Public Act 0810 104TH GENERAL ASSEMBLY

SB2802 Enrolled LRB104 17391 RPS 30816 b

Public Act 104-0810

AN ACT concerning public employee benefits.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Pension Code is amended by changing Sections 7-132, 7-158, 7-164, 7-172, 7-205, and 7-206 as follows:

(40 ILCS 5/7-132) (from Ch. 108 1/2, par. 7-132)

Sec. 7-132. Municipalities, instrumentalities and participating instrumentalities included and effective dates. (A) Municipalities and their instrumentalities.

(a) The following described municipalities, but not including any with more than 1,000,000 inhabitants, and the instrumentalities thereof, shall be included within and be subject to this Article beginning upon the effective dates specified by the Board:

(1) Except as to the municipalities and instrumentalities thereof specifically excluded under this Article, every county shall be subject to this Article, and all cities, villages and incorporated towns having a population in excess of 5,000 inhabitants as determined by the last preceding decennial or subsequent federal census, shall be subject to this Article following publication of the census by the Bureau of the Census. Within 90 days after publication of the census, the Board shall notify any municipality that has become subject to this Article as a result of that census, and shall provide information to the corporate authorities of the municipality explaining the duties and consequences of participation. The notification shall also include a proposed date upon which participation by the municipality will commence.

However, for any city, village or incorporated town that attains a population over 5,000 inhabitants after having provided social security coverage for its employees under the Social Security Enabling Act, participation under this Article shall not be mandatory but may be elected in accordance with subparagraph (3) or (4) of this paragraph (a), whichever is applicable.

(2) School districts, other than those specifically excluded under this Article, shall be subject to this Article, without election, with respect to all employees thereof.

(3) Towns and all other bodies politic and corporate which are formed by vote of, or are subject to control by, the electors in towns and are located in towns which are not participating municipalities on the effective date of this Act, may become subject to this Article by election pursuant to Section 7-132.1.

(4) Any other municipality (together with its instrumentalities), other than those specifically excluded from participation and those described in paragraph (3) above, may elect to be included either by referendum under Section 7-134 or by the adoption of a resolution or ordinance by its governing body. A copy of such resolution or ordinance duly authenticated and certified by the clerk of the municipality or other appropriate official of its governing body shall constitute the required notice to the board of such action.

(b) A municipality that is about to begin participation shall submit to the Board an application to participate, in a form acceptable to the Board, not later than 90 days prior to the proposed effective date of participation. The Board shall act upon the application within 90 days, and if it finds that the application is in conformity with its requirements and the requirements of this Article, participation by the applicant shall commence on a date acceptable to the municipality and specified by the Board, but in no event more than one year from the date of application.

(c) A participating municipality which succeeds to the functions of a participating municipality which is dissolved or terminates its existence shall assume and be transferred the net accumulation balance in the municipality reserve and the municipality account receivable balance of the terminated municipality.

(d) In the case of a Veterans Assistance Commission whose employees were being treated by the Fund on January 1, 1990 as employees of the county served by the Commission, the Fund may continue to treat the employees of the Veterans Assistance Commission as county employees for the purposes of this Article, unless the Commission becomes a participating instrumentality in accordance with subsection (B) of this Section.

(B) Participating instrumentalities.

(a) The participating instrumentalities designated in paragraph (b) of this subsection shall be included within and be subject to this Article if:

(1) an application to participate, in a form acceptable to the Board and adopted by a two-thirds vote of the governing body, is presented to the Board not later than 90 days prior to the proposed effective date; and

(2) the Board finds that the application is in conformity with its requirements, that the applicant has reasonable expectation to continue as a political entity for a period of at least 10 years and has the prospective financial capacity to meet its current and future obligations to the Fund, and that the actuarial soundness of the Fund may be reasonably expected to be unimpaired by approval of participation by the applicant.

The Board shall notify the applicant of its findings within 90 days after receiving the application, and if the Board approves the application, participation by the applicant shall commence on the effective date specified by the Board.

(b) The following participating instrumentalities, so long as they meet the requirements of Section 7-108 and the area served by them or within their jurisdiction is not located entirely within a municipality having more than one million inhabitants, may be included hereunder:

i. Township School District Trustees.

ii. Multiple County and Consolidated Health Departments created under Division 5-25 of the Counties Code or its predecessor law.

iii. Public Building Commissions created under the Public Building Commission Act, and located in counties of less than 1,000,000 inhabitants.

iv. A multitype, consolidated or cooperative library system created under the Illinois Library System Act. Any library system created under the Illinois Library System Act that has one or more predecessors that participated in the Fund may participate in the Fund upon application. The Board shall establish procedures for implementing the transfer of rights and obligations from the predecessor system to the successor system.

v. Regional Planning Commissions created under Division 5-14 of the Counties Code or its predecessor law.

vi. Local Public Housing Authorities created under the Housing Authorities Act, located in counties of less than 1,000,000 inhabitants.

