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State Universities Retirement System A Discussion with Community College Presidents & Trustees. March 11, 2011. William Mabe, Executive Director State Universities Retirement System. Discussion Topics. Background SURS Financial Condition Pension Funding & Security 6% Salary Exemption

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state universities retirement system a discussion with community college presidents trustees

State Universities Retirement SystemA Discussion with Community College Presidents & Trustees

March 11, 2011

William Mabe, Executive Director

State Universities Retirement System

discussion topics

Discussion Topics

Background

SURS Financial Condition

Pension Funding & Security

6% Salary Exemption

Transfer of Retirement Contribution Costs

Pending Legislation

background current situation
Background – Current Situation
  • SURS covers employees of state universities, community colleges and affiliated state agencies
    • 163,000 active and inactive members
    • 48,000 benefit recipients
    • Represent 68 different employers
  • SURS is the sole source of retirement income for its participants
    • No contribution to Social Security by employer/state
    • No benefit from Social Security upon retirement
surs membership
SURS Membership
  • Diverse membership
    • Occupation
      • 45% are professors and teachers
      • 55% are staff employees, e.g., building service workers, groundskeepers, clerical, and administrative staff
    • Employer
      • 57% work at the universities
      • 42% work at community colleges
      • 1% work at other entities such as state scientific surveys
    • Income
      • Final average salary of 2010 retirees is $50,811
      • Average monthly retirement benefit is $2,830
surs investment portfolio
SURS Investment Portfolio
  • $13.5 Billion as of 12/31/10
  • Broadly diversified
  • This slide relates to the Defined Benefit plan and does not include assets in the Self-Managed Plan (SMP).
surs current financial condition
SURS Current Financial Condition
  • As of December 31, 2010, SURS’ funding ratio is estimated to be 43.8% on a market value basis.
deterioration of funding ratio
Deterioration of Funding Ratio

*Using Market Value of Assets Method

state pension funding levels
State Pension Funding Levels

Source: Pew Center on the States, 2010.

state contribution vs arc
State Contribution vs. ARC
  • Statutory funding of SURS is consistently less than that of the ARC
perpetual underfunding
Perpetual Underfunding
  • The actual contribution to SURS has exceeded the ARC only once since 1997
long term outlook
Long Term Outlook
  • “The perpetual underfunding puts the plan at serious risk for ultimate exhaustion of the trust, leaving the responsibility for the payment of benefits elsewhere.”

- Gabriel Roeder Smith & Company (GRS), SURS’ Actuary

  • Key for long term health of SURS rests with the State’s decision to fund the ARC
  • Investment performance alone cannot make up for unfunded liability
the solution funding
The Solution: Funding
  • Annual Required Contribution (ARC)
    • GASB provides guidance on calculation
    • 2 Components
      • Normal Cost – Present value of benefits earned by active employees in the coming year
      • Amortization of the Unfunded Liability – typically over a 30-year period
  • Diligent funding of the ARC leads to full funding over time
      • Assuming economic and demographic assumptions are accurate
  • State funding of SURS dictated by statute, not ARC
is my pension secure
Is My Pension Secure?
  • SURS currently pays annual benefits of approximately $1.5 billion
  • Benefits are believed to be secure for the foreseeable future
    • Why? Approximate Amount
      • Investment Portfolio +$13 Billion
      • Member Contributions +$280 Million
      • Investment Income +$475 Million (2010)
      • State Contributions Determined by Statute
  • Pension benefits guaranteed by State Constitution
potential budget impact of elimination of 6 salary exemption
Potential Budget Impact of Elimination of 6% Salary Exemption
  • Difference between 6% amount billed to employers and amount paid
    • Approximately $12 million over past 5 ½ years
    • Lower amount paid due to many exemptions allowed under the 6% statute
  • Elimination of exemptions would result in actual payments closer to billed amount
    • Approximately $2.25 million/year total impact to community college and university budgets
shifting retirement costs
Shifting Retirement Costs
  • The State could potentially transfer retirement contribution costs directly to colleges
    • Legislation required to change funding mechanism
  • Scenario analysis performed by SURS actuary
    • 5-year phase-in of 20% each year (FY’13 – FY’17)
    • 10-year phase-in of 10% each year (FY’13 – FY’22)
    • 33-year phase-in of 3.03% each year (FY’13 – FY’45)
  • Potential impact of normal cost transfer to community colleges shown on following pages
impact of normal cost transfer to community college districts
Impact of Normal Cost Transfer to Community College Districts
  • Transferring employer normal cost contributions to community college districts would transfer at most 7.07% of the total employer contributions in the 5-year phase-in scenario, 5.65% of the total employer contributions under the 10-year phase-in scenario and 1.99% in the 33-year phase-in scenario.
  • Since the transfer is based on normal cost, and the normal cost is a small (and growing smaller with tier 2) percentage of the total costs, the amount transferred is a small portion of the total contribution.

