SUAA Mini Briefing

 

Sitting in the Senate or House Gallery always provides a view of lawmaking that most of you cannot imagine. During these final days of session, passing legislation is sometimes done a bit differently than nearly everyone realizes. This Mini Briefing provides information as to where legislation is at this moment - in real time. However, the latest action of the following bills might have changed before this email is even read by you.

SB 1 - House Speaker Madigan's pension reform sits in the Senate on order of Concurrence.

SB 1515 - passed both Houses; Specifies that the procurement of the program of group health benefits for Medicare-primary members and their Medicare-primary dependents by the Department of Central Management Services is subject to the approval of the applicable Chief Procurement Officer.

This basically allows the CMS Chief Procurement Officer to by-pass the Commission of Government Forecasting and Accountability when securing bids for the State sponsored proposed Medicare health insurance.

SB 1687 - Cost shifting is still waiting on the final language, but is on Second Reading in the House as a Floor Amendment. Previously it was SURS return to work bill; however, it was shelled this past Sunday night.

SB 2404 - Senate President Cullerton's pension reform bill sits in the House Rules Committee.

Now possibly making their way through the Senate are the three Madigan bills. These bills along with Cost Shifting could be the pension deal for now:

HB 1154 - provides that 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.

HB 1165 - reforms automatic annual increases provided to Tier 1 participants and Tier 1 retirees. Members receiving an annuity of less than $25,000 a year shall continue to receive a 3% compounded automatic annual increase, members receiving an annuity of $25,000 or more shall receive an automatic annual increase of $750. Members shall not be eligible for an automatic annual increase until the January 1st following attainment of age 67 or the January 1st following the 5th anniversary of the annuity start date. Automatic annual increase received prior to the effective date are protected and not diminished.

HB 1166 - reforms Tier 1 participants’ normal retirement age. The following adjustments apply to Tier 1 participants retiring after July 1, 2013:

·         Members age 45 or older on the effective date shall not be subject to any delay in retirement eligibility;

·         Members age 40-45 on the effective date shall be subject to a 1 year delay in retirement eligibility;

·         Members age 35-40 on the effective date shall be subject to a 3 year delay in retirement eligibility; and

·         Members younger than age 35 on the effective date shall be subject to a 5 year delay in retirement eligibility.

Appropriations are moving smoothly except for the Republicans acknowledging that they have been mostly left out of discussions especially in those that refer to Higher Education. $35 M from the Higher Education budget was given to Elementary and Secondary Education. Accordingly it was because the State supported universities have the opportunity to raise tuition and fees. The reduction seems to leave all those participating in the decision satisfied and the higher education appropriation flat-lined (same as last year). Detailed information is in HB 208 Amendment 1.

For those of you who are wanting more information check out FY 2014 Group Health Insurance Report (click on title).

May 31st is the deadline to make health insurance changes to CMS.

Title: SUAA Mini Briefing

Source: State University Annuities Association

Date: May 29, 2013

Link: http://tinyurl.com/l9cyc9w

Senate Bill 1 House Amendment 1 Passes the House

Senate Bill 1 House Amendment 1
passes the House with 62 Yeas and 51 Nays and 2 Present

Please keep this information for a reference going forward!

First and most importantly the above referenced bill now needs to go back to the Senate floor for passage; under concurrence. It will need 30 YEA votes for concurrence or passage.  Most likely the votes to pass are already counted in the Senate.  Look for SB 1 to be on the Senate Calendar upon the Senate's return to Springfield on Monday.

Secondly the bill does affect both those currently working and retired.  The pension systems included are State Universities Retirement System (SURS), State Employees Retirement System (SERS), Teachers Retirement System (TRS) and General Assembly Retirement System (GARS).  The Judges Retirement System is not included.

Thirdly, the Senate did not vote Thursday, May 2nd; only the House.

Fourth important notation is that the bill has an immediate effective date if passed in the Senate.  The legislature will have 30 days after passage to send the bill to the Governor.  The Governor then has up to 60 days to sign the bill for Enactment. 

Fifth detail is Tier I is defined as those who were hired on or before December 31, 2010.  Tier II is defined as those who were hired on or after January 1, 2011.

The Senate will return on Monday, May 6th; the House will return on Tuesday, May 7th.

Please find out who your Senator is for purpose of contacting them in reference to Senate
Bill 1.  The vote could be taken quite early this next week.

All information will be posted on the SUAA website.  We ask that you refer to the website often.  Past Mini Briefings, news articles, alerts, and other items of interest are always available. 

The possible changes to Tier I currently employed and retirees are divided starting on the next page.  It is important that you become knowledgeable about your current benefits and how the proposed changes could affect you.  Only benefit changes are addressed in this issue of the Mini Briefing.   

There are no changes to Tier II employees.