vii. Illinois Municipal League.

viii. Northeastern Illinois Metropolitan Area Planning Commission.

ix. Southwestern Illinois Metropolitan Area Planning Commission.

x. Illinois Association of Park Districts.

xi. Illinois Supervisors, County Commissioners and Superintendents of Highways Association.

xii. Tri-City Regional Port District.

xiii. An association, or not-for-profit corporation, membership in which is authorized under Section 85-15 of the Township Code.

xiv. Drainage Districts operating under the Illinois Drainage Code.

xv. Local mass transit districts created under the Local Mass Transit District Act.

xvi. Soil and water conservation districts created under the Soil and Water Conservation Districts Law.

xvii. Commissions created to provide water supply or sewer services or both under Division 135, Division 135.5, or Division 136 of Article 11 of the Illinois Municipal Code.

xviii. Public water districts created under the Public Water District Act.

xix. Veterans Assistance Commissions established under Section 9 of the Military Veterans Assistance Act that serve counties with a population of less than 1,000,000.

xx. The governing body of an entity, other than a vocational education cooperative, created under an intergovernmental cooperative agreement established between participating municipalities under the Intergovernmental Cooperation Act, which by the terms of the agreement is the employer of the persons performing services under the agreement under the usual common law rules determining the employer-employee relationship. The governing body of such an intergovernmental cooperative entity established prior to July 1, 1988 may make participation retroactive to the effective date of the agreement and, if so, the effective date of participation shall be the date the required application is filed with the fund. If any such entity is unable to pay the required employer contributions to the fund, then the participating municipalities shall make payment of the required contributions and the payments shall be allocated as provided in the agreement or, if not so provided, equally among them.

xxi. The Illinois Municipal Electric Agency.

xxii. The Waukegan Port District.

xxiii. The Fox Waterway Agency created under the Fox Waterway Agency Act.

xxiv. The Illinois Municipal Gas Agency.

xxv. The Kaskaskia Regional Port District.

xxvi. The Southwestern Illinois Development Authority.

xxvii. The Cairo Public Utility Company.

xxviii. Except with respect to employees who elect to participate in the State Employees' Retirement System of Illinois under Section 14-104.13 of this Code, the Chicago Metropolitan Agency for Planning created under the Regional Planning Act, provided that, with respect to the benefits payable pursuant to Sections 7-146, 7-150, and 7-164 and the requirement that eligibility for such benefits is conditional upon satisfying a minimum period of service or a minimum contribution, any employee of the Chicago Metropolitan Agency for Planning that was immediately prior to such employment an employee of the Chicago Area Transportation Study or the Northeastern Illinois Planning Commission, such employee's service at the Chicago Area Transportation Study or the Northeastern Illinois Planning Commission and contributions to the State Employees' Retirement System of Illinois established under Article 14 and the Illinois Municipal Retirement Fund shall count towards the satisfaction of such requirements.

xxix. United Counties Council (formerly the Urban Counties Council), but only if the Council has a ruling from the United States Internal Revenue Service that it is a governmental entity.

xxx. The Will County Governmental League, but only if the League has a ruling from the United States Internal Revenue Service that it is a governmental entity.

xxxi. The Firefighters' Pension Investment Fund.

xxxii. The Police Officers' Pension Investment Fund.

xxxiii. The Joliet Regional Port District.

(c) The governing boards of special education joint agreements created under Section 10-22.31 of the School Code without designation of an administrative district shall be included within and be subject to this Article as participating instrumentalities when the joint agreement becomes effective. However, the governing board of any such special education joint agreement in effect before September 5, 1975 shall not be subject to this Article unless the joint agreement is modified by the school districts to provide that the governing board is subject to this Article, except as otherwise provided by this Section.

The governing board of the Special Education District of Lake County shall become subject to this Article as a participating instrumentality on July 1, 1997. Notwithstanding subdivision (a)1 of Section 7-139, on the effective date of participation, employees of the governing board of the Special Education District of Lake County shall receive creditable service for their prior service with that employer, up to a maximum of 5 years, without any employee contribution. Employees may establish creditable service for the remainder of their prior service with that employer, if any, by applying in writing and paying an employee contribution in an amount determined by the Fund, based on the employee contribution rates in effect at the time of application for the creditable service and the employee's salary rate on the effective date of participation for that employer, plus interest at the effective rate from the date of the prior service to the date of payment. Application for this creditable service must be made before July 1, 1998; the payment may be made at any time while the employee is still in service. The employer may elect to make the required contribution on behalf of the employee.

The governing board of a special education joint agreement created under Section 10-22.31 of the School Code for which an administrative district has been designated, if there are employees of the cooperative educational entity who are not employees of the administrative district, may elect to participate in the Fund and be included within this Article as a participating instrumentality, subject to such application procedures and rules as the Board may prescribe.

