Bill Text: IL SB2404 | 2013-2014 | 98th General Assembly | Engrossed

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Amends the Budget Stabilization Act. Provides for transfers from the General Revenue Fund to the Pension Stabilization Fund according to a specified schedule beginning in FY 2016 and continuing until FY 2045 or until the retirement funds have achieved a 100% funding ratio, whichever is earlier. Amends the General Assembly, State Employee, State Universities and Downstate Teacher Articles of the Illinois Pension Code. Changes the manner in which the annual required State contribution is calculated so that the affected systems are 100% funded by 2045. Provides that employee contributions to the retirement systems are increased an additional 1% on July 1, 2013 and 2% on July 1, 2014. Provides that the State is contractually obligated to each retirement plan participant and retiree to provide funding to the retirement systems according to the specified amortization schedule beginning in FY 2016 and continuing until FY 2045 or until the retirement funds have achieved a 100% funding ratio, whichever is earlier, in addition to the annual required State contribution certified by the Board for each fiscal year. Provides that each retirement system has the right to bring a mandamus action against the State to compel the State to make any installment of the annual required State contribution certified by the Board and the transfers required under the Budget Stabilization Act. Further provides that if a retirement system fails to bring a mandamus action against the State to compel the State to make any required installment, then any participant or retiree may bring such a mandamus action. Effective July 1, 2013.

Spectrum: Partisan Bill (Democrat 41-2)

Status: (Failed) 2015-01-13 - Session Sine Die [SB2404 Detail]

Download: Illinois-2013-SB2404-Engrossed.html

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AN ACT concerning public employee benefits.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Public Labor Relations Act is
amended by changing Section 4 as follows:
(5 ILCS 315/4) (from Ch. 48, par. 1604)
Sec. 4. Management 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, examination techniques and direction of employees.
Employers, however, shall be required 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, but
excluding (i) the payment of the additional member
contributions set forth in subsections (a-1) and (a-5) of
Sections 14-133, 15-157, and 16-152 of the Illinois Pension
Code and (ii) the provision of compensation or benefits to
employees who make the election under Section 14-106.5,
15-132.9, or 16-122.9 of the Illinois Pension Code in order to
offset all or part of any compensation or benefit limitations

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included as part of the elections under those Sections.
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, 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 (i) the payment of the additional member
contributions set forth in subsections (a-1) and (a-5) of
Sections 14-133, 15-157, and 16-152 of the Illinois Pension
Code and (ii) the provision of compensation or benefits to
employees who make the election under Section 14-106.5,
15-132.9, or 16-122.9 of the Illinois Pension Code in order to
offset all or part of any compensation or benefit limitations
included as part of the elections under those Sections.
The chief judge of the judicial circuit that employs a
public employee who is a court reporter, as defined in the
Court Reporters Act, has the authority to hire, appoint,
promote, evaluate, discipline, and discharge court reporters
within that judicial circuit.
Nothing in this amendatory Act of the 94th General Assembly
shall be construed to intrude upon the judicial functions of
any court. This amendatory Act of the 94th General Assembly
applies only to nonjudicial administrative matters relating to

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the collective bargaining rights of court reporters.
(Source: P.A. 94-98, eff. 7-1-05.)
Section 10. The State Employees Group Insurance Act of 1971
is amended by changing Sections 6.9 and 6.10 and by adding
Sections 6.10A and 6.16 as follows:
(5 ILCS 375/6.9)
Sec. 6.9. Health benefits for community college benefit
recipients and community college dependent beneficiaries.
(a) Purpose. It is the purpose of this amendatory Act of
1997 to establish a uniform program of health benefits for
community college benefit recipients and their dependent
beneficiaries under the administration of the Department of
Central Management Services.
(b) Creation of program. Beginning July 1, 1999, the
Department of Central Management Services shall be responsible
for administering a program of health benefits for community
college benefit recipients and community college dependent
beneficiaries under this Section. The State Universities
Retirement System and the boards of trustees of the various
community college districts shall cooperate with the
Department in this endeavor.
(c) Eligibility. All community college benefit recipients
and community college dependent beneficiaries shall be
eligible to participate in the program established under this

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Section, without any interruption or delay in coverage or
limitation as to pre-existing medical conditions. Eligibility
to participate shall be determined by the State Universities
Retirement System. Eligibility information shall be
communicated to the Department of Central Management Services
in a format acceptable to the Department.
(d) Coverage. The health benefit coverage provided under
this Section shall be a program of health, dental, and vision
benefits.
The program of health benefits under this Section may
include any or all of the benefit limitations, including but
not limited to a reduction in benefits based on eligibility for
federal medicare benefits, that are provided under subsection
(a) of Section 6 of this Act for other health benefit programs
under this Act.
(e) Insurance rates and premiums. The Director shall
determine the insurance rates and premiums for community
college benefit recipients and community college dependent
beneficiaries. Rates and premiums may be based in part on age
and eligibility for federal Medicare coverage. The Director
shall also determine premiums that will allow for the
establishment of an actuarially sound reserve for this program.
The cost of health benefits under the program shall be paid
as follows:
(1) For a community college benefit recipient, costs
shall be an amount equal to the difference between the

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projected costs of health benefits under the program and
projected contributions from community college districts,
active contributors, and other income of the program. Other
income of the program shall exclude contributions made by
the State to retire unpaid claims of the program up to 75%
of the total insurance rate shall be paid from the
Community College Health Insurance Security Fund.
(2) The balance of the rate of insurance, including the
entire premium for any coverage for community college
dependent beneficiaries that has been elected, shall be
paid by deductions authorized by the community college
benefit recipient to be withheld from his or her monthly
annuity or benefit payment from the State Universities
Retirement System; except that (i) if the balance of the
cost of coverage exceeds the amount of the monthly annuity
or benefit payment, the difference shall be paid directly
to the State Universities Retirement System by the
community college benefit recipient, and (ii) all or part
of the balance of the cost of coverage may, at the option
of the board of trustees of the community college district,
be paid to the State Universities Retirement System by the
board of the community college district from which the
community college benefit recipient retired. The State
Universities Retirement System shall promptly deposit all
moneys withheld by or paid to it under this subdivision
(e)(2) into the Community College Health Insurance

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Security Fund. These moneys shall not be considered assets
of the State Universities Retirement System.
(f) Financing. All revenues arising from the
administration of the health benefit program established under
this Section shall be deposited into the Community College
Health Insurance Security Fund, which is hereby created as a
nonappropriated trust fund to be held outside the State
Treasury, with the State Treasurer as custodian. Any interest
earned on moneys in the Community College Health Insurance
Security Fund shall be deposited into the Fund.
Moneys in the Community College Health Insurance Security
Fund shall be used only to pay the costs of the health benefit
program established under this Section, including associated
administrative costs and the establishment of a program
reserve. Beginning January 1, 1999, the Department of Central
Management Services may make expenditures from the Community
College Health Insurance Security Fund for those costs.
(g) Contract for benefits. The Director shall by contract,
self-insurance, or otherwise make available the program of
health benefits for community college benefit recipients and
their community college dependent beneficiaries that is
provided for in this Section. The contract or other arrangement
for the provision of these health benefits shall be on terms
deemed by the Director to be in the best interest of the State
of Illinois and the community college benefit recipients based
on, but not limited to, such criteria as administrative cost,

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service capabilities of the carrier or other contractor, and
the costs of the benefits.
(h) Continuation of program. It is the intention of the
General Assembly that the program of health benefits provided
under this Section be maintained on an ongoing, affordable
basis. The program of health benefits provided under this
Section may be amended by the State and is not intended to be a
pension or retirement benefit subject to protection under
Article XIII, Section 5 of the Illinois Constitution.
(i) Other health benefit plans. A health benefit plan
provided by a community college district (other than a
community college district subject to Article VII of the Public
Community College Act) under the terms of a collective
bargaining agreement in effect on or prior to the effective
date of this amendatory Act of 1997 shall continue in force
according to the terms of that agreement, unless otherwise
mutually agreed by the parties to that agreement and the
affected retiree. A community college benefit recipient or
community college dependent beneficiary whose coverage under
such a plan expires shall be eligible to begin participating in
the program established under this Section without any
interruption or delay in coverage or limitation as to
pre-existing medical conditions.
This Act does not prohibit any community college district
from offering additional health benefits for its retirees or
their dependents or survivors.

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(Source: P.A. 90-497, eff. 8-18-97; 90-655, eff. 7-30-98.)
(5 ILCS 375/6.10)
Sec. 6.10. Contributions to the Community College Health
Insurance Security Fund.
(a) Beginning January 1, 1999, every active contributor of
the State Universities Retirement System (established under
Article 15 of the Illinois Pension Code) who (1) is a full-time
employee of 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 and (2) is not an employee as defined in Section 3 of
this Act shall make contributions toward the cost of community
college annuitant and survivor health benefits at the rate of
0.50% of salary. Beginning July 1, 2014, the contribution rate
under this subsection (a) shall be 0.93% of salary.
These contributions shall be deducted by the employer and
paid to the State Universities Retirement System as service
agent for the Department of Central Management Services. The
System may use the same processes for collecting the
contributions required by this subsection that it uses to
collect the contributions received from those employees under
Section 15-157 of the Illinois Pension Code. An employer may
agree to pick up or pay the contributions required under this
subsection on behalf of the employee; such contributions shall
be deemed to have been paid by the employee.

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The State Universities Retirement System shall promptly
deposit all moneys collected under this subsection (a) into the
Community College Health Insurance Security Fund created in
Section 6.9 of this Act. The moneys collected under this
Section shall be used only for the purposes authorized in
Section 6.9 of this Act and shall not be considered to be
assets of the State Universities Retirement System.
Contributions made under this Section are not transferable to
other pension funds or retirement systems and are not
refundable upon termination of service.
(b) Beginning January 1, 1999, every community college
district (other than a community college district subject to
Article VII of the Public Community College Act) or association
of community college boards that is an employer under the State
Universities Retirement System shall contribute toward the
cost of the community college health benefits provided under
Section 6.9 of this Act an amount equal to 0.50% of the salary
paid to its full-time employees who participate in the State
Universities Retirement System and are not members as defined
in Section 3 of this Act. Beginning July 1, 2014, the
contribution rate under this subsection (b) shall be 0.93% of
salary.
These contributions shall be paid by the employer to the
State Universities Retirement System as service agent for the
Department of Central Management Services. The System may use
the same processes for collecting the contributions required by

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this subsection that it uses to collect the contributions
received from those employers under Section 15-155 of the
Illinois Pension Code.
The State Universities Retirement System shall promptly
deposit all moneys collected under this subsection (b) into the
Community College Health Insurance Security Fund created in
Section 6.9 of this Act. The moneys collected under this
Section shall be used only for the purposes authorized in
Section 6.9 of this Act and shall not be considered to be
assets of the State Universities Retirement System.
Contributions made under this Section are not transferable to
other pension funds or retirement systems and are not
refundable upon termination of service.
The Department of Healthcare and Family 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 Community College
Health Insurance Security Fund. The Department may promulgate
rules further defining the methodology for the transfers. Any
interest earned by moneys in the funds or accounts shall inure
to the Community College Health Insurance Security Fund. The

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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.
(c) On or before November 15 of each year, the Board of
Trustees of the State Universities Retirement System shall
certify to the Governor, the Director of Central Management
Services, and the State Comptroller its estimate of the total
amount of contributions to be paid under subsection (a) of this
Section for the next fiscal year. Beginning in fiscal year
2008, the amount certified shall be decreased or increased each
year by the amount that the actual active employee
contributions either fell short of or exceeded the estimate
used by the Board in making the certification for the previous
fiscal year. The State Universities Retirement System shall
calculate the amount of actual active employee contributions in
fiscal years 1999 through 2005. Based upon this calculation,
the fiscal year 2008 certification shall include an amount
equal to the cumulative amount that the actual active employee
contributions either fell short of or exceeded the estimate
used by the Board in making the certification for those fiscal

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years. The certification shall include a detailed explanation
of the methods and information that the Board relied upon in
preparing its estimate. As soon as possible after the effective
date of this Section, the Board shall submit its estimate for
fiscal year 1999.
(d) Beginning in fiscal year 1999, on the first day of each
month, or as soon thereafter as may be practical, the State
Treasurer and the State Comptroller shall transfer from the
General Revenue Fund to the Community College Health Insurance
Security Fund 1/12 of the annual amount appropriated for that
fiscal year to the State Comptroller for deposit into the
Community College Health Insurance Security Fund under Section
1.4 of the State Pension Funds Continuing Appropriation Act.
(e) Except where otherwise specified in this Section, the
definitions that apply to Article 15 of the Illinois Pension
Code apply to this Section.
(Source: P.A. 94-839, eff. 6-6-06; 95-632, eff. 9-25-07.)
(5 ILCS 375/6.10A new)
Sec. 6.10A. City colleges; optional participation in
program of health benefits. Notwithstanding any other
provision of this Act, the Department of Central Management
Services shall adopt rules authorizing optional participation
in the program of health benefits for community college benefit
recipients and community college dependent beneficiaries by
any person who is otherwise ineligible to participate in that

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program solely as a result of that or another person's
employment with a community college district subject to Article
VII of the Public Community College Act.
(5 ILCS 375/6.16 new)
Sec. 6.16. Health benefit election for Tier I employees and
Tier I retirees.
(a) For purposes of this Section:
"Eligible Tier I employee" means, except as provided in
subsection (g) of this Section, an individual who makes or is
deemed to have made an election under paragraph (1) of
subsection (a) of Section 2-110.3, 14-106.5, 15-132.9, or
16-122.9 of the Illinois Pension Code.
"Eligible Tier I retiree" means, except as provided in
subsection (g) of this Section, an individual who makes or is
deemed to have made an election under paragraph (1) of
subsection (a-5) of Section 2-110.3, 14-106.5, 15-132.9, or
16-122.9 of the Illinois Pension Code.
"Program of health benefits" means (i) a health plan, as
defined in subsection (o) of Section 3 of this Act, that is
designed and contracted for by the Director under this Act or
any successor Act or (ii) if administration of that health plan
is transferred to a trust established by the State or an
independent Board in order to provide health benefits to a
class of a persons that includes eligible Tier I retirees, then
the plan of health benefits provided through that trust.

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(b) As adequate and legal consideration for making an
election under paragraph (1) of subsection (a) or (a-5) of
Section 2-110.3, 14-106.5, 15-132.9, or 16-122.9 of the
Illinois Pension Code, as the case may be, each eligible Tier I
employee and each eligible Tier I retiree shall receive a
vested and enforceable contractual right to participate in a
program of health benefits while he or she qualifies as an
annuitant or retired employee. That right also extends to such
a person's dependents and survivors who are eligible under the
applicable program of health benefits.
(c) Notwithstanding subsection (b), eligible Tier I
employees and eligible Tier I retirees may be required to make
contributions toward the cost of coverage under a program of
health benefits.
(d) The vested and enforceable contractual right to a
program of health benefits is not offered as, and shall not be
considered, a pension or retirement benefit under Article XIII,
Section 5 of the Illinois Constitution, the Illinois Pension
Code, or any subsequent or successor enactment providing
pension benefits.
(e) Notwithstanding any other provision of law, except
subsection (g) of this Section, a Tier I employee or Tier I
retiree who has made an election under paragraph (2) of
subsection (a) or (a-5) of Section 2-110.3, 14-106.5, 15-132.9,
or 16-122.9 of the Illinois Pension Code, as the case may be,
shall not be entitled to participate in any program of health

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benefits under this Act as an annuitant or retired employee
receiving a retirement annuity, regardless of any contrary
election pursuant to any of those Sections under any other
retirement system.
Notwithstanding any other provision of law, except
subsection (g) of this Section, a Tier I employee who is not
entitled to participate in the program of health benefits as an
annuitant or retired employee receiving a retirement annuity,
due to an election under paragraph (2) of subsection (a) or
(a-5) of Section 2-110.3, 14-106.5, 15-132.9, or 16-122.9 of
the Illinois Pension Code, as the case may be, shall not be
required to make contributions toward the program of health
benefits while he or she is an employee or active contributor.
However, an active employee may be required to make
contributions toward health benefits he or she receives during
active service.
(f) The Department shall coordinate with each retirement
system administering an election in accordance with this
amendatory Act of the 98th General Assembly to provide
information concerning the impact of the election of health
benefits. Each System shall include information prepared by the
Department in the required election packet. The Department
shall make information available to Tier I employees and Tier I
retirees through video materials, group presentations,
consultation by telephone or other electronic means, or any
combination of these methods. The information in the election

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packet shall include a notice that states: "YOU ARE HEREBY
ADVISED THAT THE PROGRAM OF HEALTH BENEFITS OFFERED IS FOR
ACCESS TO A GROUP HEALTHCARE PLAN ADMINISTERED BY THE
DEPARTMENT, AND YOU MAY BE REQUIRED TO PAY FOR THE FULL COST OF
COVERAGE PROVIDED BY THE PLAN, INCLUDING ALL PREMIUM,
DEDUCTIBLE, AND COPAY AMOUNTS."
(g) Nothing in this Section shall be construed as applying
to a person who is eligible to make or who made the election
under Section 15-135.1 of the Illinois Pension Code.
Section 15. The Governor's Office of Management and Budget
Act is amended by changing Sections 7 and 8 as follows:
(20 ILCS 3005/7) (from Ch. 127, par. 417)
Sec. 7. All statements and estimates of expenditures
submitted to the Office in connection with the preparation of a
State budget, and any other estimates of expenditures,
supporting requests for appropriations, shall be formulated
according to the various functions and activities for which the
respective department, office or institution of the State
government (including the elective officers in the executive
department and including the University of Illinois and the
judicial department) is responsible. All such statements and
estimates of expenditures relating to a particular function or
activity shall be further formulated or subject to analysis in
accordance with the following classification of objects:

