SB 3402

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Full Text of SB3402
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	SB3402 - 104th General Assembly
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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB3402
Introduced 2/4/2026, by Sen. Robert F. Martwick
SYNOPSIS AS INTRODUCED:
40 ILCS 5/8-173	  from Ch. 108 1/2, par. 8-173
40 ILCS 5/8-173.2 new
30 ILCS 805/8.50 new
Amends the Chicago Municipal Article of the Illinois Pension Code. Beginning February 1, 2027, requires the Board of Education of the City of Chicago to make an annual contribution equal to the normal cost for all the employees of the Board of Education under the Article on and after the effective date of the amendatory Act and an apportioned contribution toward the unfunded actuarial accrued liability of the fund equal to the percentage of the Fund's total current unfunded liability that is attributable to service credit earned by employees of the Board of Education of the city prior to January 1, 1994. Provides that the amount of the liability shall be determined by the Fund's actuary and amortized in a manner consistent with the statutory funding schedule applicable to the Fund, including the requirement to achieve a funded ratio of not less than 90% by the applicable target year. Makes a conforming change. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.
LRB104 18509 RPS 31951 b
	STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT
MAY APPLY
A BILL FOR
		SB3402		LRB104 18509 RPS 31951 b
1    AN ACT concerning public employee benefits.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Illinois Pension Code is amended by
5changing Section 8-173 and by adding Section 8-173.2 as
6follows:
7    (40 ILCS 5/8-173)  (from Ch. 108 1/2, par. 8-173)
8    Sec. 8-173. Financing; tax levy.
9    (a) Except as provided in subsection (f) of this Section,
10the city council of the city shall levy a tax annually upon all
11taxable property in the city at a rate that will produce a sum
12which, when added to the amounts deducted from the salaries of
13the employees or otherwise contributed by them and the amounts
14deposited under subsection (f), will be sufficient for the
15requirements of this Article, but which when extended will
16produce an amount not to exceed the greater of the following:
17(a) the sum obtained by the levy of a tax of .1093% of the
18value, as equalized or assessed by the Department of Revenue,
19of all taxable property within such city, or (b) the sum of
20$12,000,000. However any city in which a Fund has been
21established and in operation under this Article for more than
223 years prior to 1970 shall levy for the year 1970 a tax at a
23rate on the dollar of assessed valuation of all taxable
		SB3402	- 2 -	LRB104 18509 RPS 31951 b
1property that will produce, when extended, an amount not to
2exceed 1.2 times the total amount of contributions made by
3employees to the Fund for annuity purposes in the calendar
4year 1968, and, for the year 1971 and 1972 such levy that will
5produce, when extended, an amount not to exceed 1.3 times the
6total amount of contributions made by employees to the Fund
7for annuity purposes in the calendar years 1969 and 1970,
8respectively; and for the year 1973 an amount not to exceed
91.365 times such total amount of contributions made by
10employees for annuity purposes in the calendar year 1971; and
11for the year 1974 an amount not to exceed 1.430 times such
12total amount of contributions made by employees for annuity
13purposes in the calendar year 1972; and for the year 1975 an
14amount not to exceed 1.495 times such total amount of
15contributions made by employees for annuity purposes in the
16calendar year 1973; and for the year 1976 an amount not to
17exceed 1.560 times such total amount of contributions made by
18employees for annuity purposes in the calendar year 1974; and
19for the year 1977 an amount not to exceed 1.625 times such
20total amount of contributions made by employees for annuity
21purposes in the calendar year 1975; and for the year 1978 and
22each year thereafter through levy year 2016, such levy as will
23produce, when extended, an amount not to exceed the total
24amount of contributions made by or on behalf of employees to
25the Fund for annuity purposes in the calendar year 2 years
26prior to the year for which the annual applicable tax is
		SB3402	- 3 -	LRB104 18509 RPS 31951 b
1levied, multiplied by 1.690 for the years 1978 through 1998
2and by 1.250 for the year 1999 and for each year thereafter
3through levy year 2016. Beginning in levy year 2017, and in
4each year thereafter, the levy shall not exceed the amount of
5the city's total required contribution to the Fund for the
6next payment year, as determined under subsection (a-5). For
7the purposes of this Section, the payment year is the year
8immediately following the levy year.
9    The tax shall be levied and collected in like manner with
10the general taxes of the city, and shall be exclusive of and in
11addition to the amount of tax the city is now or may hereafter
12be authorized to levy for general purposes under any laws
13which may limit the amount of tax which the city may levy for
14general purposes. The county clerk of the county in which the
15city is located, in reducing tax levies under the provisions
16of any Act concerning the levy and extension of taxes, shall
17not consider the tax herein provided for as a part of the
18general tax levy for city purposes, and shall not include the
19same within any limitation of the percent of the assessed
20valuation upon which taxes are required to be extended for
21such city.