The Boards of Control of cooperative or joint educational programs or projects created and administered under Section 3-15.14 of the School Code, whether or not the Boards act as their own administrative district, shall be included within and be subject to this Article as participating instrumentalities when the agreement establishing the cooperative or joint educational program or project becomes effective.

The governing board of a special education joint agreement entered into after June 30, 1984 and prior to September 17, 1985 which provides for representation on the governing board by less than all the participating districts shall be included within and subject to this Article as a participating instrumentality. Such participation shall be effective as of the date the joint agreement becomes effective.

The governing boards of educational service centers established under Section 2-3.62 of the School Code shall be included within and subject to this Article as participating instrumentalities. The governing boards of vocational education cooperative agreements created under the Intergovernmental Cooperation Act and approved by the State Board of Education shall be included within and be subject to this Article as participating instrumentalities. If any such governing boards or boards of control are unable to pay the required employer contributions to the fund, then the school districts served by such boards shall make payment of required contributions as provided in Section 7-172. The payments shall be allocated among the several school districts in proportion to the number of students in average daily attendance for the last full school year for each district in relation to the total number of students in average attendance for such period for all districts served. If such educational service centers, vocational education cooperatives or cooperative or joint educational programs or projects created and administered under Section 3-15.14 of the School Code are dissolved, the assets and obligations shall be distributed among the districts in the same proportions unless otherwise provided.

The governing board of Paris Cooperative High School shall be included within and be subject to this Article as a participating instrumentality on the effective date of this amendatory Act of the 96th General Assembly. If the governing board of Paris Cooperative High School is unable to pay the required employer contributions to the fund, then the school districts served shall make payment of required contributions as provided in Section 7-172. The payments shall be allocated among the several school districts in proportion to the number of students in average daily attendance for the last full school year for each district in relation to the total number of students in average attendance for such period for all districts served. If Paris Cooperative High School is dissolved, then the assets and obligations shall be distributed among the districts in the same proportions unless otherwise provided.

The Philip J. Rock Center and School shall be included within and be subject to this Article as a participating instrumentality on the effective date of this amendatory Act of the 97th General Assembly. The Philip J. Rock Center and School shall certify to the Fund the dates of service of all employees within 90 days of the effective date of this amendatory Act of the 97th General Assembly. The Fund shall transfer to the IMRF account of the Philip J. Rock Center and School all creditable service and all employer contributions made on behalf of the employees for service at the Philip J. Rock Center and School that were reported and paid to IMRF by another employer prior to this date. If the Philip J. Rock Center and School is unable to pay the required employer contributions to the Fund, then the amount due will be paid by all employers as defined in item (2) of paragraph (a) of subsection (A) of this Section. The payments shall be allocated among these employers in proportion to the number of students in average daily attendance for the last full school year for each district in relation to the total number of students in average attendance for such period for all districts. If the Philip J. Rock Center and School is dissolved, then its IMRF assets and obligations shall be distributed in the same proportions unless otherwise provided.

Financial Oversight Panels established under Article 1H of the School Code shall be included within and be subject to this Article as a participating instrumentality on the effective date of this amendatory Act of the 97th General Assembly. If the Financial Oversight Panel is unable to pay the required employer contributions to the fund, then the school districts served shall make payment of required contributions as provided in Section 7-172. If the Financial Oversight Panel is dissolved, then the assets and obligations shall be distributed to the district served.

(d) The governing boards of special recreation joint agreements created under Section 8-10b of the Park District Code, operating without designation of an administrative district or an administrative municipality appointed to administer the program operating under the authority of such joint agreement shall be included within and be subject to this Article as participating instrumentalities when the joint agreement becomes effective. However, the governing board of any such special recreation joint agreement in effect before January 1, 1980 shall not be subject to this Article unless the joint agreement is modified, by the districts and municipalities which are parties to the agreement, to provide that the governing board is subject to this Article.

If the Board returns any employer and employee contributions to any employer which erroneously submitted such contributions on behalf of a special recreation joint agreement, the Board shall include interest computed from the end of each year to the date of payment, not compounded, at the rate of 7% per annum.

(e) Each multi-township assessment district, the board of trustees of which has adopted this Article by ordinance prior to April 1, 1982, shall be a participating instrumentality included within and subject to this Article effective December 1, 1981. The contributions required under Section 7-172 shall be included in the budget prepared under and allocated in accordance with Section 2-30 of the Property Tax Code.

(f) The Illinois Medical District Commission created under the Illinois Medical District Act may be included within and subject to this Article as a participating instrumentality, notwithstanding that the location of the District is entirely within the City of Chicago. To become a participating instrumentality, the Commission must apply to the Board in the manner set forth in paragraph (a) of this subsection (B). If the Board approves the application, under the criteria and procedures set forth in paragraph (a) and any other applicable rules, criteria, and procedures of the Board, participation by the Commission shall commence on the effective date specified by the Board.

