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Legislative News

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.

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.

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.

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.

  • increases normal retirement age by eight years – from age 50 to age 58 – for Tier 1 members who will be younger than 45 years old on January 1, 2015

Retirement Age Decreases – Tier II

  • decreases normal and early retirement ages for Tier 2 members by two years

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.

  • Reduces duty disability benefit to 74% of salary in 2015, 73% of salary in 2017, and 72% of salary in 2019.

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)

  • In addition to the increased employer contributions outlined immediately above, the employer shall also contribute an additional $12.5 million in 2015, $12.5 million in 2016, and $50 million in 2019.

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

  • excerpt from amendment text (emphasis added): “if the board of park commissioners fails to pay the amount guaranteed under this Section within 60 days after the date set forth by the retirement board, the retirement board may bring a mandamus action in the Illinois Supreme Court or the Circuit Court of Cook County to compel the board of park commissioners to make the required payment[....] In ordering the board of park commissioners to make the required payment, the court may order a reasonable payment schedule to enable the board of park commissioners to make the required payment without significantly imperiling the public health, safety, or welfare.

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

  • Acts with future benefit increases affecting the system’s employees “must identify and provide for payment to the fund of additional funding at least sufficient to fund the resulting annual increase in cost to the fund as it accrues. Every new benefit increase is contingent upon the General Assembly providing the additional funding required.” Otherwise, the benefit increase is null and void.

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.”
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