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(1) Personal services
(2) State contribution for employee group insurance
(3) Contractual services
(4) Travel
(5) Commodities
(6) Equipment
(7) Permanent improvements
(8) Land
(9) Electronic Data Processing
(10) Telecommunication services
(11) Operation of Automotive Equipment
(12) Contingencies
(13) Reserve
(14) Interest
(15) Awards and Grants
(16) Debt Retirement
(17) Non-cost Charges.
(18) State retirement contribution for annual normal cost
(19) State retirement contribution for unfunded accrued
liability.
(Source: P.A. 93-25, eff. 6-20-03.)
(20 ILCS 3005/8) (from Ch. 127, par. 418)
Sec. 8. When used in connection with a State budget or
expenditure or estimate, items (1) through (16) in the
classification of objects stated in Section 7 shall have the

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meanings ascribed to those items in Sections 14 through 24.7,
respectively, of the State Finance Act. "An Act in relation to
State finance", approved June 10, 1919, as amended.
When used in connection with a State budget or expenditure
or estimate, items (18) and (19) in the classification of
objects stated in Section 7 shall have the meanings ascribed to
those items in Sections 24.12 and 24.13, respectively, of the
State Finance Act.
(Source: P.A. 82-325.)
Section 20. The State Finance Act is amended by changing
Section 13 and by adding Sections 24.12 and 24.13 as follows:
(30 ILCS 105/13) (from Ch. 127, par. 149)
Sec. 13. The objects and purposes for which appropriations
are made are classified and standardized by items as follows:
(1) Personal services;
(2) State contribution for employee group insurance;
(3) Contractual services;
(4) Travel;
(5) Commodities;
(6) Equipment;
(7) Permanent improvements;
(8) Land;
(9) Electronic Data Processing;
(10) Operation of automotive equipment;

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(11) Telecommunications services;
(12) Contingencies;
(13) Reserve;
(14) Interest;
(15) Awards and Grants;
(16) Debt Retirement;
(17) Non-Cost Charges;
(18) State retirement contribution for annual normal cost;
(19) State retirement contribution for unfunded accrued
liability;
(20) (18) Purchase Contract for Real Estate.
When an appropriation is made to an officer, department,
institution, board, commission or other agency, or to a private
association or corporation, in one or more of the items above
specified, such appropriation shall be construed in accordance
with the definitions and limitations specified in this Act,
unless the appropriation act otherwise provides.
An appropriation for a purpose other than one specified and
defined in this Act may be made only as an additional, separate
and distinct item, specifically stating the object and purpose
thereof.
(Source: P.A. 84-263; 84-264.)
(30 ILCS 105/24.12 new)
Sec. 24.12. "State retirement contribution for annual
normal cost" defined. The term "State retirement contribution

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for annual normal cost" means the portion of the total required
State contribution to a retirement system for a fiscal year
that represents the State's portion of the System's projected
normal cost for that fiscal year, as determined and certified
by the board of trustees of the retirement system in
conformance with the applicable provisions of the Illinois
Pension Code.
(30 ILCS 105/24.13 new)
Sec. 24.13. "State retirement contribution for unfunded
accrued liability" defined. The term "State retirement
contribution for unfunded accrued liability" means the portion
of the total required State contribution to a retirement system
for a fiscal year that is not included in the State retirement
contribution for annual normal cost.
Section 25. The Budget Stabilization Act is amended by
changing Sections 20 and 25 as follows:
(30 ILCS 122/20)
Sec. 20. Pension Stabilization Fund.
(a) The Pension Stabilization Fund is hereby created as a
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 when the General Assembly's

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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 2019,
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-10) In State fiscal year 2020 and each fiscal year
thereafter, the State Comptroller shall order transferred and
the State Treasurer shall transfer $1,000,000,000 from the
General Revenue Fund to the Pension Stabilization Fund.
(c-15) The transfers made pursuant to subsection (c-10) of
this Section shall continue through State fiscal year 2045 or
until each of the designated retirement systems, as defined in
Section 25, has achieved the funding ratio prescribed by law
for that retirement system, whichever occurs first.
(d) The Comptroller shall transfer 1/12 of the total amount
to be transferred each fiscal year under this Section into the

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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 2020, 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
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.)
(30 ILCS 122/25)
Sec. 25. Transfers from the Pension Stabilization Fund.
(a) As used in this Section, "designated retirement
systems" means:
(1) the State Employees' Retirement System of
Illinois;

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(2) the Teachers' Retirement System of the State of
Illinois;
(3) the State Universities Retirement System;
(4) the Judges Retirement System of Illinois; and
(5) the General Assembly Retirement System.
(b) As soon as may be practical after any money is
deposited into the Pension Stabilization Fund, the State
Comptroller shall apportion the deposited amount among the
designated retirement systems and the State Comptroller and
State Treasurer shall pay the apportioned amounts to the
designated retirement systems. The amount deposited shall be
apportioned among the designated retirement systems in
proportion to their respective certified State contributions
for the State fiscal year in which the payment is made to those
systems in the same proportion as their respective portions of
the total actuarial reserve deficiency of the designated
retirement systems, as most recently determined by the
Governor's Office of Management and Budget. Amounts received by
a designated retirement system under this Section shall be used
for funding the unfunded liabilities of the retirement system.
Payments under this Section are authorized by the continuing
appropriation under Section 1.7 of the State Pension Funds
Continuing Appropriation Act.
(c) At the request of the State Comptroller, the Governor's
Office of Management and Budget shall determine the individual
and total actuarial reserve deficiencies of the designated

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retirement systems. For this purpose, the Governor's Office of
Management and Budget shall consider the latest available audit
and actuarial reports of each of the retirement systems and the
relevant reports and statistics of the Public Pension Division
of the Department of Financial and Professional Regulation.
(d) Payments to the designated retirement systems under
this Section shall be in addition to, and not in lieu of, any
State contributions required under Section 2-124, 14-131,
15-155, 16-158, or 18-131 of the Illinois Pension Code.
Payments to the designated retirement systems under this
Section, transferred after the effective date of this
amendatory Act of the 98th General Assembly, do not reduce and
do not constitute payment of any portion of the required State
contribution under Article 2, 14, 15, 16, or 18 of the Illinois
Pension Code in that fiscal year. Such amounts shall not
reduce, and shall not be included in the calculation of, the
required State contribution under Article 2, 14, 15, 16, or 18
of the Illinois Pension Code in any future year, until the
designated retirement system has received payment of
contributions pursuant to this Act.
(Source: P.A. 94-839, eff. 6-6-06.)
Section 30. The Illinois Pension Code is amended by
changing Sections 2-108, 2-119.1, 2-125, 2-126, 2-134, 2-162,
7-109, 14-103.10, 14-114, 14-132, 14-133, 14-135.08, 14-152.1,
15-106, 15-107, 15-111, 15-136, 15-156, 15-157, 15-163,

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15-165, 15-198, 16-106, 16-121, 16-133, 16-133.1, 16-133.6,
16-136.1, 16-152, and 16-203 and by adding Sections 1-161,
1-162, 2-105.1, 2-105.2, 2-107.9, 2-110.3, 14-103.40,
14-103.41, 14-103.42, 14-106.5, 15-108.1, 15-108.2, 15-112.1,
15-132.9, 16-107.1, 16-107.2, 16-121.1, 16-122.9, 16-133.6,
and 16-158.2 as follows:
(40 ILCS 5/1-161 new)
Sec. 1-161. Tier II Task Force.
(a) Definitions. As used in this Section:
"Tier II member" means a public employee who, on or after
January 1, 2011, became a member or participant of a retirement
system or pension fund established under this Code.
"Tier II Task Force" or "Task Force" means the Tier II Task
Force created by this Section.
(b) The Tier II Task Force is hereby created. The Task
Force shall be composed of 16 members, appointed as follows:
(1) Two members of the House of Representatives
appointed by the Speaker of the House, one of whom shall
serve as co-chair;
(2) Two members of the House of Representatives
appointed by the Minority Leader of the House;
(3) Two members of the Senate appointed by the
President of the Senate, one of whom shall serve as
co-chair;
(4) Two members of the Senate appointed by the Minority

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Leader of the Senate; and
(5) Eight members, appointed by the co-chairs of the
Task Force, who are Board members of the public employee
unions representing Tier II members, no more than two of
which may be appointed from any individual public employee
union.
(c) The Task Force shall have the following
responsibilities:
(1) to examine the impact of Public Acts 96-889 and
96-1495 on the retirement security of Tier II members;
(2) to study the impact of Public Acts 96-889 and
96-1495 on the ability of retirements systems and pension
funds established under this Code to maintain qualified
plan status under the federal Internal Revenue Code and
other applicable laws;
(3) to examine the impact of the changes made by Public
Acts 96-889 and 96-1495 on the ability of public employers
to attract and retain highly qualified employees and
provide sufficient retirement security; and
(4) to make any recommendations regarding changes to
the pension benefits provided to Tier II employees the Task
Force deems necessary or advisable in order to:
(A) enhance the retirement security of Tier II
members;
(B) ensure that the various pension systems
maintain their status as qualified plans under the

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federal Internal Revenue Code and other applicable
laws; and
(C) ensure that public employers in this State are
able to attract and retain highly qualified employees
and provide sufficient retirement security.
(d) The Commission on Government Forecasting and
Accountability shall provide administrative support to the
Task Force.
(e) The Task Force shall conduct a minimum of 4 public
hearings, with hearings in Springfield, Chicago, and at least
two other locations in Illinois as determined by the Task
Force.
(f) The Task Force shall issue its report to the General
Assembly no later than February 1, 2014.
(g) This Section is repealed on January 1, 2015.
(40 ILCS 5/1-162 new)
Sec. 1-162. Optional cash balance plan.
(a) Participation and Applicability. Beginning 12 months
after the effective date of this Section, any Tier I employee
who has made the election under item (i) of paragraph (1) of
subsection (a) of Section 14-106.5, 15-132.9, or 16-122.9 may
elect to participate in the optional cash balance plan created
under this Section.
The Board of Trustees of the applicable retirement system
shall promulgate rules to establish a one-time irrevocable

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election period wherein a person eligible to participate in the
optional cash balance plan may elect to participate.
(b) Title. The package of benefits provided under this
Section may be referred to as the "optional cash balance plan".
Persons subject to the provisions of this Section may be
referred to as "participants in the optional cash balance
plan".
(b-5) Definitions. As used in this Section:
"Account" means the notional cash balance account
established under this Section for a participant in the
optional cash balance plan.
"Salary" means "compensation" as defined in Article 14,
"earnings" as defined in Article 15, and "salary" as defined in
Article 16, whichever is applicable, without regard to the
limitation in subsection (b-5) of Section 1-160.
"Tier I employee" means a person who is a Tier I employee
under the applicable Article of this Code.
(c) Cash Balance Account. A notional cash balance account
shall be established by the applicable retirement system for
each participant in the optional cash balance plan. The account
is notional and does not contain any actual money segregated
from the commingled assets of the retirement system. The cash
balance in the account is to be used in calculating benefits as
provided in this Section, but is not to be used in the
calculation of any refund, transfer, or other benefit under the
applicable Article of this Code.

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The amounts to be credited to the cash balance account
shall consist of (i) amounts contributed by or on behalf of the
participant as employee contributions, (ii) notional employer
contributions, and (iii) interest credit that is attributable
to the account, all as provided in this Section.
Whenever necessary for the prompt calculation or
administration, or when the System lacks information necessary
to the calculation or administration otherwise required of or
for a benefit under this Section, the applicable retirement
system may estimate an amount to be credited to or debited from
a participant's cash balance account and then adjust the amount
so credited or debited when more accurate information becomes
available.
The applicable retirement system shall give to each
participant in the optional cash balance plan who has not yet
retired annual notice of (1) the balance in the participant's
cash balance account and (2) an estimate of the retirement
annuity that will be payable to the participant if he or she
retires at age 59 1/2.
(d) Employee Contributions. In addition to the other
contributions required under the applicable Article, each
participant shall make contributions to the applicable
retirement system at the rate of 2% of each payment of salary.
The amount of each contribution shall be credited to the
participant's cash balance account upon receipt and after the
retirement system's reconciliation of the contribution.

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(e) Optional Employer Contributions. Employers may make
optional additional contributions to the applicable retirement
system on behalf of their employees who are participants in the
optional cash balance plan in accordance with procedures
prescribed by the retirement system, to the extent permitted by
federal law and the rules prescribed by the retirement system.
The optional additional contributions under this subsection
are actual monetary contributions to the retirement system, and
the amount of each optional additional contribution shall be
credited to the participant's cash balance account upon receipt
and after the retirement system's reconciliation of the
contribution.
(f) Interest Credit. An amount representing earnings on
investments shall be determined by the retirement system in
accordance with this Section and credited to the participant's
cash balance account for each fiscal year in which there is a
positive balance in that account; except that no additional
interest credit shall be credited while an annuity based on the
account is being paid. The interest credit amount shall be a
percentage of the average quarterly balance in the cash balance
account during that fiscal year, and shall be calculated on
June 30.
The percentage shall be the assumed treasury rate for the
previous fiscal year, unless neither the retirement system's
actual rate of investment earnings for the previous fiscal year
nor the retirement system's actual rate of investment earnings

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for the five-year period ending at the end of the previous
fiscal year is less than the assumed treasury rate.
If both the retirement system's actual rate of investment
earnings for the previous fiscal year and the actual rate of
investment earnings for the five-year period ending at the end
of the previous fiscal year are at least the assumed treasury
rate, then the percentage shall be:
(i) the assumed treasury rate, plus
(ii) two-thirds of the amount of the actual rate of
investment earnings for the previous fiscal year that
exceeds the assumed treasury rate.
However, in no event shall the percentage applied under this
subsection exceed 10%.
For the purposes of this subsection only, "previous fiscal
year" means fiscal year ending one year before the interest
rate is calculated.
For the purposes of this subsection only, "assumed treasury
rate" means the average annual yield of the 30-year U.S.
Treasury Bond over the previous fiscal year, but not less than
4%.
When a person applies for a benefit under this Section, the
retirement system shall apply an interest credit based on a
proration of an estimate of what the interest credit will be
for the relevant year. When the retirement system certifies the
credit on June 30, it shall adjust the benefit accordingly.
(f-10) Distribution upon Termination of Employment. Upon

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termination of active employment with at least 5 years of
service credit under the applicable retirement system and prior
to making application for an annuity under this Section, a
participant in the optional cash balance plan may make an
irrevocable election to distribute an amount not to exceed 40%
of the balance in the participant's account in the form of a
direct rollover to another qualified plan, to the extent
allowed by federal law. If the participant makes such an
election, then the amount distributed shall be debited from the
participant's cash balance account. A participant in the
optional cash balance plan shall be allowed only one
distribution under this subsection. The remaining balance in
the participant's account shall be used for the determination
of other benefits provided under this Section.
(f-15) Refund. In lieu of receiving a distribution under
subsection (f-10), at any time after terminating active
employment under the applicable retirement system, but before
receiving a retirement annuity under this Section, a
participant in the optional cash balance plan may elect to
receive a refund under this subsection. The refund shall
consist of an amount equal to the amount of all employee
contributions credited to the participant's account, but shall
not include any interest credit or employer contributions. If
the participant so requests, the refund may be paid in the form
of a direct rollover to another qualified plan, to the extent
allowed by federal law and in accordance with the rules of the

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applicable retirement system. Upon payment of the refund, the
participant's notional cash balance account shall be closed.
(g) Retirement Annuity. A participant in the optional cash
balance plan may begin collecting a retirement annuity at age
59 1/2, but no earlier than the date of termination of active
employment under the applicable retirement system.
The amount of the retirement annuity shall be calculated by
the retirement system, based on the balance in the cash balance
account, the assumption of future investment returns as
specified in this subsection, the participant's election to
have a lifetime survivor's annuity as specified in this
subsection, the annual increase in retirement annuity as
specified in subsection (h), the annual increase in survivor's
annuity as specified in subsection (l), and any actuarial
assumptions and tables adopted by the board of the retirement
system for this purpose. The calculation shall determine the
amount of retirement annuity, on an actuarially equivalent
basis, that shall be designed to result in the balance in the
participant's account arriving at zero on the date when the
last payment of the retirement annuity (or survivor's annuity,
if the participant elects to provide for a survivor's annuity
pursuant to this subsection) is anticipated to be paid under
the relevant actuarial assumptions. A retirement annuity or a
survivor's annuity provided under this Section shall be a life
annuity and shall not expire if the account balance equals
zero.

