issue a preliminary
report concerning the proposed recertification and
identifying, if necessary, recommended changes in actuarial
assumptions that the Board must consider before finalizing its
certification of the required State contributions. The Board's
final certification must note any deviations from the State
Actuary's recommended changes, the reason or reasons for not
following the State Actuary's recommended changes, and the
fiscal impact of not following the State Actuary's recommended
changes on the required State contribution.
(b) Through State fiscal year 1995, the State contributions
shall be paid to the System in accordance with Section 18-7 of
the School Code.
(b-1) Beginning in State fiscal year 1996, on the 15th day
of each month, or as soon thereafter as may be practicable, the
Board shall submit vouchers for payment of State contributions
to the System, in a total monthly amount of one-twelfth of the
required annual State contribution certified under subsection
(a-1). From the effective date of this amendatory Act of the
93rd General Assembly through June 30, 2004, the Board shall
not submit vouchers for the remainder of fiscal year 2004 in
excess of the fiscal year 2004 certified contribution amount
determined under this Section after taking into consideration
the transfer to the System under subsection (a) of Section
6z-61 of the State Finance Act. These vouchers shall be paid by

HB4045 Engrossed - 242 - LRB100 12674 RPS 26063 b
the State Comptroller and Treasurer by warrants drawn on the
funds appropriated to the System for that fiscal year.
If in any month the amount remaining unexpended from all
other appropriations to the System for the applicable fiscal
year (including the appropriations to the System under Section
8.12 of the State Finance Act and Section 1 of the State
Pension Funds Continuing Appropriation Act) is less than the
amount lawfully vouchered under this subsection, the
difference shall be paid from the Common School Fund under the
continuing appropriation authority provided in Section 1.1 of
the State Pension Funds Continuing Appropriation Act.
(b-2) Allocations from the Common School Fund apportioned
to school districts not coming under this System shall not be
diminished or affected by the provisions of this Article.
(b-3) For State fiscal years 2018 through 2045 (except as
otherwise provided for fiscal year 2019), 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 total payroll, including payroll that is
not deemed pensionable, but excluding payroll attributable to
participants in the defined contribution plan under Section
16-205.1, over the years remaining to and including fiscal year

HB4045 Engrossed - 243 - LRB100 12674 RPS 26063 b
2045 and shall be determined under the projected unit credit
actuarial cost method.
For State fiscal year 2019:
(1) The initial calculation and certification shall be
based on the amount determined above.
(2) For purposes of the recertification due on or
before May 1, 2018, the recalculation of the required State
contribution for fiscal year 2019 shall take into account
the effect on the System's liabilities of the elections
made under Section 16-122.9.
(3) For purposes of the recertification due on or
before October 1, 2018, the total required State
contribution for fiscal year 2019 shall be reduced by the
amount of the consideration payments made to Tier 1
employees who made the election under paragraph (1) of
subsection (a) of Section 16-122.9.
Beginning in State fiscal year 2018, any increase or
decrease in State contribution over the prior fiscal year due
exclusively to changes in actuarial or investment assumptions
adopted by the Board shall be included in the State
contribution to the System, as a percentage of the applicable
employee payroll, and shall be increased in equal annual
increments so that by the State fiscal year occurring 5 years
after the adoption of the actuarial or investment assumptions,
the State is contributing at the rate otherwise required under
this Section.

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For State fiscal years 2012 through 2017 2045, the minimum
contribution to the System to be made by the State for each
fiscal year shall be an amount determined by the System to be
sufficient to bring the total assets of the System up to 90% of
the total actuarial liabilities of the System by the end of
State fiscal year 2045. In making these determinations, the
required State contribution shall be calculated each year as a
level percentage of payroll over the years remaining to and
including fiscal year 2045 and shall be determined under the
projected unit credit actuarial cost method.
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

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total required State contribution for State fiscal year 2006 is
$534,627,700.
Notwithstanding any other provision of this Article, the
total required State contribution for State fiscal year 2007 is
$738,014,500.
For each of State fiscal years 2008 through 2009, the State
contribution to the System, as a percentage of the applicable
employee payroll, shall be increased in equal annual increments
from the required State contribution for State fiscal year
2007, so that by State fiscal year 2011, the State is
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

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pro rata share of bond sale expenses determined by the System's
share of total bond proceeds, (ii) any amounts received from
the Common School Fund in fiscal year 2011, and (iii) any
reduction in bond proceeds due to the issuance of discounted
bonds, if applicable. This amount shall include, in addition to
the amount certified by the System, an amount necessary to meet
employer contributions required by the State as an employer
under paragraph (e) of this Section, which may also be used by
the System for contributions required by paragraph (a) of
Section 16-127.
Beginning in State fiscal year 2046, the minimum State
contribution for each fiscal year shall be the amount needed to
maintain the total assets of the System at 90% of the total
actuarial liabilities of the System.
Amounts received by the System pursuant to Section 25 of
the Budget Stabilization Act or Section 8.12 of the State
Finance Act in any fiscal year do not reduce and do not
constitute payment of any portion of the minimum State
contribution required under this Article in that fiscal year.
Such amounts shall not reduce, and shall not be included in the
calculation of, the required State contributions under this
Article in any future year until the System has reached a
funding ratio of at least 90%. A reference in this Article to
the "required State contribution" or any substantially similar
term does not include or apply to any amounts payable to the
System under Section 25 of the Budget Stabilization Act.

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Notwithstanding any other provision of this Section, the
required State contribution for State fiscal year 2005 and for
fiscal year 2008 and each fiscal year thereafter, as calculated
under this Section and certified under subsection (a-1), shall
not exceed an amount equal to (i) the amount of the required
State contribution that would have been calculated under this
Section for that fiscal year if the System had not received any
payments under subsection (d) of Section 7.2 of the General
Obligation Bond Act, minus (ii) the portion of the State's
total debt service payments for that fiscal year on the bonds
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-4) For employees first hired on or after 6 months after

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the effective date of this amendatory Act of the 100th General
Assembly who have elected the benefits under Section 1-161 of
this Code, the employer shall annually contribute an amount,
expressed as a percentage of payroll, equal to the defined
benefit normal cost of the defined benefit plan, less the
employee contribution, plus 2%. On an annual basis, the System
shall certify to each employer the amount of unfunded liability
accrued in the employer's account to be paid by the employer so
that the System is 90% funded by the end of State fiscal year
2045. The contributions shall be divided equally over a
12-month period and made monthly. The employer shall also
contribute an amount equal to the employer defined
contribution, as set on an individual employee basis, under
paragraph (2) of subsection (k) of Section 1-161 during each
pay period. The System shall have the authority to adopt rules
regarding implementation of employer contributions.
(c) Payment of the required State contributions and of all
pensions, retirement annuities, death benefits, refunds, and
other benefits granted under or assumed by this System, and all
expenses in connection with the administration and operation
thereof, are obligations of the State.
If members are paid from special trust or federal funds
which are administered by the employing unit, whether school
district or other unit, the employing unit shall pay to the
System from such funds the full accruing retirement costs based
upon that service, which, beginning July 1, 2014, shall be at a

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rate, expressed as a percentage of salary, equal to the total
minimum contribution to the System to be made by the State for
that fiscal year, including both normal cost and unfunded
liability components, expressed as a percentage of payroll, as
determined by the System under subsection (b-3) of this
Section. Employer contributions, based on salary paid to
members from federal funds, may be forwarded by the
distributing agency of the State of Illinois to the System
prior to allocation, in an amount determined in accordance with
guidelines established by such agency and the System. Any
contribution for fiscal year 2015 collected as a result of the
change made by this amendatory Act of the 98th General Assembly
shall be considered a State contribution under subsection (b-3)
of this Section.
(d) Effective July 1, 1986, any employer of a teacher as
defined in paragraph (8) of Section 16-106 shall pay the
employer's normal cost of benefits based upon the teacher's
service, in addition to employee contributions, as determined
by the System. Such employer contributions shall be forwarded
monthly in accordance with guidelines established by the
System.
However, with respect to benefits granted under Section
16-133.4 or 16-133.5 to a teacher as defined in paragraph (8)
of Section 16-106, the employer's contribution shall be 12%
(rather than 20%) of the member's highest annual salary rate
for each year of creditable service granted, and the employer

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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
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

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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) For school years beginning on or after June 1, 2005 and
before July 1, 2018, if If the amount of a teacher's salary for
any school year used to determine final average salary exceeds
the member's annual full-time salary rate with the same

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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
shall specify the calculations used to determine the amount

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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.
(f-1) For school years beginning on or after July 1, 2018,
if the amount of a teacher's salary for any school year 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 the unadjusted percentage increase in
the consumer price index-u for the calendar year immediately

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preceding the beginning of the school year, published by the
Public Pension Division of the Department of Insurance by
November 1 of each year, then 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 the unadjusted percentage increase in the consumer
price index-u for the applicable calendar year. 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 (f-1), the System shall calculate the
amount of the payment and bill the employer for that amount.
The bill shall specify the calculations used to determine the
amount due. If the employer disputes the amount of the bill, it
may, within 30 days after receipt of the bill, apply to the
System in writing for a recalculation. The application must
specify in detail the grounds of the dispute and, if the
employer asserts that the calculation is subject to subsection
(h-1) 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-1). Upon

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receiving a timely application for recalculation, the System
shall review the application and, if appropriate, recalculate
the amount due.
The employer contributions required under this subsection
(f-1) may be paid in the form of a lump sum within 90 days after
receipt of the bill. If the employer contributions are not paid
within 90 days after receipt of the bill, then interest shall
be charged at a rate equal to the System's annual actuarially
assumed rate of return on investment compounded annually from
the 91st day after receipt of the bill. Payments must be
concluded within 3 years after the employer's receipt of the
bill.
For the purposes of this Section, "consumer price index-u"
means the index published by the Bureau of Labor Statistics of
the United States Department of Labor that measures the average
change in prices of goods and services purchased by all urban
consumers, United States city average, all items, 1982-84 =
100. The new amount resulting from each annual adjustment shall
be determined by the Public Pension Division of the Department
of Insurance and made available to the boards of the retirement
systems and pension funds by November 1 of each year.
(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).

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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

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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.
(h-1) When assessing payment for any amount due under
subsection (f-1), the System shall exclude earnings increases
paid to participants under contracts or collective bargaining
agreements entered into, amended, or renewed before the

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effective date of this amendatory Act of the 100th General
Assembly.
(i) The System shall prepare a report and file copies of
the report with the Governor and the General Assembly by
January 1, 2007 that contains all of the following information:
(1) The number of recalculations required by the
changes made to this Section by Public Act 94-1057 for each
employer.
(2) The dollar amount by which each employer's
contribution to the System was changed due to
recalculations required by Public Act 94-1057.
(3) The total amount the System received from each
employer as a result of the changes made to this Section by
Public Act 94-4.
(4) The increase in the required State contribution
resulting from the changes made to this Section by Public
Act 94-1057.
(i-5) For school years beginning on or after July 1, 2018,
if the amount of a participant's salary for any school year,
determined on a full-time equivalent basis, exceeds $140,000,
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
amount of earnings that exceed $140,000 multiplied by the level
percentage of payroll used in that fiscal year as determined by
the System to be sufficient to bring the total assets of the

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System up to 90% of the total actuarial liabilities of the
System by the end of State fiscal year 2045. This amount 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, the System shall calculate the amount of
the payment and bill the employer for that amount. The bill
shall specify the calculations used to determine the amount
due. If the employer disputes the amount of the bill, it may,
within 30 days after receipt of the bill, apply to the System
in writing for a recalculation. The application must specify in
detail the grounds of the dispute. Upon receiving a timely
application for recalculation, the System shall review the
application and, if appropriate, recalculate the amount due.
The employer contributions required under this subsection
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.

