Amendment 10 to SB1673 Passes Committee(Includes SURS Summary)

First a great big thank you to all who have contacted or tried to contact their Representative. We do realize that the phones are somewhat paralyzed due to all of the calls. So for those of you who did not make contact do appreciate your efforts just as much.

Amendment 10 to SB1673 passed the House Personnel and Pensions Committee earlier today. The votes were as follows:

Yes – Nekritz, Biss, Currie, May, Schmitz, Senger
No - Burke, Poe, Morrison

It is thought that there will be another Amendment added; quite possibly on the House Floor.

At this time, it is still possible that Amendment 10 will be heard yet today as there is still lots of time left for House activities.

Please read the SURS synopsis of Amendment 10 below:

SB 1673 (HA #10)
Tier I Employee and Tier I Retiree Reform
House Amendment #10 to SB 1673 applies to members of the General Assembly Retirement System (GARS), the State Employees’ Retirement System (SERS), the State Universities Retirement System (SURS), and the Teachers’ Retirement System (TRS).

The following analysis is SURS specific.

Automatic Annual Increase Reform
Tier 1 participants and Tier 1 retirees shall not receive an automatic annual increases to their retirement annuity until January 1, 2020. Beginning January 1, 2020 and each January 1st thereafter, Tier 1 retirees age 67 and over shall receive an automatic annual increase that is equal to 3% compounded on annuities up to $25,000. Members receiving annuities in excess of the cap on automatic annual increases shall receive an automatic annual increase of $750.

Pensionable Earnings Limitation
Pensionable earnings shall not exceed the Social Security Wage Base (wage base is $113,100 for FY 13). Tier 1 participants that are receiving earnings exceeding the social security wage base as of the effective date are grandfathered and will be limited to their annual earnings rate on the effective date. Participants subject to a collective bargaining agreement or employment contract shall be exempt from this limitation until the expiration of the existing agreement or contract. No calculation of benefit shall include earnings in excess of this limitation.

Tier 1 Employee Contribution Increase
Tier 1 employee contributions shall increase by an additional 1% of earnings in Fiscal Year 2014, and by an additional 1% of earnings in Fiscal Year 2015 so that such participants shall be contributing 10% (11.5% for alternative formula participants) of earnings for Fiscal Year 2015 and each year thereafter.

Change to the State Contribution Schedule
The State shall be required to adhere to a funding schedule that provides an annual contribution sufficient to cover the employer’s normal cost plus an annual amount to amortize the unfunded liability so that SURS is 100% funded by 2043. Then, in Fiscal Year 2044 and each fiscal year thereafter, the State shall contribute an annual amount to maintain a funding status of 100%.

Additional State Contributions beginning in Fiscal Year 2020
Beginning in Fiscal Year 2020, $1 billion will be transferred from the General Revenue Fund into the Pension Stabilization fund on an annual basis. Such transfer will serve as an additional contribution to the required State contribution provided under Section 15-155, and the transfer shall be made each fiscal year thereafter until the 5 State Retirement Systems are 100% funded. This annual transfer of $1billion is available due to the expiration of debt service payments to pension obligation bonds issued in Fiscal Years 2010 and 2011 to fund the State Retirement Systems.

State Funding Enforcement
Beginning July 1, 2013, the state shall be contractually obligated to contribute to the System in each state fiscal year an amount not less than the sum of the state's required contribution. The obligation is a contractual obligation protected and enforceable under Article I, Section 16 and Article XIII, Section 5 of the Illinois Constitution.

Notwithstanding any other provision of law, if the state fails to pay in a state fiscal year the amount guaranteed under this subsection, the system may bring a mandamus action in the circuit court of Sangamon County to compel the state to make payment, irrespective of other remedies that may be available to the system. In ordering the state to make the required payment, the court may order a reasonable payment schedule to enable the state to make the required payment without significantly imperiling the public health, safety, or welfare.

Prohibition of Non-Public Employers
Employers that are not defined as an employer under the SURS articles shall be excluded from enrolling new employees in SURS. Those employees of such employers that are already SURS participants shall remain participants. SURS is given the authority to determine whether or not a person is an employee. SURS members shall not be eligible to receive service credit for a leave of absence for service with a teacher organization if that leave of absence begins on or after the effective date.

Severability
The changes made by this amendment to Acts other than the Pension Code are severable from the other changes made by this Act. The changes made by this amendment to an Article of the Pension Code are severable from the changes made by this amendment to another Article of the Pension Code. However, the changes made by this amendment in an Article of the Pension Code that relate to (i) automatic annual increases, (ii) employee or member contributions, (iii) State or employer contributions, (iv) State funding guarantees, or (v) salary, earnings, or compensation are mutually dependent and inseverable.


Source: Email to SUAA membership
Author: Linda L. Brookhart
Link: www.suaa.org