Source: Gabriel Roeder Smith & Company

5 year phase in of normal cost contributions
5-Year Phase-In of Normal Cost Contributions

Source: Gabriel Roeder Smith & Company

Total employer normal cost is the sum of the employer funded normal cost contributions (red) and the non-employer funded normal cost (blue). The contributions required from the State and Federal Trust Funds would be the non-employer funded normal cost (blue) and the unfunded liability contributions (green).

10 year phase in of normal cost contributions
10-Year Phase-In of Normal Cost Contributions

Source: Gabriel Roeder Smith & Company

Total employer normal cost is the sum of the employer funded normal cost contributions (red) and the non-employer funded normal cost (blue). The contributions required from the State and Federal Trust Funds would be the non-employer funded normal cost (blue) and the unfunded liability contributions (green).

33 year phase in of normal cost contributions
33-Year Phase-In of Normal Cost Contributions

Source: Gabriel Roeder Smith & Company

Total employer normal cost is the sum of the employer funded normal cost contributions (red) and the non-employer funded normal cost (blue). The contributions required from the State and Federal Trust Funds would be the non-employer funded normal cost (blue) and the unfunded liability contributions (green).

pending legislation21
Pending Legislation

HB 146- FRE Cap for Current Participants

Rep. Franks

HB 146 amends the GARS, IMRF, SERS, SURS, TRS, and JRS Articles of the Illinois Pension Code. The bill caps the

final rate of earnings for current participants at $106,800, but authorizes that amount to be annually increased by the lesser of 3% or 1/2 of the annual percentage increase in the CPI-U. Employee contributions are capped so that participants are not making contributions on amounts of salary in excess of the cap.

Status: House Executive (No hearing scheduled)

HB 149- Current and Future Participant Benefit Reform

Rep. Cross

 HB 149 amends the General Provisions Article of the Illinois Pension Code to require persons who became participants in a state retirement system prior to January 1, 2011 (Tier 1 participants) to make a one-time, irrevocable election to participate under one of the following benefit formulas:

Option I: The traditional benefit package under the applicable Article of the Pension Code;

Option II: The existing benefit package for new hires; or

Option III: A self-managed plan (if made available by the participant's employer).

Persons who became or become participants on or after January 1, 2011 (Tier 2 participants) must make a one-time irrevocable election to participate under Option II or Option III. Participant contributions are adjusted pursuant to each benefit option.

Status: House Personnel and Pensions (No hearing scheduled)

pending legislation continued
Pending Legislation (Continued)

HB 1325- Optional Defined Contribution Retirement Plans

Rep. Greg Harris

HB 1325 amends the General Provisions Article of the Illinois Pension Code to authorize each pension fund and retirement system to establish and administer an optional retirement plan. The optional retirement plan is a defined contribution or self managed plan. The bill sets forth requirements for the plans, and authorizes each employer that is subject to the Code to make an irrevocable election to participate in the plan. The bill provides for employee contributions equal to employee contributions made to the system or fund’s defined benefit plan, but does not stipulate employer contributions aside from an employer contribution for disability benefits to not exceed 1%.

Status: House Personnel and Pensions (3/10/11)

HB 1374- CIP Reform

Rep. Currie

HB 1374 amends the State Group Insurance Act of 1971 to reform the College Insurance Plan (CIP). The bill allows City College employees and retirees to participate under CIP. The bill incrementally increases district contributions, active employee contributions, and State contributions to CIP so that all 3 are contributing 1.18% (currently .5%) of pay on July 1, 2015. City Colleges are required to “buy in” and must contribute $5 million to the plan by March 31, 2011 and an additional $5 million by March 31, 2012.

Status: Referred to House Executive Committee (No hearing scheduled)

pending legislation continued23
Pending Legislation (Continued)

HB 1502- Tier 2 Normal Retirement Age

Rep. Poe

HB 1502 amends the Illinois Pension Code to provide that a Tier 2 participant is entitled to a retirement annuity upon written application if he or she has attained age 62 (rather than age 67), has at least 10 years of service credit, and is otherwise eligible under the requirements of the applicable Article. The bill removes provisions reducing an annuity if the participant is less than age 67.