HB4045 Engrossed - 260 - LRB100 12674 RPS 26063 b
(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.
(l) If Section 16-122.9 is determined to be
unconstitutional or otherwise invalid by a final unappealable
decision of an Illinois court or a court of competent
jurisdiction, then the changes made to this Section by this
amendatory Act of the 100th General Assembly shall not take
effect and are repealed by operation of law.
(Source: P.A. 96-43, eff. 7-15-09; 96-1497, eff. 1-14-11;
96-1511, eff. 1-27-11; 96-1554, eff. 3-18-11; 97-694, eff.
6-18-12; 97-813, eff. 7-13-12; 98-674, eff. 6-30-14.)
(40 ILCS 5/16-190.5 new)

HB4045 Engrossed - 261 - LRB100 12674 RPS 26063 b
Sec. 16-190.5. Accelerated pension benefit payment.
(a) As used in this Section:
"Eligible person" means a person who:
(1) has terminated service;
(2) has accrued sufficient service credit to be
eligible to receive a retirement annuity under this
Article;
(3) has not received any retirement annuity under this
Article; and
(4) does not have a QILDRO in effect against him or her
under this Article.
"Pension benefit" means the benefits under this Article, or
Article 1 as it relates to those benefits, including any
anticipated annual increases, that an eligible person is
entitled to upon attainment of the applicable retirement age.
"Pension benefit" also includes applicable survivor's or
disability benefits.
(b) Before January 1, 2018, and annually thereafter, the
System shall calculate, using actuarial tables and other
assumptions adopted by the Board, the net present value of
pension benefits for each eligible person and shall offer each
eligible person the opportunity to irrevocably elect to receive
an amount determined by the System to be equal to 70% of the
net present value of his or her pension benefits in lieu of
receiving any pension benefit. The offer shall specify the
dollar amount that the eligible person will receive if he or

HB4045 Engrossed - 262 - LRB100 12674 RPS 26063 b
she so elects and shall expire when a subsequent offer is made
to an eligible person or when the System determines that 10% of
eligible persons in that year have made the election under this
subsection, whichever occurs first. The System shall make a
good faith effort to contact every eligible person to notify
him or her of the election and of the amount of the accelerated
pension benefit payment.
Until the System determines that 10% of eligible persons in
that year have made the election under this subsection, an
eligible person may irrevocably elect to receive an accelerated
pension benefit payment in the amount that the System offers
under this subsection in lieu of receiving any pension benefit.
A person who elects to receive an accelerated pension benefit
payment under this Section may not elect to proceed under the
Retirement Systems Reciprocal Act with respect to service under
this Article.
(c) A person's credits and creditable service under this
Article shall be terminated upon the person's receipt of an
accelerated pension benefit payment under this Section, and no
other benefit shall be paid under this Article based on those
terminated credits and creditable service, including any
retirement, survivor, or other benefit; except that to the
extent that participation, benefits, or premiums under the
State Employees Group Insurance Act of 1971 are based on the
amount of service credit, the terminated service credit shall
be used for that purpose.

HB4045 Engrossed - 263 - LRB100 12674 RPS 26063 b
(d) If a person who has received an accelerated pension
benefit payment under this Section returns to active service
under this Article, then:
(1) Any benefits under the System earned as a result of
that return to active service shall be based solely on the
person's credits and creditable service arising from the
return to active service.
(2) The accelerated pension benefit payment may not be
repaid to the System, and the terminated credits and
creditable service may not under any circumstances be
reinstated.
(e) As a condition of receiving an accelerated pension
benefit payment, an eligible person must have another
retirement plan or account qualified under the Internal Revenue
Code of 1986, as amended, for the accelerated pension benefit
payment to be rolled into. The accelerated pension benefit
payment under this Section may be subject to withholding or
payment of applicable taxes, but to the extent permitted by
federal law, a person who receives an accelerated pension
benefit payment under this Section must direct the System to
pay all of that payment as a rollover into another retirement
plan or account qualified under the Internal Revenue Code of
1986, as amended.
(f) Before January 1, 2019 and every January 1 thereafter,
the Board shall certify to the Illinois Finance Authority and
the General Assembly the amount by which the total amount of

HB4045 Engrossed - 264 - LRB100 12674 RPS 26063 b
accelerated pension benefit payments made under this Section
exceed the amount appropriated to the System for the purpose of
making those payments.
(g) The Board shall adopt any rules necessary to implement
this Section.
(h) No provision of this Section shall be interpreted in a
way that would cause the applicable System to cease to be a
qualified plan under the Internal Revenue Code of 1986.
(i) Notwithstanding any other provision of this Section, in
no case shall the total amount of accelerated pension benefit
payments paid under this Section, Section 14-147.5, and Section
15-185.5, and Section 16-190.5 cause the Illinois Finance
Authority to issue more than the $250,000,000 of State Pension
Obligation Acceleration Bonds authorized in subsection (c-5)
of Section 801-40 of the Illinois Finance Authority Act.
(40 ILCS 5/16-203)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 16-203. Application and expiration of new benefit
increases.
(a) As used in this Section, "new benefit increase" means
an increase in the amount of any benefit provided under this
Article, or an expansion of the conditions of eligibility for
any benefit under this Article, that results from an amendment
to this Code that takes effect after June 1, 2005 (the

HB4045 Engrossed - 265 - LRB100 12674 RPS 26063 b
effective date of Public Act 94-4). "New benefit increase",
however, does not include any benefit increase resulting from
the changes made to this Article by Public Act 95-910 or this
amendatory Act of the 100th General Assembly this amendatory
Act of the 95th General Assembly.
(b) Notwithstanding any other provision of this Code or any
subsequent amendment to this Code, every new benefit increase
is subject to this Section and shall be deemed to be granted
only in conformance with and contingent upon compliance with
the provisions of this Section.
(c) The Public Act enacting a new benefit increase must
identify and provide for payment to the System of additional
funding at least sufficient to fund the resulting annual
increase in cost to the System as it accrues.
Every new benefit increase is contingent upon the General
Assembly providing the additional funding required under this
subsection. The Commission on Government Forecasting and
Accountability shall analyze whether adequate additional
funding has been provided for the new benefit increase and
shall report its analysis to the Public Pension Division of the
Department of Insurance Financial and Professional Regulation.
A new benefit increase created by a Public Act that does not
include the additional funding required under this subsection
is null and void. If the Public Pension Division determines
that the additional funding provided for a new benefit increase
under this subsection is or has become inadequate, it may so

HB4045 Engrossed - 266 - LRB100 12674 RPS 26063 b
certify to the Governor and the State Comptroller and, in the
absence of corrective action by the General Assembly, the new
benefit increase shall expire at the end of the fiscal year in
which the certification is made.
(d) Every new benefit increase shall expire 5 years after
its effective date or on such earlier date as may be specified
in the language enacting the new benefit increase or provided
under subsection (c). This does not prevent the General
Assembly from extending or re-creating a new benefit increase
by law.
(e) Except as otherwise provided in the language creating
the new benefit increase, a new benefit increase that expires
under this Section continues to apply to persons who applied
and qualified for the affected benefit while the new benefit
increase was in effect and to the affected beneficiaries and
alternate payees of such persons, but does not apply to any
other person, including without limitation a person who
continues in service after the expiration date and did not
apply and qualify for the affected benefit while the new
benefit increase was in effect.
(Source: P.A. 94-4, eff. 6-1-05; 95-910, eff. 8-26-08.)
(40 ILCS 5/16-205.1 new)
Sec. 16-205.1. Defined contribution plan.
(a) By July 1, 2018, the System shall prepare and implement
a voluntary defined contribution plan for up to 5% of eligible

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active Tier 1 employees. The System shall determine the 5% cap
by the number of active Tier 1 employees on the effective date
of this Section. The defined contribution plan developed under
this Section shall be a plan that aggregates employer and
employee contributions in individual participant accounts
which, after meeting any other requirements, are used for
payouts after retirement in accordance with this Section and
any other applicable laws.
As used in this Section, "defined benefit plan" means the
retirement plan available under this Article to Tier 1
employees who have not made the election authorized under this
Section.
(1) Under the defined contribution plan, an active Tier
1 employee of this System could elect to cease accruing
benefits in the defined benefit plan under this Article and
begin accruing benefits for future service in the defined
contribution plan. Service credit under the defined
contribution plan may be used for determining retirement
eligibility under the defined benefit plan. An active Tier
1 employee who elects to cease accruing benefits in his or
her defined benefit plan shall be prohibited from
purchasing service credit on or after the date of his or
her election. A Tier 1 employee making the irrevocable
election provided under this Section shall not receive
interest accruals to his or her benefit under paragraph (A)
of subsection (a) of Section 16-133 on or after the date of

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his or her election.
(2) Participants in the defined contribution plan
shall pay employee contributions at the same rate as Tier 1
employees in this System who do not participate in the
defined contribution plan.
(3) State contributions shall be paid into the accounts
of all participants in the defined contribution plan at a
uniform rate, expressed as a percentage of salary and
determined for each year. This rate shall be no higher than
the employer's normal cost for Tier 1 employees in the
defined benefit plan for that year, as determined by the
System and expressed as a percentage of salary, and shall
be no lower than 0% of salary. The State shall adjust this
rate annually.
(4) The defined contribution plan shall require 5 years
of participation in the defined contribution plan before
vesting in State contributions. If the participant fails to
vest in them, the State contributions, and the earnings
thereon, shall be forfeited.
(5) The defined contribution plan may provide for
participants in the plan to be eligible for the defined
disability benefits available to other participants under
this Article. If it does, the System shall reduce the
employee contributions credited to the member's defined
contribution plan account by an amount determined by the
System to cover the cost of offering such benefits.

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(6) The defined contribution plan shall provide a
variety of options for investments. These options shall
include investments in a fund created by the System and
managed in accordance with legal and fiduciary standards,
as well as investment options otherwise available.
(7) The defined contribution plan shall provide a
variety of options for payouts to retirees and their
survivors.
(8) To the extent authorized under federal law and as
authorized by the System, the plan shall allow former
participants in the plan to transfer or roll over employee
and vested State contributions, and the earnings thereon,
into other qualified retirement plans.
(9) The System shall reduce the employee contributions
credited to the member's defined contribution plan account
by an amount determined by the System to cover the cost of
offering these benefits and any applicable administrative
fees.
(b) Only persons who are active Tier 1 employees of the
System on the effective date of this Section are eligible to
participate in the defined contribution plan. Participation in
the defined contribution plan shall be limited to the first 5%
of eligible persons who elect to participate. The election to
participate in the defined contribution plan is voluntary and
irrevocable.
(c) An eligible Tier 1 employee may irrevocably elect to

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participate in the defined contribution plan by filing with the
System a written application to participate that is received by
the System prior to its determination that 5% of eligible
persons have elected to participate in the defined contribution
plan.
When the System first determines that 5% of eligible
persons have elected to participate in the defined contribution
plan, the System shall provide notice to previously eligible
employees that the plan is no longer available and shall cease
accepting applications to participate.
(d) The System shall make a good faith effort to contact
each active Tier 1 employee who is eligible to participate in
the defined contribution plan. The System shall mail
information describing the option to join the defined
contribution plan to each of these employees to his or her last
known address on file with the System. If the employee is not
responsive to other means of contact, it is sufficient for the
System to publish the details of the option on its website.
Upon request for further information describing the
option, the System shall provide employees with information
from the System before exercising the option to join the plan,
including information on the impact to their vested benefits or
non-vested service. The individual consultation shall include
projections of the member's defined benefits at retirement or
earlier termination of service and the value of the member's
account at retirement or earlier termination of service. The