SB2404 Engrossed - 34 - LRB098 09018 EFG 39154 b
The annuity payment shall begin on the date specified by
the participant submitting a written application, which date
shall not be prior to termination of employment or more than
one year before the application is received by the board;
however, if the participant is not an employee of an employer
participating in this System or in a participating system as
defined in Article 20 of this Code on April 1 of the calendar
year next following the calendar year in which the participant
attains age 70 1/2, the annuity payment period shall begin on
that date regardless of whether an application has been filed.
The participant may elect, under the participant's written
application for retirement, to receive a reduced annuity
payable for his or her life and to have a lifetime survivor's
annuity in a monthly amount equal to 50%, 75%, or 100% of that
reduced monthly amount, to be paid after the participant's
death to his or her eligible survivor. Eligibility for a
survivor's annuity shall be determined under the applicable
Article of this Code.
For the purpose of calculating retirement annuities,
future investment returns shall be assumed to be a percentage
equal to the average yield of the 30-year U.S. Treasury Bond
over the 5 fiscal years prior to the calculation of the initial
retirement annuity, plus 250 basis points; but not less than 4%
nor more than 8%.
(h) Annual Increase in Retirement Annuity. The retirement
annuity shall be subject to an automatic annual increase in an

SB2404 Engrossed - 35 - LRB098 09018 EFG 39154 b
amount equal to 3% of the originally granted annuity on each
January 1 occurring on or after the first anniversary of the
annuity start date.
(i) Disability Benefits. There are no disability benefits
provided under the optional cash balance plan, and no amounts
for disability shall be deducted from the account of a
participant in the optional cash balance plan. The disability
benefits provided under the applicable retirement system apply
to participants in the optional cash balance plan.
(j) Return to Service. Upon a return to service under the
same retirement system after beginning to receive a retirement
annuity under the optional cash balance plan, the retirement
annuity shall be suspended and active participation in the
optional cash balance plan shall resume. Upon termination of
the employment, the retirement annuity shall resume in an
amount to be recalculated in accordance with subsection (g),
taking into effect the changes in the cash balance account. If
a retired annuitant returns to service, his or her notional
cash balance account shall be decreased by each payment of
retirement annuity prior to the return to service.
(k) Survivor's Annuity - Death before Retirement. In the
case of a participant in the optional cash balance plan who had
less than 5 years of service under the applicable Article and
had not begun receiving a retirement annuity, the eligible
survivor shall be entitled only to a refund of employee
contributions under subsection (f-15).

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In the case of a participant in the optional cash balance
plan who had at least 5 years of service under the applicable
Article and had not begun receiving a retirement annuity, the
eligible survivor shall be entitled to receive a survivor's
annuity beginning at age 59 1/2 upon written application. The
survivor's annuity shall be calculated in the same manner as a
retirement annuity under subsection (g). At any time before
receiving a survivor's annuity, the eligible survivor may claim
a distribution under subsection (f-10) or a refund under
subsection (f-15). The deceased participant's account shall
continue to receive interest credit until the eligible survivor
begins to receive a survivor's annuity or receives a refund of
employee contributions under subsection (f-15).
Eligibility for a survivor's annuity shall be determined
under the applicable Article of this Code. A child's or
parent's annuity for an otherwise eligible child or dependent
parent shall be in the same amount, if any, prescribed under
the applicable Article.
(l) Annual Increase in Survivor's Annuity. A survivor's
annuity granted under subsection (g) or (k) shall be subject to
an automatic annual increase in an amount equal to 3% of the
originally granted annuity on each January 1 occurring on or
after the first anniversary of the annuity start date.
(m) Applicability of Provisions. The following provisions,
if and as they exist in this Code, do not apply to participants
in the optional cash balance plan with respect to participation

SB2404 Engrossed - 37 - LRB098 09018 EFG 39154 b
in the optional cash balance plan, except as they are
specifically provided for in this Section:
(1) minimum service or vesting requirements (other
than as provided in this Section);
(2) provisions limiting a retirement annuity to a
specified percentage of salary;
(3) provisions authorizing a minimum retirement or
survivor's annuity or a supplemental annuity;
(4) provisions authorizing any form of retirement
annuity or survivor's annuity not authorized under this
Section;
(5) provisions authorizing a reversionary annuity
(other than the survivor's annuity under subsection (g));
(6) provisions authorizing a refund of employee
contributions upon termination of service (other than upon
the death of the participant without an eligible survivor)
or any lump-sum payout in lieu of a retirement or
survivor's annuity (other than the distribution under
subsection (f-10) or the refund under subsection (f-15) of
this Section;
(7) provisions authorizing optional service credits or
the payment of optional additional contributions (other
than the optional employer contributions specifically
authorized in this Section); or
(8) a level income option.
The Retirement Systems Reciprocal Act (Article 20 of this

SB2404 Engrossed - 38 - LRB098 09018 EFG 39154 b
Code) does not apply to participation in the optional cash
balance plan and does not affect the calculation of benefits
payable under this Section.
The other provisions of this Code continue to apply to
participants in the optional cash balance plan, to the extent
that they do not conflict with this Section. In the case of a
conflict between the provisions of this Section and any other
provision of this Code, the provisions of this Section control.
(n) Rules. The Board of Trustees of the applicable
retirement system may adopt rules and procedures for the
implementation of this Section, including but not limited to
determinations of how to integrate the administration of this
Section with the requirements of the applicable Article and any
other applicable provisions of this Code.
(o) Actual Employer Contributions. Payment of employer
contributions with respect to participants in the optional cash
balance plan shall be the responsibility of the actual
employer. Optional additional contributions by employers may
be paid in any amount, but must be paid in the manner specified
by the applicable retirement system.
(p) Prospective Modification. The provisions set forth in
this Section are subject to prospective changes made by law,
provided that any such changes shall not apply to any benefits
accrued under this Section prior to the effective date of any
amendatory Act of the General Assembly.
(q) Qualified Plan Status. No provision of this Section

SB2404 Engrossed - 39 - LRB098 09018 EFG 39154 b
shall be interpreted in a way that would cause the applicable
retirement system to cease to be a qualified plan under Section
401(a) of the Internal Revenue Code of 1986.
(40 ILCS 5/2-105.1 new)
Sec. 2-105.1. Tier I employee. "Tier I employee": A
participant who first became a participant before January 1,
2011.
(40 ILCS 5/2-105.2 new)
Sec. 2-105.2. Tier I retiree. "Tier I retiree" means a
former Tier I employee who is receiving a retirement annuity.
(40 ILCS 5/2-107.9 new)
Sec. 2-107.9. Future increase in income. "Future increase
in income": Any increase in income in any form offered for
service as a member under this Article after June 30, 2014 that
would qualify as "salary", as defined in Section 2-108, but for
the fact that the increase in income was offered to the member
on the condition that it not qualify as salary and was accepted
by the member subject to that condition.
(40 ILCS 5/2-108) (from Ch. 108 1/2, par. 2-108)
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

SB2404 Engrossed - 40 - LRB098 09018 EFG 39154 b
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.
Notwithstanding any other provision of this Section,
"salary" does not include any future increase in income that is
offered for service as a member under this Article pursuant to
the requirements of subsection (c) of Section 2-110.3 and
accepted by a Tier I employee, or a Tier I retiree returning to
active service, who has made the election under paragraph (2)
of subsection (a) or (a-5) of Section 2-110.3.
(Source: P.A. 86-27; 86-273; 86-1028; 86-1488.)

SB2404 Engrossed - 41 - LRB098 09018 EFG 39154 b
(40 ILCS 5/2-110.3 new)
Sec. 2-110.3. Election by Tier I employees and Tier I
retirees.
(a) Each Tier I employee shall make an irrevocable election
either:
(1) to agree to item (i) or (ii) as set forth in this
paragraph (1):
(i) to have the amount of the automatic annual
increases in his or her retirement annuity that are
otherwise provided for in this Article calculated,
instead, as provided in subsection (a-1) of Section
2-119.1, and to waive his or her eligibility for 2
automatic annual increases in retirement annuity as
provided in subsection (a-2) of Section 2-119.1; or
(ii) to waive his or her eligibility for 3
automatic annual increases in retirement annuity, as
provided in subsection (a-3) of Section 2-119.1, and to
make the contributions set forth in subsection (a-5) of
Section 2-126; or
(2) to not agree to item (i) or (ii) as set forth in
paragraph (1) of this subsection.
The election required under this subsection (a) shall be
made by each Tier I employee no earlier than February 1, 2014
and no later than May 31, 2014, except that:
(i) a person who becomes a Tier I employee under this

SB2404 Engrossed - 42 - LRB098 09018 EFG 39154 b
Article on or after February 1, 2014 must make the election
under this subsection (a) within 60 days after becoming a
Tier I employee;
(ii) a person who returns to active service as a Tier I
employee under this Article on or after February 1, 2014
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 I employee; and
(iii) a person who made the election under subsection
(a-5) as a Tier I retiree remains bound by that election
and shall not make a later election under this subsection
(a).
If a Tier I 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) Each Tier I retiree shall make an irrevocable
election either:
(1) to agree to the following:
(i) to have the amount of the automatic annual
increases in his or her retirement annuity calculated
without regard to subsection (a-1), (a-2), or (a-3) of
Section 2-119.1; and
(ii) to waive his or her eligibility for 2
automatic annual increases in retirement annuity as
provided in subsection (a-4) of Section 2-119.1; or

SB2404 Engrossed - 43 - LRB098 09018 EFG 39154 b
(2) to not agree to items (i) and (ii) as set forth in
paragraph (1) of this subsection.
The election required under this subsection (a-5) shall be
made by each Tier I retiree no earlier than February 1, 2014
and no later than May 31, 2014, except that:
(i) a person who becomes a Tier I retiree under this
Article on or after February 1, 2014 must make the election
under this subsection (a-5) within 60 days after becoming a
Tier I retiree; and
(ii) a person who made the election under subsection
(a) as a Tier I employee remains bound by that election and
shall not make a later election under this subsection
(a-5).
If a Tier I retiree fails for any reason to make a required
election under this subsection within the time specified, then
the Tier I retiree shall be deemed to have made the election
under paragraph (2) of this subsection.
(a-10) All elections under subsection (a) or (a-5) that are
made or deemed to be made before June 1, 2014 shall take effect
on July 1, 2014. Elections that are made or deemed to be made
on or after June 1, 2014 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 98th General Assembly for making an
election under paragraph (1) of subsection (a) of this Section,

SB2404 Engrossed - 44 - LRB098 09018 EFG 39154 b
any future increases in income offered for service as a member
under this Article to a Tier I employee who has made an
election under paragraph (1) of subsection (a) of this Section
shall be offered expressly and irrevocably as constituting
salary under Section 2-108.
As adequate and legal consideration provided under this
amendatory Act of the 98th General Assembly for making an
election under paragraph (1) of subsection (a-5) of this
Section, any future increases in income offered for service as
a member under this Article to a Tier I retiree who returns to
active service after having made an election under paragraph
(1) of subsection (a-5) of this Section shall be offered
expressly and irrevocably as constituting salary under Section
2-108.
(c) A Tier I employee who makes the election under
paragraph (2) of subsection (a) of this Section shall not be
subject to either item (i) or (ii) set forth in paragraph (1)
of subsection (a) of this Section. However, any future
increases in income offered for service as a member under this
Article to a Tier I employee who has made the election under
paragraph (2) of subsection (a) of this Section shall be
offered expressly and irrevocably as not constituting salary
under Section 2-108, and the member may not accept any future
increase in income that is offered in violation of this
requirement.
A Tier I retiree who makes the election under paragraph (2)

SB2404 Engrossed - 45 - LRB098 09018 EFG 39154 b
of subsection (a-5) of this Section shall not be subject to
either item (i) or (ii) set forth in paragraph (1) of
subsection (a-5) of this Section. However, any future increases
in income offered for service as a member under this Article to
a Tier I retiree who returns to active service and has made the
election under paragraph (2) of subsection (a-5) of this
Section shall be offered expressly and irrevocably as not
constituting salary under Section 2-108, and the member may not
accept any future increase in income that is offered in
violation of this requirement.
(d) The System shall make a good faith effort to contact
each Tier I employee and Tier I retiree subject to this
Section. The System shall mail information describing the
required election to each Tier I employee and Tier I retiree by
United States Postal Service mail to his or her last known
address on file with the System. If the Tier I employee or Tier
I retiree 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 I employees and Tier I retirees 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 I employees and Tier I retirees an

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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 I
employee or Tier I retiree should make or specific to the legal
or tax circumstances of or consequences to the Tier I employee
or Tier I retiree.
The System shall inform Tier I employees and Tier I
retirees in the election packet required under this subsection
that the Tier I employee or Tier I retiree 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, beneficiary,
or annuitant 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 98th General Assembly to provide information
concerning the impact of the election set forth in this
Section.

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(e) Notwithstanding any other provision of law, any future
increases in income offered for service as a member must be
offered expressly and irrevocably as not constituting "salary"
under Section 2-108 to any Tier I employee, or Tier I retiree
returning to active service, who has made an election under
paragraph (2) of subsection (a) or (a-5) of Section 2-110.3. A
Tier I employee, or Tier I retiree returning to active service,
who has made an election under paragraph (2) or subsection (a)
or (a-5) of Section 2-110.3 shall not accept any future
increase in income that is offered for service as a member
under this Article in violation of the requirement set forth in
this subsection.
(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 this Section is determined to be unconstitutional or
otherwise invalid by a final unappealable decision of an
Illinois court or a court of competent jurisdiction as applied
to Tier I employees but not as applied to Tier I retirees, then
this Section and the changes deriving from the election
required under this Section shall be null and void as applied
to Tier I employees but shall remain in full effect for Tier I
retirees.

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(i) If this Section is determined to be unconstitutional or
otherwise invalid by a final unappealable decision of an
Illinois court or a court of competent jurisdiction as applied
to Tier I retirees but not as applied to Tier I employees, then
this Section and the changes deriving from the election
required under this Section shall be null and void as applied
to Tier I retirees but shall remain in full effect for Tier I
employees.
(j) 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 5/2-119.1) (from Ch. 108 1/2, par. 2-119.1)
Sec. 2-119.1. Automatic increase in retirement annuity.
(a) Except as provided in subsections (a-1), (a-2), (a-3),
and (a-4), 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

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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 I employee who made the election under item (i) of
paragraph (1) of subsection (a) of Section 2-110.3, the amount
of each automatic annual increase in retirement annuity
occurring on or after the effective date of that election,
other than the initial increase, shall be 3% of the originally
granted retirement annuity.
(a-2) Notwithstanding any other provision of this Article,
for a Tier I employee who made the election under item (i) of
paragraph (1) of subsection (a) of Section 2-110.3, once the
first annual increase under this Section has been granted, the
next 2 scheduled annual increases shall be skipped, and
thereafter all annual increases shall be granted.
(a-3) Notwithstanding any other provision of this Article,
for a Tier I employee who made the election under item (ii) of
paragraph (1) of subsection (a) of Section 2-110.3, once the
first annual increase under this Section has been granted, the
next 3 scheduled annual increases shall be skipped, and
thereafter all annual increases shall be granted.

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(a-4) Notwithstanding any other provision of this Article,
for a Tier I retiree who made the election under paragraph (1)
of subsection (a-5) of Section 2-110.3:
(1) if the Tier I retiree has not received the first
annual increase under this Section as of the effective date
of this amendatory Act of the 98th General Assembly, then
once the first annual increase under this Section has been
granted, the next scheduled annual increase shall be
skipped, the following annual increase shall be granted,
the next annual increase shall be skipped, and thereafter
all annual increases shall be granted; and
(2) if the Tier I retiree has received the first annual
increase under this Section as of the effective date of
this amendatory Act of the 98th General Assembly, then the
next annual increase after that effective date shall be
skipped, the following annual increase shall be granted,
the next annual increase shall be skipped, and thereafter
all annual increases shall be granted.
(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,

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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
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

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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, except
as otherwise provided in subsection (a-2), (a-3), or (a-4).
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
subsection (a-1) or (b-5), 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 5/2-125) (from Ch. 108 1/2, par. 2-125)

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Sec. 2-125. Obligations of State; funding guarantee.
(a) The payment of (1) the required State contributions,
(2) all benefits granted under this system and (3) all expenses
of administration and operation are obligations of the State to
the extent specified in this Article.
All income, interest and dividends derived from deposits
and investments shall be credited to the account of the system
in the State Treasury and used to pay benefits under this
Article.
(b) The State shall be contractually obligated to
contribute to the System in each State fiscal year an amount
not less than the sum required in Section 2-124 as that Section
existed prior to the effective date of this amendatory Act of
the 98th General Assembly.
The obligations created under this subsection (b) are
contractual obligations protected and enforceable under
Article I, Section 16 and Article XIII, Section 5 of the
Illinois Constitution.
Notwithstanding any other provision of law, if the State
fails to pay in a State fiscal year the amount guaranteed under
this subsection (b), the System may bring a mandamus action in
the Circuit Court of Sangamon County to compel the State to
make that payment, irrespective of other remedies that may be
available to the System. It shall be the mandatory fiduciary
obligation of the Board of the System to bring that action if
the State fails to pay in the fiscal year the amount guaranteed

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under this subsection (b). Before commencing that action, the
Board shall submit a voucher for contributions required under
Section 2-134. If the State fails to pay a vouchered amount
within 90 days after receiving a voucher for that amount, then
the Board shall submit a written request to the Comptroller
seeking payment of that amount. A copy of the request shall be
filed with the Secretary of State, and the Secretary of State
shall provide copies of the request to the Governor and General
Assembly. No earlier than the 16th day after filing a request
with the Secretary, but no later than the 21st day after filing
that request, the Board may commence such an action in the
Circuit Court. If the Board fails to commence such action on or
before the 21st day after filing the request with the Secretary
of State, then any Tier I employee or Tier I retiree who made
an election under paragraph (1) of subsection (a) or (a-5) of
Section 2-110.3 may file a mandamus action against the Board to
compel the Board to commence its mandamus action against the
State. This subsection (b) constitutes an express waiver of the
State's sovereign immunity. In ordering the State to make the
required payment, the court may order a reasonable payment
schedule to enable the State to make the required payment. The
obligations and causes of action created under this subsection
(b) shall be in addition to any other right or remedy otherwise
accorded by common law, or State or federal law, and nothing in
this subsection (b) shall be construed to deny, abrogate,
impair, or waive any such common law or statutory right or

