Legislation

Legislation

Please note: SURS does not endorse specific pension reform legislation. Our goal is to update and educate SURS members concerning legislation that may affect their retirement benefits.

House

HB 0199
- No Investments in Ford Motor Company
Sponsor(s): Representative Mary E. Flowers

HB 199 amends the General Provisions Article of the Illinois Pension Code to prohibit the state-funded retirement systems from investing in Ford Motor Company and its subsidiaries.

Specifically, HB 199 requires the Illinois Investment Policy Board to make its best efforts to identify all subsidiaries of Ford Motor Company and include those companies in the list of restricted companies distributed to each retirement system by July 1, 2020. These efforts must include the following, as appropriate in the Illinois Investment Policy Board’s judgment: (1) reviewing and relying on publicly available information; (2) contacting asset managers contracted by the retirement systems that invest in Ford Motor Company; and (3) contacting other institutional investors that have divested from or engaged with Ford Motor Company.

Generally, each retirement system must sell, redeem, divest, or withdraw all direct holdings of restricted companies from its assets under management in an orderly and fiduciarily responsible manner within 12 months after the company’s most recent appearance on the list of restricted companies, and the retirement system cannot acquire securities of the restricted companies. These provisions do not apply to the retirement system’s indirect holdings or private market funds. For those investments, the Illinois Investment Policy Board must submit letters to the managers requesting that they consider removing the companies from the fund or create a similar actively managed fund having indirect holdings devoid of the companies. If the manager creates a similar fund, the retirement system must replace all applicable investments with investments in the similar fund in an expedited timeframe consistent with prudent investing standards. A retirement system may cease divesting from companies if clear and convincing evidence shows that the value of investments in such companies becomes equal to or less than 0.5% of the market value of all assets under management by the retirement system, upon providing a written notice to the Illinois Investment Policy Board in advance of the cessation of the divestment.

HB 199 takes effect in accordance with the Effective Date of Laws Act.

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HB 0280
- No Investments in Companies that Contract to Build Border Wall
Sponsor(s): Representative Will Guzzardi

HB 280 amends the General Provisions Article of the Illinois Pension Code to prohibit the state-funded retirement systems from investing in companies that contract to build a border wall. The term “contract to build a border wall” means entering into a contract with the federal government for construction pursuant to Section 4 of Executive Order 13767 of the President of the United States.

Specifically, HB 280 requires the Illinois Investment Policy Board to make its best efforts to identify all companies that contract to build a border wall and include those companies in the list of restricted companies distributed to each retirement system within six months after the effective date of the legislation. These efforts must include the following, as appropriate in the Illinois Investment Policy Board’s judgment: (1) reviewing and relying on publicly available information regarding companies that contract to build a border wall, including information provided by nonprofit organizations, research firms, and government entities; (2) contacting asset managers contracted by the retirement systems that invest in companies that contract to build a border wall; (3) contacting other institutional investors that have divested from or engaged with companies that contract to build a border wall; and (4) retaining an independent research firm to identify companies that contract to build a border wall.

Generally, each retirement system must sell, redeem, divest, or withdraw all direct holdings of restricted companies from its assets under management in an orderly and fiduciarily responsible manner within 12 months after the company’s most recent appearance on the list of restricted companies, and the retirement system cannot acquire securities of the restricted companies. These provisions do not apply to the retirement system’s indirect holdings or private market funds. For those investments, the Illinois Investment Policy Board must submit letters to the managers requesting that they consider removing the companies from the fund or create a similar actively managed fund having indirect holdings devoid of the companies. If the manager creates a similar fund, the retirement system must replace all applicable investments with investments in the similar fund in an expedited timeframe consistent with prudent investing standards. A retirement system may cease divesting from companies if clear and convincing evidence shows that the value of investments in such companies becomes equal to or less than 0.5% of the market value of all assets under management by the retirement system, upon providing a written notice to the Illinois Investment Policy Board in advance of the cessation of the divestment.

HB 280 takes effect immediately upon becoming law.

Status:

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HB 0329
- University Student Athlete Employees
Sponsor(s): Representative Thaddeus Jones

HB 329 amends the University of Illinois Act, the Southern Illinois University Management Act, the Chicago State University Law, the Eastern Illinois University Law, the Governors State University Law, the Illinois State University Law, the Northeastern Illinois University Law, the Northern Illinois University Law and the Western Illinois University Law.

HB 329 requires each university to classify a student athlete of any of the top three financially profitable intercollegiate athletic programs at the university as an employee of the university. The university must pay the student athlete a minimum of $25,000 per academic year, but the work hours and work schedule of the student athlete are at the discretion of the university. Additionally, HB 329 allows the university to classify a student athlete of any of the other intercollegiate athletic programs of the university as an employee of the university, and allows the pay, work hours, and work schedule of the student athlete to be determined by the university.