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System shall not provide advice or counseling with respect to
whether the employee should exercise the option. The System
shall inform Tier 1 employees who are eligible to participate
in the defined contribution plan that they may also wish to
obtain information and counsel relating to their option from
any other available source, including but not limited to labor
organizations, private counsel, and financial advisors.
(e) In no event shall the System, its staff, its authorized
representatives, or the Board be liable for any information
given to an employee under this Section. The System may
coordinate with the Illinois Department of Central Management
Services and other retirement systems administering a defined
contribution plan in accordance with this amendatory Act of the
100th General Assembly to provide information concerning the
impact of the option set forth in this Section.
(f) Notwithstanding any other provision of this Section, no
person shall begin participating in the defined contribution
plan until it has attained qualified plan status and received
all necessary approvals from the U.S. Internal Revenue Service.
(g) The System shall report on its progress under this
Section, including the available details of the defined
contribution plan and the System's plans for informing eligible
Tier 1 employees about the plan, to the Governor and the
General Assembly on or before January 15, 2018.
(h) The intent of this amendatory Act of the 100th General
Assembly is to ensure that the State's normal cost of

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participation in the defined contribution plan is similar, and
if possible equal, to the State's normal cost of participation
in the defined benefit plan, unless a lower State's normal cost
is necessary to ensure cost neutrality.
(40 ILCS 5/16-206.1 new)
Sec. 16-206.1. Defined contribution plan; termination. If
the defined contribution plan is terminated or becomes
inoperative pursuant to law, then each participant in the plan
shall automatically be deemed to have been a contributing Tier
1 employee in the System's defined benefit plan during the time
in which he or she participated in the defined contribution
plan, and for that purpose the System shall be entitled to
recover the amounts in the participant's defined contribution
accounts.
(40 ILCS 5/17-106.05 new)
Sec. 17-106.05. Tier 1 employee. "Tier 1 employee": A
teacher under this Article who first became a member or
participant before January 1, 2011 under any reciprocal
retirement system or pension fund established under this Code
other than a retirement system or pension fund established
under Article 2, 3, 4, 5, 6, or 18 of this Code. However, for
the purposes of the election under Section 17-115.5, "Tier 1
employee" does not include a teacher under this Article who
would qualify as a Tier 1 employee but who has made an

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irrevocable election on or before June 1, 2017 to retire from
service pursuant to the terms of an employment contract or a
collective bargaining agreement in effect on June 1, 2017,
excluding any extension, amendment, or renewal of that
agreement after that date, and has notified the Fund of that
election.
(40 ILCS 5/17-113.4 new)
Sec. 17-113.4. Salary. "Salary" means any income in any
form that qualifies as "average salary" or "annual rate of
salary" for purposes of paragraph (1) of subsection (c) of
Section 17-116 and "salary" for payroll deduction purposes
under Sections 17-130, 17-131, and 17-132.
Notwithstanding any other provision of this Section,
"salary" does not include any future increase in income that is
offered by an employer for service as a Tier 1 employee under
this Article pursuant to the condition set forth in subsection
(c) of Section 17-115.5 and accepted under that condition by a
Tier 1 employee who has made the election under paragraph (2)
of subsection (a) of Section 17-115.5.
(40 ILCS 5/17-113.5 new)
Sec. 17-113.5. Future increase in income. "Future increase
in income" means an increase to a Tier 1 employee's base pay
that is offered by an employer to the Tier 1 employee for
service under this Article after June 30, 2018 that qualifies

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as "salary", as defined in Section 17-113.4, or would qualify
as "salary" but for the fact that it was offered to and
accepted by the Tier 1 employee under the condition set forth
in subsection (c) of Section 17-115.5. The term "future
increase in income" includes an increase to a Tier 1 employee's
base pay that is paid to the Tier 1 employee pursuant to an
extension, amendment, or renewal of any employment contract or
collective bargaining agreement after the effective date of
this Section.
(40 ILCS 5/17-113.6 new)
Sec. 17-113.6. Base pay. As used in Section 17-113.5 of
this Code, "base pay" means the greater of either (i) the Tier
1 employee's annualized rate of salary as of June 30, 2018, or
(ii) the Tier 1 employee's annualized rate of salary
immediately preceding the expiration, renewal, or amendment of
an employment contract or collective bargaining agreement in
effect on the effective date of this Section. For a person
returning to active service as a Tier 1 employee after June 30,
2018, however, "base pay" means the employee's annualized rate
of salary as of the employee's last date of service prior to
July 1, 2018. The Fund shall calculate the base pay of each
Tier 1 employee pursuant to this Section.
(40 ILCS 5/17-115.5 new)
Sec. 17-115.5. Election by Tier 1 employees.

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(a) Each active Tier 1 employee shall make an irrevocable
election either:
(1) to agree to delay his or her eligibility for
automatic annual increases in service retirement pension
as provided in Section 17-119.2 and to have the amount of
the automatic annual increases in his or her service
retirement pension and survivor's pension that are
otherwise provided for in this Article calculated,
instead, as provided in Section 17-119.2; or
(2) to not agree to paragraph (1) of this subsection.
The election required under this subsection (a) shall be
made by each active Tier 1 employee no earlier than January 1,
2018 and no later than March 31, 2018, except that:
(i) a person who becomes a Tier 1 employee under this
Article on or after January 1, 2018 must make the election
under this subsection (a) within 60 days after becoming a
Tier 1 employee; and
(ii) a person who returns to active service as a Tier 1
employee under this Article on or after January 1, 2018 and
has not yet made an election under this Section must make
the election under this subsection (a) within 60 days after
returning to active service as a Tier 1 employee.
If a Tier 1 employee fails for any reason to make a
required election under this subsection within the time
specified, then the employee shall be deemed to have made the
election under paragraph (2) of this subsection.

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(a-5) If this Section is enjoined or stayed by an Illinois
court or a court of competent jurisdiction pending the entry of
a final and unappealable decision, and this Section is
determined to be constitutional or otherwise valid by a final
unappealable decision of an Illinois court or a court of
competent jurisdiction, then the election procedure set forth
in subsection (a) of this Section shall commence on the 180th
calendar day after the date of the issuance of the final
unappealable decision and shall conclude at the end of the
270th calendar day after that date.
(a-10) All elections under subsection (a) that are made or
deemed to be made before July 1, 2018 shall take effect on July
1, 2018. Elections that are made or deemed to be made on or
after July 1, 2018 shall take effect on the first day of the
month following the month in which the election is made or
deemed to be made.
(b) As adequate and legal consideration provided under this
amendatory Act of the 100th General Assembly for making an
election under paragraph (1) of subsection (a) of this Section,
an employer shall be expressly and irrevocably prohibited from
offering any future increases in income to a Tier 1 employee
who has made an election under paragraph (1) of subsection (a)
of this Section on the condition of not constituting salary
under Section 17-113.4.
As adequate and legal consideration provided under this
amendatory Act of the 100th General Assembly for making an

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election under paragraph (1) of subsection (a) of this Section,
each Tier 1 employee who has made an election under paragraph
(1) of subsection (a) of this Section shall receive a
consideration payment equal to 10% of the contributions made by
or on behalf of the employee under Section 17-130 before the
effective date of that election. The State Comptroller shall
pay the consideration payment to the Tier 1 employee out of
funds appropriated for that purpose under Section 1.9 of the
State Pension Funds Continuing Appropriation Act. The Fund
shall calculate the amount of each consideration payment and,
by July 1, 2018, shall certify to the State Comptroller the
amount of the consideration payment, together with the name,
address, and any other available payment information of the
Tier 1 employee as found in the records of the Fund. The Fund
shall make additional calculations and certifications of
consideration payments to the State Comptroller as the Fund
deems necessary.
(c) A Tier 1 employee who makes the election under
paragraph (2) of subsection (a) of this Section shall not be
subject to paragraph (1) of subsection (a) of this Section.
However, each future increase in income offered by an employer
under this Article to a Tier 1 employee who has made the
election under paragraph (2) of subsection (a) of this Section
shall be offered by the employer expressly and irrevocably on
the condition of not constituting salary under Section 17-113.4
and that the Tier 1 employee's acceptance of the offered future

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increase in income shall constitute his or her agreement to
that condition.
(d) The Fund shall make a good faith effort to contact each
Tier 1 employee subject to this Section. The Fund shall mail
information describing the required election to each Tier 1
employee by United States Postal Service mail to his or her
last known address on file with the Fund. If the Tier 1
employee is not responsive to other means of contact, it is
sufficient for the Fund to publish the details of any required
elections on its website or to publish those details in a
regularly published newsletter or other existing public forum.
Tier 1 employees who are subject to this Section shall be
provided with an election packet containing information
regarding their options, as well as the forms necessary to make
the required election. Upon request, the Fund shall offer Tier
1 employees an opportunity to receive information from the Fund
before making the required election. The information may
consist of video materials, group presentations, individual
consultation with a member or authorized representative of the
Fund in person or by telephone or other electronic means, or
any combination of those methods. The Fund shall not provide
advice or counseling with respect to which election a Tier 1
employee should make or specific to the legal or tax
circumstances of or consequences to the Tier 1 employee.
The Fund shall inform Tier 1 employees in the election
packet required under this subsection that the Tier 1 employee

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may also wish to obtain information and counsel relating to the
election required under this Section from any other available
source, including, but not limited to, labor organizations and
private counsel.
In no event shall the Fund, its staff, or the Board be held
liable for any information given to a member regarding the
elections under this Section. The Fund shall coordinate with
the Illinois Department of Central Management Services and each
other retirement system administering an election in
accordance with this amendatory Act of the 100th General
Assembly to provide information concerning the impact of the
election set forth in this Section.
(e) Notwithstanding any other provision of law, an employer
under this Article is required to offer each future increase in
income expressly and irrevocably on the condition of not
constituting "salary" under Section 17-113.4 to any Tier 1
employee who has made an election under paragraph (2) of
subsection (a) of this Section. The offer shall also provide
that the Tier 1 employee's acceptance of the offered future
increase in income shall constitute his or her agreement to the
condition set forth in this subsection.
For purposes of legislative intent, the condition set forth
in this subsection shall be construed in a manner that ensures
that the condition is not violated or circumvented through any
contrivance of any kind.
(f) A member's election under this Section is not a

HB4045 Engrossed - 280 - LRB100 12674 RPS 26063 b
prohibited election under subdivision (j)(1) of Section 1-119
of this Code.
(g) No provision of this Section shall be interpreted in a
way that would cause the Fund to cease to be a qualified plan
under Section 401(a) of the Internal Revenue Code of 1986.
(h) If an election created by this amendatory Act in any
other Article of this Code or any change deriving from that
election is determined to be unconstitutional or otherwise
invalid by a final unappealable decision of an Illinois court
or a court of competent jurisdiction, the invalidity of that
provision shall not in any way affect the validity of this
Section or the changes deriving from the election required
under this Section.
(40 ILCS 5/17-116) (from Ch. 108 1/2, par. 17-116)
Sec. 17-116. Service retirement pension.
(a) Each teacher having 20 years of service upon attainment
of age 55, or who thereafter attains age 55 shall be entitled
to a service retirement pension upon or after attainment of age
55; and each teacher in service on or after July 1, 1971, with
5 or more but less than 20 years of service shall be entitled
to receive a service retirement pension upon or after
attainment of age 62.
(b) The service retirement pension for a teacher who
retires on or after June 25, 1971, at age 60 or over, shall be
calculated as follows:

