Legislation 100th General Assembly (2017-2018)

House

HR 0076
- Urge Repeal of Federal Government Pension Offset and Windfall Elimination Provision
Sponsor(s): Representative Mary E. Flowers

HR 76 resolves that the Illinois House of Representatives urges the U.S. Congress to introduce and pass legislation that eliminates both the Government Pension Offset and the Windfall Elimination Provision.

HR 76 further resolves that suitable copies of the resolution be delivered to President Donald Trump, U.S. Senate Majority Leader Mitch McConnell, U.S. Senate Minority Leader Chuck Schumer, U.S. Speaker of the House Paul Ryan, U.S. House of Representatives Minority Leader Nancy Pelosi, and all members of the Illinois Congressional Delegation.

The resolution was adopted on 6/22/2017.

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Senate

SB 0006
- Fiscal Year 2018 Budget
Sponsor(s): Senator Heather A. Steans and Representative Gregory Harris

SB 6 appropriates $1,587,985,000 for the FY 2018 state contribution to SURS.  Of this amount, $1,372,985,000 comes from the General Revenue Fund and $215,000,000 comes from the State Pensions Fund.  The certified state contribution to SURS for FY 2018 is $1,753,685,000.  (Please note: SB 42 requires recertification of the FY 2018 state contribution by November 1, 2017.)

SB 6 also appropriates $4,133,336 for the FY 2018 state contribution to the College Insurance Program (CIP), which provides health insurance to community college retirees.  This amount is equal to the certified contribution for FY 2018.

SB 6 takes effect immediately upon becoming law.

Became Public Act 100-0021 on July 6, 2017.

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SB 0042
- Fiscal Year 2018 Budget Implementation Act
Sponsor(s): Senator Donne E. Trotter and Representative Gregory Harris

SB 42 creates the FY 2018 Budget Implementation Act for the purpose of making changes in state programs that are necessary to implement the state budget.

SB 42 authorizes the use of money in the State Pensions Fund as part of the FY 2018 state contribution to SURS.  It also makes the following changes to SURS:

Optional Hybrid Plan

SB 42 creates an optional hybrid plan for new participants of SURS on or after the implementation date of the optional hybrid plan and current Tier II participants who irrevocably elect to participate in the optional hybrid plan.  The optional hybrid plan does not apply to participants in the Self-Managed Plan.  Individuals who first become participants of SURS on or after the implementation date of the optional hybrid plan (and who are not participants in the Self-Managed Plan) can irrevocably elect to participate in Tier II within 30 days after becoming a participant.  The implementation date of the optional hybrid plan means the earliest date upon which the SURS Board of Trustees authorizes members of SURS to begin participating in the optional hybrid plan.  SURS must endeavor to make such participation available as soon as possible after the effective date of the legislation and must establish an implementation date by board resolution.

Stated differently, individuals who first become participants of SURS on or after the implementation date of the optional hybrid plan will have the option to participate in: the optional hybrid plan, the Tier II plan or the Self-Managed Plan.  Current Tier II participants will have the option to elect to participate in the optional hybrid plan.

For the defined benefit portion of the optional hybrid plan:

  • Final average salary (“FAS”) equals the average monthly (or annual) salary during the period of service in which earnings were the highest during the last 120 months (or 10 years) of service.
  • Pensionable earnings are capped at the federal Social Security Wage Base.
  • Age and service credits for retirement are the normal Social Security retirement age applicable to that member, but no earlier than age 67, with 10 years of service credit.
  • Retirement annuities are calculated using the following formula: 1.25 percent x each year of service credit x FAS.
  • Automatic annual increases are applied beginning one year after retirement, calculated at ½ of the percentage increase in the CPI-W.
  • Survivor benefits are equal to 66 2/3 percent of the member’s retirement annuity on the date of death, or 66 2/3 percent of the member’s earned annuity without an age reduction if the member was not retired on the date of death.
  • Employee contributions are equal to the lower of 6.2 percent of salary or the normal cost of benefits under the defined benefit portion of the plan.

For the defined contribution portion of the optional hybrid plan:

  • Employee contributions are equal to a minimum of 4 percent of salary.
  • Employer contributions for employees with at least one year of service with the same employer are equal to a rate that may be set for individual employees, but no higher than 6 percent of salary and no lower than 2 percent of salary.
  • The participant vests in employer contributions when they are paid into his or her account.
  • The plan must provide a variety of investment options (including investments handled by the Illinois State Board of Investment) and a variety of options for payouts to retirees and their survivors.