SB2404 Engrossed - 55 - LRB098 09018 EFG 39154 b
remedy.
Any payments required to be made by the State pursuant to
this subsection (b) are expressly subordinated to the payment
of the principal, interest, and premium, if any, on any bonded
debt obligation of the State or any other State-created entity,
either currently outstanding or to be issued, for which the
source of repayment or security thereon is derived directly or
indirectly from tax revenues collected by the State or any
other State-created entity. Payments on such bonded
obligations include any statutory fund transfers or other
prefunding mechanisms or formulas set forth, now or hereafter,
in State law or bond indentures, into debt service funds or
accounts of the State related to such bonded obligations,
consistent with the payment schedules associated with such
obligations.
(Source: P.A. 83-1440.)
(40 ILCS 5/2-126) (from Ch. 108 1/2, par. 2-126)
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,
1969, 6%; for service between July 1, 1969 and January 10,
1973, 6 1/2%; for service after January 10, 1973, 7%; for

SB2404 Engrossed - 56 - LRB098 09018 EFG 39154 b
service after December 31, 1981, 8 1/2%.
(a-5) In addition to the contributions otherwise required
under this Article, each Tier I employee who made the election
under item (ii) of paragraph (1) of subsection (a) of Section
2-110.3 shall also make the following contributions toward the
cost of his or her retirement annuity from each payment of
salary received by him or her for service as a member:
(1) beginning July 1, 2014 and through June 30, 2015,
1% of salary; and
(2) beginning on July 1, 2015, 2% of salary.
(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

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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
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 shall not be based
on any salary in excess of the salary limitation applicable to
that participant under Section 2-108 or 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

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$106,800, plus any increases in that amount under Section
2-108.1.
(Source: P.A. 96-1490, eff. 1-1-11.)
(40 ILCS 5/2-134) (from Ch. 108 1/2, par. 2-134)
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 through 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 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.
(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

SB2404 Engrossed - 59 - LRB098 09018 EFG 39154 b
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 certification shall include a
copy of the actuarial recommendations upon which it is based
and shall specifically identify the System's projected State
normal cost for that fiscal year. The Board's certification
must note any deviations from the State Actuary's recommended
changes, the reason or reasons for not following the State
Actuary's recommended changes, and the fiscal impact of not
following the State Actuary's recommended changes on the
required State contribution.
(a-7) 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

SB2404 Engrossed - 60 - LRB098 09018 EFG 39154 b
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.
(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
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

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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)
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 98th General Assembly.
(b) Notwithstanding any other provision of this Code or any
subsequent amendment to this Code, every new benefit increase

SB2404 Engrossed - 62 - LRB098 09018 EFG 39154 b
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 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

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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.)
(40 ILCS 5/7-109) (from Ch. 108 1/2, par. 7-109)
Sec. 7-109. Employee.
(1) "Employee" means any person who:
(a) 1. Receives earnings as payment for the performance
of personal services or official duties out of the
general fund of a municipality, or out of any special
fund or funds controlled by a municipality, or by an
instrumentality thereof, or a participating
instrumentality, including, in counties, the fees or
earnings of any county fee office; and
2. Under the usual common law rules applicable in

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determining the employer-employee relationship, has
the status of an employee with a municipality, or any
instrumentality thereof, or a participating
instrumentality, including aldermen, county
supervisors and other persons (excepting those
employed as independent contractors) who are paid
compensation, fees, allowances or other emolument for
official duties, and, in counties, the several county
fee offices.
(b) Serves as a township treasurer appointed under the
School Code, as heretofore or hereafter amended, and who
receives for such services regular compensation as
distinguished from per diem compensation, and any regular
employee in the office of any township treasurer whether or
not his earnings are paid from the income of the permanent
township fund or from funds subject to distribution to the
several school districts and parts of school districts as
provided in the School Code, or from both such sources; or
is the chief executive officer, chief educational officer,
chief fiscal officer, or other employee of a Financial
Oversight Panel established pursuant to Article 1H of the
School Code, other than a superintendent or certified
school business official, except that such person shall not
be treated as an employee under this Section if that person
has negotiated with the Financial Oversight Panel, in
conjunction with the school district, a contractual

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agreement for exclusion from this Section.
(c) Holds an elective office in a municipality,
instrumentality thereof or participating instrumentality.
(2) "Employee" does not include persons who:
(a) Are eligible for inclusion under any of the
following laws:
1. "An Act in relation to an Illinois State
Teachers' Pension and Retirement Fund", approved May
27, 1915, as amended;
2. Articles 15 and 16 of this Code.
However, such persons shall be included as employees to
the extent of earnings that are not eligible for inclusion
under the foregoing laws for services not of an
instructional nature of any kind.
However, any member of the armed forces who is employed
as a teacher of subjects in the Reserve Officers Training
Corps of any school and who is not certified under the law
governing the certification of teachers shall be included
as an employee.
(b) Are designated by the governing body of a
municipality in which a pension fund is required by law to
be established for policemen or firemen, respectively, as
performing police or fire protection duties, except that
when such persons are the heads of the police or fire
department and are not eligible to be included within any
such pension fund, they shall be included within this

SB2404 Engrossed - 66 - LRB098 09018 EFG 39154 b
Article; provided, that such persons shall not be excluded
to the extent of concurrent service and earnings not
designated as being for police or fire protection duties.
However, (i) any head of a police department who was a
participant under this Article immediately before October
1, 1977 and did not elect, under Section 3-109 of this Act,
to participate in a police pension fund shall be an
"employee", and (ii) any chief of police who elects to
participate in this Fund under Section 3-109.1 of this
Code, regardless of whether such person continues to be
employed as chief of police or is employed in some other
rank or capacity within the police department, shall be an
employee under this Article for so long as such person is
employed to perform police duties by a participating
municipality and has not lawfully rescinded that election.
(c) After August 26, 2011 (the effective date of Public
Act 97-609), are contributors to or eligible to contribute
to a Taft-Hartley pension plan established on or before
June 1, 2011 and are employees of a theatre, arena, or
convention center that is located in a municipality located
in a county with a population greater than 5,000,000, and
to which the participating municipality is required to
contribute as the person's employer based on earnings from
the municipality. Nothing in this paragraph shall affect
service credit or creditable service for any period of
service prior to August 26, 2011, and this paragraph shall

SB2404 Engrossed - 67 - LRB098 09018 EFG 39154 b
not apply to individuals who are participating in the Fund
prior to August 26, 2011.
(d) Become an employee of any of the following
participating instrumentalities on or after the effective
date of this amendatory Act of the 98th General Assembly:
the Illinois Municipal League; the Illinois Association of
Park Districts; the Illinois Supervisors, County
Commissioners and Superintendents of Highways Association;
an association or not-for-profit corporation, membership
in which is authorized under Section 85-15 of the Township
Code; the United Counties Council; or the Will County
Governmental League.
(3) All persons, including, without limitation, public
defenders and probation officers, who receive earnings from
general or special funds of a county for performance of
personal services or official duties within the territorial
limits of the county, are employees of the county (unless
excluded by subsection (2) of this Section) notwithstanding
that they may be appointed by and are subject to the direction
of a person or persons other than a county board or a county
officer. It is hereby established that an employer-employee
relationship under the usual common law rules exists between
such employees and the county paying their salaries by reason
of the fact that the county boards fix their rates of
compensation, appropriate funds for payment of their earnings
and otherwise exercise control over them. This finding and this

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amendatory Act shall apply to all such employees from the date
of appointment whether such date is prior to or after the
effective date of this amendatory Act and is intended to
clarify existing law pertaining to their status as
participating employees in the Fund.
(Source: P.A. 97-429, eff. 8-16-11; 97-609, eff. 8-26-11;
97-813, eff. 7-13-12.)
(40 ILCS 5/14-103.10) (from Ch. 108 1/2, par. 14-103.10)
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
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

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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
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:

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(1) for vacation;
(2) for accumulated unused sick leave;
(3) upon discharge or dismissal; and
(4) for approved holidays.
(f) Notwithstanding any other provision of this Section,
"compensation" does not include any future increase in income
offered by a department under this Article pursuant to the
requirements of subsection (c) of Section 14-106.5 that is
accepted by a Tier I employee, or a Tier I retiree returning to
active service, who has made the election under paragraph (2)
of subsection (a) or (a-5) of Section 14-106.5.
(g) Notwithstanding any other provision of this Section,
for an employee who first becomes a participant on or after the
effective date of this amendatory Act of the 98th General
Assembly, "compensation" does not include any payments or
reimbursements for travel vouchers submitted more than 30 days
after the last day of travel for which the voucher is
submitted.
(Source: P.A. 96-1490, eff. 1-1-11.)
(40 ILCS 5/14-103.40 new)
Sec. 14-103.40. Tier I employee. "Tier I 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

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under Article 2, 3, 4, 5, 6, or 18 of this Code.
(40 ILCS 5/14-103.41 new)
Sec. 14-103.41. Tier I retiree. "Tier I retiree": A former
Tier I employee who is receiving a retirement annuity.
(40 ILCS 5/14-103.42 new)
Sec. 14-103.42. Future increase in income. "Future
increase in income": Any increase in income in any form offered
by a department to an employee under this Article after June
30, 2014 that would qualify as "compensation", as defined in
Section 14-103.10, but for the fact that the department offered
the increase in income to the employee on the condition that it
not qualify as compensation and the employee accepted the
increase in income subject to that condition. The term "future
increase in income" does not include an increase in income in
any form that is paid to a Tier I employee under an employment
contract or collective bargaining agreement that is in effect
on the effective date of this Section but does include an
increase in income in any form pursuant to an extension,
amendment, or renewal of any such employment contract or
collective bargaining agreement on or after the effective date
of this amendatory Act of the 98th General Assembly.
(40 ILCS 5/14-106.5 new)
Sec. 14-106.5. Election by Tier I employees and Tier I

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retirees.
(a) Each Tier I employee shall make an irrevocable election
either:
(1) to agree to item (i) or (ii) as set forth in this
paragraph (1):
(i) to have the amount of the automatic annual
increases in his or her retirement annuity that are
otherwise provided for in this Article calculated,
instead, as provided in subsection (a-1) of Section
14-114, and to waive his or her eligibility for 2
automatic annual increases in retirement annuity as
provided in subsection (a-2) of Section 14-114; or
(ii) to waive his or her eligibility for 3
automatic annual increases in retirement annuity, as
provided in subsection (a-3) of Section 14-114, and to
make the contributions set forth in subsection (a-5) of
Section 14-133; or
(2) to not agree to item (i) or (ii) as set forth in
paragraph (1) of this subsection.
The election required under this subsection (a) shall be
made by each Tier I employee no earlier than February 1, 2014
and no later than May 31, 2014, except that:
(i) a person who becomes a Tier I employee under this
Article on or after February 1, 2014 must make the election
under this subsection (a) within 60 days after becoming a
Tier I employee;

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(ii) a person who returns to active service as a Tier I
employee under this Article on or after February 1, 2014
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 I employee; and
(iii) a person who made the election under subsection
(a-5) as a Tier I retiree remains bound by that election
and shall not make a later election under this subsection
(a).
If a Tier I 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) Each Tier I retiree shall make an irrevocable
election either:
(1) to agree to the following:
(i) to have the amount of the automatic annual
increases in his or her retirement annuity calculated
without regard to subsection (a-1), (a-2), or (a-3) of
Section 14-114; and
(ii) to waive his or her eligibility for 2
automatic annual increases in retirement annuity as
provided in subsection (a-4) of Section 14-114; or
(2) to not agree to items (i) and (ii) as set forth in
paragraph (1) of this subsection.
The election required under this subsection (a-5) shall be

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made by each Tier I retiree no earlier than February 1, 2014
and no later than May 31, 2014, except that:
(i) a person who becomes a Tier I retiree under this
Article on or after February 1, 2014 must make the election
under this subsection (a-5) within 60 days after becoming a
Tier I retiree; and
(ii) a person who made the election under subsection
(a) as a Tier I employee remains bound by that election and
shall not make a later election under this subsection
(a-5).
If a Tier I retiree fails for any reason to make a required
election under this subsection within the time specified, then
the Tier I retiree shall be deemed to have made the election
under paragraph (2) of this subsection.
(a-10) All elections under subsection (a) or (a-5) that are
made or deemed to be made before June 1, 2014 shall take effect
on July 1, 2014. Elections that are made or deemed to be made
on or after June 1, 2014 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 98th General Assembly for making an
election under paragraph (1) of subsection (a) of this Section,
any future increases in income offered by a department under
this Article to a Tier I employee who has made an election
under paragraph (1) of subsection (a) of this Section shall be

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offered expressly and irrevocably as constituting compensation
under Section 14-103.10. In addition, a Tier I employee who has
made an election under item (i) of paragraph (1) of subsection
(a) of this Section shall receive the right to also participate
in the optional cash balance plan established under Section
1-162.
As adequate and legal consideration provided under this
amendatory Act of the 98th General Assembly for making an
election under paragraph (1) of subsection (a-5) of this
Section, any future increases in income offered by a department
under this Article to a Tier I retiree who returns to active
service after having made the election under paragraph (1) of
subsection (a-5) of this Section shall be offered expressly and
irrevocably as constituting compensation under Section
14-103.10.
(c) A Tier I employee who makes the election under
paragraph (2) of subsection (a) of this Section shall not be
subject to either item (i) or (ii) set forth in paragraph (1)
of subsection (a) of this Section. However, any future
increases in income offered by a department under this Article
to a Tier I employee who has made the election under paragraph
(2) of subsection (a) of this Section shall be offered by the
department expressly and irrevocably as not constituting
compensation under Section 14-103.10, and the employee may not
accept any future increase in income that is offered in
violation of this requirement. In addition, a Tier I employee

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who has made the election under paragraph (2) of subsection (a)
of this Section shall not receive the right to participate in
the optional cash balance plan established under Section 1-162.
A Tier I retiree who makes the election under paragraph (2)
of subsection (a-5) of this Section shall not be subject to
either item (i) or (ii) set forth in paragraph (1) of
subsection (a-5) of this Section. However, any future increases
in income offered by a department under this Article to a Tier
I retiree who returns to active service and has made the
election under paragraph (2) of subsection (a-5) of this
Section shall be offered by the department expressly and
irrevocably as not constituting compensation under Section
14-103.10, and the employee may not accept any future increase
in income that is offered in violation of this requirement. In
addition, a Tier I retiree who returns to active service and
has made the election under paragraph (2) of subsection (a) of
this Section shall not receive the right to participate in the
optional cash balance plan established under Section 1-162.
(d) The System shall make a good faith effort to contact
each Tier I employee and Tier I retiree subject to this
Section. The System shall mail information describing the
required election to each Tier I employee and Tier I retiree by
United States Postal Service mail to his or her last known
address on file with the System. If the Tier I employee or Tier
I retiree 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 I employees and Tier I retirees 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 I employees and Tier I retirees 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 I
employee or Tier I retiree should make or specific to the legal
or tax circumstances of or consequences to the Tier I employee
or Tier I retiree.
The System shall inform Tier I employees and Tier I
retirees in the election packet required under this subsection
that the Tier I employee or Tier I retiree 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

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held liable for any information given to a member, beneficiary,
or annuitant 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 98th 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 any future
increases in income expressly and irrevocably as not
constituting "compensation" under Section 14-103.10 to any
Tier I employee, or Tier I retiree returning to active service,
who has made an election under paragraph (2) of subsection (a)
or (a-5) of Section 14-106.5. A Tier I employee, or Tier I
retiree returning to active service, who has made an election
under paragraph (2) of subsection (a) or (a-5) of Section
14-106.5 shall not accept any future increase in income that is
offered by an employer under this Article in violation of the
requirement set forth in this subsection.
(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) An employee who has made the election under item (i) of
paragraph (1) of subsection (a) of this Section may elect to
participate in the optional cash balance plan under Section

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1-162.
The election to participate in the optional cash balance
plan shall be made in writing, in the manner provided by the
applicable retirement system.
(h) 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.
(i) If this Section is determined to be unconstitutional or
otherwise invalid by a final unappealable decision of an
Illinois court or a court of competent jurisdiction as applied
to Tier I employees but not as applied to Tier I retirees, then
this Section and the changes deriving from the election
required under this Section shall be null and void as applied
to Tier I employees but shall remain in full effect for Tier I
retirees.
(j) If this Section is determined to be unconstitutional or
otherwise invalid by a final unappealable decision of an
Illinois court or a court of competent jurisdiction as applied
to Tier I retirees but not as applied to Tier I employees, then
this Section and the changes deriving from the election
required under this Section shall be null and void as applied
to Tier I retirees but shall remain in full effect for Tier I
employees.
(k) 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

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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)
Sec. 14-114. Automatic increase in retirement annuity.
(a) Subject to the provisions of subsections (a-1), (a-2),
(a-3), and (a-4), 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 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

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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.
(a-1) Notwithstanding any other provision of this Article,
for a Tier I employee who made the election under item (i) of
paragraph (1) of subsection (a) of Section 14-106.5, the amount
of each automatic annual increase in retirement annuity

