6% SOFT CAP ON END-OF-CAREER TRS CREDITABLE EARNINGS INCREASES RESTORED

By Adam Dauksas

June 6, 2019 

            Yesterday, Governor J.B. Pritzker signed into law Senate Bill 1814, which restores the 6% soft cap before excess salary costs will be assessed against a school district on end-of-career TRS creditable earnings increases used to calculate a retirement annuity.  Just last year, then-Governor Bruce Rauner signed into law legislation reducing that cap to 3% for any individual employment contracts and collective bargaining agreements entered into on or after June 4, 2018. 

 

            Several of our clients negotiated contracts last year while the 3% threshold was in effect.  Some of those contracts contained contingency language that would allow the 6% soft cap to again be applied in the event the Legislature reversed course without re-opening the agreement.  Other contracts did not, meaning the 3% limit would still apply for the duration of the agreement.  Either way, we anticipate that most districts will begin receiving questions and inquiries from their unions, teachers and administrators alike regarding how the restoration of the 6% limit affects them and, in particular, their 2018-2019 TRS creditable earnings increases.

 

            If your district negotiated an agreement last year to which the lower 3% threshold applied, we recommend that you contact your attorney at Scariano, Himes and Petrarca, Chtd. who assisted in bargaining that agreement in order to effectively and efficiently navigate this change in the law. 

 

Tags     Personnel; Pensions

 

 

 


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