State Funding Changes

SB 42 requires the state to make additional contributions to SURS in FY 2018, FY 2019 and FY 2020 equal to 2 percent of the total payroll of each employee who participates in the optional hybrid plan or who participates in the Tier II plan in lieu of the optional hybrid plan.

SB 42 requires any change in an actuarial assumption that increases or decreases the required state contribution and first applies in FY 2018 or thereafter to be implemented in equal annual amounts over a five-year period beginning in the state fiscal year in which the change first applies to the required state contribution.

SB 42 requires any change in an actuarial assumption that increases or decreases the required state contribution and first applied to the state contribution in FY 2014, FY 2015, FY 2016 or FY 2017 to be implemented as already applies in state fiscal years before 2018 and, in the portion of the five-year period beginning in the state fiscal year in which the actuarial change first applied that occurs in state fiscal year 2018 or thereafter, by calculating the change in equal annual amounts over that five-year period and then implementing it at the resulting annual rate in each of the remaining fiscal years in that five-year period.

SB 42 requires recertification of the amount of the required state contribution for FY 2018, based on the changes made by the legislation.

Employer Funding Changes

SB 42 requires each employer under SURS to contribute the following amounts:

  • In FY 2018, FY 2019 and FY 2020, the normal cost of the defined benefit plan, minus the employee contribution, for each employee of the employer who participates in the optional hybrid plan or participates in the Tier II plan in lieu of the optional hybrid plan; or
  • Beginning in FY 2021, the normal cost of the defined benefit plan, minus the employee contribution, plus 2 percent, for each employee of the employer who participates in the optional hybrid plan or participates in the Tier II plan in lieu of the optional hybrid plan; plus;
  • Beginning in FY 2018, the amount for that fiscal year to amortize any unfunded actuarial accrued liability attributable to the defined benefits of the employer’s employees who first became participants on or after the implementation date of the optional hybrid plan and the employer’s employees who were previously Tier II participants but elected to participate in the optional hybrid plan, determined as a level percentage of payroll over a 30-year rolling amortization period.

Stated differently, beginning in FY 2018, the employer will be responsible for: (1) the employer normal cost of the defined benefits of optional hybrid plan participants and the employer normal cost of the defined benefits of participants who would have been in the optional hybrid plan but elected to participate in the Tier II plan; and (2) the unfunded liability of the defined benefits of optional hybrid plan participants, participants who would have been in the optional hybrid plan but elected to participate in the Tier II plan, and participants who currently participate in the Tier II plan but elect to participate in the optional hybrid plan.  Additionally, beginning in FY 2021, the employer will pay a 2 percent surcharge for optional hybrid plan participants and participants who would have been in the optional hybrid plan but elected to participate in the Tier II plan.  

SB 42 requires SURS to create and maintain individual employer accounts for this purpose.

SB 42 also requires the employer to pay the employer normal cost of the portion of an employee’s earnings that exceeds the amount of salary set for the governor, for academic years beginning on or after July 1, 2017.

Effective Date

SB 42 takes effect immediately upon becoming law.

Became Public Act 100-0023 on July 6, 2017.

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SB 1345
- Public Act 100-0023 Trailer Bill – Tier Clarification
Sponsor(s): Senator Donne E. Trotter and Representative Robert Martwick

SB 1345 clarifies that individuals who first become members of SURS on or after January 1, 2011, and prior to the implementation date of the Optional Hybrid Plan will participate in SURS as Tier II members.

Public Act 100-0023 (effective July 6, 2017) closed Tier II for individuals who first become members of SURS on or after January 6, 2018.   As a result, under Public Act 100-0023, individuals who first become members of SURS on or after January 6, 2018 would not have a benefit “Tier” assigned to them, meaning that the retirement benefits for those members would not be clearly defined in statute.  SB 1345 provides that individuals who first become members of SURS on or after January 6, 2018, and until the implementation date of the Optional Hybrid Plan will participate in SURS as Tier II members.  

SB 1345 takes effect immediately upon becoming law.

Became Public Act 100-0563 effective December 8, 2017.