22    Revenues derived from such tax shall be paid to the city
23treasurer of the city as collected and held by the city
24treasurer for the benefit of the fund.
25    If the payments on account of taxes are insufficient
26during any year to meet the requirements of this Article, the
		SB3402	- 4 -	LRB104 18509 RPS 31951 b
1city may issue tax anticipation warrants against the current
2tax levy.
3    The city may continue to use other lawfully available
4funds in lieu of all or part of the levy, as provided under
5subsection (f) of this Section.
6    (a-5) (1) Beginning in payment year 2018, the city's
7required annual contribution to the Fund for payment years
82018 through 2022 shall be: for 2018, $266,000,000; for 2019,
9$344,000,000; for 2020, $421,000,000; for 2021, $499,000,000;
10and for 2022, $576,000,000.
11    (2) For payment years 2023 through 2058, the city's
12required annual contribution to the Fund shall be the amount
13determined by the Fund to be equal to the sum of (i) the city's
14portion of the projected normal cost for that fiscal year,
15plus (ii) an amount determined on a level percentage of
16applicable employee payroll basis (reflecting any limits on
17individual participants' pay that apply for benefit and
18contribution purposes under this plan) that is sufficient to
19bring the total actuarial assets of the Fund up to 90% of the
20total actuarial liabilities of the Fund by the end of 2058, 
21minus (iii) the amount required to be contributed by the Board 
22of Education of the city under Section 8-173.2.
23    (3) For payment years after 2058, the city's required
24annual contribution to the Fund shall be equal to the amount,
25if any, needed to bring the total actuarial assets of the Fund
26up to 90% of the total actuarial liabilities of the Fund as of
		SB3402	- 5 -	LRB104 18509 RPS 31951 b
1the end of the year. In making the determinations under
2paragraphs (2) and (3) of this subsection, the actuarial
3calculations shall be determined under the entry age normal
4actuarial cost method, and any actuarial gains or losses from
5investment return incurred in a fiscal year shall be
6recognized in equal annual amounts over the 5-year period
7following the fiscal year.
8    To the extent that the city's contribution for any of the
9payment years referenced in this subsection is made with
10property taxes, those property taxes shall be levied,
11collected, and paid to the Fund in a like manner with the
12general taxes of the city.
13    (a-10) If the city fails to transmit to the Fund
14contributions required of it under this Article by December 31
15of the year in which such contributions are due, the Fund may,
16after giving notice to the city, certify to the State
17Comptroller the amounts of the delinquent payments, and the
18Comptroller must, beginning in payment year 2018, deduct and
19deposit into the Fund the certified amounts or a portion of
20those amounts from the following proportions of grants of
21State funds to the city:
22        (1) in payment year 2018, one-third of the total
23    amount of any grants of State funds to the city;
24        (2) in payment year 2019, two-thirds of the total
25    amount of any grants of State funds to the city; and
26        (3) in payment year 2020 and each payment year
		SB3402	- 6 -	LRB104 18509 RPS 31951 b
1    thereafter, the total amount of any grants of State funds
2    to the city.
3    The State Comptroller may not deduct from any grants of
4State funds to the city more than the amount of delinquent
5payments certified to the State Comptroller by the Fund.
6    (b) On or before July 1, 2017, and each July 1 thereafter,
7the board shall certify to the city council the annual amounts
8required under this Article, for which the tax herein provided
9shall be levied for the following year. The board shall
10compute the amounts necessary to be credited to the reserves
11established and maintained as herein provided, and shall make
12an annual determination of the amount of the required city
13contributions, and certify the results thereof to the city
14council.
15    (c) In respect to employees of the city who are
16transferred to the employment of a park district by virtue of
17the "Exchange of Functions Act of 1957", the corporate
18authorities of the park district shall annually levy a tax
19upon all the taxable property in the park district at such rate
20per cent of the value of such property, as equalized or
21assessed by the Department of Revenue, as shall be sufficient,
22when added to the amounts deducted from their salaries and
23otherwise contributed by them to provide the benefits to which
24they and their dependents and beneficiaries are entitled under
25this Article. The city shall not levy a tax hereunder in
26respect to such employees.
		SB3402	- 7 -	LRB104 18509 RPS 31951 b
1    The tax so levied by the park district shall be in addition
2to and exclusive of all other taxes authorized to be levied by
3the park district for corporate, annuity fund, or other
4purposes. The county clerk of the county in which the park
5district is located, in reducing any tax levied under the
6provisions of any act concerning the levy and extension of
7taxes shall not consider such tax as part of the general tax
8levy for park purposes, and shall not include the same in any
9limitation of the per cent of the assessed valuation upon
10which taxes are required to be extended for the park district.
11The proceeds of the tax levied by the park district, upon
12receipt by the district, shall be immediately paid over to the
13city treasurer of the city for the uses and purposes of the
14fund.