HB4045 Engrossed - 281 - LRB100 12674 RPS 26063 b
(1) For creditable service earned before July 1, 1998
that has not been augmented under Section 17-119.1: 1.67%
for each of the first 10 years of service; 1.90% for each
of the next 10 years of service; 2.10% for each year of
service in excess of 20 but not exceeding 30; and 2.30% for
each year of service in excess of 30, based upon average
salary as herein defined.
(2) For creditable service earned on or after July 1,
1998 by a member who has at least 30 years of creditable
service on July 1, 1998 and who does not elect to augment
service under Section 17-119.1: 2.3% of average salary for
each year of creditable service earned on or after July 1,
1998.
(3) For all other creditable service: 2.2% of average
salary for each year of creditable service.
(c) When computing such service retirement pensions, the
following conditions shall apply:
1. Average salary shall consist of the average annual
rate of salary for the 4 consecutive years of validated
service within the last 10 years of service when such
average annual rate was highest. In the determination of
average salary for retirement allowance purposes, for
members who commenced employment after August 31, 1979,
that part of the salary for any year shall be excluded
which exceeds the annual full-time salary rate for the
preceding year by more than 20%. In the case of a member

HB4045 Engrossed - 282 - LRB100 12674 RPS 26063 b
who commenced employment before August 31, 1979 and who
receives salary during any year after September 1, 1983
which exceeds the annual full time salary rate for the
preceding year by more than 20%, an Employer and other
employers of eligible contributors as defined in Section
17-106 shall pay to the Fund an amount equal to the present
value of the additional service retirement pension
resulting from such excess salary. The present value of the
additional service retirement pension shall be computed by
the Board on the basis of actuarial tables adopted by the
Board. If a member elects to receive a pension from this
Fund provided by Section 20-121, his salary under the State
Universities Retirement System and the Teachers'
Retirement System of the State of Illinois shall be
considered in determining such average salary. Amounts
paid after the effective date of this amendatory Act of
1991 for unused vacation time earned after that effective
date shall not under any circumstances be included in the
calculation of average salary or the annual rate of salary
for the purposes of this Article.
2. Proportionate credit shall be given for validated
service of less than one year.
3. For retirement at age 60 or over the pension shall
be payable at the full rate.
4. For separation from service below age 60 to a
minimum age of 55, the pension shall be discounted at the

HB4045 Engrossed - 283 - LRB100 12674 RPS 26063 b
rate of 1/2 of one per cent for each month that the age of
the contributor is less than 60, but a teacher may elect to
defer the effective date of pension in order to eliminate
or reduce this discount. This discount shall not be
applicable to any participant who has at least 34 years of
service or a retirement pension of at least 74.6% of
average salary on the date the retirement annuity begins.
5. No additional pension shall be granted for service
exceeding 45 years. Beginning June 26, 1971 no pension
shall exceed the greater of $1,500 per month or 75% of
average salary as herein defined.
6. Service retirement pensions shall begin on the
effective date of resignation, retirement, the day
following the close of the payroll period for which service
credit was validated, or the time the person resigning or
retiring attains age 55, or on a date elected by the
teacher, whichever shall be latest; provided that, for a
person who first becomes a member after the effective date
of this amendatory Act of the 99th General Assembly, the
benefit shall not commence more than one year prior to the
date of the Fund's receipt of an application for the
benefit.
7. A member who is eligible to receive a retirement
pension of at least 74.6% of average salary and will attain
age 55 on or before December 31 during the year which
commences on July 1 shall be deemed to attain age 55 on the

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preceding June 1.
8. A member retiring after the effective date of this
amendatory Act of 1998 shall receive a pension equal to 75%
of average salary if the member is qualified to receive a
retirement pension equal to at least 74.6% of average
salary under this Article or as proportional annuities
under Article 20 of this Code.
(d) Notwithstanding any other provision of this Section,
annual salary does not include any future increase in income
that is offered for service to a Tier 1 employee under this
Article pursuant to the condition set forth in subsection (c)
of Section 17-115.5 and accepted under that condition by a Tier
1 employee who has made the election under paragraph (2) of
subsection (a) of Section 17-115.5.
Notwithstanding any other provision of this Section,
annual salary does not include any consideration payment made
to a Tier 1 employee.
(Source: P.A. 99-702, eff. 7-29-16.)
(40 ILCS 5/17-119.2 new)
Sec. 17-119.2. Automatic annual increases in service
retirement pension and survivor's pension for certain Tier 1
employees. Notwithstanding any other provision of this
Article, for a Tier 1 employee who made the election under
paragraph (1) of subsection (a) of Section 17-115.5:
(1) The initial increase in service retirement pension

HB4045 Engrossed - 285 - LRB100 12674 RPS 26063 b
shall occur on the January 1 occurring either on or after
the attainment of age 67 or the fifth anniversary of the
pension start date, whichever is earlier.
(2) The amount of each automatic annual increase in
service retirement pension or survivor's pension occurring
on or after the effective date of that election shall be
calculated as a percentage of the originally granted
service retirement pension or survivor's pension, equal to
3% or one-half the annual unadjusted percentage increase
(but not less than zero) in the consumer price index-u for
the 12 months ending with the September preceding each
November 1, whichever is less. If the annual unadjusted
percentage change in the consumer price index-u for the 12
months ending with the September preceding each November 1
is zero or there is a decrease, then the annuity shall not
be increased.
For the purposes of this Section, "consumer price index-u"
means the index published by the Bureau of Labor Statistics of
the United States Department of Labor that measures the average
change in prices of goods and services purchased by all urban
consumers, United States city average, all items, 1982-84 =
100. The new amount resulting from each annual adjustment shall
be determined by the Public Pension Division of the Department
of Insurance and made available to the Board by November 1 of
each year.

HB4045 Engrossed - 286 - LRB100 12674 RPS 26063 b
(40 ILCS 5/17-127) (from Ch. 108 1/2, par. 17-127)
Sec. 17-127. Financing; revenues for the Fund.
(a) The revenues for the Fund shall consist of: (1) amounts
paid into the Fund by contributors thereto and from employer
contributions and State appropriations in accordance with this
Article; (2) amounts contributed to the Fund by an Employer;
(3) amounts contributed to the Fund pursuant to any law now in
force or hereafter to be enacted; (4) contributions from any
other source; and (5) the earnings on investments.
(b) The General Assembly finds that for many years the
State has contributed to the Fund an annual amount that is
between 20% and 30% of the amount of the annual State
contribution to the Article 16 retirement system, and the
General Assembly declares that it is its goal and intention to
continue this level of contribution to the Fund in the future.
(c) Beginning in State fiscal year 1999, the State shall
include in its annual contribution to the Fund an additional
amount equal to 0.544% of the Fund's total teacher payroll;
except that this additional contribution need not be made in a
fiscal year if the Board has certified in the previous fiscal
year that the Fund is at least 90% funded, based on actuarial
determinations. These additional State contributions are
intended to offset a portion of the cost to the Fund of the
increases in retirement benefits resulting from this
amendatory Act of 1998.
(d) In addition to any other contribution required under

HB4045 Engrossed - 287 - LRB100 12674 RPS 26063 b
this Article, including the contribution required under
subsection (c), for State fiscal year 2017, the State shall
contribute the amount of $215,200,000 to the Fund. This amount
shall be deemed a portion of the employer's required
contribution.
(Source: P.A. 90-548, eff. 12-4-97; 90-566, eff. 1-2-98;
90-582, eff. 5-27-98; 90-655, eff. 7-30-98.)
(40 ILCS 5/17-129) (from Ch. 108 1/2, par. 17-129)
Sec. 17-129. Employer contributions; deficiency in Fund.
(a) If in any fiscal year of the Board of Education ending
prior to 1997 the total amounts paid to the Fund from the Board
of Education (other than under this subsection, and other than
amounts used for making or "picking up" contributions on behalf
of teachers) and from the State do not equal the total
contributions made by or on behalf of the teachers for such
year, or if the total income of the Fund in any such fiscal
year of the Board of Education from all sources is less than
the total such expenditures by the Fund for such year, the
Board of Education shall, in the next succeeding year, in
addition to any other payment to the Fund set apart and
appropriate from moneys from its tax levy for educational
purposes, a sum sufficient to remove such deficiency or
deficiencies, and promptly pay such sum into the Fund in order
to restore any of the reserves of the Fund that may have been
so temporarily applied. Any amounts received by the Fund after

HB4045 Engrossed - 288 - LRB100 12674 RPS 26063 b
December 4, 1997 from State appropriations, including under
Section 17-127, shall be a credit against and shall fully
satisfy any obligation that may have arisen, or be claimed to
have arisen, under this subsection (a) as a result of any
deficiency or deficiencies in the fiscal year of the Board of
Education ending in calendar year 1997.
(b) (i) Notwithstanding any other provision of this
Section, and notwithstanding any prior certification by the
Board under subsection (c) for fiscal year 2011, the Board of
Education's total required contribution to the Fund for fiscal
year 2011 under this Section is $187,000,000.
(ii) Notwithstanding any other provision of this Section,
the Board of Education's total required contribution to the
Fund for fiscal year 2012 under this Section is $192,000,000.
(iii) Notwithstanding any other provision of this Section,
the Board of Education's total required contribution to the
Fund for fiscal year 2013 under this Section is $196,000,000.
(iv) For fiscal years 2014 through 2059, the minimum
contribution to the Fund to be made by the Board of Education
in each fiscal year shall be an amount determined by the Fund
to be sufficient to bring the total assets of the Fund up to
90% of the total actuarial liabilities of the Fund by the end
of fiscal year 2059. In making these determinations, the
required Board of Education contribution shall be calculated
each year as a level percentage of the applicable employee
payrolls over the years remaining to and including fiscal year

HB4045 Engrossed - 289 - LRB100 12674 RPS 26063 b
2059 and shall be determined under the projected unit credit
actuarial cost method.
(v) Beginning in fiscal year 2060, the minimum Board of
Education contribution for each fiscal year shall be the amount
needed to maintain the total assets of the Fund at 90% of the
total actuarial liabilities of the Fund.
(vi) Notwithstanding any other provision of this
subsection (b), for any fiscal year, the contribution to the
Fund from the Board of Education shall not be required to be in
excess of the amount calculated as needed to maintain the
assets (or cause the assets to be) at the 90% level by the end
of the fiscal year.
(vii) Any contribution by the State to or for the benefit
of the Fund, including, without limitation, as referred to
under Section 17-127, shall be a credit against any
contribution required to be made by the Board of Education
under this subsection (b).
(c) The Board shall determine the amount of Board of
Education 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, in order to
meet the minimum contribution requirements of subsections (a)
and (b). Annually, on or before February 28, the Board shall
certify to the Board of Education the amount of the required
Board of Education contribution for the coming fiscal year. The
certification shall include a copy of the actuarial

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recommendations upon which it is based.
Beginning in fiscal year 2018, any increase or decrease in
the Board of Education's contribution over the prior fiscal
year due exclusively to changes in actuarial or investment
assumptions adopted by the Board shall be included in the Board
of Education's contribution to the Fund, as a percentage of the
applicable employee payroll, and shall be increased in equal
annual increments so that by the fiscal year occurring 5 years
after the adoption of the actuarial or investment assumptions,
the Board of Education is contributing at the rate otherwise
required under this Section.
(d) As soon as practical after the effective date of this
amendatory Act of the 100th General Assembly, the Board shall
recalculate and recertify to the Board of Education the amount
of the required Board of Education contribution to the Fund for
fiscal years 2017 and 2018, as necessary to take into account
the changes in required Board of Education contributions made
by this amendatory Act of the 100th General Assembly.
On or before May 1, 2018, the Board shall recalculate and
recertify to the Board of Education the amount of the required
Board of Education contribution to the Fund for fiscal year
2019, taking into account the effect on the Fund's liabilities
of the elections made under Section 17-115.5.
(Source: P.A. 96-889, eff. 4-14-10.)
(40 ILCS 5/17-130) (from Ch. 108 1/2, par. 17-130)