(C) Prospective participants. Beginning January 1, 1992, each prospective participating municipality or participating instrumentality shall pay to the Fund the cost, as determined by the Board, of a study prepared by the Fund or its actuary, detailing the prospective costs of participation in the Fund to be expected by the municipality or instrumentality.

(Source: P.A. 104-284, eff. 8-15-25.)

(40 ILCS 5/7-158) (from Ch. 108 1/2, par. 7-158)

Sec. 7-158. Surviving spouse annuities; options annuities - Options. In lieu of the surviving spouse annuity an eligible surviving spouse shall have the option of receiving other benefits as follows:

1. The surviving spouse of a participating employee may elect to receive either a single sum death benefit or a surviving spouse annuity and the $8,000 ($3,000 for those who first retired prior to the effective date of this amendatory Act of the 104th General Assembly) $3,000 death benefit provided in Sections 7-163 and 7-164.

2. The surviving spouse of an employee, who has separated from service and would have been entitled to a retirement annuity on date of death, may elect to receive either a single sum death benefit or a surviving spouse annuity and the $8,000 ($3,000 for those who first retired prior to the effective date of this amendatory Act of the 104th General Assembly) $3,000 death benefit provided in Sections 7-163 and 7-164.

3. If any surviving spouse annuity is payable prior to the earliest age at which the recipient will become eligible for a widows' or widowers' insurance benefit under the Federal Social Security Act, the recipient may elect that the annuity payments from this fund shall exceed those payable after attaining such age by an amount not in excess of the estimated Social Security Benefit, determined as of the effective date of the surviving spouse annuity, provided that in no case shall the total annuity payments made by this fund exceed in actuarial value the annuity which would have been paid had no such election been made.

4. The surviving spouse of a participating employee, whose annuity was suspended upon return to employment and who had one year or more of service after his return, may apply the additional service credits to a supplemental surviving spouse annuity and receive the $8,000 ($3,000 for those who first retired prior to the effective date of this amendatory Act of the 104th General Assembly) $3,000 death benefit or apply the additional service credits to a single sum death benefit and forego the $8,000 ($3,000 for those who first retired prior to the effective date of this amendatory Act of the 104th General Assembly) $3,000 death benefit payable upon the death of an annuitant.

5. The surviving spouse of a participating employee, whose annuity was suspended upon return to employment and who had less than one year of service after his return, shall have the additional service credits applied towards a supplemental surviving spouse annuity and shall receive the $8,000 ($3,000 for those who first retired prior to the effective date of this amendatory Act of the 104th General Assembly) $3,000 death benefit.

(Source: P.A. 85-941.)

(40 ILCS 5/7-164) (from Ch. 108 1/2, par. 7-164)

Sec. 7-164. Death benefits; amount benefits - Amount. The amount of the death benefit shall be:

1. Upon the death of an employee with at least one year of service occurring while in an employment relationship (including employees drawing disability benefits) with a participating municipality or participating instrumentality, an amount equal to the sum of:

(a) The employee's normal, additional and survivor credits, including interest credited thereto through the end of the preceding calendar year, but excluding credits and interest thereon allowed for periods of disability.

(b) An amount equal to the employee's annual final rate of earnings. An employee who dies as a result of injuries connected with his duties shall be considered to have a year of service for purposes of this benefit.

2. Upon the death of an employee with less than 1 year of service occurring while in the service of any participating municipality or instrumentality, an amount equal to the sum of his accumulated normal, additional and survivor credits on the date of death, excluding those credits and interest thereon allowed during periods of disability.

3. Upon the death of an employee who has separated from service and was not entitled to a retirement annuity on the date of death, an amount equal to the sum of his accumulated normal, survivor and additional credits on the date of death excluding those credits and interest thereon allowed during periods of disability.

4. Upon the death of an employee in an employment relationship, or an employee who has service and was entitled to a retirement annuity on the date of death, when a surviving spouse or child annuity is awarded, $8,000 ($3,000 for those who first retired prior to the effective date of this amendatory Act of the 104th General Assembly) $3,000.

5. Upon the death of an employee, who has separated from service and was entitled to a retirement annuity on the date of death, and no surviving spouse or child annuity is awarded, $8,000 ($3,000 for those who first retired prior to the effective date of this amendatory Act of the 104th General Assembly) $3,000 plus an amount equal to his accumulated normal, survivor and additional credits on the date of death, excluding those credits and interest earned thereon allowed during periods of disability.

6. Upon the death of an employee annuitant, $8,000 ($3,000 for those who first retired prior to the effective date of this amendatory Act of the 104th General Assembly) $3,000 and, unless a surviving spouse, child or reversionary annuity is payable, the sum of (i) the excess of the normal and survivor credits, excluding those allowed during periods of disability, which the annuitant had as of the effective date of his annuity over the total annuities paid pursuant to paragraph (a) 1 of Section 7-142 to the date of death, plus (ii) the excess of the additional credits, excluding any such credits used to create a reversionary annuity, used to provide the annuity granted pursuant to paragraph (a) 2 of Section 7-142 over the total annuity payments made pursuant thereto to the time of death.

