January 20, 2017

     ALLIANCE LEGISLATIVE REPORT (100-01)

     SENATE TO MAKE GOOD ON BUDGET PROMISE
 
In the last hours of the 99th General Assembly, leaders in the Illinois  State Senate unveiled a proposed budget compromise package that would  attempt to place the State on sound financial footing. Amendments were filed to bills that would raise new revenue for the State and borrow money in order for the State to pay old bills; include concessions for Democrats that would increase the minimum wage and address Chicago teacher pensions; and include items on the Republican Governor's wish list such as pension reform, a property tax freeze, and Workers' Compensation Act reform.
 
Even though time ran out in those waning hours of the "lame duck" session, the move by Senate President John Cullerton and Republican Leader Christine Radogno has kick started the budget conversation. At that time they pledged to reintroduce the budget bill package in the new General Assembly, and now that has been done. Bills are scheduled for committee hearings next week.
 
Approval of this "grand compromise" is far from a guarantee. Negotiations will continue and there has been no indication that House Speaker Michael Madigan has weighed in as yet. There is no doubt that interest groups and political organizations have already begun to lobby legislators on certain parts of the package. As with any compromise of this magnitude, there are plenty of provisions for everyone to hate.
 
SENATE EXECUTIVE COMMITTEE
Tuesday, January 24, 10:00 a.m., Room 212, State Capitol
 
SB 1 (Cullerton, J., D-Chicago) is a School Code "shell bill", possibly a "place-holder" for school funding reform language.
 
SB 2 (Lightford, D-Maywood) increases the State's minimum wage as follows: $8.25 per hour through June 30 2017; $9.00 per hour from July 1, 2017 through June 30, 2018; $9.50 per hour from July 1, 2018 through June 30, 2019; $10.00 per hour from July 1, 2019 through June 30, 2020; $10.50 per hour from July 1, 2020 through June 30, 2021; $11.00 per hour from July 1, 2021 and thereafter.
The bill preempts home rule and creates an income tax credit for employers with less than 50 employers.
 
SB 5 (Cullerton, J.) addresses funding of the Chicago Teachers Pension Fund. The bill authorizes $215 million in FY 2017 and $221 million in FY 2018 for payment to the pension fund for Chicago teachers. Beginning in FY 2019, the State will contribute to the pension fund the normal costs for that fiscal year, plus an amount to defray health insurance costs. The pension board will determine the amount of the State contributions for each fiscal year on the basis of actuarial tables and other assumptions.
 
SB 8 (Harmon, D-Oak Park) contains revisions to the procurement procedures for State government and institutions of higher education.
 
SB 11 (Cullerton, J.) The bill makes numerous changes to the State's pension laws. For the Teachers' Retirement System (TRS), it:
  • includes a modified "cost shift" for TRS employers for those employees who, after July 1, 2018, earn an annual salary of $180,000 or more. The employer would be responsible for the pension costs, including a portion of the unfunded liability, associated with the salary in excess of the stated rate. Salaries paid pursuant to existing contracts and collectively bargained agreements will be exempted until their expiration;
  • for school years on or after July 1, 2018, replaces the current 6% "cap" with the Consumer Price Index (CPI); and
  • requires Tier 1 TRS members to choose to either select to receive the Tier 2 Cost of Living Adjustment (COLA) payment or keep their current Tier 1 annual 3% COLA.
  • For those members who choose the Tier 2 COLA, future salary increases will continue to be used to calculate a member's creditable earnings for pension purposes. They will also receive a one-time payment of 10% of their total member contributions (called a "consideration payment").
  • For those members that choose to remain with the Tier 1 COLA, they will receive salary increases although those salary increases will not be used in pension calculations.
  • The member contributions for TRS members who choose the Tier 2 COLA payment will no longer include the additional payment attributed to the Tier 1 COLA payment and accordingly their contributions will decrease to 8.1%.
  • Tier 1 employees who, by June 1, 2017, have made an irrevocable election to retire in accordance with an existing collectively bargained agreement, are not required to make the election described above.
  • Requires TRS to offer, by July 1, 2018, up to 5% of eligible active Tier 1 members the option of participating in a voluntary 401K plan in lieu of continued participation in the TRS defined benefit pension plan. Provides for vesting in the 401K type plan after five years. 
  • makes multiple changes to the Illinois Educational Labor Relations Act including:
  • makes implementation of the Act changes an employer right;
  • adds new section which excludes these pension law changes from collective bargaining or interest arbitration; 
  • prohibits unions from filing an unfair labor relations charge against an employer over this Act's implementation; and
  • amends that section of the Illinois Educational Labor Relations Act which gives IELRA laws superiority; provides that Pension Code changes prevail in case of conflict.
SB 12 (Connelly, R-Naperville) makes numerous changes to the Workers' Compensation Act.
 