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Sec. 17-130. Participants' contributions by payroll
deductions.
(a) Except as provided in subsection (a-5), there There
shall be deducted from the salary of each teacher 7.50% of his
salary for service or disability retirement pension and 0.5% of
salary for the annual increase in base pension.
In addition, there shall be deducted from the salary of
each teacher 1% of his salary for survivors' and children's
pensions.
(a-5) Beginning on July 1, 2018 or the effective date of
the Tier 1 employee's election under paragraph (1) of Section
17-115.5, whichever is later, in lieu of the contributions
otherwise required under subsection (a), each Tier 1 employee
who made the election under paragraph (1) of Section 17-115.5
shall make contributions of 7.50% of salary for service or
disability retirement pension and 0.6% of salary for survivors'
and children's pensions.
(b) An Employer and any employer of eligible contributors
as defined in Section 17-106 is authorized to make the
necessary deductions from the salaries of its teachers. Such
amounts shall be included as a part of the Fund. An Employer
and any employer of eligible contributors as defined in Section
17-106 shall formulate such rules and regulations as may be
necessary to give effect to the provisions of this Section.
(c) All persons employed as teachers shall, by such
employment, accept the provisions of this Article and of

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Sections 34-83 to 34-85, inclusive, of "The School Code",
approved March 18, 1961, as amended, and thereupon become
contributors to the Fund in accordance with the terms thereof.
The provisions of this Article and of those Sections shall
become a part of the contract of employment.
(d) A person who (i) was a member before July 1, 1998, (ii)
retires with more than 34 years of creditable service, and
(iii) does not elect to qualify for the augmented rate under
Section 17-119.1 shall be entitled, at the time of retirement,
to receive a partial refund of contributions made under this
Section for service occurring after the later of June 30, 1998
or attainment of 34 years of creditable service, in an amount
equal to 1.00% of the salary upon which those contributions
were based.
(Source: P.A. 97-8, eff. 6-13-11.)
(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

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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 2018 through 2045, the minimum
contribution to the System to be made by the State for each
fiscal year shall be an amount determined by the System to be
sufficient to bring the total assets of the System up to 90% of
the total actuarial liabilities of the System by the end of
State fiscal year 2045. In making these determinations, the
required State contribution shall be calculated each year as a
level percentage of total payroll, including payroll that is
not deemed pensionable, over the years remaining to and
including fiscal year 2045 and shall be determined under the
projected unit credit actuarial cost method.
Beginning in State fiscal year 2018, any increase or
decrease in State contribution over the prior fiscal year due
exclusively to changes in actuarial or investment assumptions
adopted by the Board shall be included in the State
contribution to the System, as a percentage of the applicable
employee payroll, and shall be increased in equal annual
increments so that by the State fiscal year occurring 5 years
after the adoption of the actuarial or investment assumptions,
the State is contributing at the rate otherwise required under
this Section.
For State fiscal years 2012 through 2017 2045, the minimum
contribution to the System to be made by the State for each

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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 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
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

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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 2046, the minimum State
contribution for each fiscal year shall be the amount needed to
maintain the total assets of the System at 90% of the total
actuarial liabilities of the System.
Amounts received by the System pursuant to Section 25 of
the Budget Stabilization Act or Section 8.12 of the State

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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
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

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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
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.

HB4045 Engrossed - 298 - LRB100 12674 RPS 26063 b
7-13-12.)
(40 ILCS 5/18-140) (from Ch. 108 1/2, par. 18-140)
Sec. 18-140. To certify required State contributions and
submit vouchers.
(a) The Board shall certify to the Governor, on or before
November 15 of each year until November 15, 2011, the amount of
the required State contribution to the System for the following
fiscal year and shall specifically identify the System's
projected State normal cost for that 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.
On or before November 1 of each year, beginning November 1,
2012, the Board shall submit to the State Actuary, the
Governor, and the General Assembly a proposed certification of
the amount of the required State contribution to the System for
the next fiscal year, along with all of the actuarial
assumptions, calculations, and data upon which that proposed
certification is based. On or before January 1 of each year
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

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January 15, 2013 and every January 15 thereafter, the Board
shall certify to the Governor and the General Assembly the
amount of the required State contribution for the next fiscal
year. The Board's certification must note any deviations from
the State Actuary's recommended changes, the reason or reasons
for not following the State Actuary's recommended changes, and
the fiscal impact of not following the State Actuary's
recommended changes on the required State contribution.
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.
As soon as practical after the effective date of this

HB4045 Engrossed - 300 - LRB100 12674 RPS 26063 b
amendatory Act of the 100th General Assembly, the Board shall
recalculate and recertify to the State Actuary, the Governor,
and the General Assembly the amount of the State contribution
to the System for State fiscal year 2018, taking into account
the changes in required State contributions made by this
amendatory Act of the 100th General Assembly. The State Actuary
shall review the assumptions and valuations underlying the
Board's revised certification and issue a preliminary report
concerning the proposed recertification and identifying, if
necessary, recommended changes in actuarial assumptions that
the Board must consider before finalizing its certification of
the required State contributions. The Board's final
certification must note any deviations from the State Actuary's
recommended changes, the reason or reasons for not following
the State Actuary's recommended changes, and the fiscal impact
of not following the State Actuary's recommended changes on the
required State contribution.
(b) Beginning in State fiscal year 1996, 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 one-twelfth of the
required annual State contribution certified under subsection
(a). 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

HB4045 Engrossed - 301 - LRB100 12674 RPS 26063 b
determined under this Section after taking into consideration
the transfer to the System under subsection (c) 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 Section, the difference
shall be paid from the General Revenue Fund under the
continuing appropriation authority provided in Section 1.1 of
the State Pension Funds Continuing Appropriation Act.
(Source: P.A. 96-1497, eff. 1-14-11; 96-1511, eff. 1-27-11;
97-694, eff. 6-18-12.)
(40 ILCS 5/20-121) (from Ch. 108 1/2, par. 20-121)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 20-121. Calculation of proportional retirement
annuities.
(a) Upon retirement of the employee, a proportional
retirement annuity shall be computed by each participating
system in which pension credit has been established on the
basis of pension credits under each system. The computation

HB4045 Engrossed - 302 - LRB100 12674 RPS 26063 b
shall be in accordance with the formula or method prescribed by
each participating system which is in effect at the date of the
employee's latest withdrawal from service covered by any of the
systems in which he has pension credits which he elects to have
considered under this Article. However, the amount of any
retirement annuity payable under the self-managed plan
established under Section 15-158.2 of this Code or under the
defined contribution plan established under Article 2, 14, 15,
or 16 of this Code depends solely on the value of the
participant's vested account balances and is not subject to any
proportional adjustment under this Section.
(a-5) For persons who participate in a defined contribution
plan established under Article 2, 14, 15, or 16 of this Code to
whom the provisions of this Article apply, the pension credits
established under the defined contribution plan may be
considered in determining eligibility for or the amount of the
defined benefit retirement annuity that is payable by any other
participating system.
(b) Combined pension credit under all retirement systems
subject to this Article shall be considered in determining
whether the minimum qualification has been met and the formula
or method of computation which shall be applied, except as may
be otherwise provided with respect to vesting in State or
employer contributions in a defined contribution plan. If a
system has a step-rate formula for calculation of the
retirement annuity, pension credits covering previous service

HB4045 Engrossed - 303 - LRB100 12674 RPS 26063 b
which have been established under another system shall be
considered in determining which range or ranges of the
step-rate formula are to be applicable to the employee.
(c) Interest on pension credit shall continue to accumulate
in accordance with the provisions of the law governing the
retirement system in which the same has been established during
the time an employee is in the service of another employer, on
the assumption such employee, for interest purposes for pension
credit, is continuing in the service covered by such retirement
system.
(Source: P.A. 91-887, eff. 7-6-00.)
(40 ILCS 5/20-123) (from Ch. 108 1/2, par. 20-123)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 20-123. Survivor's annuity. The provisions governing
a retirement annuity shall be applicable to a survivor's
annuity. Appropriate credits shall be established for
survivor's annuity purposes in those participating systems
which provide survivor's annuities, according to the same
conditions and subject to the same limitations and restrictions
herein prescribed for a retirement annuity. If a participating
system has no survivor's annuity benefit, or if the survivor's
annuity benefit under that system is waived, pension credit
established in that system shall not be considered in
determining eligibility for or the amount of the survivor's

HB4045 Engrossed - 304 - LRB100 12674 RPS 26063 b
annuity which may be payable by any other participating system.
For persons who participate in the self-managed plan
established under Section 15-158.2 or the portable benefit
package established under Section 15-136.4, pension credit
established under Article 15 may be considered in determining
eligibility for or the amount of the survivor's annuity that is
payable by any other participating system, but pension credit
established in any other system shall not result in any right
to a survivor's annuity under the Article 15 system.
For persons who participate in a defined contribution plan
established under Article 2, 14, 15, or 16 of this Code to whom
the provisions of this Article apply, the pension credits
established under the defined contribution plan may be
considered in determining eligibility for or the amount of the
defined benefit survivor's annuity that is payable by any other
participating system, but pension credits established in any
other system shall not result in any right to or increase in
the value of a survivor's annuity under the defined
contribution plan, which depends solely on the options chosen
and the value of the participant's vested account balances and
is not subject to any proportional adjustment under this
Section.
(Source: P.A. 91-887, eff. 7-6-00.)
(40 ILCS 5/20-124) (from Ch. 108 1/2, par. 20-124)
(Text of Section WITHOUT the changes made by P.A. 98-599,

HB4045 Engrossed - 305 - LRB100 12674 RPS 26063 b
which has been held unconstitutional)
Sec. 20-124. Maximum benefits.
(a) In no event shall the combined retirement or survivors
annuities exceed the highest annuity which would have been
payable by any participating system in which the employee has
pension credits, if all of his pension credits had been
validated in that system.
If the combined annuities should exceed the highest maximum
as determined in accordance with this Section, the respective
annuities shall be reduced proportionately according to the
ratio which the amount of each proportional annuity bears to
the aggregate of all such annuities.
(b) In the case of a participant in the self-managed plan
established under Section 15-158.2 of this Code to whom the
provisions of this Article apply:
(i) For purposes of calculating the combined
retirement annuity and the proportionate reduction, if
any, in a retirement annuity other than one payable under
the self-managed plan, the amount of the Article 15
retirement annuity shall be deemed to be the highest
annuity to which the annuitant would have been entitled if
he or she had participated in the traditional benefit
package as defined in Section 15-103.1 rather than the
self-managed plan.
(ii) For purposes of calculating the combined
survivor's annuity and the proportionate reduction, if

HB4045 Engrossed - 306 - LRB100 12674 RPS 26063 b
any, in a survivor's annuity other than one payable under
the self-managed plan, the amount of the Article 15
survivor's annuity shall be deemed to be the highest
survivor's annuity to which the survivor would have been
entitled if the deceased employee had participated in the
traditional benefit package as defined in Section 15-103.1
rather than the self-managed plan.
(iii) Benefits payable under the self-managed plan are
not subject to proportionate reduction under this Section.
(c) In the case of a participant in a defined contribution
plan established under Article 2, 14, 15, or 16 of this Code to
whom the provisions of this Article apply:
(i) For purposes of calculating the combined
retirement annuity and the proportionate reduction, if
any, in a defined benefit retirement annuity, any benefit
payable under the defined contribution plan shall not be
considered.
(ii) For purposes of calculating the combined
survivor's annuity and the proportionate reduction, if
any, in a defined benefit survivor's annuity, any benefit
payable under the defined contribution plan shall not be
considered.
(iii) Benefits payable under a defined contribution
plan established under Article 2, 14, 15, or 16 of this
Code are not subject to proportionate reduction under this
Section.