Status: House Personnel and Pensions (No hearing scheduled)

HB 2061- FRE Reform for New Participants

Rep. Sente

HB 2061 amends the General Provisions Article of the Illinois Pension Code. The bill applies to persons hired on or after July 1, 2011. The bill provides that if the amount of earnings of participant of a retirement system or pension fund exceeds the amount of his or her earnings with the same employer for the previous plan year by more than 12%, then that portion of the increase of salary in excess of 12% shall not be included in the calculation of final rate of earnings. The bill does not apply the same cap to employee contributions.

Status: House Personnel and Pension (3/10/11)

pending legislation continued24
Pending Legislation (Continued)

HB 2915- Posting of Annuities on the IL Transparency and Accountability Portal

Rep. Tryon

HB 2915 amends the Department of Central Management Services Law of the Civil Administrative Code of Illinois. The bill provides that the Illinois Transparency and Accountability Portal (ITAP) shall include members of the General Assembly in its database of current State employees and individual consultants. The database shall provide insurance and pension benefit information on employees in the database. All information on the ITAP shall be available to the user to download in spreadsheet or CSV format. The ITAP shall include a public forum and a commenting interface. Effective January 1, 2012.

The statute applies to employees of certain agencies under the Governor. We are currently reviewing this bill to determine how many of our participants would be included.

Status: House Executive (No hearing scheduled)

HB 3072- Prohibition on Reducing Certified Contributions

Rep. Reitz

HB 3072 amends the State Finance Act. In a Section permitting the Governor to reduce the amount of funds appropriated for statutory mandates to accommodate budgetary limitations, provides that the Section does not apply to funds appropriated under the State Pension Funds Continuing Appropriation Act. 

Status: House Executive (No hearing scheduled)

pending legislation continued25
Pending Legislation (Continued)

HB 3075- Tier 2 Normal Retirement Age

Rep. Beiser

HB 3075 amends the General Provisions Article of the Illinois Pension Code to provide that a Tier 2 participant is entitled to a retirement annuity if he or she has attained age 62 (rather than age 67), has at least 10 years of service credit, and is otherwise eligible under the requirements of the applicable Article.

The bill removes provisions reducing an annuity if the participant is less than age 67, and allows participants who have attained age 57 (rather than 62) and have at least 10 years of service credit to elect to retire early with penalty.

Status: House Personnel and Pensions (No hearing scheduled)

HB 3081- COLA Reduction for all Annuitants and Participants

Rep. David Harris

HB 3081 amends the General Provisions Article of the Illinois Pension Code. The bill provides for reductions in COLAS for all annuitants and participants of the state retirement systems. All annuitants and participants in service prior to January 1, 2011 shall be eligible to receive a 2% compounded COLA (decreased from 3%), and participants beginning service on or after January 1, 2011 shall receive a COLA equal to 2% or one-half the annual unadjusted percentage increase (but not less than zero) in the consumer price index-u for the 12 months ending with the September preceding each November 1, whichever is less, not compounded.

Status: House Personnel and Pensions (No hearing scheduled)

pending legislation continued26
Pending Legislation (Continued)

HB 3116- Interstate Compact on Return to Work

Rep. Jefferson

 HB 3116 creates the Public Pension Abuse Abatement Act. The bill authorizes and directs the Governor to execute a compact on behalf of the State with any other state to end abuse of public pension programs. The compacting states shall agree that no governmental employer under the jurisdiction of any state shall pay wages or salary to any public pension fund annuitant unless that annuitant elects to suspend his or her pension for the duration of his or her employment. The compact would override SURS return to work policies.

Status: House Personnel and Pensions (No hearing scheduled)

HB 3136- Pension Funding and Fairness Act

Rep. Mitchell

HB 3136 places statutory limitations on state spending and revenue enhancements. The bill prioritizes pension funding as the State’s first appropriation and makes changes to how pension contributions are determined. The Sponsor intends to increase funding, however there is no definite funding schedule provided. The legislation authorizes the Commission on Government Forecasting and Accountability (COGFA) to determine state contributions to systems acting in compliance with generally accepted accounting principles.