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occurring on or after the effective date of that election shall
be 3% of the originally granted retirement annuity.
(a-2) Notwithstanding any other provision of this Article,
for a Tier I employee who made the election under item (i) of
paragraph (1) of subsection (a) of Section 14-106.5, once the
first annual increase under this Section has been granted, the
next 2 scheduled annual increases shall be skipped, and
thereafter all annual increases shall be granted.
(a-3) Notwithstanding any other provision of this Article,
for a Tier I employee who made the election under item (ii) of
paragraph (1) of subsection (a) of Section 14-106.5, once the
first annual increase under this Section has been granted, the
next 3 scheduled annual increases shall be skipped, and
thereafter all annual increases shall be granted.
(a-4) Notwithstanding any other provision of this Article,
for a Tier I retiree who made the election under paragraph (1)
of subsection (a-5) of Section 14-106.5:
(1) if the Tier I retiree has not received the first
annual increase under this Section as of the effective date
of this amendatory Act of the 98th General Assembly, then
once the first annual increase under this Section has been
granted, the next scheduled annual increase shall be
skipped, the following annual increase shall be granted,
the next annual increase shall be skipped, and thereafter
all annual increases shall be granted; and
(2) if the Tier I retiree has received the first annual

SB2404 Engrossed - 83 - LRB098 09018 EFG 39154 b
increase under this Section as of the effective date of
this amendatory Act of the 98th General Assembly, then the
next annual increase after that effective date shall be
skipped, the following annual increase shall be granted,
the next annual increase shall be skipped, and thereafter
all annual increases shall be granted.
(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,

SB2404 Engrossed - 84 - LRB098 09018 EFG 39154 b
1982, any annuitant who began receiving a retirement annuity on
or before January 1, 1977, shall have his retirement annuity
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 5/14-132) (from Ch. 108 1/2, par. 14-132)
Sec. 14-132. Obligations of State; funding guarantee.
(a) The payment of the required department contributions,
all allowances, annuities, benefits granted under this

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Article, and all expenses of administration of the system are
obligations of the State of Illinois to the extent specified in
this Article.
All income of the system shall be credited to a separate
account for this system in the State treasury and shall be used
to pay allowances, annuities, benefits and administration
expense.
(b) The State shall be contractually obligated to
contribute to the System in each State fiscal year an amount
not less than the sum required in Section 14-131 as that
Section existed prior to the effective date of this amendatory
Act of the 98th General Assembly.
The obligations created under this subsection (b) are
contractual obligations protected and enforceable under
Article I, Section 16 and Article XIII, Section 5 of the
Illinois Constitution.
Notwithstanding any other provision of law, if the State
fails to pay in a State fiscal year the amount guaranteed under
this subsection (b), the System may bring a mandamus action in
the Circuit Court of Sangamon County to compel the State to
make that payment, irrespective of other remedies that may be
available to the System. It shall be the mandatory fiduciary
obligation of the Board of the System to bring that action if
the State fails to pay in the fiscal year the amount guaranteed
under this subsection (b). Before commencing that action, the
Board shall submit a voucher for the contributions required in

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Section 14-131. If the State fails to pay a vouchered amount
within 90 days after receiving a voucher for that amount, then
the Board shall submit a written request to the Comptroller
seeking payment of that amount. A copy of the request shall be
filed with the Secretary of State, and the Secretary of State
shall provide copies of the request to the Governor and General
Assembly. No earlier than the 16th day after filing a request
with the Secretary, but no later than the 21st day after filing
that request, the Board may commence such an action in the
Circuit Court. If the Board fails to commence such action on or
before the 21st day after filing the request with the Secretary
of State, then any Tier I employee or Tier I retiree who made
the election under paragraph (1) of subsection (a) or (a-5) of
Section 14-106.5 may file a mandamus action against the Board
to compel the Board to commence its mandamus action against the
State. This subsection (b) constitutes an express waiver of the
State's sovereign immunity. In ordering the State to make the
required payment, the court may order a reasonable payment
schedule to enable the State to make the required payment. The
obligations and causes of action created under this subsection
(b) shall be in addition to any other right or remedy otherwise
accorded by common law, or State or federal law, and nothing in
this subsection shall be construed to deny, abrogate, impair,
or waive any such common law or statutory right or remedy.
Any payments required to be made by the State pursuant to
this subsection (b) are expressly subordinated to the payment

SB2404 Engrossed - 87 - LRB098 09018 EFG 39154 b
of the principal, interest, and premium, if any, on any bonded
debt obligation of the State or any other State-created entity,
either currently outstanding or to be issued, for which the
source of repayment or security thereon is derived directly or
indirectly from tax revenues collected by the State or any
other State-created entity. Payments on such bonded
obligations include any statutory fund transfers or other
prefunding mechanisms or formulas set forth, now or hereafter,
in State law or bond indentures, into debt service funds or
accounts of the State related to such bonded obligations,
consistent with the payment schedules associated with such
obligations.
(Source: P.A. 80-841.)
(40 ILCS 5/14-133) (from Ch. 108 1/2, par. 14-133)
Sec. 14-133. Contributions on behalf of members.
(a) 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

SB2404 Engrossed - 88 - LRB098 09018 EFG 39154 b
"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%
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-1) In addition to the contributions required under
subsection (a), an employee who elects to participate in the
optional cash balance plan under Section 1-162 shall pay to the

SB2404 Engrossed - 89 - LRB098 09018 EFG 39154 b
System for the purpose of participating in the optional cash
balance plan an additional contribution of 2% of each payment
of compensation received while he or she is a participant in
the optional cash balance plan. These contributions shall not
be used for the purpose of determining any benefit under this
Article except as provided in the optional cash balance plan.
(a-5) In addition to the contributions otherwise required
under this Article, each Tier I member who made the election
under item (ii) of paragraph (1) of subsection (a) of Section
14-106.5 shall also make the following contributions for
retirement annuity from each payment of compensation:
(1) beginning July 1, 2014 and through June 30, 2015,
1% of compensation; and
(2) beginning on July 1, 2015, 2% of compensation.
(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
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)
Sec. 14-135.08. To certify required State contributions.
(a) To certify to the Governor and to each department, on

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or before November 15 of each year through 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,
beginning January 1, 2013, the State Actuary shall issue a
preliminary report concerning the proposed certification and
identifying, if necessary, recommended changes in actuarial
assumptions that the Board must consider before finalizing its
certification of the required State contributions.
On or before January 15, 2013 and each January 15
thereafter, the Board shall certify to the Governor and the
General Assembly the amount of the required State contribution
for the next fiscal year. The certification shall include a
copy of the actuarial recommendations upon which it is based
and shall specifically identify the System's projected State

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normal cost for that fiscal year. The Board's certification
must note any deviations from the State Actuary's recommended
changes, the reason or reasons for not following the State
Actuary's recommended changes, and the fiscal impact of not
following the State Actuary's recommended changes on the
required State contribution.
(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
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

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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
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.
(Source: P.A. 96-1497, eff. 1-14-11; 96-1511, eff. 1-27-11;
97-694, eff. 6-18-12.)
(40 ILCS 5/14-152.1)
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

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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 or Article 1 by Public Act
96-37 or this amendatory Act of the 98th 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
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 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

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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. 96-37, eff. 7-13-09.)
(40 ILCS 5/15-106) (from Ch. 108 1/2, par. 15-106)
Sec. 15-106. Employer. "Employer": The University of

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Illinois, Southern Illinois University, Chicago State
University, Eastern Illinois University, Governors State
University, Illinois State University, Northeastern Illinois
University, Northern Illinois University, Western Illinois
University, the State Board of Higher Education, the Illinois
Mathematics and Science Academy, the University Civil Service
Merit Board, the Board of Trustees of the State Universities
Retirement System, the Illinois Community College Board,
community college boards, any association of community college
boards organized under Section 3-55 of the Public Community
College Act, the Board of Examiners established under the
Illinois Public Accounting Act, and, only during the period for
which employer contributions required under Section 15-155 are
paid, the following organizations: the alumni associations,
the foundations and the athletic associations which are
affiliated with the universities and colleges included in this
Section as employers. An individual that begins employment
after the effective date of this amendatory Act of the 98th
General Assembly with an entity not defined as an employer in
this Section shall not be deemed an employee for the purposes
of this Article with respect to that employment and shall not
be eligible to participate in the System with respect to that
employment; provided, however, that those individuals who are
both employed and already participants in the System on the
effective date of this amendatory Act of the 98th General
Assembly shall be entitled to remain participants in the System

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for the duration of that employment and continue to earn
service credit.
Notwithstanding any provision of law to the contrary, an
individual who begins employment with any of the following
employers on or after the effective date of this amendatory Act
of the 98th General Assembly shall not be deemed an employee
and shall not be eligible to participate in the System with
respect to that employment: any association of community
college boards organized under Section 3-55 of the Public
Community College Act, the Association of Illinois
Middle-Grade Schools, the Illinois Association of School
Administrators, the Illinois Association for Supervision and
Curriculum Development, the Illinois Principals Association,
the Illinois Association of School Business Officials, or the
Illinois Special Olympics; provided, however, that those
individuals who are both employed and already participants in
the System on the effective date of this amendatory Act of the
98th General Assembly shall be entitled to remain participants
in the System for the duration of that employment and continue
to earn service credit.
A department as defined in Section 14-103.04 is an employer
for any person appointed by the Governor under the Civil
Administrative Code of Illinois who is a participating employee
as defined in Section 15-109. The Department of Central
Management Services is an employer with respect to persons
employed by the State Board of Higher Education in positions

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with the Illinois Century Network as of June 30, 2004 who
remain continuously employed after that date by the Department
of Central Management Services in positions with the Illinois
Century Network, the Bureau of Communication and Computer
Services, or, if applicable, any successor bureau.
The cities of Champaign and Urbana shall be considered
employers, but only during the period for which contributions
are required to be made under subsection (b-1) of Section
15-155 and only with respect to individuals described in
subsection (h) of Section 15-107.
(Source: P.A. 95-369, eff. 8-23-07; 95-728, eff. 7-1-08 - See
Sec. 999.)
(40 ILCS 5/15-107) (from Ch. 108 1/2, par. 15-107)
Sec. 15-107. Employee.
(a) "Employee" means any member of the educational,
administrative, secretarial, clerical, mechanical, labor or
other staff of an employer whose employment is permanent and
continuous or who is employed in a position in which services
are expected to be rendered on a continuous basis for at least
4 months or one academic term, whichever is less, who (A)
receives payment for personal services on a warrant issued
pursuant to a payroll voucher certified by an employer and
drawn by the State Comptroller upon the State Treasurer or by
an employer upon trust, federal or other funds, or (B) is on a
leave of absence without pay. Employment which is irregular,

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intermittent or temporary shall not be considered continuous
for purposes of this paragraph.
However, a person is not an "employee" if he or she:
(1) is a student enrolled in and regularly attending
classes in a college or university which is an employer,
and is employed on a temporary basis at less than full
time;
(2) is currently receiving a retirement annuity or a
disability retirement annuity under Section 15-153.2 from
this System;
(3) is on a military leave of absence;
(4) is eligible to participate in the Federal Civil
Service Retirement System and is currently making
contributions to that system based upon earnings paid by an
employer;
(5) is on leave of absence without pay for more than 60
days immediately following termination of disability
benefits under this Article;
(6) is hired after June 30, 1979 as a public service
employment program participant under the Federal
Comprehensive Employment and Training Act and receives
earnings in whole or in part from funds provided under that
Act; or
(7) is employed on or after July 1, 1991 to perform
services that are excluded by subdivision (a)(7)(f) or
(a)(19) of Section 210 of the federal Social Security Act

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from the definition of employment given in that Section (42
U.S.C. 410).
(b) Any employer may, by filing a written notice with the
board, exclude from the definition of "employee" all persons
employed pursuant to a federally funded contract entered into
after July 1, 1982 with a federal military department in a
program providing training in military courses to federal
military personnel on a military site owned by the United
States Government, if this exclusion is not prohibited by the
federally funded contract or federal laws or rules governing
the administration of the contract.
(c) Any person appointed by the Governor under the Civil
Administrative Code of the State is an employee, if he or she
is a participant in this system on the effective date of the
appointment.
(d) A participant on lay-off status under civil service
rules is considered an employee for not more than 120 days from
the date of the lay-off.
(e) A participant is considered an employee during (1) the
first 60 days of disability leave, (2) the period, not to
exceed one year, in which his or her eligibility for disability
benefits is being considered by the board or reviewed by the
courts, and (3) the period he or she receives disability
benefits under the provisions of Section 15-152, workers'
compensation or occupational disease benefits, or disability
income under an insurance contract financed wholly or partially

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by the employer.
(f) Absences without pay, other than formal leaves of
absence, of less than 30 calendar days, are not considered as
an interruption of a person's status as an employee. If such
absences during any period of 12 months exceed 30 work days,
the employee status of the person is considered as interrupted
as of the 31st work day.
(g) A staff member whose employment contract requires
services during an academic term is to be considered an
employee during the summer and other vacation periods, unless
he or she declines an employment contract for the succeeding
academic term or his or her employment status is otherwise
terminated, and he or she receives no earnings during these
periods.
(h) 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 that fire department became employed by the fire
department of the City of Urbana or the City of Champaign shall
continue to be considered as an employee for purposes of this
Article for so long as the individual remains employed as a
firefighter by the City of Urbana or the City of Champaign. The
individual shall cease to be considered an employee under this
subsection (h) upon the first termination of the individual's
employment as a firefighter by the City of Urbana or the City

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of Champaign.
(i) An individual who is employed on a full-time basis as
an officer or employee of a statewide teacher organization that
serves System participants or an officer of a national teacher
organization that serves System participants may participate
in the System and shall be deemed an employee, provided that
(1) the individual has previously earned creditable service
under this Article, (2) the individual files with the System an
irrevocable election to become a participant before the
effective date of this amendatory Act of the 97th General
Assembly, (3) the individual does not receive credit for that
employment under any other Article of this Code, and (4) the
individual first became a full-time employee of the teacher
organization and becomes a participant before the effective
date of this amendatory Act of the 97th General Assembly. An
employee under this subsection (i) is responsible for paying to
the System both (A) employee contributions based on the actual
compensation received for service with the teacher
organization and (B) employer contributions equal to the normal
costs (as defined in Section 15-155) resulting from that
service; all or any part of these contributions may be paid on
the employee's behalf or picked up for tax purposes (if
authorized under federal law) by the teacher organization.
A person who is an employee as defined in this subsection
(i) may establish service credit for similar employment prior
to becoming an employee under this subsection by paying to the

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System for that employment the contributions specified in this
subsection, plus interest at the effective rate from the date
of service to the date of payment. However, credit shall not be
granted under this subsection for any such prior employment for
which the applicant received credit under any other provision
of this Code, or during which the applicant was on a leave of
absence under Section 15-113.2.
(j) A person employed by the State Board of Higher
Education in a position with the Illinois Century Network as of
June 30, 2004 shall be considered to be an employee for so long
as he or she remains continuously employed after that date by
the Department of Central Management Services in a position
with the Illinois Century Network, the Bureau of Communication
and Computer Services, or, if applicable, any successor bureau
and meets the requirements of subsection (a).
(k) In the case of doubt as to whether any person is an
employee within the meaning of this Section, the decision of
the Board shall be final.
(Source: P.A. 97-651, eff. 1-5-12.)
(40 ILCS 5/15-108.1 new)
Sec. 15-108.1. Tier I employee. "Tier I employee": An
employee under this Article, other than a participant in the
self-managed plan under Section 15-158.2, who first became a
member or participant before January 1, 2011 under any
reciprocal retirement system or pension fund established under

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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
15-132.9 and the consequences arising from that election, "Tier
I employee" does not include a participant under this Article
who would qualify as a Tier I employee but who has made an
irrevocable election on or before January 1, 2013 to retire
from service pursuant to the terms of a collective bargaining
agreement in effect on January 1, 2013, excluding any
extension, amendment, or renewal of that agreement on or after
that date, and has notified the System of that election.
(40 ILCS 5/15-108.2 new)
Sec. 15-108.2. Tier I retiree. "Tier I retiree": A former
Tier I employee who is receiving a retirement annuity. However,
for the purposes of the election under Section 15-132.9 and the
consequences arising from that election, "Tier I retiree" also
includes a participant under this Article who would qualify as
a Tier I employee but who has made an irrevocable election on
or before January 1, 2013 to retire from service pursuant to
the terms of a collective bargaining agreement in effect on
January 1, 2013, excluding any extension, amendment, or renewal
of that agreement on or after that date, and has notified the
System of that election.
A person does not become a Tier I retiree by virtue of
receiving a reversionary, survivors, beneficiary or disability

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annuity.
(40 ILCS 5/15-111) (from Ch. 108 1/2, par. 15-111)
Sec. 15-111. Earnings. "Earnings": 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
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

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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.
Notwithstanding any other provision of this Section,
"earnings" does not include any future increase in income
offered by an employer under this Article pursuant to the
requirements of subsection (c) of Section 15-132.9 that is
accepted by a Tier I employee, or a Tier I retiree returning to
active service, who has made the election under paragraph (2)
of subsection (a) or (a-5) of Section 15-132.9.
(Source: P.A. 91-887, eff. 7-6-00.)
(40 ILCS 5/15-112.1 new)
Sec. 15-112.1. Future increase in income. "Future increase
in income": Any increase in income in any form offered by an
employer to an employee under this Article after June 30, 2014
that would qualify as "earnings", as defined in Section 15-111,
but for the fact that the employer offered the increase in
income to the employee on the condition that it not qualify as
earnings and the employee accepted the increase in income