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(Source: P.A. 91-887, eff. 7-6-00.)
(40 ILCS 5/20-125) (from Ch. 108 1/2, par. 20-125)
(Text of Section WITHOUT the changes made by P.A. 98-599,
which has been held unconstitutional)
Sec. 20-125. Return to employment - suspension of benefits.
If a retired employee returns to employment which is covered by
a system from which he is receiving a proportional annuity
under this Article, his proportional annuity from all
participating systems shall be suspended during the period of
re-employment, except that this suspension does not apply to
any distributions payable under the self-managed plan
established under Section 15-158.2 or under a defined
contribution plan established under Article 2, 14, 15, or 16 of
this Code.
The provisions of the Article under which such employment
would be covered shall govern the determination of whether the
employee has returned to employment, and if applicable the
exemption of temporary employment or employment not exceeding a
specified duration or frequency, for all participating systems
from which the retired employee is receiving a proportional
annuity under this Article, notwithstanding any contrary
provisions in the other Articles governing such systems.
(Source: P.A. 91-887, eff. 7-6-00.)
(40 ILCS 5/2-165 rep.)

HB4045 Engrossed - 308 - LRB100 12674 RPS 26063 b
(40 ILCS 5/2-166 rep.)
(40 ILCS 5/14-155 rep.)
(40 ILCS 5/14-156 rep.)
(40 ILCS 5/15-200 rep.)
(40 ILCS 5/15-201 rep.)
(40 ILCS 5/16-205 rep.)
(40 ILCS 5/16-206 rep.)
Section 50. The Illinois Pension Code is amended by
repealing Sections 2-165, 2-166, 14-155, 14-156, 15-200,
15-201, 16-205, and 16-206.
Section 55. The State Pension Funds Continuing
Appropriation Act is amended by changing Section 1.1 and adding
Section 1.9 as follows:
(40 ILCS 15/1.1)
Sec. 1.1. Appropriations to certain retirement systems.
(a) There is hereby appropriated from the General Revenue
Fund to the General Assembly Retirement System, on a continuing
monthly basis, the amount, if any, by which the total available
amount of all other appropriations to that retirement system
for the payment of State contributions is less than the total
amount of the vouchers for required State contributions
lawfully submitted by the retirement system for that month
under Section 2-134 of the Illinois Pension Code.
(b) There is hereby appropriated from the General Revenue

HB4045 Engrossed - 309 - LRB100 12674 RPS 26063 b
Fund to the State Universities Retirement System, on a
continuing monthly basis, the amount, if any, by which the
total available amount of all other appropriations to that
retirement system for the payment of State contributions,
including any deficiency in the required contributions of the
optional retirement program established under Section 15-158.2
of the Illinois Pension Code, is less than the total amount of
the vouchers for required State contributions lawfully
submitted by the retirement system for that month under Section
15-165 of the Illinois Pension Code.
(c) There is hereby appropriated from the Common School
Fund to the Teachers' Retirement System of the State of
Illinois, on a continuing monthly basis, the amount, if any, by
which the total available amount of all other appropriations to
that retirement system for the payment of State contributions
is less than the total amount of the vouchers for required
State contributions lawfully submitted by the retirement
system for that month under Section 16-158 of the Illinois
Pension Code.
(d) There is hereby appropriated from the General Revenue
Fund to the Judges Retirement System of Illinois, on a
continuing monthly basis, the amount, if any, by which the
total available amount of all other appropriations to that
retirement system for the payment of State contributions is
less than the total amount of the vouchers for required State
contributions lawfully submitted by the retirement system for

HB4045 Engrossed - 310 - LRB100 12674 RPS 26063 b
that month under Section 18-140 of the Illinois Pension Code.
(e) The continuing appropriations provided by subsections
(a), (b), (c), and (d) of this Section shall first be available
in State fiscal year 1996. The continuing appropriations
provided by subsection (h) of this Section shall first be
available as provided in that subsection (h).
(f) For State fiscal year 2010 only, the continuing
appropriations provided by this Section are equal to the amount
certified by each System on or before December 31, 2008, less
(i) the gross proceeds of the bonds sold in fiscal year 2010
under the authorization contained in subsection (a) of Section
7.2 of the General Obligation Bond Act and (ii) any amounts
received from the State Pensions Fund.
(g) For State fiscal year 2011 only, the continuing
appropriations provided by this Section are equal to the amount
certified by each System on or before April 1, 2011, less (i)
the gross proceeds of the bonds sold in fiscal year 2011 under
the authorization contained in subsection (a) of Section 7.2 of
the General Obligation Bond Act and (ii) any amounts received
from the State Pensions Fund.
(h) For State fiscal year 2017, there is hereby
appropriated from the Common School Fund to the Public School
Teachers' Pension and Retirement Fund of Chicago the amount, if
any, by which the total available amount of all other State
appropriations to that Retirement Fund for the payment of State
contributions under subsection (d) of Section 17-127 of the

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Illinois Pension Code is less than the total amount of required
State contributions under subsection (d) of Section 17-127.
(Source: P.A. 96-43, eff. 7-15-09; 96-1497, eff. 1-14-11;
96-1511, eff. 1-27-11.)
(40 ILCS 15/1.9 new)
Sec. 1.9. Appropriation for consideration payment. There
is hereby appropriated from the General Revenue Fund to the
State Comptroller, on a continuing basis, all amounts necessary
for the payment of consideration payments under subsection (b)
of Sections 2-110.3, 14-106.5, 15-132.9, 16-122.9, and
17-115.5 of the Illinois Pension Code, in the amounts certified
to the State Comptroller by the respective retirement system or
pension fund.
Section 60. The School Code is amended by changing Sections
24-1 and 24-8 and by adding Section 34-18.53 as follows:
(105 ILCS 5/24-1) (from Ch. 122, par. 24-1)
Sec. 24-1. Appointment-Salaries-Payment-School
month-School term.) School boards shall appoint all teachers,
determine qualifications of employment and fix the amount of
their salaries subject to any limitation set forth in this Act
and subject to any applicable restrictions in Section 16-122.9
of the Illinois Pension Code. They shall pay the wages of
teachers monthly, subject, however, to the provisions of

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Section 24-21. The school month shall be the same as the
calendar month but by resolution the school board may adopt for
its use a month of 20 days, including holidays. The school term
shall consist of at least the minimum number of pupil
attendance days required by Section 10-19, any additional legal
school holidays, days of teachers' institutes, or equivalent
professional educational experiences, and one or two days at
the beginning of the school term when used as a teachers'
workshop.
(Source: P.A. 80-249.)
(105 ILCS 5/24-8) (from Ch. 122, par. 24-8)
Sec. 24-8. Minimum salary. In fixing the salaries of
teachers, school boards shall pay those who serve on a
full-time basis not less than a rate for the school year that
is based upon training completed in a recognized institution of
higher learning, as follows: for the school year beginning July
1, 1980 and thereafter, less than a bachelor's degree, $9,000;
120 semester hours or more and a bachelor's degree, $10,000;
150 semester hours or more and a master's degree, $11,000.
Based upon previous public school experience in this State
or any other State, territory, dependency or possession of the
United States, or in schools operated by or under the auspices
of the United States, teachers who serve on a full-time basis
shall have their salaries increased to at least the following
amounts above the starting salary for a teacher in such

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district in the same classification: with less than a
bachelor's degree, $750 after 5 years; with 120 semester hours
or more and a bachelor's degree, $1,000 after 5 years and
$1,600 after 8 years; with 150 semester hours or more and a
master's degree, $1,250 after 5 years, $2,000 after 8 years and
$2,750 after 13 years. However, any salary increase is subject
to any applicable restrictions in Section 16-122.9 of the
Illinois Pension Code.
For the purpose of this Section a teacher's salary shall
include any amount paid by the school district on behalf of the
teacher, as teacher contributions, to the Teachers' Retirement
System of the State of Illinois.
If a school board establishes a schedule for teachers'
salaries based on education and experience, not inconsistent
with this Section, all certificated nurses employed by that
board shall be paid in accordance with the provisions of such
schedule (subject to any applicable restrictions in Section
16-122.9 of the Illinois Pension Code).
For purposes of this Section, a teacher who submits a
certificate of completion to the school office prior to the
first day of the school term shall be considered to have the
degree stated in such certificate.
(Source: P.A. 83-913.)
(105 ILCS 5/34-18.53 new)
Sec. 34-18.53. Future increase in income. The Board of

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Education must not pay, offer, or agree to pay any future
increase in income, as that term is defined in Section 17-113.5
of the Illinois Pension Code, to any person in a manner that
violates Section 17-115.5 of the Illinois Pension Code.
Section 65. The State Universities Civil Service Act is
amended by changing Section 36d as follows:
(110 ILCS 70/36d) (from Ch. 24 1/2, par. 38b3)
Sec. 36d. Powers and duties of the Merit Board. The Merit
Board shall have the power and duty-
(1) To approve a classification plan prepared under its
direction, assigning to each class positions of
substantially similar duties. The Merit Board shall have
power to delegate to its Director the duty of assigning
each position in the classified service to the appropriate
class in the classification plan approved by the Merit
Board.
(2) To prescribe the duties of each class of positions
and the qualifications required by employment in that
class.
(3) To prescribe the range of compensation for each
class or to fix a single rate of compensation for employees
in a particular class; and to establish other conditions of
employment which an employer and employee representatives
have agreed upon as fair and equitable. The Merit Board

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shall direct the payment of the "prevailing rate of wages"
in those classifications in which, on January 1, 1952, any
employer is paying such prevailing rate and in such other
classes as the Merit Board may thereafter determine.
"Prevailing rate of wages" as used herein shall be the
wages paid generally in the locality in which the work is
being performed to employees engaged in work of a similar
character. Subject to any applicable restrictions in
Section 14-106.5, 15-132.9, or 16-122.9 of the Illinois
Pension Code, each Each employer covered by the University
System shall be authorized to negotiate with
representatives of employees to determine appropriate
ranges or rates of compensation or other conditions of
employment and may recommend to the Merit Board for
establishment the rates or ranges or other conditions of
employment which the employer and employee representatives
have agreed upon as fair and equitable, but excluding the
changes, the impact of changes, and the implementation of
the changes set forth in this amendatory Act of the 100th
General Assembly. Any rates or ranges established prior to
January 1, 1952, and hereafter, shall not be changed except
in accordance with the procedures herein provided.
(4) To recommend to the institutions and agencies
specified in Section 36e standards for hours of work,
holidays, sick leave, overtime compensation and vacation
for the purpose of improving conditions of employment

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covered therein and for the purpose of insuring conformity
with the prevailing rate principal.
(5) To prescribe standards of examination for each
class, the examinations to be related to the duties of such
class. The Merit Board shall have power to delegate to the
Director and his staff the preparation, conduct and grading
of examinations. Examinations may be written, oral, by
statement of training and experience, in the form of tests
of knowledge, skill, capacity, intellect, aptitude; or, by
any other method, which in the judgment of the Merit Board
is reasonable and practical for any particular
classification. Different examining procedures may be
determined for the examinations in different
classifications but all examinations in the same
classification shall be uniform.
(6) To authorize the continuous recruitment of
personnel and to that end, to delegate to the Director and
his staff the power and the duty to conduct open and
continuous competitive examinations for all
classifications of employment.
(7) To cause to be established from the results of
examinations registers for each class of positions in the
classified service of the State Universities Civil Service
System, of the persons who shall attain the minimum mark
fixed by the Merit Board for the examination; and such
persons shall take rank upon the registers as candidates in