Generally accepted accounting principles would seem to suggest the GASB ARC, but the terminology is not defined in statute and COGFA has broad discretion in determining contributions. Systems could still certify contributions, but the State Comptroller must make monthly distributions of the COGFA determination. COGFA is allowed to increase and decrease state contributions throughout the fiscal year. The General Assembly may “override” a COGFA determination with the Governor’s approval and a 3/5ths majority of each chamber. COGFA is a bi-partisan Commission made up of 12 members of the General Assembly appointed by legislative caucus leaders. COGFA is not bound by any actuarial or valuation methods in this legislation or under current law. COGFA is not made a fiduciary to the Fund.

Status: House Executive (No hearing scheduled)

pending legislation continued27
Pending Legislation (Continued)

HB 3375- Return to Work

Rep. McCarthy

HB 3375 amends the General Provisions Article of the Illinois Pension Code. The bill provides that any annuitant of a retirement system or pension fund shall have their annuity suspended if they become a participant of any other system or fund and are employed on a full-time basis. Effective July 1, 2011.

The bill applies to current annuitants, current participants, and future participants.

Status: House Personnel and Pensions

HB 3383- Extension of Exemptions to the 6% Rule

Rep. William Davis

HB 3383 amends the TRS and SURS Articles of the Illinois Pension Code. The bill extends exemptions to the systems’ 6% rule by 5 years. The 6% rule applies a cap on pensionable salary for members within 10 years of retirement eligibility. If employers make additional contributions sufficient to cover the cost of salary increases in excess of 6% cap, the increase is pensionable. Certain exemptions to the rule were adopted and are set to expire on July 1, 2011. This bill would extend that expiration date to July 1, 2016.

Status: House Executive (No hearing scheduled)

pending legislation continued28
Pending Legislation (Continued)

HB 3633- Pension Funding and Fairness Act

Rep. Bost

HB 3633 places statutory limitations on state spending and revenue enhancements. The bill prioritizes pension funding as the State’s first appropriation and makes changes to how pension contributions are determined. The Sponsor intends to increase funding, however there is no definite funding schedule provided. The legislation authorizes the Commission on Government Forecasting and Accountability (COGFA) to determine state contributions to systems acting in compliance with generally accepted accounting principles.

Generally accepted accounting principles would seem to suggest the GASB ARC, but the terminology is not defined in statute and COGFA has broad discretion in determining contributions. Systems could still certify contributions, but the State Comptroller must make monthly distributions of the COGFA determination. COGFA is allowed to increase and decrease state contributions throughout the fiscal year. The General Assembly may “override” a COGFA determination with the Governor’s approval and a 3/5ths majority of each chamber. COGFA is a bi-partisan Commission made up of 12 members of the General Assembly appointed by legislative caucus leaders. COGFA is not bound by any actuarial or valuation methods in this legislation or under current law. COGFA is not made a fiduciary to the Fund.

Status: House Executive (No hearing scheduled)

pending legislation continued29
Pending Legislation (Continued)

SB 29- Current Participant and New Participant Benefit Reform

Sen. Lauzen

SB 29 amends the GARS, SERS, SURS, TRS, and JARS Articles of the Illinois Pension Code. The bill makes changes to benefits applicable to all participants.

The portion of any annuity earned by any participant on or after July 1, 2011 shall be reduced by .5% for each month an annuitant’s age is under normal Social Security retirement age. Multipliers for all service on or after July 1, 2011 are reduced to 2%. The maximum amount of service credit any participant can earned is limited to 35 years. All pensionable salary is limited to base salary.

Current participants’ maximum pensionable salary is capped at $106,800 as annually adjusted, and final rate of earnings are a participant’s highest 8 consecutive years of service within their last 10 years of service. COLAs are not an earned until a participant reaches normal Social Security retirement age, and COLAs for retirement and survivor annuities are reduced to 3% or ½ CPI-U, whichever is less.

A new participant may only establish creditable service for employment with an employer, and a member may not convert any unused sick leave or vacation time into creditable service. A new participant is entitled to refund upon separating from employment of his or her total contributions. A participant may re-establish credit by paying the full amount refunded plus actuarially assumed interest of the refunded amount, not compounded.