7. Upon the death of an annuitant receiving a reversionary annuity or of a person designated to receive a reversionary annuity prior to the receipt of such annuity the sum of the additional credits of the person creating the reversionary annuity as of the effective date of his own retirement annuity over the reversionary annuity payments, if any, made prior to the date of death of such annuitant or person designated to receive the reversionary annuity.

8. Upon the death of an annuitant receiving a beneficiary annuity which was effective before January 1, 1986, the excess of the death benefit which was used to provide the annuity, over the sum of all annuity payments made to the beneficiary. Upon the death of an annuitant receiving a beneficiary annuity effective January 1, 1986 or thereafter, the sum of (i) the excess of the normal and survivor credits, excluding those allowed during periods of disability, which the annuitant had as of the effective date of his annuity over the total annuities paid pursuant to paragraph (c) of Section 7-165, to date of death, plus (ii) the excess of the additional credits, excluding any such credits used to create a reversionary annuity, used to provide the annuity granted pursuant to paragraph (d) of Section 7-165 over the total annuity payments made pursuant thereto to the time of death.

9. Upon the marriage prior to reaching age 55 (except for a surviving spouse who remarries after December 31, 2000) or death of a person receiving a surviving spouse annuity, unless a child annuity is payable, the sum of (i) the excess of the normal and survivor credits, excluding those credits and interest thereon allowed during periods of disability, attributable to the employee at the effective date of the annuity or date of death, whichever first occurred, over the total of all annuity payments attributable to paragraph (a) 1 of Section 7-142 made to the employee or surviving spouse plus (ii) the excess of the additional credits, excluding any such credits used to create a reversionary annuity or used to provide the annuity attributable to paragraph (a) 2 of Section 7-142 over the total of such payments.

10. Upon the marriage, death or attainment of age 18 of a child receiving a child annuity, if no other child annuities are payable, the sum of (i) the excess of the normal and survivor credits excluding those credits and interest thereon allowed during periods of disability, of the employee at the effective date of the annuity or date of death, whichever first occurred, over the total annuity payments attributable to paragraph (a) 1 of Section 7-142 made to the employee, surviving spouse and children plus (ii) the excess of the additional credits, excluding any such credits used to create a reversionary annuity, used to provide the annuity attributable to paragraph (a) 2 of Section 7-142 over the total annuity payments made to the employee, surviving spouse and children, pursuant thereto.

11. Upon the death of the participating employee whose annuity was suspended upon his return to employment:

a. If a surviving spouse or child annuity is awarded, $8,000 ($3,000 for those who first retired prior to the effective date of this amendatory Act of the 104th General Assembly) $3,000;

b. If no surviving spouse or child annuity is awarded and he had less than one year's service upon return, $8,000 ($3,000 for those who first retired prior to the effective date of this amendatory Act of the 104th General Assembly) $3,000 plus the excess of the normal, survivor and additional credits, including interest thereon, but excluding those allowed during a period of disability, at the effective date of the suspended annuity, plus those allowed after his return, over all annuity payments made to the employee;

c. If no surviving spouse or child annuity is awarded and he has one year or more of service upon return, the higher of (a) the payment under subparagraph b of this paragraph or (b) the payment under paragraph 1 of this Section, taking into consideration only the service and credits allowed after his return, plus the excess of the normal, survivor and additional credits, including interest thereon, excluding those allowed during periods of disability, at the effective date of his suspended annuity over all annuity payments made to the employee.

12. The $8,000 ($3,000 for those who first retired prior to the effective date of this amendatory Act of the 104th General Assembly) $3,000 death benefit provided in paragraphs 4 and 6 shall not be payable to beneficiaries of persons who terminated service prior to September 8, 1971, unless the payment or agreement for payment provided by Section 7-144.2 of this Article is made prior to the date of death.

13. The increase in certain death benefits from $1,000 to $3,000 provided by this amendatory Act of 1987 shall apply only to deaths occurring on or after January 1, 1988.

The increase in certain death benefits from $3,000 to $8,000 provided by this amendatory Act of the 104th General Assembly shall apply only to deaths occurring on or after January 1, 2027.

(Source: P.A. 91-887, eff. 7-6-00.)

(40 ILCS 5/7-172) (from Ch. 108 1/2, par. 7-172)

Sec. 7-172. Contributions by participating municipalities and participating instrumentalities.