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subject to that condition. The term "future increase in income"
does not include an increase in income in any form that is paid
to a Tier I employee under an employment contract or collective
bargaining agreement that is in effect on the effective date of
this Section but does include an increase in income in any form
pursuant to an extension, amendment, or renewal of any such
employment contract or collective bargaining agreement on or
after the effective date of this amendatory Act of the 98th
General Assembly.
(40 ILCS 5/15-132.9 new)
Sec. 15-132.9. Election by Tier I employees and Tier I
retirees.
(a) Each Tier I employee shall make an irrevocable election
either:
(1) to agree to item (i) or (ii) as set forth in this
paragraph (1):
(i) to have the amount of the automatic annual
increases in his or her retirement annuity that are
otherwise provided for in this Article calculated,
instead, as provided in subsection (d-1) of Section
15-136, and to waive his or her eligibility for 2
automatic annual increases in retirement annuity as
provided in subsection (d-2) of Section 15-157; or
(ii) to waive his or her eligibility for 3
automatic annual increases in retirement annuity, as

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provided in subsection (d-3) of Section 15-136, and to
make the contributions set forth in subsection (a-5) of
Section 15-157; or
(2) to not agree to item (i) or (ii) as set forth in
paragraph (1) of this subsection.
The election required under this subsection (a) shall be
made by each Tier I employee no earlier than February 1, 2014
and no later than May 31, 2014, except that:
(i) a person who becomes a Tier I employee under this
Article on or after February 1, 2014 must make the election
under this subsection (a) within 60 days after becoming a
Tier I employee;
(ii) a person who returns to active service as a Tier I
employee under this Article on or after February 1, 2014
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 I employee; and
(iii) a person who made the election under subsection
(a-5) as a Tier I retiree remains bound by that election
and shall not make a later election under this subsection
(a).
If a Tier I 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) Each Tier I retiree shall make an irrevocable

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election either:
(1) to agree to the following:
(i) to have the amount of the automatic annual
increases in his or her retirement annuity calculated
without regard to subsection (d-1), (d-2), or (d-3) of
Section 15-136; and
(ii) to waive his or her eligibility for 2
automatic annual increases in retirement annuity as
provided in subsection (d-4) of Section 15-136; or
(2) to not agree to items (i) and (ii) as set forth in
paragraph (1) of this subsection.
The election required under this subsection (a-5) shall be
made by each Tier I retiree no earlier than February 1, 2014
and no later than May 31, 2014, except that:
(i) a person who becomes a Tier I retiree under this
Article on or after February 1, 2014 must make the election
under this subsection (a-5) within 60 days after becoming a
Tier I retiree; and
(ii) a person who made the election under subsection
(a) as a Tier I employee remains bound by that election and
shall not make a later election under this subsection
(a-5).
If a Tier I retiree fails for any reason to make a required
election under this subsection within the time specified, then
the Tier I retiree shall be deemed to have made the election
under paragraph (2) of this subsection.

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(a-10) All elections under subsection (a) or (a-5) that are
made or deemed to be made before June 1, 2014 shall take effect
on July 1, 2014. Elections that are made or deemed to be made
on or after June 1, 2014 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 98th General Assembly for making an
election under paragraph (1) of subsection (a) of this Section,
any future increases in income offered by an employer under
this Article to a Tier I employee who has made an election
under paragraph (1) of subsection (a) of this Section shall be
offered expressly and irrevocably as constituting earnings
under Section 15-111. In addition, a Tier I employee who has
made an election under item (i) of paragraph (1) of subsection
(a) of this Section shall receive the right to also participate
in the optional cash balance plan established under Section
1-162.
As adequate and legal consideration provided under this
amendatory Act of the 98th General Assembly for making an
election under paragraph (1) of subsection (a-5) of this
Section, any future increases in income offered by an employer
under this Article to a Tier I retiree who returns to active
service after having made the election under paragraph (1) of
subsection (a-5) of this Section shall be offered expressly and
irrevocably as constituting earnings under Section 15-111.

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(c) A Tier I employee who makes the election under
paragraph (2) of subsection (a) of this Section shall not be
subject to either item (i) or (ii) set forth in paragraph (1)
of subsection (a) of this Section. However, any future
increases in income offered by an employer under this Article
to a Tier I employee who has made the election under paragraph
(2) of subsection (a) of this Section shall be offered by the
employer expressly and irrevocably as not constituting
earnings under Section 15-111, and the employee may not accept
any future increase in income that is offered in violation of
this requirement. In addition, a Tier I employee who has made
the election under paragraph (2) of subsection (a) of this
Section shall not receive the right to participate in the
optional cash balance plan established under Section 1-162.
A Tier I retiree who makes the election under paragraph (2)
of subsection (a-5) of this Section shall not be subject to
either item (i) or (ii) set forth in paragraph (1) of
subsection (a-5) of this Section. However, any future increases
in income offered by an employer under this Article to a Tier I
retiree who returns to active service and has made the election
under paragraph (2) of subsection (a-5) of this Section shall
be offered by the employer expressly and irrevocably as not
constituting earnings under Section 15-111, and the employee
may not accept any future increase in income that is offered in
violation of this requirement. In addition, a Tier I retiree
who returns to active service and has made the election under

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paragraph (2) of subsection (a-5) of this Section shall not
receive the right to participate in the optional cash balance
plan established under Section 1-162.
(d) The System shall make a good faith effort to contact
each Tier I employee and Tier I retiree subject to this
Section. The System shall mail information describing the
required election to each Tier I employee and Tier I retiree by
United States Postal Service mail to his or her last known
address on file with the System. If the Tier I employee or Tier
I retiree 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 I employees and Tier I retirees 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 I employees and Tier I retirees 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 I

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employee or Tier I retiree should make or specific to the legal
or tax circumstances of or consequences to the Tier I employee
or Tier I retiree.
The System shall inform Tier I employees and Tier I
retirees in the election packet required under this subsection
that the Tier I employee or Tier I retiree 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, beneficiary,
or annuitant 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 98th 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 any future increases in
income expressly and irrevocably as not constituting
"earnings" under Section 15-111 to any Tier I employee, or Tier
I retiree returning to active service, who has made an election
under paragraph (2) of subsection (a) or (a-5) of this Section.
A Tier I employee, or Tier I retiree returning to active

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service, who has made an election under paragraph (2) of
subsection (a) or (a-5) of this Section shall not accept any
future increase in income that is offered by an employer under
this Article in violation of the requirement set forth in this
subsection.
(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) An employee who has made the election under item (i) of
paragraph (1) of subsection (a) of this Section may elect to
participate in the optional cash balance plan under Section
1-162.
The election to participate in the optional cash balance
plan shall be made in writing, in the manner provided by the
applicable retirement system.
(h) 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.
(i) If this Section is determined to be unconstitutional or
otherwise invalid by a final unappealable decision of an
Illinois court or a court of competent jurisdiction as applied
to Tier I employees but not as applied to Tier I retirees, then
this Section and the changes deriving from the election
required under this Section shall be null and void as applied
to Tier I employees but shall remain in full effect for Tier I
retirees.

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(j) If this Section is determined to be unconstitutional or
otherwise invalid by a final unappealable decision of an
Illinois court or a court of competent jurisdiction as applied
to Tier I retirees but not as applied to Tier I employees, then
this Section and the changes deriving from the election
required under this Section shall be null and void as applied
to Tier I retirees but shall remain in full effect for Tier I
employees.
(k) 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 5/15-136) (from Ch. 108 1/2, par. 15-136)
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

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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
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.

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For the purpose of calculating an annuity under this Rule
2, neither the contribution required under subsection (a-1) of
Section 15-157 nor the contribution required under subsection
(a-5) of that Section shall be considered when determining the
participant's accumulated normal contributions under clause
(i) or the employer contribution under clause (ii).
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
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.

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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
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

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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.
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
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.
Rule 5: The retirement annuity of a participant who elected
early retirement under the provisions of Section 15-136.2 and
who, on or before February 16, 1995, brought administrative
proceedings pursuant to the administrative rules adopted by the
System to challenge the calculation of his or her retirement
annuity shall be the sum of the following, determined from
amounts credited to the participant in accordance with the
actuarial tables and the prescribed rate of interest in effect

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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; and
(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) an annuity which can be provided on an
actuarially equivalent basis from the employee
contribution for early retirement under Section 15-136.2,
and an annuity from employer contributions of an amount
equal to that which can be provided on an actuarially
equivalent basis from the employee contribution for early
retirement under Section 15-136.2.
In no event shall a retirement annuity under this Rule 5 be
lower than the amount obtained by adding (1) the monthly amount
obtained by dividing the combined employee and employer
contributions made under Section 15-136.2 by the System's
annuity factor for the age of the participant at the beginning
of the annuity payment period and (2) the amount equal to the
participant's annuity if calculated under Rule 1, reduced under
Section 15-136(b) as if no contributions had been made under

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Section 15-136.2.
With respect to a participant who is qualified for a
retirement annuity under this Rule 5 whose retirement annuity
began before the effective date of this amendatory Act of the
91st General Assembly, and for whom an employee contribution
was made under Section 15-136.2, the System shall recalculate
the retirement annuity under this Rule 5 and shall pay any
additional amounts due in the manner provided in Section
15-186.1 for benefits mistakenly set too low.
The amount of a retirement annuity calculated under this
Rule 5 shall be computed solely on the basis of those
contributions specifically set forth in this Rule 5. Except as
provided in clause (iii) of this Rule 5, neither an employee
nor employer contribution for early retirement under Section
15-136.2, nor any other employer contribution, shall be used in
the calculation of the amount of a retirement annuity under
this Rule 5.
The General Assembly has adopted the changes set forth in
Section 25 of this amendatory Act of the 91st General Assembly
in recognition that the decision of the Appellate Court for the
Fourth District in Mattis v. State Universities Retirement
System et al. might be deemed to give some right to the
plaintiff in that case. The changes made by Section 25 of this
amendatory Act of the 91st General Assembly are a legislative
implementation of the decision of the Appellate Court for the
Fourth District in Mattis v. State Universities Retirement

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System et al. with respect to that plaintiff.
The changes made by Section 25 of this amendatory Act of
the 91st General Assembly apply without regard to whether the
person is in service as an employee on or after its effective
date.
(b) 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.
(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

SB2404 Engrossed - 122 - LRB098 09018 EFG 39154 b
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 subsections (d-1), (d-2),
(d-3), and (d-4), an An annuitant 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, Rule 4, or Rule 5, 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
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, Rule 4, or Rule 5 contained in
this Section. The change made under this subsection by P.A.

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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 I employee who made the election under item (i) of
paragraph (1) of subsection (a) of Section 15-132.9, the amount
of each automatic annual increase in retirement annuity
occurring on or after the effective date of that election,
other than the initial increase, shall be 3% of the originally
granted retirement annuity.
(d-2) Notwithstanding any other provision of this Article,
for a Tier I employee who made the election under item (i) of
paragraph (1) of subsection (a) of Section 15-132.9, once the
first annual increase under this Section has been granted, the
next 2 scheduled annual increases shall be skipped, and
thereafter all annual increases shall be granted.
(d-3) Notwithstanding any other provision of this Article,
for a Tier I employee who made the election under item (ii) of

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paragraph (1) of subsection (a) of Section 15-132.9, once the
first annual increase under this Section has been granted, the
next 3 scheduled annual increases shall be skipped, and
thereafter all annual increases shall be granted.
(d-4) Notwithstanding any other provision of this Article,
for a Tier I retiree who made the election under paragraph (1)
of subsection (a-5) of Section 15-132.9:
(1) if the Tier I retiree has not received the first
annual increase under this Section as of the effective date
of this amendatory Act of the 98th General Assembly, then
once the first annual increase under this Section has been
granted, the next scheduled annual increase shall be
skipped, the following annual increase shall be granted,
the next annual increase shall be skipped, and thereafter
all annual increases shall be granted; and
(2) if the Tier I retiree has received the first annual
increase under this Section as of the effective date of
this amendatory Act of the 98th General Assembly, then the
next annual increase after that effective date shall be
skipped, the following annual increase shall be granted,
the next annual increase shall be skipped, and thereafter
all annual increases shall be granted.
(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

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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
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

SB2404 Engrossed - 126 - LRB098 09018 EFG 39154 b
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
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.)
(40 ILCS 5/15-156) (from Ch. 108 1/2, par. 15-156)
Sec. 15-156. Obligations of State.

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(a) The payment of (1) the required State contributions,
(2) all benefits granted under this system and (3) all expenses
in connection with the administration and operation thereof are
obligations of the State of Illinois to the extent specified in
this Article. The accumulated employee normal, additional and
survivors insurance contributions credited to the accounts of
active and inactive participants shall not be used to pay the
State's share of the obligations.
(b) The State shall be contractually obligated to
contribute to the System in each State fiscal year an amount
not less than the sum required in Section 15-155 as that
Section existed prior to the effective date of this amendatory
Act of the 98th General Assembly.
The obligations created under this subsection (b) are
contractual obligations protected and enforceable under
Article I, Section 16 and Article XIII, Section 5 of the
Illinois Constitution.
Notwithstanding any other provision of law, if the State
fails to pay in a State fiscal year the amount guaranteed under
this subsection (b), the System may bring a mandamus action in
the Circuit Court of Champaign County to compel the State to
make that payment, irrespective of other remedies that may be
available to the System. It shall be the mandatory fiduciary
obligation of the Board of the System to bring that action if
the State fails to pay in the fiscal year the amount guaranteed
under this subsection (b). Before commencing that action, the

SB2404 Engrossed - 128 - LRB098 09018 EFG 39154 b
Board shall submit a voucher for contributions required under
Section 15-155. If the State fails to pay a vouchered amount
within 90 days after receiving a voucher for that amount, then
the Board shall submit a written request to the Comptroller
seeking payment of that amount. A copy of the request shall be
filed with the Secretary of State, and the Secretary of State
shall provide copies of the request to the Governor and General
Assembly. No earlier than the 16th day after filing a request
with the Secretary, but no later than the 21st day after filing
that request, the Board may commence such an action in the
Circuit Court. If the Board fails to commence such action on or
before the 21st day after filing the request with the Secretary
of State, then any Tier I employee or Tier I retiree who made
the election under paragraph (1) of subsection (a) or (a-5) of
Section 15-132.9 may file a mandamus action against the Board
to compel the Board to commence its mandamus action against the
State. This subsection (b) constitutes an express waiver of the
State's sovereign immunity. In ordering the State to make the
required payment, the court may order a reasonable payment
schedule to enable the State to make the required payment. The
obligations and causes of action created under this subsection
(b) shall be in addition to any other right or remedy otherwise
accorded by common law, or State or federal law, and nothing in
this subsection shall be construed to deny, abrogate, impair,
or waive any such common law or statutory right or remedy.
Any payments required to be made by the State pursuant to

SB2404 Engrossed - 129 - LRB098 09018 EFG 39154 b
this subsection (b) are expressly subordinated to the payment
of the principal, interest, and premium, if any, on any bonded
debt obligation of the State or any other State-created entity,
either currently outstanding or to be issued, for which the
source of repayment or security thereon is derived directly or
indirectly from tax revenues collected by the State or any
other State-created entity. Payments on such bonded
obligations include any statutory fund transfers or other
prefunding mechanisms or formulas set forth, now or hereafter,
in State law or bond indentures, into debt service funds or
accounts of the State related to such bonded obligations,
consistent with the payment schedules associated with such
obligations.
(Source: P.A. 83-1440.)
(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

SB2404 Engrossed - 130 - LRB098 09018 EFG 39154 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.
(a-1) In addition to the contributions otherwise required
under this Article, an employee who elects to participate in

SB2404 Engrossed - 131 - LRB098 09018 EFG 39154 b
the optional cash balance plan under Section 1-162 shall pay to
the System for the purpose of participating in the optional
cash balance plan a contribution of 2% of each payment of
earnings received while he or she is a participant in the
optional cash balance plan. These contributions shall not be
used for the purpose of determining any benefit under this
Article except as provided in the optional cash balance plan.
(a-5) In addition to the contributions otherwise required
under this Article, each Tier I participant who made the
election under item (ii) of paragraph (1) of subsection (a) of
Section 15-132.9 shall also make the following contributions
toward the retirement benefits payable under the retirement
program applicable to the employee from each payment of
earnings applicable to employment under this system:
(1) beginning July 1, 2014 and through June 30, 2015,
1% of earnings; and
(2) beginning on July 1, 2015, 2% of earnings.
Except as otherwise specified, these contributions are to
be considered as normal contributions for purposes of this
Article.
(b) Starting September 1, 1969, each participating
employee shall make additional contributions of 1/2 of 1% of
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

SB2404 Engrossed - 132 - LRB098 09018 EFG 39154 b
benefits obtained under that retirement program.
(c) 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 considered as additional contributions for
purposes of this Article.
(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
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

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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 participating employee may make contributions for the
purchase of service credit under this Article.
(Source: P.A. 90-32, eff. 6-27-97; 90-65, eff. 7-7-97; 90-448,
eff. 8-16-97; 90-511, eff. 8-22-97; 90-576, eff. 3-31-98;
90-655, eff. 7-30-98; 90-766, eff. 8-14-98.)
(40 ILCS 5/15-163) (from Ch. 108 1/2, par. 15-163)
Sec. 15-163. To consider applications and authorize
payments.
To consider and pass on all certifications of employment
and applications for annuities and benefits; to authorize the
granting of annuities and benefits; and to limit or suspend any
payment or payments, all in accordance with this Article.
(Source: Laws 1963, p. 161.)