Status: Senate Executive Subcommittee on State Government Operations (3/9/11)

pending legislation continued30
Pending Legislation (Continued)

SB 36- Pension Funding and Fairness Act

Sen. Murphy

SB 36 places statutory limitations on state spending and revenue enhancements. The bill prioritizes pension funding as the State’s first appropriation and makes changes to how pension contributions are determined. The Sponsor intends to increase funding, however there is no definite funding schedule provided. The legislation authorizes the Commission on Government Forecasting and Accountability (COGFA) to determine state contributions to systems acting in compliance with generally accepted accounting principles.

Generally accepted accounting principles would seem to suggest the GASB ARC, but the terminology is not defined in statute and COGFA has broad discretion in determining contributions. Systems could still certify contributions, but the State Comptroller must make monthly distributions of the COGFA determination. COGFA is allowed to increase and decrease state contributions throughout the fiscal year. The General Assembly may “override” a COGFA determination with the Governor’s approval and a 3/5ths majority of each chamber.

COGFA is a bi-partisan Commission made up of 12 members of the General Assembly appointed by legislative caucus leaders. COGFA is not bound by any actuarial or valuation methods in this legislation or under current law. COGFA is not made a fiduciary to the Fund.

Status: Senate Executive Subcommittee on State Government Operations (3/9/11)

pending legislation continued31
Pending Legislation (Continued)

SB 105- Current and Future Participant Benefit Reform

Sen. Lauzen

SB 105 amends the General Provisions Article of the Illinois Pension Code to require persons who became participants in a state retirement system prior to January 1, 2011 (Tier 1 participants) to make a one-time, irrevocable election to participate under one of the following benefit formulas:

Option I: The traditional benefit package under the applicable Article of the Pension Code;

Option II: The existing benefit package for new hires; or

Option III: A self-managed plan (if made available by the participant's employer).

Persons who became or become participants on or after January 1, 2011 (Tier 2 participants) must make a one-time irrevocable election to participate under Option II or Option III.

Participant contributions are adjusted pursuant to each benefit option.

SB 105 is identical to HB 149.

Status: Senate Executive Subcommittee on State Government Operations (3/9/11)

pending legislation continued32
Pending Legislation (Continued)

SB 1556- Retiree Health Insurance Reform

Sen. Haine

SB 1556 amends the State Employees Group Insurance Act of 1971. The bill provides that in order to be eligible for group insurance benefits under a retirement system: (i) each annuitant or retired employee must meet the vesting requirements of the applicable retirement system and (ii) each survivor must establish that the deceased employee, annuitant, or retired employee upon whom the annuity is based was eligible to participate in the group insurance system under the applicable retirement system. The bill specifies that certain persons do not qualify as community college dependent beneficiaries or TRS dependent beneficiaries. Provides that only employees (rather than employees, annuitants, retired employees, and survivors) and their elected dependents are eligible and covered for all benefits available under the Act's programs. Annuitants, survivors, and retired employees and their elected dependents are immediately eligible for the group health benefits program and that the coverage of those persons is effective immediately upon the completion of the required forms. Requires, however, each survivor who is seeking coverage under that program to establish that he or she would have been eligible for coverage under the deceased member upon whom the survivor's annuity is based.

Status: Senate Pension and Investments (3/9/11)

SB 1634- SURS Purchase of Optional Service Credit for Unused Sick Leave

Sen. Frerichs

SB 1634 amends the State Universities Article of the Illinois Pension Code. The bill provides that an employee is entitled to receive service credit for up to 2 years (now up to 1 year) of unused sick leave. 

Status: Senate Pension and Investments (3/9/11)

pending legislation continued33
Pending Legislation (Continued)

SB 1635- SURS COLA Increase for Annuitants Retired Prior to 1/1/80

Sen. Frerichs

SB 1635 amends the State Universities Article of the Illinois Pension Code. The bill provides that, on January 1, 2012, the monthly pension of an annuitant who retired before January 1, 1980 shall be recalculated and increased to reflect the amount the annuitant would have received in January 2012 had the annuitant been receiving a 3% increase for each year he or she received a monthly annuity under Rule 1, Rule 2, Rule 3, Rule 4, or Rule 5. An additional increase of 3% of the amount of the retirement annuity will be received by the annuitant each January thereafter.

Status: Senate Pension and Investments (3/9/11)

SB 1711- CIP Reform

Sen. Haine

SB 1711 amends the State Group Insurance Act of 1971 to reform the College Insurance Plan (CIP). The bill incrementally increases district contributions, active employee contributions, and State contributions to CIP so that all 3 are contributing .97% (currently .5%) of pay on July 1, 2013. Increases in contributions are limited to 105% of the previous year’s rate as determined by Central Management Services. SURS is not required to recertify contributions to CIP in FY 11 or FY 12.