(a) Each participating municipality and each participating instrumentality shall make payment to the fund as follows:

1. municipality contributions in an amount determined by applying the municipality contribution rate to each payment of earnings paid to each of its participating employees;

2. an amount equal to the employee contributions provided by paragraph (a) of Section 7-173, whether or not the employee contributions are withheld as permitted by that Section;

3. all accounts receivable, together with interest charged thereon, as provided in Section 7-209, and any amounts due under subsection (a-5) of Section 7-144;

4. if it has no participating employees with current earnings, an amount payable which, over a closed period of 20 years for participating municipalities and 10 years for participating instrumentalities, will amortize, at the effective rate for that year, any unfunded obligation. The unfunded obligation shall be computed as provided in paragraph 2 of subsection (b);

5. if it has fewer than 7 participating employees or a negative balance in its municipality reserve, the greater of (A) an amount payable that, over a period of 20 years, will amortize at the effective rate for that year any unfunded obligation, computed as provided in paragraph 2 of subsection (b) or (B) the amount required by paragraph 1 of this subsection (a).

(b) A separate municipality contribution rate shall be determined for each calendar year for all participating municipalities together with all instrumentalities thereof. The municipality contribution rate shall be determined for participating instrumentalities as if they were participating municipalities. The municipality contribution rate shall be the sum of the following percentages:

1. The percentage of earnings of all the participating employees of all participating municipalities and participating instrumentalities which, if paid over the entire period of their service, will be sufficient when combined with all employee contributions available for the payment of benefits, to provide all annuities for participating employees, and the $8,000 ($3,000 for those who first retired prior to the effective date of this amendatory Act of the 104th General Assembly) $3,000 death benefit payable under Sections 7-158 and 7-164, such percentage to be known as the normal cost rate.

2. The percentage of earnings of the participating employees of each participating municipality and participating instrumentalities necessary to adjust for the difference between the present value of all benefits, excluding temporary and total and permanent disability and death benefits, to be provided for its participating employees and the sum of its accumulated municipality contributions and the accumulated employee contributions and the present value of expected future employee and municipality contributions pursuant to subparagraph 1 of this paragraph (b). This adjustment shall be spread over a period determined by the Board, not to exceed 30 years for participating municipalities or 10 years for participating instrumentalities.

3. The percentage of earnings of the participating employees of all municipalities and participating instrumentalities necessary to provide the present value of all temporary and total and permanent disability benefits granted during the most recent year for which information is available.

4. The percentage of earnings of the participating employees of all participating municipalities and participating instrumentalities necessary to provide the present value of the net single sum death benefits expected to become payable from the reserve established under Section 7-206 during the year for which this rate is fixed.

5. The percentage of earnings necessary to meet any deficiency arising in the Terminated Municipality Reserve.

(c) A separate municipality contribution rate shall be computed for each participating municipality or participating instrumentality for its sheriff's law enforcement employees.

A separate municipality contribution rate shall be computed for the sheriff's law enforcement employees of each forest preserve district that elects to have such employees. For the period from January 1, 1986 to December 31, 1986, such rate shall be the forest preserve district's regular rate plus 2%.

In the event that the Board determines that there is an actuarial deficiency in the account of any municipality with respect to a person who has elected to participate in the Fund under Section 3-109.1 of this Code, the Board may adjust the municipality's contribution rate so as to make up that deficiency over such reasonable period of time as the Board may determine.

(d) The Board may establish a separate municipality contribution rate for all employees who are program participants employed under the federal Comprehensive Employment Training Act by all of the participating municipalities and instrumentalities. The Board may also provide that, in lieu of a separate municipality rate for these employees, a portion of the municipality contributions for such program participants shall be refunded or an extra charge assessed so that the amount of municipality contributions retained or received by the fund for all CETA program participants shall be an amount equal to that which would be provided by the separate municipality contribution rate for all such program participants. Refunds shall be made to prime sponsors of programs upon submission of a claim therefor and extra charges shall be assessed to participating municipalities and instrumentalities. In establishing the municipality contribution rate as provided in paragraph (b) of this Section, the use of a separate municipality contribution rate for program participants or the refund of a portion of the municipality contributions, as the case may be, may be considered.

(e) Computations of municipality contribution rates for the following calendar year shall be made prior to the beginning of each year, from the information available at the time the computations are made, and on the assumption that the employees in each participating municipality or participating instrumentality at such time will continue in service until the end of such calendar year at their respective rates of earnings at such time.

(f) Any municipality which is the recipient of State allocations representing that municipality's contributions for retirement annuity purposes on behalf of its employees as provided in Section 12-21.16 of the Illinois Public Aid Code shall pay the allocations so received to the Board for such purpose. Estimates of State allocations to be received during any taxable year shall be considered in the determination of the municipality's tax rate for that year under Section 7-171. If a special tax is levied under Section 7-171, none of the proceeds may be used to reimburse the municipality for the amount of State allocations received and paid to the Board. Any multiple-county or consolidated health department which receives contributions from a county under Section 11.2 of "An Act in relation to establishment and maintenance of county and multiple-county health departments", approved July 9, 1943, as amended, or distributions under Section 3 of the Department of Public Health Act, shall use these only for municipality contributions by the health department.