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SB 1714
- Investment Consultant Disclosures
Sponsor(s): Senator James F. Clayborne, Jr. and Representative Arthur Turner

SB 1714 amends the General Provisions article of the Illinois Pension Code.

SB 1714 requires each consultant retained by the board of a retirement system, pension fund or investment board to disclose the following information by Jan. 1, 2018, and each Jan. 1 thereafter:

  • The total number of searches for investment services made by the consultant in the prior calendar year;

  • The total number of searches for investment services made by the consultant in the prior calendar year that included: (i) a minority-owned business; (ii) a female-owned business; or (iii) a business owned by a person with a disability;

  • The total number of searches for investment services made by the consultant in the prior calendar year in which the consultant recommended for selection: (i) a minority-owned business; (ii) a female-owned business; or (iii) a business owned by a person with a disability;

  • The total number of searches for investment services made by the consultant in the prior calendar year that resulted in the selection of: (i) a minority-owned business; (ii) a female-owned business; or (iii) a business owned by a person with a disability; and

  • The total dollar amount of investment made in the previous calendar year with: (i) a minority-owned business; (ii) a female-owned business; or (iii) a business owned by a person with a disability that was selected after a search for investment services performed by the consultant.

Beginning Jan. 1, 2018, the board of a retirement system, pension fund or investment board is prohibited from awarding a contract, oral or written, for consulting services without first requiring the consultant to make these disclosures.  These disclosures must be considered, within the bounds of financial and fiduciary prudence, prior to the awarding of a contract, oral or written, for consulting services.

SB 1714 also requires each consultant retained by the board of a retirement system, pension fund or investment board to disclose the following information by Jan. 1, 2018, and each Jan. 1 thereafter: all compensation and economic opportunity received in the last 24 months from investment advisors retained by the board of a retirement system, pension fund or investment board.  

Finally, SB 1714 requires each consultant to disclose the following information to the board of a retirement system, pension fund or investment board beginning Jan. 1, 2018: any compensation or economic opportunity received in the last 24 months from an investment advisor that is recommended for selection by the consultant.  The consultant must make this disclosure prior to the board selecting an investment advisor for appointment.  Beginning Jan. 1, 2018, the board of a retirement system, pension fund or investment board is prohibited from awarding a contract, oral or written, for consulting services without first requiring the consultant to make these disclosures.

SB 1714 takes effect immediately upon becoming law.

Became Public Act 100-0542 effective November 8, 2017.

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SB 2954
- Governor's Salary Rule Corrections
Sponsor(s): Senator Omar Aquino and Representative Robert Martwick

SB 2954 amends the State Universities Retirement System and Teachers’ Retirement System articles of the Illinois Pension Code to correct the Governor’s Salary Rule that was enacted by the General Assembly as part of Public Act 100-0023.

As it relates to SURS, SB 2954 removes the requirement that SURS use an employee’s full-time equivalent earnings for purposes of the calculation, changes the term academic/school year to state fiscal year, clarifies that SURS will not “double-charge” on normal cost amounts previously paid by the employer during the state fiscal year, gives SURS the ability to recover delinquent amounts under the law, and applies the changes retroactively to the effective date of Public Act 100-0023.

SB 2954 takes effect immediately upon becoming law.

Became Public Act 100-0624 on July 20, 2018.

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SB 3046
- TRIP and CIP – Re-Enrollment
Sponsor(s): Senator Andy Manar and Representative Jehan Gordon-Booth

SB 3046 amends the State Employees Group Insurance Act of 1971. It allows eligible TRS and community college benefit recipients to enroll or re-enroll in the Teachers' Retiree Health Insurance Program (TRIP) or the College Insurance Program (CIP), as applicable, during any applicable annual open enrollment period and as otherwise permitted by the Department of Central Management Services. Additionally, it provides that the benefit recipient cannot be deemed ineligible to participate in TRIP or CIP, as applicable, solely by reason of having made a previous election to disenroll or otherwise not participate in TRIP or CIP, as applicable.

Currently, a community college benefit recipient or a community college dependent beneficiary can opt-out of CIP at any time. Once a community college benefit recipient or a community college dependent beneficiary elects not to participate in CIP, he or she cannot re-enroll in CIP, unless: (1) he or she experiences involuntary termination of his or her health insurance coverage; or (2) he or she turns 65 years of age.

SB 3046 takes effect immediately upon becoming law.

Became Public Act 100-1017 on August 21, 2018.

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