Status: Senate Executive (3/9/11)

pending legislation continued34
Pending Legislation (Continued)

SB 2018- Prohibition on Reducing Certified Contributions

Sen. Harmon

SB 2018 amends the State Finance Act. In a Section permitting the Governor to reduce the amount of funds appropriated for statutory mandates to accommodate budgetary limitations, provides that the Section does not apply to funds appropriated under the State Pension Funds Continuing Appropriation Act. 

Status: Senate Executive (3/9/11)

SB 2156- Limitations on Benefit Increases

Sen. Brady

SB 2156 amends the GARS, SERS, SURS, TRS and Judges Article of the Illinois Pension Code. The bill provides that every new benefit increase is contingent upon each affected pension or retirement system (i) having been at least 90% funded according to its most recent annual actuarial valuation and (ii) having received any required State contributions that have come due since the most recent annual actuarial valuation. A new benefit increase not satisfying this additional requirement is null and void, unless the new benefit increase is required to maintain qualified plan status.

Status: Senate Pensions and Investments (3/9/11)

pending legislation continued35
Pending Legislation (Continued)

SB 2187- Extension of the 6% Rule

Sen. James Clayborne

SB 2187 amends the TRS and SURS Articles of the Illinois Pension Code. The bill extends exemptions to the systems’ 6% rule by 5 years. The 6% rule applies a cap on pensionable salary for members within 10 years of retirement eligibility. If employers make additional contributions sufficient to cover the cost of salary increases in excess of 6% cap, the increase is pensionable. Certain exemptions to the rule were adopted and are set to expire on July 1, 2011. This bill would extend that expiration date to July 1, 2016.

Status: Senate Pensions and Investments (3/9/11)

HJR 17- Pension Reform Task Force

Rep. May

HJR 17 creates the Pension Reform Task Force to assess whether a prospective diminution in pension benefits for current public employees is consistent with the prohibition on the diminishment and impairment of pension benefits under Article XIII, Section 5 of the Illinois Constitution.

Status: House Rules

pending legislation continued36
Pending Legislation (Continued)

HJRCA 5- Limitation on Benefit Increases

Rep. Michael J. Madigan

HJRCA 5 provides that a bill shall not become a law without the concurrence of 3/5ths of members elected to each house of the General Assembly if that bill increases a benefit under any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof. The amendment provides if the Governor vetoes such a bill, then it shall not become law unless it is passed, upon its return, by a record vote of two-thirds of the members elected to each house of the General Assembly. 

Status: House Rules

HJRCA 25- Limitation on Benefit Increases

Rep. Hammond

HJRCA 25 proposes constitutional limitations on revenue increases and budget finance. Additionally, the amendment requires that, in each fiscal year, obligations of the State to retirement systems and pension funds created under the Illinois Pension Code must be met as provided in that Code. Effective upon being declared adopted.

Status: House Rules

pending legislation continued37
Pending Legislation (Continued)

SJRCA 6- Limitations on Benefit Increases

Sen. Murphy

SJRCA 6 provides that a bill shall not become a law without the concurrence of 3/5ths of members elected to each house of the General Assembly if that bill increases a benefit under any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof. The amendment provides if the Governor vetoes such a bill, then it shall not become law unless it is passed, upon its return, by a record vote of two-thirds of the members elected to each house of the General Assembly. 

Status: Senate Executive (No hearing scheduled)

SJRCA 17- Limitation on Benefit Increases

Sen. Brady

SJRCA 17 proposes to amend the General Provisions Article of the Illinois Constitution. The amendment provides that a new benefit increase shall not take effect unless, within 60 calendar days after the effective date of the new benefit increase, the Auditor General certifies (i) that each State-funded retirement system was at least 90% funded and that each system has received required State contributions due from the date of that valuation to the effective date of the new benefit increase or (ii) that enactment of the new benefit increase is required to maintain a system's qualified plan status.

Status: Senate Executive (No hearing scheduled)

wrap up
Wrap Up
  • Chronic, inadequate funding has left SURS in precarious financial condition
    • Recent financial turmoil has worsened situation
  • Funding ratio, as of December 31, 2010 (FYTD), is approximately 43.8% (using market value of assets method)
  • GRS, SURS’ actuary, recommends a funding policy that recognizes and funds to the Annual Required Contribution (ARC)