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the order of their relative excellence as determined by
examination, without reference to priority of time of
examination.
(8) To provide by its rules for promotions in the
classified service. Vacancies shall be filled by promotion
whenever practicable. For the purpose of this paragraph, an
advancement in class shall constitute a promotion.
(9) To set a probationary period of employment of no
less than 6 months and no longer than 12 months for each
class of positions in the classification plan, the length
of the probationary period for each class to be determined
by the Director.
(10) To provide by its rules for employment at regular
rates of compensation of persons with physical
disabilities in positions in which the disability does not
prevent the individual from furnishing satisfactory
service.
(11) To make and publish rules, to carry out the
purpose of the State Universities Civil Service System and
for examination, appointments, transfers and removals and
for maintaining and keeping records of the efficiency of
officers and employees and groups of officers and employees
in accordance with the provisions of Sections 36b to 36q,
inclusive, and said Merit Board may from time to time make
changes in such rules.
(12) To appoint a Director and such assistants and

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other clerical and technical help as may be necessary
efficiently to administer Sections 36b to 36q, inclusive.
To authorize the Director to appoint an assistant resident
at the place of employment of each employer specified in
Section 36e and this assistant may be authorized to give
examinations and to certify names from the regional
registers provided in Section 36k.
(13) To submit to the Governor of this state on or
before November 1 of each year prior to the regular session
of the General Assembly a report of the University System's
business and an estimate of the amount of appropriation
from state funds required for the purpose of administering
the University System.
(Source: P.A. 99-143, eff. 7-27-15.)
Section 70. The University of Illinois Act is amended by
adding Section 100 as follows:
(110 ILCS 305/100 new)
Sec. 100. Future increases in income. The University of
Illinois must not pay, offer, or agree to pay any future
increase in income, as that term is defined in Section
14-103.42, 15-112.1, or 16-121.1 of the Illinois Pension Code,
to any person in a manner that violates Section 14-106.5,
15-132.9, or 16-122.9 of the Illinois Pension Code.

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Section 75. The Southern Illinois University Management
Act is amended by adding Section 85 as follows:
(110 ILCS 520/85 new)
Sec. 85. Future increases in income. Southern Illinois
University must not pay, offer, or agree to pay any future
increase in income, as that term is defined in Section
14-103.42, 15-112.1, or 16-121.1 of the Illinois Pension Code,
to any person in a manner that violates Section 14-106.5,
15-132.9, or 16-122.9 of the Illinois Pension Code.
Section 80. The Chicago State University Law is amended by
adding Section 5-195 as follows:
(110 ILCS 660/5-195 new)
Sec. 5-195. Future increases in income. Chicago State
University must not pay, offer, or agree to pay any future
increase in income, as that term is defined in Section
14-103.42, 15-112.1, or 16-121.1 of the Illinois Pension Code,
to any person in a manner that violates Section 14-106.5,
15-132.9, or 16-122.9 of the Illinois Pension Code.
Section 85. The Eastern Illinois University Law is amended
by adding Section 10-195 as follows:
(110 ILCS 665/10-195 new)

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Sec. 10-195. Future increases in income. Eastern Illinois
University must not pay, offer, or agree to pay any future
increase in income, as that term is defined in Section
14-103.42, 15-112.1, or 16-121.1 of the Illinois Pension Code,
to any person in a manner that violates Section 14-106.5,
15-132.9, or 16-122.9 of the Illinois Pension Code.
Section 90. The Governors State University Law is amended
by adding Section 15-195 as follows:
(110 ILCS 670/15-195 new)
Sec. 15-195. Future increases in income. Governors State
University must not pay, offer, or agree to pay any future
increase in income, as that term is defined in Section
14-103.42, 15-112.1, or 16-121.1 of the Illinois Pension Code,
to any person in a manner that violates Section 14-106.5,
15-132.9, or 16-122.9 of the Illinois Pension Code.
Section 95. The Illinois State University Law is amended by
adding Section 20-200 as follows:
(110 ILCS 675/20-200 new)
Sec. 20-200. Future increases in income. Illinois State
University must not pay, offer, or agree to pay any future
increase in income, as that term is defined in Section
14-103.42, 15-112.1, or 16-121.1 of the Illinois Pension Code,

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to any person in a manner that violates Section 14-106.5,
15-132.9, or 16-122.9 of the Illinois Pension Code.
Section 100. The Northeastern Illinois University Law is
amended by adding Section 25-195 as follows:
(110 ILCS 680/25-195 new)
Sec. 25-195. Future increases in income. Northeastern
Illinois University must not pay, offer, or agree to pay any
future increase in income, as that term is defined in Section
14-103.42, 15-112.1, or 16-121.1 of the Illinois Pension Code,
to any person in a manner that violates Section 14-106.5,
15-132.9, or 16-122.9 of the Illinois Pension Code.
Section 105. The Northern Illinois University Law is
amended by adding Section 30-205 as follows:
(110 ILCS 685/30-205 new)
Sec. 30-205. Future increases in income. Northern Illinois
University must not pay, offer, or agree to pay any future
increase in income, as that term is defined in Section
14-103.42, 15-112.1, or 16-121.1 of the Illinois Pension Code,
to any person in a manner that violates Section 14-106.5,
15-132.9, or 16-122.9 of the Illinois Pension Code.
Section 110. The Western Illinois University Law is amended

HB4045 Engrossed - 322 - LRB100 12674 RPS 26063 b
by adding Section 35-200 as follows:
(110 ILCS 690/35-200 new)
Sec. 35-200. Future increases in income. Western Illinois
University must not pay, offer, or agree to pay any future
increase in income, as that term is defined in Section
14-103.42, 15-112.1, or 16-121.1 of the Illinois Pension Code,
to any person in a manner that violates Section 14-106.5,
15-132.9, or 16-122.9 of the Illinois Pension Code.
Section 115. The Public Community College Act is amended by
changing Sections 3-26 and 3-42 as follows:
(110 ILCS 805/3-26) (from Ch. 122, par. 103-26)
Sec. 3-26. (a) To make appointments and fix the salaries of
a chief administrative officer, who shall be the executive
officer of the board, other administrative personnel, and all
teachers, but subject to any applicable restrictions in Section
14-106.5, 15-132.9, or 16-122.9 of the Illinois Pension Code.
In making these appointments and fixing the salaries, the board
may make no discrimination on account of sex, race, creed,
color or national origin.
(b) Upon the written request of an employee, to withhold
from the compensation of that employee the membership dues of
such employee payable to any specified labor organization as
defined in the Illinois Educational Labor Relations Act. Under

HB4045 Engrossed - 323 - LRB100 12674 RPS 26063 b
such arrangement, an amount shall be withheld for each regular
payroll period which is equal to the prorata share of the
annual membership dues plus any payments or contributions and
the board shall pay such withholding to the specified labor
organization within 10 working days from the time of the
withholding.
(Source: P.A. 83-1014.)
(110 ILCS 805/3-42) (from Ch. 122, par. 103-42)
Sec. 3-42. To employ such personnel as may be needed, to
establish policies governing their employment and dismissal,
and to fix the amount of their compensation, subject to any
applicable restrictions in Section 14-106.5, 15-132.9, or
16-122.9 of the Illinois Pension Code. In the employment,
establishment of policies and fixing of compensation the board
may make no discrimination on account of sex, race, creed,
color or national origin.
Residence within any community college district or outside
any community college district shall not be considered:
(a) in determining whether to retain or not retain any
employee of a community college employed prior to July 1,
1977 or prior to the adoption by the community college
board of a resolution making residency within the community
college district of some or all employees a condition of
employment, whichever is later;
(b) in assigning, promoting or transferring any

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employee of a community college to an office or position
employed prior to July 1, 1977 or prior to the adoption by
the community college board of a resolution making
residency within the community college district of some or
all employees a condition of employment, whichever is
later; or
(c) in determining the salary or other compensation of
any employee of a community college.
(Source: P.A. 80-248.)
Section 120. The Illinois Educational Labor Relations Act
is amended by changing Sections 4, 14, and 17 and by adding
Section 10.6 as follows:
(115 ILCS 5/4) (from Ch. 48, par. 1704)
Sec. 4. Employer rights. Employers shall not be required to
bargain over matters of inherent managerial policy, which shall
include such areas of discretion or policy as the functions of
the employer, standards of services, its overall budget, the
organizational structure and selection of new employees and
direction of employees. Employers, however, shall be required
to bargain collectively with regard to policy matters directly
affecting wages (but subject to any applicable restrictions in
Section 14-106.5, 15-132.9, 16-122.9, or 17-115.5 of the
Illinois Pension Code), hours and terms and conditions of
employment as well as the impact thereon upon request by

HB4045 Engrossed - 325 - LRB100 12674 RPS 26063 b
employee representatives, but excluding the changes, the
impact of changes, and the implementation of the changes set
forth in Section 14-106.5, 15-132.9, 16-122.9, or 17-115.5 of
the Illinois Pension Code. To preserve the rights of employers
and exclusive representatives which have established
collective bargaining relationships or negotiated collective
bargaining agreements prior to the effective date of this Act,
employers shall be required to bargain collectively with regard
to any matter concerning wages (but subject to any applicable
restrictions in Section 14-106.5, 15-132.9, 16-122.9, or
17-115.5 of the Illinois Pension Code), hours or conditions of
employment about which they have bargained for and agreed to in
a collective bargaining agreement prior to the effective date
of this Act, but excluding the changes, the impact of changes,
and the implementation of the changes set forth in Section
14-106.5, 15-132.9, 16-122.9, or 17-115.5 of the Illinois
Pension Code.
(Source: P.A. 83-1014.)
(115 ILCS 5/10.6 new)
Sec. 10.6. No collective bargaining or interest
arbitration regarding certain changes to the Illinois Pension
Code.
(a) Notwithstanding any other provision of this Act,
employers shall not be required to bargain over matters
affected by the changes, the impact of the changes, and the

HB4045 Engrossed - 326 - LRB100 12674 RPS 26063 b
implementation of the changes to Article 14, 15, 16, or 17 of
the Illinois Pension Code made by the addition of Section
14-106.5, 15-132.9, 16-122.9, or 17-115.5 of the Illinois
Pension Code, which are deemed to be prohibited subjects of
bargaining. Notwithstanding any provision of this Act, the
changes, impact of the changes, or implementation of the
changes to Article 14, 15, 16, or 17 of the Illinois Pension
Code made by the addition of Section 14-106.5, 15-132.9,
16-122.9, or 17-115.5 of the Illinois Pension Code shall not be
subject to interest arbitration or any award issued pursuant to
interest arbitration. The provisions of this Section shall not
apply to an employment contract or collective bargaining
agreement that is in effect on the effective date of this
amendatory Act of the 100th General Assembly. However, any such
contract or agreement that is modified, amended, renewed, or
superseded after the effective date of this amendatory Act of
the 100th General Assembly shall be subject to the provisions
of this Section. The provisions of this Section shall not apply
to the ability of any employer and employee representative to
bargain collectively with regard to the pick up of employee
contributions pursuant to Section 14-133.1, 15-157.1,
16-152.1, 17-130.1, or 17-130.2 of the Illinois Pension Code.
(b) Nothing in this Section shall be construed as otherwise
limiting any of the obligations and requirements applicable to
employers under any of the provisions of this Act, including,
but not limited to, the requirement to bargain collectively

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with regard to policy matters directly affecting wages, hours,
and terms and conditions of employment as well as the impact
thereon upon request by employee representatives, except for
the matters set forth in subsection (a) of this Section that
are deemed prohibited subjects of bargaining. Nothing in this
Section shall be construed as otherwise limiting any of the
rights of employees or employee representatives under the
provisions of this Act, except for the matters set forth in
subsection (a) of this Section that are deemed prohibited
subjects of bargaining.
(c) In case of any conflict between this Section and any
other provisions of this Act or any other law, the provisions
of this Section shall control.
(115 ILCS 5/14) (from Ch. 48, par. 1714)
Sec. 14. Unfair labor practices.
(a) Educational employers, their agents or representatives
are prohibited from:
(1) Interfering, restraining or coercing employees in
the exercise of the rights guaranteed under this Act.
(2) Dominating or interfering with the formation,
existence or administration of any employee organization.
(3) Discriminating in regard to hire or tenure of
employment or any term or condition of employment to
encourage or discourage membership in any employee
organization.