15    The various sums to be contributed by the city and park
16district and allocated for the purposes of this Article, and
17any interest to be contributed by the city, shall be derived
18from the revenue from the taxes authorized in this Section or
19otherwise as expressly provided in this Section.
20    If it is not possible or practicable for the city to make
21contributions for age and service annuity and widow's annuity
22at the same time that employee contributions are made for such
23purposes, such city contributions shall be construed to be due
24and payable as of the end of the fiscal year for which the tax
25is levied and shall accrue thereafter with interest at the
26effective rate until paid.
		SB3402	- 8 -	LRB104 18509 RPS 31951 b
1    (d) With respect to employees whose wages are funded as
2participants under the Comprehensive Employment and Training
3Act of 1973, as amended (P.L. 93-203, 87 Stat. 839, P.L.
493-567, 88 Stat. 1845), hereinafter referred to as CETA,
5subsequent to October 1, 1978, and in instances where the
6board has elected to establish a manpower program reserve, the
7board shall compute the amounts necessary to be credited to
8the manpower program reserves established and maintained as
9herein provided, and shall make a periodic determination of
10the amount of required contributions from the City to the
11reserve to be reimbursed by the federal government in
12accordance with rules and regulations established by the
13Secretary of the United States Department of Labor or his
14designee, and certify the results thereof to the City Council.
15Any such amounts shall become a credit to the City and will be
16used to reduce the amount which the City would otherwise
17contribute during succeeding years for all employees.
18    (e) In lieu of establishing a manpower program reserve
19with respect to employees whose wages are funded as
20participants under the Comprehensive Employment and Training
21Act of 1973, as authorized by subsection (d), the board may
22elect to establish a special municipality contribution rate
23for all such employees. If this option is elected, the City
24shall contribute to the Fund from federal funds provided under
25the Comprehensive Employment and Training Act program at the
26special rate so established and such contributions shall
		SB3402	- 9 -	LRB104 18509 RPS 31951 b
1become a credit to the City and be used to reduce the amount
2which the City would otherwise contribute during succeeding
3years for all employees.
4    (f) In lieu of levying all or a portion of the tax required
5under this Section in any year, the city may deposit with the
6city treasurer for the benefit of the fund, to be held in
7accordance with this Article, an amount that, together with
8the taxes levied under this Section for that year, is not less
9than the amount of the city contributions for that year as
10certified by the board to the city council. The deposit may be
11derived from any source legally available for that purpose,
12including, but not limited to, the proceeds of city
13borrowings. The making of a deposit shall satisfy fully the
14requirements of this Section for that year to the extent of the
15amounts so deposited. Amounts deposited under this subsection
16may be used by the fund for any of the purposes for which the
17proceeds of the tax levied by the city under this Section may
18be used, including the payment of any amount that is otherwise
19required by this Article to be paid from the proceeds of that
20tax.
21(Source: P.A. 100-23, eff. 7-6-17.)
22    (40 ILCS 5/8-173.2 new)
23    Sec. 8-173.2. Required employer contributions by the Board 
24of Education of the city. Beginning February 1, 2027, the 
25Board of Education of the city, rather than the city, is 
		SB3402	- 10 -	LRB104 18509 RPS 31951 b
1required to make the following annual contributions to the 
2pension fund:
3        (1) a contribution equal to the normal cost for all 
4    the employees of the Board of Education of the city under 
5    this Article who are employed by the Board of Education of 
6    the city on and after the effective date of this 
7    amendatory Act of the 104th General Assembly; and
8        (2) notwithstanding any other provision of law, an 
9    apportioned contribution toward the unfunded actuarial 
10    accrued liability of the Fund, as calculated under 
11    paragraph (2) of subsection (a-5) of Section 8-173, equal 
12    to the percentage of the Fund's total current unfunded 
13    liability that is attributable to service credit earned by 
14    employees of the Board of Education of the city prior to 
15    January 1, 1994. The amount of such liability shall be 
16    determined by the Fund's actuary and amortized in a manner 
17    consistent with the statutory funding schedule applicable 
18    to the Fund, including the requirement to achieve a funded 
19    ratio of not less than 90% by the applicable target year. 
20    Contributions required under this paragraph (2) shall 
21    constitute employer contributions of the Board of 
22    Education of the city and shall be in addition to any 
23    required normal cost contributions for service rendered on 
24    and after the effective date of this amendatory Act of the 
25    104th General Assembly.
		SB3402	- 11 -	LRB104 18509 RPS 31951 b
1    Section 90. The State Mandates Act is amended by adding
2Section 8.50 as follows:
3    (30 ILCS 805/8.50 new)
4    Sec. 8.50. Exempt mandate. Notwithstanding Sections 6 and 
58 of this Act, no reimbursement by the State is required for 
6the implementation of any mandate created by this amendatory 
7Act of the 104th General Assembly.
8    Section 99. Effective date. This Act takes effect upon
9becoming law.