(g) Municipality contributions for the several purposes specified shall, for township treasurers and employees in the offices of the township treasurers who meet the qualifying conditions for coverage hereunder, be allocated among the several school districts and parts of school districts serviced by such treasurers and employees in the proportion which the amount of school funds of each district or part of a district handled by the treasurer bears to the total amount of all school funds handled by the treasurer.

From the funds subject to allocation among districts and parts of districts pursuant to the School Code, the trustees shall withhold the proportionate share of the liability for municipality contributions imposed upon such districts by this Section, in respect to such township treasurers and employees and remit the same to the Board.

The municipality contribution rate for an educational service center shall initially be the same rate for each year as the regional office of education or school district which serves as its administrative agent. When actuarial data become available, a separate rate shall be established as provided in subparagraph (i) of this Section.

The municipality contribution rate for a public agency, other than a vocational education cooperative, formed under the Intergovernmental Cooperation Act shall initially be the average rate for the municipalities which are parties to the intergovernmental agreement. When actuarial data become available, a separate rate shall be established as provided in subparagraph (i) of this Section.

(h) Each participating municipality and participating instrumentality shall make the contributions in the amounts provided in this Section in the manner prescribed from time to time by the Board and all such contributions shall be obligations of the respective participating municipalities and participating instrumentalities to this fund. The failure to deduct any employee contributions shall not relieve the participating municipality or participating instrumentality of its obligation to this fund. Delinquent payments of contributions due under this Section may, with interest, be recovered by civil action against the participating municipalities or participating instrumentalities. Municipality contributions, other than the amount necessary for employee contributions, for periods of service by employees from whose earnings no deductions were made for employee contributions to the fund, may be charged to the municipality reserve for the municipality or participating instrumentality.

(i) Contributions by participating instrumentalities shall be determined as provided herein except that the percentage derived under subparagraph 2 of paragraph (b) of this Section, and the amount payable under subparagraph 4 of paragraph (a) of this Section, shall be based on an amortization period of 10 years.

(j) Notwithstanding the other provisions of this Section, the additional unfunded liability accruing as a result of Public Act 94-712 shall be amortized over a period of 30 years beginning on January 1 of the second calendar year following the calendar year in which Public Act 94-712 takes effect, except that the employer may provide for a longer amortization period by adopting a resolution or ordinance specifying a 35-year or 40-year period and submitting a certified copy of the ordinance or resolution to the fund no later than June 1 of the calendar year following the calendar year in which Public Act 94-712 takes effect.

(k) If the amount of a participating employee's reported earnings for any of the 12-month periods used to determine the final rate of earnings exceeds the employee's 12-month reported earnings with the same employer for the previous year by the greater of 6% or 1.5 times the annual increase in the Consumer Price Index-U, as established by the United States Department of Labor for the preceding September, the participating municipality or participating instrumentality that paid those earnings shall pay to the Fund, in addition to any other contributions required under this Article, the present value of the increase in the pension resulting from the portion of the increase in reported earnings that is in excess of the greater of 6% or 1.5 times the annual increase in the Consumer Price Index-U, as determined by the Fund. This present value shall be computed on the basis of the actuarial assumptions and tables used in the most recent actuarial valuation of the Fund that is available at the time of the computation.

Whenever it determines that a payment is or may be required under this subsection (k), the fund shall calculate the amount of the payment and bill the participating municipality or participating instrumentality for that amount. The bill shall specify the calculations used to determine the amount due. If the participating municipality or participating instrumentality disputes the amount of the bill, it may, within 30 days after receipt of the bill, apply to the fund in writing for a recalculation. The application must specify in detail the grounds of the dispute. Upon receiving a timely application for recalculation, the fund shall review the application and, if appropriate, recalculate the amount due. The participating municipality and participating instrumentality contributions required under this subsection (k) may be paid in the form of a lump sum within 90 days after receipt of the bill. If the participating municipality and participating instrumentality contributions are not paid within 90 days after receipt of the bill, then interest will be charged at a rate equal to the fund's annual actuarially assumed rate of return on investment compounded annually from the 91st day after receipt of the bill. Payments must be concluded within 7 years after receipt of the bill by the participating municipality or participating instrumentality.

When assessing payment for any amount due under this subsection (k), the fund shall exclude earnings increases resulting from overload or overtime earnings.

When assessing payment for any amount due under this subsection (k), the fund shall exclude earnings increases resulting from payments for unused vacation time, but only for payments for unused vacation time made in the final 3 months of the final rate of earnings period.

When assessing payment for any amount due under this subsection (k), the fund shall also exclude earnings increases attributable to standard employment promotions resulting in increased responsibility and workload.

When assessing payment for any amount due under this subsection (k), the fund shall exclude reportable earnings increases resulting from periods where the member was paid through workers' compensation.

This subsection (k) does not apply to earnings increases due to amounts paid as required by federal or State law or court mandate or to earnings increases due to the participating employee returning to the regular number of hours worked after having a temporary reduction in the number of hours worked.

