06/01/2018

By: Brittany Flaherty Theis

On May 31, 2018, House Bill 109 (the “budget bill”) and House Bill 3342 (the “budget implementation bill”) passed both houses and will be sent to Governor Rauner for signing. The legislature has 30 days to send the bill to the Governor, but is expected to do so within the next week. If enacted, the budget implementation bill will reduce end-of-career salary caps from 6 percent to 3 percent for Teachers’ Retirement System (“TRS”) members and State Universities Retirement System (“SURS”) participants. The reduction has been described as one of the pension-cost savings measures included in the 2019 fiscal year budget legislation.

Specifically, the budget implementation bill provides that if the amount of a TRS member’s or SURS participant’s salary that is used to determine the final average salary for retirement purposes for any school year exceeds that member’s/participant’s full-time salary rate with the same employer for the previous school year by more than 3 percent, the employer must pay a penalty to TRS or SURS. (Currently, the cap is 6 percent.) The penalty is in addition to all other payments required under the Illinois Pension Code.

By its terms, the lower cap imposed by the budget implementation bill will be effective starting this coming 2018-2019 school year and will apply to earnings paid to a TRS member or SURS participant pursuant to a contract or collective bargaining agreement entered into, amended, or renewed on or after the effective date of House Bill 3342. Because House Bill 3342 takes effect upon becoming law, the effective date could be as soon as next week – depending upon when Governor Rauner signs the bill. He has 60 days to act before the bill would automatically become law, but he is expected to sign prior to July 1, 2018, when the 2019 fiscal year begins.

The budget implementation bill also has provisions regarding options for TRS members, SURS participants, and State Employees’ Retirement System of Illinois (“SERS”) members to elect to receive an accelerated pension benefit payment.

Whitt Law will continue to monitor the budget implementation bill and House Bill 109 (the “budget bill”). Whitt Law has attorneys with collective bargaining experience, as well as significant experience addressing contract and retirement matters. Please contact Whitt Law Attorneys Brian R. Bare or Brittany Flaherty Theis if you have any questions regarding the details or implications of these bills, or to discuss the ways in which Whitt Law can advocate for you.

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