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(40 ILCS 5/15-165) (from Ch. 108 1/2, par. 15-165)
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 through 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
contribution to the System for State fiscal year 2011, applying

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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 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 and the projected State cost
for the self-managed plan for that 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

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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
president 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
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

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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
Section 15-155(a-1).
(Source: P.A. 96-1497, eff. 1-14-11; 96-1511, eff. 1-27-11;
97-694, eff. 6-18-12.)

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(40 ILCS 5/15-198)
Sec. 15-198. 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 or Article 1, 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 or
Article 1 by this amendatory Act of the 98th 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

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funding has been provided for the new benefit increase and
shall report its analysis to the Public Pension Division of the
Department of 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

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apply and qualify for the affected benefit while the new
benefit increase was in effect.
(Source: P.A. 94-4, eff. 6-1-05.)
(40 ILCS 5/16-106) (from Ch. 108 1/2, par. 16-106)
Sec. 16-106. Teacher. "Teacher": The following
individuals, provided that, for employment prior to July 1,
1990, they are employed on a full-time basis, or if not
full-time, on a permanent and continuous basis in a position in
which services are expected to be rendered for at least one
school term:
(1) Any educational, administrative, professional or
other staff employed in the public common schools included
within this system in a position requiring certification
under the law governing the certification of teachers;
(2) Any educational, administrative, professional or
other staff employed in any facility of the Department of
Children and Family Services or the Department of Human
Services, in a position requiring certification under the
law governing the certification of teachers, and any person
who (i) works in such a position for the Department of
Corrections, (ii) was a member of this System on May 31,
1987, and (iii) did not elect to become a member of the
State Employees' Retirement System pursuant to Section
14-108.2 of this Code; except that "teacher" does not
include any person who (A) becomes a security employee of

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the Department of Human Services, as defined in Section
14-110, after June 28, 2001 (the effective date of Public
Act 92-14), or (B) becomes a member of the State Employees'
Retirement System pursuant to Section 14-108.2c of this
Code;
(3) Any regional superintendent of schools, assistant
regional superintendent of schools, State Superintendent
of Education; any person employed by the State Board of
Education as an executive; any executive of the boards
engaged in the service of public common school education in
school districts covered under this system of which the
State Superintendent of Education is an ex-officio member;
(4) Any employee of a school board association
operating in compliance with Article 23 of the School Code
who is certificated under the law governing the
certification of teachers, provided that he or she becomes
such an employee before the effective date of this
amendatory Act of the 98th General Assembly;
(5) Any person employed by the retirement system who:
(i) was an employee of and a participant in the
system on August 17, 2001 (the effective date of Public
Act 92-416), or
(ii) becomes an employee of the system on or after
August 17, 2001;
(6) Any educational, administrative, professional or
other staff employed by and under the supervision and

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control of a regional superintendent of schools, provided
such employment position requires the person to be
certificated under the law governing the certification of
teachers and is in an educational program serving 2 or more
districts in accordance with a joint agreement authorized
by the School Code or by federal legislation;
(7) Any educational, administrative, professional or
other staff employed in an educational program serving 2 or
more school districts in accordance with a joint agreement
authorized by the School Code or by federal legislation and
in a position requiring certification under the laws
governing the certification of teachers;
(8) Any officer or employee of a statewide teacher
organization or officer of a national teacher organization
who is certified under the law governing certification of
teachers, provided: (i) the individual had previously
established creditable service under this Article, (ii)
the individual files with the system an irrevocable
election to become a member before January 5, 2012 (the
effective date of Public Act 97-651) this amendatory Act of
the 97th General Assembly, (iii) the individual does not
receive credit for such service under any other Article of
this Code, and (iv) the individual first became an officer
or employee of the teacher organization and becomes a
member before January 5, 2012 (the effective date of Public
Act 97-651) this amendatory Act of the 97th General

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Assembly;
(9) Any educational, administrative, professional, or
other staff employed in a charter school operating in
compliance with the Charter Schools Law who is certificated
under the law governing the certification of teachers; .
(10) Any person employed, on the effective date of this
amendatory Act of the 94th General Assembly, by the
Macon-Piatt Regional Office of Education in a
birth-through-age-three pilot program receiving funds
under Section 2-389 of the School Code who is required by
the Macon-Piatt Regional Office of Education to hold a
teaching certificate, provided that the Macon-Piatt
Regional Office of Education makes an election, within 6
months after the effective date of this amendatory Act of
the 94th General Assembly, to have the person participate
in the system. Any service established prior to the
effective date of this amendatory Act of the 94th General
Assembly for service as an employee of the Macon-Piatt
Regional Office of Education in a birth-through-age-three
pilot program receiving funds under Section 2-389 of the
School Code shall be considered service as a teacher if
employee and employer contributions have been received by
the system and the system has not refunded those
contributions.
An annuitant receiving a retirement annuity under this
Article or under Article 17 of this Code who is employed by a

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board of education or other employer as permitted under Section
16-118 or 16-150.1 is not a "teacher" for purposes of this
Article. A person who has received a single-sum retirement
benefit under Section 16-136.4 of this Article is not a
"teacher" for purposes of this Article.
(Source: P.A. 97-651, eff. 1-5-12; revised 8-3-12.)
(40 ILCS 5/16-107.1 new)
Sec. 16-107.1. Tier I employee. "Tier I 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 16-122.9 and the
consequences arising from that election, "Tier I employee" does
not include a teacher under this Article who would qualify as a
Tier I employee but who has made an irrevocable election on or
before January 1, 2013 to retire from service pursuant to the
terms of a collective bargaining agreement in effect on January
1, 2013, excluding any extension, amendment, or renewal of that
agreement on or after that date, and has notified the System of
that election.
(40 ILCS 5/16-107.2 new)
Sec. 16-107.2. Tier I retiree. "Tier I retiree": A former

SB2404 Engrossed - 145 - LRB098 09018 EFG 39154 b
Tier I employee who is receiving a retirement annuity. However,
for the purposes of the election under Section 16-122.9 and the
consequences arising from that election, "Tier I retiree" also
includes a teacher under this Article who would qualify as a
Tier I employee but who has made an irrevocable election on or
before January 1, 2013 to retire from service pursuant to the
terms of a collective bargaining agreement in effect on January
1, 2013, excluding any extension, amendment, or renewal of that
agreement on or after that date, and has notified the System of
that election.
(40 ILCS 5/16-121) (from Ch. 108 1/2, par. 16-121)
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 offered
by an employer under this Article pursuant to the requirements
of subsection (c) of Section 16-122.9 that is accepted by a
Tier I employee, or a Tier I retiree returning to active
service, who has made the election under paragraph (2) of
subsection (a) or (a-5) of Section 16-122.9.
(Source: P.A. 84-1028.)

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(40 ILCS 5/16-121.1 new)
Sec. 16-121.1. Future increase in income. "Future increase
in income": Any increase in income in any form offered by an
employer to a teacher under this Article after June 30, 2014
that would qualify as "salary", as defined in Section 16-121,
but for the fact that the employer offered the increase in
income to the employee on the condition that it not qualify as
compensation and the employee accepted the increase in income
subject to that condition. The term "future increase in income"
does not include an increase in income in any form that is paid
to a Tier I employee under an employment contract or collective
bargaining agreement that is in effect on the effective date of
this Section but does include an increase in income in any form
pursuant to an extension, amendment, or renewal of any such
employment contract or collective bargaining agreement on or
after the effective date of this amendatory Act of the 98th
General Assembly.
(40 ILCS 5/16-122.9 new)
Sec. 16-122.9. Election by Tier I employees.
(a) Each Tier I employee shall make an irrevocable election
either:
(1) to agree to item (i) or (ii) as set forth in this
paragraph (1):
(i) to have the amount of the automatic annual

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increases in his or her retirement annuity 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, and to waive his or her
eligibility for 2 automatic annual increases in
retirement annuity, as provided in subsection (a-2) of
Section 16-133.1 or subsection (b-2) of Section
16-136.1, whichever is applicable; or
(ii) to waive his or her eligibility for 3
automatic annual increases in retirement annuity, as
provided in subsection (a-3) of Section 16-133.1 or
subsection (b-3) of Section 16-136.1, whichever is
applicable, and to make the contributions set forth in
subsection (a-5) of Section 16-152; or
(2) to not agree to item (i) or (ii) as set forth in
paragraph (1) of this subsection.
The election required under this subsection (a) shall be
made by each Tier I employee no earlier than February 1, 2014
and no later than May 31, 2014, except that:
(i) a person who becomes a Tier I employee under this
Article on or after February 1, 2014 must make the election
under this subsection (a) within 60 days after becoming a
Tier I employee; and
(ii) a person who returns to active service as a Tier I
employee under this Article on or after February 1, 2014

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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 I employee; and
(iii) a person who made the election under subsection
(a-5) as a Tier I retiree remains bound by that election
and shall not make a later election under this subsection
(a).
If a Tier I 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) Each Tier I retiree shall make an irrevocable
election either:
(1) to agree to the following:
(i) to have the amount of the automatic annual
increases in his or her retirement annuity calculated
without regard to subsection (a-1), (a-2), or (a-3) of
Section 16-133.1 or subsection (b-1), (b-2), or (b-3)
of Section 16-136.1, whichever is applicable; and
(ii) to waive his or her eligibility for 2
automatic annual increases in retirement annuity, as
provided in subsection (a-4) of Section 16-133.1 or
subsection (b-4) of Section 16-136.1, whichever is
applicable; or
(2) to not agree to items (i) and (ii) as set forth in
paragraph (1) of this subsection.

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The election required under this subsection (a-5) shall be
made by each Tier I retiree no earlier than February 1, 2014
and no later than May 31, 2014, except that:
(i) a person who becomes a Tier I retiree under this
Article on or after February 1, 2014 must make the election
under this subsection (a-5) within 60 days after becoming a
Tier I retiree; and
(ii) a person who made the election under subsection
(a) as a Tier I employee remains bound by that election and
shall not make a later election under this subsection
(a-5).
If a Tier I retiree fails for any reason to make a required
election under this subsection within the time specified, then
the Tier I retiree shall be deemed to have made the election
under paragraph (2) of this subsection.
(a-10) All elections under subsection (a) that are made or
deemed to be made before June 1, 2014 shall take effect on July
1, 2014. Elections that are made or deemed to be made on or
after June 1, 2014 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 98th General Assembly for making an
election under paragraph (1) of subsection (a) of this Section,
any future increases in income offered by an employer under
this Article to a Tier I employee who has made an election

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under paragraph (1) of subsection (a) of this Section shall be
offered expressly and irrevocably as constituting salary under
Section 16-121. In addition, a Tier I employee who has made an
election under item (i) of paragraph (1) of subsection (a) of
this Section shall receive the right to also participate in the
optional cash balance plan established under Section 1-162.
Finally, a Tier I employee, other than a Tier I retiree
returning to active service as a Tier I employee, who has made
an election under item (i) of paragraph (1) of subsection (a)
of this Section shall receive the right to the early retirement
without discount option set forth in Section 16-133.6.
As adequate and legal consideration provided under this
amendatory Act of the 98th General Assembly for making an
election under paragraph (1) of subsection (a-5) of this
Section, any future increases in income offered by an employer
under this Article to a Tier I retiree who returns to active
service after having made an election under paragraph (1) of
subsection (a-5) of this Section shall be offered expressly and
irrevocably as constituting salary under Section 16-121.
(c) A Tier I employee who makes the election under
paragraph (2) of subsection (a) of this Section shall not be
subject to either item (i) or (ii) set forth in paragraph (1)
of subsection (a) of this Section. However, any future
increases in income offered by an employer under this Article
to a Tier I employee who has made the election under paragraph
(2) of subsection (a) of this Section shall be offered by the

SB2404 Engrossed - 151 - LRB098 09018 EFG 39154 b
employer expressly and irrevocably as not constituting salary
under Section 16-121, and the employee may not accept any
future increase in income that is offered in violation of this
requirement. In addition, a Tier I employee who has made the
election under paragraph (2) of subsection (a) of this Section
shall not receive the right to participate in the optional cash
balance plan established under Section 1-162. Finally, a Tier I
employee who has made the election under paragraph (2) of
subsection (a) of this Section shall not receive the right to
the early retirement without discount option set forth in
Section 16-133.6.
A Tier I retiree who makes the election under paragraph (2)
of subsection (a-5) of this Section shall not be subject to
either item (i) or (ii) set forth in paragraph (1) of
subsection (a-5) of this Section. However, any future increases
in income offered by an employer under this Article to a Tier I
retiree who returns to active service and has made the election
under paragraph (2) of subsection (a-5) of this Section shall
be offered by the employer expressly and irrevocably as not
constituting salary under Section 16-121, and the employee may
not accept any future increase in income that is offered in
violation of this requirement. In addition, a Tier I retiree
who returns to active service and has made the election under
paragraph (2) of subsection (a) of this Section shall not
receive the right to participate in the optional cash balance
plan established under Section 1-162.

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(d) The System shall make a good faith effort to contact
each Tier I employee and Tier I retiree subject to this
Section. The System shall mail information describing the
required election to each Tier I employee and Tier I retiree by
United States Postal Service mail to his or her last known
address on file with the System. If the Tier I employee or Tier
I retiree 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 I employees and Tier I retirees 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 I employees and Tier I retirees 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 I
employee or Tier I retiree should make or specific to the legal
or tax circumstances of or consequences to the Tier I employee
or Tier I retiree.

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The System shall inform Tier I employees and Tier I
retirees in the election packet required under this subsection
that the Tier I employee or Tier I retiree 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, beneficiary,
or annuitant 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 98th 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 any future increases in
income expressly and irrevocably as not constituting "salary"
under Section 16-121 to any Tier I employee, or Tier I retiree
returning to active service, who has made an election under
paragraph (2) of subsection (a) or (a-5) of Section 16-122.9. A
Tier I employee, or Tier I retiree returning to active service,
who has made an election under paragraph (2) of subsection (a)
or (a-5) of Section 16-122.9 shall not accept any future
increase in income that is offered by an employer under this

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Article in violation of the requirement set forth in this
subsection.
(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) An employee who has made the election under item (i) of
paragraph (1) of subsection (a) of this Section may elect to
participate in the optional cash balance plan under Section
1-162.
The election to participate in the optional cash balance
plan shall be made in writing, in the manner provided by the
applicable retirement system.
(h) 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.
(i) If this Section is determined to be unconstitutional or
otherwise invalid by a final unappealable decision of an
Illinois court or a court of competent jurisdiction as applied
to Tier I employees but not as applied to Tier I retirees, then
this Section and the changes deriving from the election
required under this Section shall be null and void as applied
to Tier I employees but shall remain in full effect for Tier I
retirees.
(j) If this Section is determined to be unconstitutional or
otherwise invalid by a final unappealable decision of an
Illinois court or a court of competent jurisdiction as applied

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to Tier I retirees but not as applied to Tier I employees, then
this Section and the changes deriving from the election
required under this Section shall be null and void as applied
to Tier I retirees but shall remain in full effect for Tier I
employees.
(k) 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 5/16-133) (from Ch. 108 1/2, par. 16-133)
Sec. 16-133. Retirement annuity; amount.
(a) The amount of the retirement annuity shall be (i) in
the case of a person who first became a teacher under this
Article before July 1, 2005, the larger of the amounts
determined under paragraphs (A) and (B) below, or (ii) in the
case of a person who first becomes a teacher under this Article
on or after July 1, 2005, the amount determined under the
applicable provisions of paragraph (B):
(A) An amount consisting of the sum of the following:
(1) An amount that can be provided on an
actuarially equivalent basis by the member's

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accumulated contributions at the time of retirement;
and
(2) The sum of (i) the amount that can be provided
on an actuarially equivalent basis by the member's
accumulated contributions representing service prior
to July 1, 1947, and (ii) the amount that can be
provided on an actuarially equivalent basis by the
amount obtained by multiplying 1.4 times the member's
accumulated contributions covering service subsequent
to June 30, 1947; and
(3) If there is prior service, 2 times the amount
that would have been determined under subparagraph (2)
of paragraph (A) above on account of contributions
which would have been made during the period of prior
service creditable to the member had the System been in
operation and had the member made contributions at the
contribution rate in effect prior to July 1, 1947.
For the purpose of calculating an annuity under this Rule
2, neither the contribution required under subsection
(a-1) of Section 16-152 nor the contribution required under
subsection (a-5) of that Section shall be considered when
determining the participant's accumulated normal
contributions under clause (i) or the employer
contribution under clause (ii).
This paragraph (A) does not apply to a person who first
becomes a teacher under this Article on or after July 1,

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2005.
(B) An amount consisting of the greater of the
following:
(1) For creditable service earned before July 1,
1998 that has not been augmented under Section
16-129.1: 1.67% of final average salary for each of the
first 10 years of creditable service, 1.90% of final
average salary for each year in excess of 10 but not
exceeding 20, 2.10% of final average salary for each
year in excess of 20 but not exceeding 30, and 2.30% of
final average salary for each year in excess of 30; and
For creditable service earned on or after July 1,
1998 by a member who has at least 24 years of
creditable service on July 1, 1998 and who does not
elect to augment service under Section 16-129.1: 2.2%
of final average salary for each year of creditable
service earned on or after July 1, 1998 but before the
member reaches a total of 30 years of creditable
service and 2.3% of final average salary for each year
of creditable service earned on or after July 1, 1998
and after the member reaches a total of 30 years of
creditable service; and
For all other creditable service: 2.2% of final
average salary for each year of creditable service; or
(2) 1.5% of final average salary for each year of
creditable service plus the sum $7.50 for each of the