This subsection (k) does not apply to earnings increases paid to individuals under contracts or collective bargaining agreements entered into, amended, or renewed before January 1, 2012 (the effective date of Public Act 97-609), earnings increases paid to members who are 10 years or more from retirement eligibility, or earnings increases resulting from an increase in the number of hours required to be worked.

When assessing payment for any amount due under this subsection (k), the fund shall also exclude earnings attributable to personnel policies adopted before January 1, 2012 (the effective date of Public Act 97-609) as long as those policies are not applicable to employees who begin service on or after January 1, 2012 (the effective date of Public Act 97-609).

The change made to this Section by Public Act 100-139 is a clarification of existing law and is intended to be retroactive to January 1, 2012 (the effective date of Public Act 97-609).

(Source: P.A. 103-464, eff. 8-4-23; 104-284, eff. 8-15-25.)

(40 ILCS 5/7-205) (from Ch. 108 1/2, par. 7-205)

Sec. 7-205. Reserves for annuities. Appropriate reserves shall be created for payment of all annuities granted under this Article at the time such annuities are granted and in amounts determined to be necessary under actuarial tables adopted by the Board upon recommendation of the actuary of the fund. All annuities payable shall be charged to the annuity reserve.

1. Amounts credited to annuity reserves shall be derived by transfer of all the employee credits from the appropriate employee reserves and by charges to the municipality reserve of those municipalities in which the retiring employee has accumulated service. If a retiring employee has accumulated service in more than one participating municipality or participating instrumentality, the municipality charges for non-concurrent service shall be calculated as follows:

(A) for purposes of calculating the annuity reserve, an annuity will be calculated based on service and adjusted earnings with each employer (without regard to the vesting requirement contained in subsection (a) of Section 7-142); and

(B) the difference between the municipality charges for the actual annuity granted and the aggregation of the municipality charges based upon the ratio of each from those calculations to the aggregated total from paragraph (A) of this item 1.

Aggregate municipality charges for concurrent service shall be prorated based on the employee's earnings. The municipality charges for retirement annuities calculated under subparagraph a. of paragraph 1. of subsection (a) of Section 7-142 shall be prorated based on actual contributions.

2. Supplemental annuities shall be handled as a separate annuity and amounts to be credited to the annuity reserve therefor shall be derived in the same manner as a regular annuity.

3. When a retirement annuity is granted to an employee with a spouse eligible for a surviving spouse annuity, there shall be credited to the annuity reserve an amount to fund the cost of both the retirement and surviving spouse annuity as a joint and survivors annuity.

4. Beginning January 1, 1989, when a retirement annuity is awarded, an amount equal to the present value of the $8,000 ($3,000 for those who first retired prior to the effective date of this amendatory Act of the 104th General Assembly) $3,000 death benefit payable upon the death of the annuitant shall be transferred to the annuity reserve from the appropriate municipality reserves in the same manner as the transfer for annuities.

5. All annuity reserves shall be revalued annually as of December 31. Beginning as of December 31, 1973, adjustment required therein by such revaluation shall be charged or credited to the earnings and experience variation reserve.

6. There shall be credited to the annuity reserve all of the payments made by annuitants under Section 7-144.2, plus an additional amount from the earnings and experience variation reserve to fund the cost of the incremental annuities granted to annuitants making these payments.

7. As of December 31, 1972, the excess in the annuity reserve shall be transferred to the municipality reserves. An amount equal to the deficiency in the reserve of participating municipalities and participating instrumentalities which have no participating employees shall be allocated to their reserves. The remainder shall be allocated in amounts proportionate to the present value, as of January 1, 1972, of annuities of annuitants of the remaining participating municipalities and participating instrumentalities.

(Source: P.A. 97-319, eff. 1-1-12; 97-609, eff. 1-1-12; 97-813, eff. 7-13-12.)

(40 ILCS 5/7-206) (from Ch. 108 1/2, par. 7-206)

Sec. 7-206. Death Reserve. All death benefit payments shall be charged to the Death Reserve, other than the $8,000 ($3,000 for those who first retired prior to the effective date of this amendatory Act of the 104th General Assembly) $3,000 death benefits paid after December 31, 1988 upon the death of an annuitant. All contributions for death purposes under Section 7-172(b)4 shall be credited to the same reserve. Whenever the balance in such reserve at the close of a year exceeds 100% of the average annual charges to this account during the 3 preceding calendar years, the basic actuarial assumptions upon which municipality contribution rates for these purposes are based, shall be reviewed and revised in such manner as is deemed necessary to reduce such balance.

(Source: P.A. 89-136, eff. 7-14-95.)

Section 90. The State Mandates Act is amended by adding Section 8.50 as follows:

(30 ILCS 805/8.50 new)

Sec. 8.50. 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 104th General Assembly.

Section 99. Effective date. This Act takes effect upon becoming law, except that the changes to Sections 7-158, 7-164, 7-172, 7-205, and 7-206 of the Illinois Pension Code take effect January 1, 2027.