Legislative update

Some new legislation has been filed for consideration in committees this afternoon. Here’s a rundown:

SBc66 — ADW bill. Being heard today at 3 p.m. in House Exec, Room 188 of the Capitol

SB 1955 — looks to be disaster aid. Heard in Exec at 3 p.m.


SB 1961 — cleanup apparently making clear who represents the state if sued over the pensions funding guarantee. Heard in House Pensions at 4:30 p.m. today in Room 118


SB 1227 — several options for offering tax incentives to companies, including Univar, ADM and Office Max/Depot. Mike Zalewski is the sponsor and the satellite tax is a revenue source. Heard in House Revenue and Finance Committee today at 4:30 p.m. in Room 114 of the Capitol.


12/2/2013 3:00PM Executive Committee
Room 118 Capitol Building – Springfield, IL
12/2/2013 4:30PM Personnel and Pensions Committee
Room 118 Capitol Building – Springfield, IL
12/2/2013 4:30PM Revenue & Finance Committee
Room 114 Capitol Building – Springfield, IL

On Mon, Dec 2, 2013 at 7:31 AM, Ryan Keith <rkprsolutions> wrote:

Here’s a look at what’s going on these next couple of days:

Pensions – I’ve included below and attached the fact sheet from the legislative leaders that I sent around on Friday, so it’s handy. The conference committee has a hearing tomorrow morning at 8:30 a.m. in Room 212 of the Capitol on the new agreement. Glad to connect you with Rep. Elaine Nekritz and/or Rep. Mike Zalewski on this as needed.

The new version of the bill will be available here when it is filed:


Gambling – State Rep. Bob Rita is carrying Senate Bill 66, the bill agreed to by the stakeholders in the horse racing industry to extend Advance Deposit Wagering (ADW) in Illinois. A hearing on the bill has not been scheduled yet but I’ll let you know when it is set. I have several background documents I can send you if you’re going to get into this issue, and the bill is here:


McPier – Bob is also carrying House Bill 3728, which changes some contractor requirements at McCormick Place in Chicago. The bill is scheduled to be heard by the House Executive Committee today at 3 p.m. in Room 118 of the Capitol:


If other hearings are scheduled for later today, I’ll send an update.



Details as of 11/29/13

Funding schedule and method for certifying contributions: Establishes an actuarially sound funding schedule to achieve 100% funding no later than the end of FY 2044. Contributions will be certified using the entry age normal actuarial cost method (EAN), which averages costs evenly over the pensioner’s employment and results in level contributions.

Supplemental contributions: The State will contribute (i) $364 million in FY 2019, (ii) $1 billion annually thereafter through 2045 or until the system reaches 100% funding, and (iii) 10% of the annual savings resulting from pension reform beginning in FY 2016 until the system reaches 100% funding. These contributions will be “pure add on,” which means State contributions in any year will not be reduced by these amounts.

Funding guarantee: If the State fails to make a pension payment or a supplemental contribution, a retirement system may file an action in the Illinois Supreme Court to compel the State to make the required pension payment and/or supplemental contribution set by law each year.

Employee contribution: Employees will contribute 1% less of their salary toward their pension.

Annual annuity adjustment (COLAs): Future COLAs will be based on a retiree’s years of service and the full CPI. The annual increase will be equal to 3% of years of service multiplied by $1,000 ($800 for those coordinated with social security). The $1000/$800 will be adjusted each year by the CPI for everyone (retirees and current employees). Those with an annuity that is less than their years of service multiplied by $1000/$800, or whatever the amount is at the time of retirement, will receive a COLA equal to 3% compounded each year until their annuity reaches that amount.

Additionally, current employees will miss annual adjustments depending on age: employees 50 or over miss 1 adjustment (year 2); 49-47 miss 3 adjustments (years 2, 4, and 6); 46-44 miss 4 adjustments (years 2, 4, 6, and 8); 43 and under miss 5 adjustments (years 2, 4, 6, 8, 10).

Pensionable salary cap: Applies the Tier II salary cap ($109,971 for 2013), which is annually adjusted by the lesser of 3% or ½ of the annual CPI-U. Salaries that currently exceed the cap or that will exceed the cap based on raises in a collective bargaining agreement would be grandfathered in.

Retirement age: For those 45 years of age or under, the retirement age will be increased on a graduated scale. For each year a member is under 46, the retirement age will be increased by 4 months (up to 5 years).

Effective rate of interest (ERI): For all purposes, the ERI for SURS and the rate of regular interest for TRS will be the interest rate paid by 30-year U.S. Treasury bonds plus 75 basis points.

GARS Tier 2 fix: Brings GARS Tier 2 salary cap and annual adjustment in line with other Tier 2 benefits.

Pension abuses: Prohibits future members of non-governmental organizations from participating in IMRF, SURS, and TRS. Prohibits new hires from using sick or vacation time toward pensionable salary or years of service (applies to SERS, SURS, TRS, IMRF, Cook County, and Chicago Teachers).

Defined contribution plan: Beginning July 1, 2015, up to 5% of Tier 1 active members have the option of joining a defined contribution plan. The plan must be revenue neutral and employee contributions will be equal to those for the defined benefit plan. If a member chooses to opt into the defined contribution plan, benefits previously accrued in the defined benefit plan will be frozen.

Collective bargaining: All pension matters, except pension pickups, are removed from collective bargaining.

Healthcare payments: Prohibits the State pension systems from using pension funds to pay healthcare costs.