SB 13 (Radogno, R-La Grange) imposes a property tax freeze on units of local government and provides mandate relief for school districts. For the 2017 and 2018 levy years, the bill sets the property tax extension limitation for all counties (including home rule taxing bodies) at 0%, or the rate of increase approved by voters. Exceptions are if a special purpose extension was made for:
  • the payment of principal and interest on bonds or other evidences of indebtedness issued by the taxing district;
  • contributions to a pension fund; or
  • public safety purposes.
  • If these were required to be included in a taxing district's aggregate extension for the 2016 levy year then the extension limitation for the 2017 and 2018 levy years shall be the lesser of 5% or the increase in the Consumer Price Index during the 12-month calendar year preceding the levy year, or the increase approved by voters. 
The bill also makes the following changes regarding mandate relief for school districts. It would:
  • change the mandate waiver process to strike the requirements that prohibited school districts from requesting drivers' education waivers, thus allowing such requests to be made;
  • modify the 3rd party contracting limitations to eliminate the requirement that contractors seeking to deliver services have to meet the same benefit package as school employed workers. It requires school districts to forward a copy of the cost projection to the Illinois State Board of Education (ISBE) when a bid is accepted;
  • allow a school district to discharge any mandate that is unfunded by holding a public hearing and referendum. Any mandate discharged must be reported to the ISBE;
  • allow a school board to determine the schedule and frequency of physical education courses requiring a minimum of three days per week, and allow high schools to excuse freshman and sophomore students who participate in interscholastic or extracurricular athletic programs; and
  • allow a school district to contract for drivers education services.
SENATE APPROPRIATIONS I COMMITTEE
Tuesday, January 24, 2:00 p.m., Room 400, State Capitol
 
SB 4 (Trotter, D-Chicago) provides authorization for $7 billion in borrowing for the use of paying the backlog of State bills. The bonds are to be repaid in seven years.
 
SENATE GAMING COMMITTEE
Tuesday, January 24, 2:00 p.m., Room 212, State Capitol
 
SB 7 (Link, D-Vernon Hills) adds several provisions to expand gaming in the State, including the authorization of a casino in Chicago run by a Chicago Casino Development Board with its five members appointed by the Mayor. It also authorizes electronic gaming at Horse Racing Tracks and adds five additional riverboat casino owner licenses. Under this scenario, new casinos are speculated to be placed in Lake County, Rockford, the south suburbs of Chicago, Danville, and in Williamson County. The racetracks expected to receive the video gaming are in Arlington Heights, Cicero and Collinsville. Proceeds would be split among the State, the City of Chicago, and various economic development structures generally targeted for high poverty and minority areas.
 
SENATE REVENUE COMMITTEE
Tuesday, January 24, 3:00 p.m., Room 409, State Capitol
 
SB 9 (Hutchinson, D-Olympia Fields) makes numerous changes to the State's tax structure, including:
  • creating the Sugar-Sweetened Beverage Tax Act by imposing a tax on distributors of bottled sugar-sweetened beverages (1cent per ounce sold). Distributors must file for a permit ($250) then file monthly statements with the Department of Revenue regarding the number of bottles sold. The distributors must add the tax to the price of the beverage for sale. 2% of the receipts go to an administrative fund and the remainder is deposited into the General Revenue Fund;
  • increasing the individual income tax rate from 3.25% to 4.95% and the corporate income tax rate from 4.8% to 7% beginning January 1, 2017;
  • extending the life of several business development income tax credits;
  • increasing the Education Expense Credit (for taxpayers who pay tuition for non-public K-12 education) from $500 to $750; and
  • creating an income tax credit of $250 for teachers or other school personnel who purchase instructional material or supplies. 
This legislative report was written and edited by the lobbyists of the Illinois Association of School Boards to provide information to the members of the organizations that comprise the Statewide School Management Alliance.