Veto Session Wrap-Up

2013 Veto Session Wrap-Up 
By Sean M. Smoot, Director & Chief Counsel

Despite predictions to the contrary, the November 2013 Veto Session was rather lively compared to previous years.

MARRIAGE
The General Assembly finally passed the Marriage Equality Act which will allow same-sex couples to legally marry.  This was by far the most controversial measure taken up by the legislature during this session.  Governor Quinn has announced that he will sign the bill this month; the law takes effect on June 1st, 2014.

GUNS
Additionally, several measures were introduced that would impact changes to the recently passed Concealed Carry law including a major initiative pushed by the City of Chicago.  A major piece of the Chicago sponsored bill is mandatory minimum sentencing for first offenders convicted of possessing a firearm in violation of the UUW statute.  This measure did not pass.  However, a deal was announced on the last day of session that will likely be introduced in the form of a Bill when the General Assembly next returns to Springfield.

PENSIONS
In what could be described as a devastating blow to our efforts to protect the retirement security of all public employees in the State of Illinois, the General Assembly passed several House amendments to SB 1523 affecting the pension fund for employees of the Chicago Park District.  The amended bill was opposed by the PBPA and the We Are One coalition.  It was opposed largely because the legislation was quickly touted as a potential template for making similar changes to other pension funds for both city and state employees/retirees.

The following is a summary of the changes included in the Bill:  

Retirement Age Increases  – Tier I
Note: Current Tier I normal retirement age is age 50 with 10 years of service.

Retirement Age Decreases – Tier II

COLA Reductions

Note: Current Tier I COLA is 3% simple in the Chicago Parks system.

• Tier I COLA converts to a Tier II COLA (i.e., the lesser of 3% or ½ of CPI and remains simple)
• Three-year staggered COLA holiday in years 2015, 2017, and 2019

Duty Disability Benefit Reductions
Note: The current duty disability benefit is 75% of salary.

Increased Employer Contributions
Note: Currently, the Board of Park Commissioners is required to contribute an amount equal to the employee contributions during the fiscal year two years prior to the year the tax is levied, multiplied by 1.10.

The amendment gradually increases the employer contribution multiplier, as follows:

• For 2015, the multiplier is 1.7 times the amount of employee contributions during the 12-month fiscal year ending December 31, 2013. For 2016, the multiplier is 1.7. For 2017 and 2018, the multiplier is 2.3. For 2019 and thereafter until the funded ratio is 90%, the multiplier is 2.9 times the employee contributions during the fiscal year 2 years prior to the year for which the applicable tax is levied.
  
  
• Beginning in the fiscal year in which the Fund attains a funding ratio of at least 90%, the contribution shall be the lesser of (1) 2.90 times the employee contributions during the fiscal year 2 years prior to the year for which the applicable tax is levied, or (2) the amount needed to maintain a funded ratio of 90%.

Supplemental Employer Contributions (in addition to Increased Regular Employer Contributions)

Increased Employee Contributions
Note: Current employee contribution is 9% for Tier I and II.

• increases employee contributions from 9% to 10% in 2015, 11% in 2017, and 12% in 2019
• once fund reaches 90% funded, decreases employee contributions to 10.5% (note: higher contributions kick in again if fund goes below 90%)

Funding Language

Benefit Increases Cannot Take Effect Unless Paid For and Verified by Actuaries

Pension Funds Cannot Be Used to Subsidize Retiree Health Care

• excerpt from the bill: “The Fund shall not use any contribution received by the Fund under this Article to provide a subsidy for the cost of participation in a retiree health care program.”