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first 20 years of creditable service.
The amount of the retirement annuity determined under this
paragraph (B) shall be reduced by 1/2 of 1% for each month
that the member is less than age 60 at the time the
retirement annuity begins. However, this reduction shall
not apply (i) if the member has at least 35 years of
creditable service, or (ii) if the member retires on
account of disability under Section 16-149.2 of this
Article with at least 20 years of creditable service, or
(iii) if the member (1) has earned during the period
immediately preceding the last day of service at least one
year of contributing creditable service as an employee of a
department as defined in Section 14-103.04, (2) has earned
at least 5 years of contributing creditable service as an
employee of a department as defined in Section 14-103.04,
(3) retires on or after January 1, 2001, and (4) retires
having attained an age which, when added to the number of
years of his or her total creditable service, equals at
least 85. Portions of years shall be counted as decimal
equivalents.
(b) For purposes of this Section, final average salary
shall be the average salary for the highest 4 consecutive years
within the last 10 years of creditable service as determined
under rules of the board. The minimum final average salary
shall be considered to be $2,400 per year.
In the determination of final average salary for members

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other than elected officials and their appointees when such
appointees are allowed by statute, that part of a member's
salary for any year beginning after June 30, 1979 which exceeds
the member's annual full-time salary rate with the same
employer for the preceding year by more than 20% shall be
excluded. The exclusion shall not apply in any year in which
the member's creditable earnings are less than 50% of the
preceding year's mean salary for downstate teachers as
determined by the survey of school district salaries provided
in Section 2-3.103 of the School Code.
(c) In determining the amount of the retirement annuity
under paragraph (B) of this Section, a fractional year shall be
granted proportional credit.
(d) The retirement annuity determined under paragraph (B)
of this Section shall be available only to members who render
teaching service after July 1, 1947 for which member
contributions are required, and to annuitants who re-enter
under the provisions of Section 16-150.
(e) The maximum retirement annuity provided under
paragraph (B) of this Section shall be 75% of final average
salary.
(f) A member retiring after the effective date of this
amendatory Act of 1998 shall receive a pension equal to 75% of
final average salary if the member is qualified to receive a
retirement annuity equal to at least 74.6% of final average
salary under this Article or as proportional annuities under

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Article 20 of this Code.
(Source: P.A. 94-4, eff. 6-1-05.)
(40 ILCS 5/16-133.1) (from Ch. 108 1/2, par. 16-133.1)
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.
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
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

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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), (a-2),
(a-3), or (a-4), if applicable, 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, and 3% for periods after December 31, 1977.
(a-1) Notwithstanding any other provision of this Article,
for a Tier I employee who made the election under item (i) of
paragraph (1) of subsection (a) of Section 16-122.9, the amount
of each automatic annual increase in retirement annuity
occurring on or after the effective date of that election,
other than the initial increase, shall be 3% of the originally

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granted retirement annuity.
(a-2) Notwithstanding any other provision of this Article,
for a Tier I employee who made the election under item (i) of
paragraph (1) of subsection (a) of Section 16-122.9, once the
initial annual increase under this Section has been granted,
the next 2 scheduled annual increases shall be skipped, and
thereafter all annual increases shall be granted.
(a-3) Notwithstanding any other provision of this Article,
for a Tier I employee who made the election under item (ii) of
paragraph (1) of subsection (a) of Section 16-122.9 once the
first annual increase under this Section has been granted, the
next 3 scheduled annual increases shall be skipped, and
thereafter all annual increases shall be granted.
(a-4) Notwithstanding any other provision of this Article,
for a Tier I retiree who made the election under paragraph (1)
of subsection (a-5) of Section 16-122.9:
(1) if the Tier I retiree has not received the initial
annual increase under this Section as of the effective date
of this amendatory Act of the 98th General Assembly, then
once the initial annual increase under this Section has
been granted, the next scheduled annual increase shall be
skipped, the following annual increase shall be granted,
the next annual increase shall be skipped, and thereafter
all annual increases shall be granted; and
(2) if the Tier I retiree has received the initial
annual increase under this Section as of the effective date

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of this amendatory Act of the 98th General Assembly, then
the next annual increase after that effective date shall be
skipped, the following annual increase shall be granted,
the next annual increase shall be skipped, and thereafter
all annual increases shall be granted.
(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

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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 5/16-133.6 new)
Sec. 16-133.6. Optional teacher early retirement without
discount. A Tier I employee who makes an election under item
(i) of paragraph (1) of subsection (a) of Section 16-122.9,
retires on or after the beginning of the first State fiscal
year to occur after the end of the election period specified in
Section 16-122.9, and applies for a retirement annuity within 6
months of the last day of teaching for which retirement
contributions were required may elect, at the time of
application for a retirement annuity, to make a one-time member

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contribution to the System and, thereby, avoid the reduction in
the retirement annuity for retirement before age 60 specified
in paragraph (B) of Section 16-133. The exercise of the
election shall also obligate the last employer to make a
one-time nonrefundable contribution to the System. Substitute
teachers wishing to exercise this election must teach 85 or
more days in one school term with one employer, who shall be
deemed the last employer for purposes of this Section. The last
day of teaching with that employer must be within 6 months of
the date of application for retirement. All substitute teaching
credit applied toward the required 85 days must be earned after
June 30, 1990.
The one-time member and employer contributions shall be a
percentage of the cost of this benefit as determined by the
System. However, when determining the one-time member and
employer contributions, that part of a member's salary with the
same employer which exceeds the annual salary rate for the
preceding year by more than 20% shall be excluded. The member
contribution shall be at the rate of 50% of the cost of the
benefits as determined by the System. The employer contribution
shall be at the rate of 50% of the cost of the benefits as
determined by the System.
Upon receipt of the application and election, the System
shall determine the one-time employee and employer
contributions required. The member contribution shall be
credited to the individual account of the member and the

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employer contribution shall be credited to the Benefit Trust
Reserve. The avoidance of the reduction in retirement annuity
provided under this Section is not applicable until the
member's contribution, if any, has been received by the System;
however, the date that contribution is received shall not be
considered in determining the effective date of retirement.
The number of members working for a single employer who may
retire under this Section in any year may be limited at the
option of the employer to a specified percentage of those
eligible, not less than 10%, with the right to participate to
be allocated among those applying on the basis of seniority in
the service of the employer.
(40 ILCS 5/16-136.1) (from Ch. 108 1/2, par. 16-136.1)
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
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) An annuitant entitled to increases under this Section
shall be entitled to the initial increase as of the later of:

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(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), (b-2),
(b-3), or (b-4), 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 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

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disability.
(b-1) Notwithstanding any other provision of this Article,
for a Tier I employee who made the election under item (i) of
paragraph (1) of subsection (a) of Section 16-122.9, the amount
of each automatic annual increase in retirement annuity
occurring on or after the effective date of that election,
other than the initial increase, shall be 3% of the originally
granted retirement annuity.
(b-2) Notwithstanding any other provision of this Article,
for a Tier I employee who made the election under item (i) of
paragraph (1) of subsection (a) of Section 16-122.9, once the
initial annual increase under this Section has been granted,
the next 2 scheduled annual increases shall be skipped, and
thereafter all annual increases shall be granted.
(b-3) Notwithstanding any other provision of this Article,
for a Tier I employee who made the election under item (ii) of
paragraph (1) of subsection (a) of Section 16-122.9, once the
first annual increase under this Section has been granted, the
next 3 scheduled annual increases shall be skipped, and
thereafter all annual increases shall be granted.
(b-4) Notwithstanding any other provision of this Article,
for a Tier I retiree who made the election under paragraph (1)
of subsection (a-5) of Section 16-122.9:
(1) if the Tier I retiree has not received the initial
annual increase under this Section as of the effective date
of this amendatory Act of the 98th General Assembly, then

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once the initial annual increase under this Section has
been granted, the next scheduled annual increase shall be
skipped, the following annual increase shall be granted,
the next annual increase shall be skipped, and thereafter
all annual increases shall be granted; and
(2) if the Tier I retiree has received the initial
annual increase under this Section as of the effective date
of this amendatory Act of the 98th General Assembly, then
the next annual increase after that effective date shall be
skipped, the following annual increase shall be granted,
the next annual increase shall be skipped, and thereafter
all annual increases shall be granted.
(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

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of creditable service forming the basis of the retirement
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)
Sec. 16-152. Contributions by members.
(a) 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
contributions shall not be credited to the individual
account of the member and shall not be subject to refund

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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
16-176.
(a-1) In addition to the contributions required under
subsection (a), a member who elects to participate in the
optional cash balance plan under Section 1-162 shall pay to the
System for the purpose of participating in the optional cash
balance plan a contribution of 2% of each payment of
compensation received while he or she is a participant in the
optional cash balance plan. These contributions shall not be
used for the purpose of determining any benefit under this
Article except as provided in the optional cash balance plan.
(a-5) In addition to the contributions otherwise required
under this Article, each Tier I member who made the election
under item (ii) of paragraph (1) of subsection (a) of Section
16-122.9 shall also make the following contributions toward the
cost of the retirement annuity from each payment of salary:
(1) beginning July 1, 2014 and through June 30, 2015,
1% of salary; and
(2) beginning on July 1, 2015, 2% of salary.
Except as otherwise specified, these contributions are to
be considered as normal contributions for purposes of this

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Article.
(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:
(1) The contributions shall be refunded to the member,

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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, within 120 days after the early
retirement without discount option provided under Section
16-133.2 is terminated under Section 16-176.
(Source: P.A. 93-320, eff. 7-23-03; 94-4, eff. 6-1-05.)
(40 ILCS 5/16-158.2 new)
Sec. 16-158.2. Obligations of State; funding guarantee.
The State shall be contractually obligated to contribute to the
System in each State fiscal year an amount not less than the
sum required in Section 16-158 as that Section existed prior to
the effective date of this amendatory Act of the 98th General
Assembly.
The obligations created under this Section are contractual
obligations protected and enforceable under Article I, Section

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16 and Article XIII, Section 5 of the Illinois Constitution.
Notwithstanding any other provision of law, if the State
fails to pay in a State fiscal year the amount guaranteed under
this Section, the System may bring a mandamus action in the
Circuit Court of Sangamon County to compel the State to make
that payment, irrespective of other remedies that may be
available to the System. It shall be the mandatory fiduciary
obligation of the Board of the System to bring that action if
the State fails to pay in the fiscal year the amount guaranteed
under this Section. Before commencing that action, the Board
shall submit a voucher for contributions required under Section
16-158. If the State fails to pay a vouchered amount within 90
days after receiving a voucher for that amount, then the Board
shall submit a written request to the Comptroller seeking
payment of that amount. A copy of the request shall be filed
with the Secretary of State, and the Secretary of State shall
provide copies of the request to the Governor and General
Assembly. No earlier than the 16th day after filing a request
with the Secretary, but no later than the 21st day after filing
that request, the Board may commence such an action in the
Circuit Court. If the Board fails to commence such action on or
before the 21st day after filing the request with the Secretary
of State, then any Tier I employee or Tier I retiree who has
made the election under paragraph (1) of subsection (a) or
(a-5) of Section 16-122.9 may file a mandamus action against
the Board to compel the Board to commence its mandamus action

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against the State. This Section constitutes an express waiver
of the State's sovereign immunity. In ordering the State to
make the required payment, the court may order a reasonable
payment schedule to enable the State to make the required
payment. The obligations and causes of action created under
this subsection (b) shall be in addition to any other right or
remedy otherwise accorded by common law, or State or federal
law, and nothing in this subsection (b) shall be construed to
deny, abrogate, impair, or waive any such common law or
statutory right or remedy.
Any payments required to be made by the State pursuant to
this Section are expressly subordinated to the payment of the
principal, interest, and premium, if any, on any bonded debt
obligation of the State or any other State-created entity,
either currently outstanding or to be issued, for which the
source of repayment or security thereon is derived directly or
indirectly from tax revenues collected by the State or any
other State-created entity. Payments on such bonded
obligations include any statutory fund transfers or other
prefunding mechanisms or formulas set forth, now or hereafter,
in State law or bond indentures, into debt service funds or
accounts of the State related to such bonded obligations,
consistent with the payment schedules associated with such
obligations.
(40 ILCS 5/16-203)

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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
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 98th 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

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Department of 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.

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(Source: P.A. 94-4, eff. 6-1-05; 95-910, eff. 8-26-08.)
Section 35. The School Code is amended by changing Sections
24-1 and 24-8 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 14-106.5,
15-132.9, or 16-122.9 of the Illinois Pension Code. They shall
pay the wages of teachers monthly, subject, however, to the
provisions of 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

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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
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 14-106.5, 15-132.9,
or 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'

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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
14-106.5, 15-132.9, or 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.)
Section 40. 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

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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 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 98th 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

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in Section 36e standards for hours of work, holidays, sick
leave, overtime compensation and vacation for the purpose of
improving conditions of employment 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

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take rank upon the registers as candidates in 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 physically handicapped persons in
positions in which the handicap 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 other
clerical and technical help as may be necessary efficiently to

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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. 82-524.)
Section 45. The University of Illinois Act is amended by
adding Section 85 as follows:
(110 ILCS 305/85 new)
Sec. 85. 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
14-106.5, 15-132.9, or 16-122.9 of the Illinois Pension Code,
to any person in a manner that violates any of those Sections.
Section 50. The Southern Illinois University Management
Act is amended by adding Section 70 as follows:

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(110 ILCS 520/70 new)
Sec. 70. 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
14-106.5, 15-132.9, or 16-122.9 of the Illinois Pension Code,
to any person in a manner that violates any of those Sections.
Section 55. The Chicago State University Law is amended by
adding Section 5-180 as follows:
(110 ILCS 660/5-180 new)
Sec. 5-180. 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
14-106.5, 15-132.9, or 16-122.9 of the Illinois Pension Code,
to any person in a manner that violates any of those Sections.
Section 60. The Eastern Illinois University Law is amended
by adding Section 10-180 as follows:
(110 ILCS 665/10-180 new)
Sec. 10-180. 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
14-106.5, 15-132.9, or 16-122.9 of the Illinois Pension Code,
to any person in a manner that violates any of those Sections.

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Section 65. The Governors State University Law is amended
by adding Section 15-180 as follows:
(110 ILCS 670/15-180 new)
Sec. 15-180. 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
14-106.5, 15-132.9, or 16-122.9 of the Illinois Pension Code,
to any person in a manner that violates any of those Sections.
Section 70. The Illinois State University Law is amended by
adding Section 20-185 as follows:
(110 ILCS 675/20-185 new)
Sec. 20-185. 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
14-106.5, 15-132.9, or 16-122.9 of the Illinois Pension Code,
to any person in a manner that violates any of those Sections.
Section 75. The Northeastern Illinois University Law is
amended by adding Section 25-180 as follows:
(110 ILCS 680/25-180 new)
Sec. 25-180. Future increases in income. Northeastern

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Illinois University must not pay, offer, or agree to pay any
future increase in income, as that term is defined in Section
14-106.5, 15-132.9, or 16-122.9 of the Illinois Pension Code,
to any person in a manner that violates any of those Sections.
Section 80. The Northern Illinois University Law is amended
by adding Section 30-190 as follows:
(110 ILCS 685/30-190 new)
Sec. 30-190. 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
14-106.5, 15-132.9, or 16-122.9 of the Illinois Pension Code,
to any person in a manner that violates any of those Sections.
Section 85. The Western Illinois University Law is amended
by adding Section 35-185 as follows:
(110 ILCS 690/35-185 new)
Sec. 35-185. 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
14-106.5, 15-132.9, or 16-122.9 of the Illinois Pension Code,
to any person in a manner that violates any of those Sections.
Section 90. The Public Community College Act is amended by

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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
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,

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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
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 95. The Illinois Educational Labor Relations Act is

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amended by changing Section 4 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, hours and terms and conditions of employment
as well as the impact thereon upon request by employee
representatives, but excluding (i) the payment of the
additional member contributions set forth in subsections (a-1)
and (a-5) of Sections 14-133, 15-157, and 16-152 of the
Illinois Pension Code and (ii) the provision of compensation or
benefits to employees who make an election under Section
14-106.5, 15-132.9, or 16-122.9 of the Illinois Pension Code in
order to offset all or part of any compensation or benefit
limitations included as part of the elections under those
Sections. 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, hours or conditions of employment about which

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they have bargained for and agreed to in a collective
bargaining agreement prior to the effective date of this Act,
but excluding (i) the payment of the additional member
contributions set forth in subsections (a-1) and (a-5) of
Sections 14-133, 15-157, and 16-152 of the Illinois Pension
Code and (ii) the provision of compensation or benefits to
employees who make an election under Section 14-106.5,
15-132.9, or 16-122.9 of the Illinois Pension Code in order to
offset all or part of any compensation or benefit limitations
included as part of the elections under those Sections.
(Source: P.A. 83-1014.)
Section 100. The State Mandates Act is amended by adding
Section 8.37 as follows:
(30 ILCS 805/8.37 new)
Sec. 8.37. 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 98th General Assembly.
Section 197. Severability.
(a) Except as otherwise provided in this Act, and except as
provided in subsection (b), the provisions of this Act are
severable under Section 1.31 of the Statute on Statutes.
(b) If any benefit change made by this amendatory Act in an

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Article of the Illinois Pension Code 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 State funding guarantee provisions
added to that Article by this amendatory Act shall also be
invalid, and those funding guarantee provisions shall be
contingent upon and inseverable from those benefit changes.
Section 999. Effective date. This Act takes effect upon
becoming law.