For retirees the Automatic Annual Increase (AAI) - (previously referred to as a COLA) - will be 3% of the number of years worked known as service credits multiplied by $1,000 (for SERS retirees use $800).  The matrix below is an example of how the AAI (COLA) will be administered going forward.  Thank you to the House Republican's Blog for providing the following information.

AAI Examples with the Same Starting Annuity but Varying Years of Service
Years of Service	10	15	20	25	30
Year 1 Annuity	$50,000	$50,000	$50,000	$50,000	$50,000
3% AAI Based On (Years of Service x $1,000)	$10,000	$15,000	$20,000	$25,000	$30,000
Annual AAI Increase	$300	$450	$600	$750	$900
Year 2 Annuity	$50,300	$50,450	$50,600	$50,750	$50,900
Year 3 Annuity	$50,600	$50,900	$51,200	$51,500	$51,800

The AAI is not compounded.  The determined fixed amount will be the same every year going forward.  All  AAI increases received prior to the effective date are protected and not diminished.

This change is for all Tier I retirees; there are no Tier II retirees at this time. 

Pension system members shall not be eligible for an AAI until the January 1st following attainment of age 67 or the January 1st following the 5th anniversary of the annuity start date.

An example would be someone who retired at age 55 and is now 57.  The retiree would have to wait until age 60 to receive an Automatic Annual Increase because this person is under the required five years of retirement and not age 67.

Currently employed would be affected in the following ways:

Pensionable earnings of a Tier 1 participant are capped at the applicable Social Security Wage Base  - however the legislation reads $109,971 which is the Tier II salary cap, not the current Social Security Wage Base of $113,700.

Participants currently receiving salary in excess of the Social Security Wage Base shall have their pensionable earnings limited to their salary received 365 days prior to the effective date.

Tier I participants' normal retirement age is changed for those retiring after July 1, 2013:

• Members age 45 or older on the effective date shall not be subject to any delay in retirement eligibility;
• Members age 40-45 on the effective date shall be subject to a 1 year delay in retirement eligibility;
• Members age 35-40 on the effective date shall be subject to a 3 year delay in retirement eligibility; and
• Members younger than age 35 on the effective date shall be subject to a 5 year delay in retirement eligibility.

Tier 1 employees will be required to contribute an additional 1% of payroll in Fiscal Year 2014, plus and additional 1% in Fiscal Year 2015.  This is a total of 2% of over a two year period.

The employee contribution increases are exempt from Money Purchase Plan calculations.

SB 1 requires the Comptroller to determine all effective rates of interest (ERI); currently the Comptroller only determines the effective rate of interest as it applies to Money Purchase Formula calculations.

The bill directs the Comptroller to provide special consideration to the rates of return achieved by long term U.S. Treasury Bonds.

The change is an attempt to influence the Comptroller into lowering the effective rate of interest to devalue the Money Purchase Formula.  The rate is currently set by the SURS Board of Trustees.

SB 1 grandfathers in those employees of non-public employers.  New employees will be excluded from enrolling in SURS.

SB 1 prohibits bargaining units and employers with participants in the State systems from negotiating changes related to pensions.

_____________________________________________
At this time there are Benefit Fairs being held around the State to address the changes in the health insurance. Eastern Illinois University, Illinois State University and Southern Illinois University have already held their Fairs. 

• May 6, Western Illinois University, Union Building - Grand Ballroom from 10 a.m. - 2 p.m.

• May 10, SIU-Edwardsville, Morris University Center from 10 a.m. - 2 p.m.

• May 14, UIUC, Illini Union Building, 1401 West Green Street, Rooms A - C from 10 a.m. - 2 p.m.

• May 15, Governor State University, Hall of Governors, 1 University Park, from 10 a.m. - 2 p.m.

• May 16, UI College of Medicine, 1 Illini Drive, Peoria, from 10 a.m. - 2 p.m.

• May 21, NEIU - Chicago, Alumni Hall, 5500 N. St. Louis Ave. from 10 a.m. - 2 p.m.

Changes to Medicare are not scheduled to take effect until January 1, 2014.  Enrollment is not scheduled until the month of October 2013.  This will be addressed in the next edition of the Mini Briefing.

Title: SUAA Mini Briefing

Date:May 3, 2013

Source: State Universities Annuities Association

Senate Bill 1 Passes the House

Pension Reform Status Update: 

On May 2, 2013 Senate Bill 1 passed the house with a vote of 61 / 52 / 2.

To review the breakdown of the vote, click here.




SB 1 (as amended by Amendment #3)
Choice of Health Insurance or COLAs for TRS Only
Sponsors: President Cullerton, Speaker Madigan

SB 1 would affect only members of the Teachers Retirement System who are not yet retired. SB 1 requires those members to choose between COLAs or state-sponsored retiree health insurance and future salary increases. SURS members are not impacted by SB 1.

Read the entirety of SB 1 here.

SB1 is expected to arrive in the state senate next week.