SB 1235

Abstract

Amends the State Universities Article of the Illinois Pension Code. Provides that for the purposes of computing service for academic years for any participant, one month of service means a calendar month during which the participant qualifies as an employee for any fraction of the month (instead of at least 15 or more days). Provides that the change applies to all service periods of a member who is a participant on or after January 1, 2024, except for certain service periods subject to purchases of service credit, repayment of a refund or distribution, or transfers of service if payment for such purchase, repayment, or transfer commenced prior to January 1, 2024. Provides that a provision concerning calculating a retirement annuity for a participant who has been employed at 1/2 time or less for 3 or more years shall not apply to a member who is a participant on or after January 1, 2024. Provides that any benefit increase that results from the amendatory Act is excluded from the definition of "new benefit increase". Makes conforming changes. Effective immediately. Judicial Note (Admin Office of the Illinois Courts) Based on a review of SB1235 as amended by House Amendment 1, the legislation will not increase or decrease the number of judges needed in the state of Illinois. Senate Floor Amendment No. 1 Provides that for the purposes of computing service for academic years for any participant, one month of service means a calendar month during which the participant qualifies as an employee and contributes to the System (instead of qualifies as an employee for any fraction of the month). Senate Floor Amendment No. 2 Changes references from January 1, 2024 to September 1, 2024. Pension Note (Government Forecasting & Accountability) According to SURS, the system’s actuary does not recognize the actuarial liabilities associated with part-time employees; the actuary assumes all employees are full-time. SURS reports approximately 24% of active members (73,307) have some part-time service. In addition, approximately 16% of retirement claims have a part-time adjustment, and the adjustment typically impacts the final pension amount in 10% of retirement claims. Thus, while there will be no change to SURS’ liabilities due to the new service accrual schedule and the elimination of the part-time adjustment (for the aforementioned reason that the actuary assumes all employees are FT employees), SURS claims more assets will be necessary to pay enhanced benefits due to the new accrual schedule and the elimination of the part-time adjustment. The amount by which payouts will increase as a result of these changes has not been provided by SURS. House Floor Amendment No. 2 Adds reference to: 40 ILCS 5/15-112 from Ch. 108 1/2, par. 15-112 Replaces everything after the enacting clause. Reinserts the provisions of the engrossed bill with the following changes. Further amends the State Universities Article of the Illinois Pension Code. Provides that beginning September 1, 2024, a provision excluding specified earnings in the determination of the final rate of earnings applies to an employee who has been employed at 1/2 time or less for 3 or more years. Adds an inseverability provision. Effective immediately. Land Conveyance Appraisal Note (Dept. of Transportation) No land conveyances are included in Senate Bill 1235, HA 1; therefore, there are no appraisals to be filed. State Debt Impact Note (Government Forecasting & Accountability) SB 1235, as amended by House Amendment 1, would not change the amount of authorization for any type of State-issued bond, and, therefore, would not affect the level of State indebtedness. Housing Affordability Impact Note (Housing Development Authority) This bill will have no effect on the cost of constructing, purchasing, owning, or selling a single-family residence and will not impact the cost of housing development in the state of Illinois. Balanced Budget Note (Office of Management and Budget) Please be advised that the Balanced Budget Note Act does not apply to SB 1235, as amended by House Amendment 1 as it is not a supplemental appropriation that increases or decreases appropriations. Under the Act, a balanced budget note must be prepm·ed only for bills that change a general funds appropriation for the fiscal year in which the new bill is enacted. Judicial Note (Admin Office of the Illinois Courts) Based on a review of SB1235 as amended by House Amendment 1, the legislation will not increase or decrease the number of judges needed in the state of Illinois. State Mandates Fiscal Note, House Floor Amendment No. 1 (Dept. of Commerce & Economic Opportunity) SB 1235 HA#1 does not create a State Mandate under the State Mandates Act. Home Rule Note, House Floor Amendment No. 1 (Dept. of Commerce & Economic Opportunity) SB 1235 HA #1 does not pre-empt home rule authority.