Section 15-107 of the Illinois Pension Code defines an employee for purposes of participation in SURS. Generally, Section 15-107 requires employment to be “permanent and continuous” in order for an employee to participate in SURS. Public Acts 99-830 and 99-897 (effective January 1, 2017) prospectively gave the SURS Board of Trustees the ability to determine whether a person is an employee covered under SURS. SURS is currently developing administrative rules to assist in determining whether a person is an employee eligible to participate in SURS.

HB 329 takes effect on July 1, 2019.

Status:

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HB 0350
- Repeal 3% Rule and Re-Enact 6% Rule
Sponsor(s): Representative Kathleen Willis

HB 350 amends the State Universities Retirement System and Teachers’ Retirement System Articles of the Illinois Pension Code to repeal the 3% rule and re-enact the 6% rule.

Specifically, HB 350 repeals the requirement that employers pay the present value of the resulting increase in benefits attributable to the portion of any salary increases in excess of 3% during the participant’s final rate of earnings period. Instead, HB 350 requires employers to pay the present value of the resulting increase in benefits attributable to the portion of any salary increases in excess of 6% during the participant’s final rate of earnings period. (The 3% rule became effective for academic years on or after July 1, 2018, with the exception of salary increases under contracts and collective bargaining agreements entered into, amended, or renewed before June 4, 2018.)

For members who first became members of SURS (or a reciprocal retirement system) before January 1, 2011 (Tier I members), the final rate of earnings is the four consecutive academic years of employment in which earnings are the highest (or the final 48 months of employment for certain employees). For members who first become members of SURS on or after January 1, 2011 (Tier II members), the final rate of earnings is the eight consecutive academic years of employment out of the last 10 academic years of employment in which earnings are the highest (or the 96 consecutive months of employment out of the last 120 months of employment in which earnings are the highest for certain employees).

HB 350 is identical to SB 60 of the 101st General Assembly.

HB 350 takes effect immediately upon becoming law.

Status:

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HR 0006
- Urge Solutions to Windfall Elimination Provision
Sponsor(s): Representative Mary E. Flowers

HR 6 resolves that the Illinois House of Representatives urges President Trump and the United States Congress to continue to work to find a solution to the problems created by the Windfall Elimination Provision.

HR 6 resolves that suitable copies of the resolution be delivered to President Trump, U.S. Senate Majority Leader McConnell, U.S. Senate Minority Leader Schumer, U.S. Speaker of the House Pelosi, U.S. House of Representatives Minority Leader McCarthy, and all members of the Illinois Congressional Delegation.

The Windfall Elimination Provision is a provision of federal law that requires federal Social Security benefits to be offset in order to account for pension benefits provided by the state.

Status:

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HR 0027
- Oppose Educational Pension Cost Shift
Sponsor(s): Representative David McSweeney

HR 27 resolves that the Illinois House of Representatives states its belief that an educational pension cost shift is financially wrong and would only serve to shift pension burdens from the state to the status of an unfunded mandate.

Status:

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HR 0032
- Oppose Tax on Retirement Income
Sponsor(s): Representative David McSweeney

HR 32 resolves that the Illinois House of Representatives states its belief that the Illinois Income Tax Act should not be amended to permit taxing retirement income.

HR 32 resolves that suitable copies of the resolution be delivered to all Illinois constitutional officers, the Speaker and Minority Leader of the Illinois House of Representatives, and the President and Minority Leader of the Illinois Senate.

Status:

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Senate

SB 0060
- Repeal 3% Rule and Re-Enact 6% Rule
Sponsor(s): Senator Jennifer Bertino-Tarrant

SB 60 amends the State Universities Retirement System and Teachers’ Retirement System Articles of the Illinois Pension Code to repeal the 3% rule and re-enact the 6% rule.

Specifically, SB 60 repeals the requirement that employers pay the present value of the resulting increase in benefits attributable to the portion of any salary increases in excess of 3% during the participant’s final rate of earnings period. Instead, SB 60 requires employers to pay the present value of the resulting increase in benefits attributable to the portion of any salary increases in excess of 6% during the participant’s final rate of earnings period. (The 3% rule became effective for academic years on or after July 1, 2018, with the exception of salary increases under contracts and collective bargaining agreements entered into, amended, or renewed before June 4, 2018.)

For members who first became members of SURS (or a reciprocal retirement system) before January 1, 2011 (Tier I members), the final rate of earnings is the four consecutive academic years of employment in which earnings are the highest (or the final 48 months of employment for certain employees). For members who first become members of SURS on or after January 1, 2011 (Tier II members), the final rate of earnings is the eight consecutive academic years of employment out of the last 10 academic years of employment in which earnings are the highest (or the 96 consecutive months of employment out of the last 120 months of employment in which earnings are the highest for certain employees).

SB 60 is identical to HB 350 of the 101st General Assembly.

SB 60 takes effect immediately upon becoming law.

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