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(4) Discharging or otherwise discriminating against an
employee because he or she has signed or filed an
affidavit, authorization card, petition or complaint or
given any information or testimony under this Act.
(5) Subject to and except as provided in Section 10.6,
refusing Refusing to bargain collectively in good faith
with an employee representative which is the exclusive
representative of employees in an appropriate unit,
including but not limited to the discussing of grievances
with the exclusive representative; provided, however, that
if an alleged unfair labor practice involves
interpretation or application of the terms of a collective
bargaining agreement and said agreement contains a
grievance and arbitration procedure, the Board may defer
the resolution of such dispute to the grievance and
arbitration procedure contained in said agreement.
However, no actions of the employer taken to implement or
otherwise comply with the provisions of subsection (a) of
Section 10.6 shall constitute or give rise to an unfair
labor practice under this Act.
(6) Refusing to reduce a collective bargaining
agreement to writing and signing such agreement.
(7) Violating any of the rules and regulations
promulgated by the Board regulating the conduct of
representation elections.
(8) Refusing to comply with the provisions of a binding

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arbitration award.
(9) Expending or causing the expenditure of public
funds to any external agent, individual, firm, agency,
partnership or association in any attempt to influence the
outcome of representational elections held pursuant to
paragraph (c) of Section 7 of this Act; provided, that
nothing in this subsection shall be construed to limit an
employer's right to be represented on any matter pertaining
to unit determinations, unfair labor practice charges or
pre-election conferences in any formal or informal
proceeding before the Board, or to seek or obtain advice
from legal counsel. Nothing in this paragraph shall be
construed to prohibit an employer from expending or causing
the expenditure of public funds on, or seeking or obtaining
services or advice from, any organization, group or
association established by, and including educational or
public employers, whether or not covered by this Act, the
Illinois Public Labor Relations Act or the public
employment labor relations law of any other state or the
federal government, provided that such services or advice
are generally available to the membership of the
organization, group, or association, and are not offered
solely in an attempt to influence the outcome of a
particular representational election.
(b) Employee organizations, their agents or
representatives or educational employees are prohibited from:

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(1) Restraining or coercing employees in the exercise
of the rights guaranteed under this Act, provided that a
labor organization or its agents shall commit an unfair
labor practice under this paragraph in duty of fair
representation cases only by intentional misconduct in
representing employees under this Act.
(2) Restraining or coercing an educational employer in
the selection of his representative for the purposes of
collective bargaining or the adjustment of grievances.
(3) Refusing to bargain collectively in good faith with
an educational employer, if they have been designated in
accordance with the provisions of this Act as the exclusive
representative of employees in an appropriate unit.
(4) Violating any of the rules and regulations
promulgated by the Board regulating the conduct of
representation elections.
(5) Refusing to reduce a collective bargaining
agreement to writing and signing such agreement.
(6) Refusing to comply with the provisions of a binding
arbitration award.
(c) The expressing of any views, argument, opinion or the
dissemination thereof, whether in written, printed, graphic or
visual form, shall not constitute or be evidence of an unfair
labor practice under any of the provisions of this Act, if such
expression contains no threat of reprisal or force or promise
of benefit.

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(d) The actions of a Financial Oversight Panel created
pursuant to Section 1A-8 of the School Code due to a district
violating a financial plan shall not constitute or be evidence
of an unfair labor practice under any of the provisions of this
Act. Such actions include, but are not limited to, reviewing,
approving, or rejecting a school district budget or a
collective bargaining agreement.
(Source: P.A. 89-572, eff. 7-30-96.)
(115 ILCS 5/17) (from Ch. 48, par. 1717)
Sec. 17. Effect on other laws. In case of any conflict
between the provisions of this Act and any other law (other
than Section 14-106.5, 15-132.9, 16-122.9, or 17-115.5 of the
Illinois Pension Code), executive order or administrative
regulation, the provisions of this Act shall prevail and
control. The provisions of this Act are subject to any
applicable restrictions in Section 14-106.5, 15-132.9,
16-122.9, or 17-115.5 of the Illinois Pension Code, as well as
the changes, impact of changes, and implementation of changes
set forth in Section 14-106.5, 15-132.9, 16-122.9, or 17-115.5
of the Illinois Pension Code. Nothing in this Act shall be
construed to replace or diminish the rights of employees
established by Section 36d of "An Act to create the State
Universities Civil Service System", approved May 11, 1905, as
amended or modified.
(Source: P.A. 83-1014.)

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Section 900. The State Mandates Act is amended by adding
Section 8.41 as follows:
(30 ILCS 805/8.41 new)
Sec. 8.41. Exempt mandate. Notwithstanding Sections 6 and 8
of this Act, no reimbursement by the State is required for the
implementation of any mandate created by this amendatory Act of
the 100th General Assembly.
Section 970. Severability. Except as otherwise provided in
this Act, the provisions of this Act are severable under
Section 1.31 of the Statute on Statutes.
Section 999. Effective date. This Act takes effect upon
becoming law.
HB4045 Engrossed - 333 - LRB100 12674 RPS 26063 b
INDEX
Statutes amended in order of appearance
5 ILCS 315/7.6 new
5 ILCS 315/10 from Ch. 48, par. 1610
5 ILCS 315/15 from Ch. 48, par. 1615
5 ILCS 375/3 from Ch. 127, par. 523
5 ILCS 375/10 from Ch. 127, par. 530
15 ILCS 205/5 new
15 ILCS 310/13a new
15 ILCS 410/13a new
15 ILCS 510/12a new
20 ILCS 5/5-647 new
30 ILCS 122/20
40 ILCS 5/1-160
40 ILCS 5/1-161 new
40 ILCS 5/1-162 new
40 ILCS 5/2-101 from Ch. 108 1/2, par. 2-101
40 ILCS 5/2-105 from Ch. 108 1/2, par. 2-105
40 ILCS 5/2-105.3 new
40 ILCS 5/2-107 from Ch. 108 1/2, par. 2-107
40 ILCS 5/2-107.9 new
40 ILCS 5/2-107.10 new
40 ILCS 5/2-108 from Ch. 108 1/2, par. 2-108
40 ILCS 5/2-110.3 new
40 ILCS 5/2-119.1 from Ch. 108 1/2, par. 2-119.1
HB4045 Engrossed - 334 - LRB100 12674 RPS 26063 b
40 ILCS 5/2-124 from Ch. 108 1/2, par. 2-124
40 ILCS 5/2-126 from Ch. 108 1/2, par. 2-126
40 ILCS 5/2-134 from Ch. 108 1/2, par. 2-134
40 ILCS 5/2-162
40 ILCS 5/2-165.1 new
40 ILCS 5/2-166.1 new
40 ILCS 5/14-103.10 from Ch. 108 1/2, par. 14-103.10
40 ILCS 5/14-103.41 new
40 ILCS 5/14-103.42 new
40 ILCS 5/14-103.43 new
40 ILCS 5/14-106.5 new
40 ILCS 5/14-114 from Ch. 108 1/2, par. 14-114
40 ILCS 5/14-131
40 ILCS 5/14-133 from Ch. 108 1/2, par. 14-133
40 ILCS 5/14-135.08 from Ch. 108 1/2, par. 14-135.08
40 ILCS 5/14-147.5 new
40 ILCS 5/14-152.1
40 ILCS 5/14-155.1 new
40 ILCS 5/14-155.2 new
40 ILCS 5/14-156.1 new
40 ILCS 5/15-108.1
40 ILCS 5/15-108.2
40 ILCS 5/15-111 from Ch. 108 1/2, par. 15-111
40 ILCS 5/15-112.1 new
40 ILCS 5/15-112.2 new
40 ILCS 5/15-132.9 new
HB4045 Engrossed - 335 - LRB100 12674 RPS 26063 b
40 ILCS 5/15-136 from Ch. 108 1/2, par. 15-136
40 ILCS 5/15-155 from Ch. 108 1/2, par. 15-155
40 ILCS 5/15-157 from Ch. 108 1/2, par. 15-157
40 ILCS 5/15-165 from Ch. 108 1/2, par. 15-165
40 ILCS 5/15-185.5 new
40 ILCS 5/15-198
40 ILCS 5/15-200.1 new
40 ILCS 5/15-201.1 new
40 ILCS 5/16-107.1 new
40 ILCS 5/16-121 from Ch. 108 1/2, par. 16-121
40 ILCS 5/16-121.1 new
40 ILCS 5/16-121.2 new
40 ILCS 5/16-122.9 new
40 ILCS 5/16-133.1 from Ch. 108 1/2, par. 16-133.1
40 ILCS 5/16-136.1 from Ch. 108 1/2, par. 16-136.1
40 ILCS 5/16-152 from Ch. 108 1/2, par. 16-152
40 ILCS 5/16-158 from Ch. 108 1/2, par. 16-158
40 ILCS 5/16-190.5 new
40 ILCS 5/16-203
40 ILCS 5/16-205.1 new
40 ILCS 5/16-206.1 new
40 ILCS 5/17-106.05 new
40 ILCS 5/17-113.4 new
40 ILCS 5/17-113.5 new
40 ILCS 5/17-113.6 new
40 ILCS 5/17-115.5 new
HB4045 Engrossed - 336 - LRB100 12674 RPS 26063 b
40 ILCS 5/17-116 from Ch. 108 1/2, par. 17-116
40 ILCS 5/17-119.2 new
40 ILCS 5/17-127 from Ch. 108 1/2, par. 17-127
40 ILCS 5/17-129 from Ch. 108 1/2, par. 17-129
40 ILCS 5/17-130 from Ch. 108 1/2, par. 17-130
40 ILCS 5/18-131 from Ch. 108 1/2, par. 18-131
40 ILCS 5/18-140 from Ch. 108 1/2, par. 18-140
40 ILCS 5/20-121 from Ch. 108 1/2, par. 20-121
40 ILCS 5/20-123 from Ch. 108 1/2, par. 20-123
40 ILCS 5/20-124 from Ch. 108 1/2, par. 20-124
40 ILCS 5/20-125 from Ch. 108 1/2, par. 20-125
40 ILCS 5/2-165 rep.
40 ILCS 5/2-166 rep.
40 ILCS 5/14-155 rep.
40 ILCS 5/14-156 rep.
40 ILCS 5/15-200 rep.
40 ILCS 5/15-201 rep.
40 ILCS 5/16-205 rep.
40 ILCS 5/16-206 rep.
40 ILCS 15/1.1
40 ILCS 15/1.9 new
105 ILCS 5/24-1 from Ch. 122, par. 24-1
105 ILCS 5/24-8 from Ch. 122, par. 24-8
105 ILCS 5/34-18.53 new
110 ILCS 70/36d from Ch. 24 1/2, par. 38b3
110 ILCS 305/100 new
HB4045 Engrossed - 337 - LRB100 12674 RPS 26063 b