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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GRANDFATHERED CONTRACTS TO BE SUBMITTED TO TRS BY MARCH 29, 2019

By Adam Dauksas

February 19, 2019

On June 4, 2018, then-Governor Bruce Rauner signed into law Public Act 100-0587, which reduces the 6% soft cap on end-of-career TRS creditable earnings increases to 3% for any individual employment contracts and collective bargaining agreements entered into on or after that date.  “Grandfathered” contracts and collective bargaining agreements entered into before June 4th are still subject to the old 6% limit.  Also, for employees not covered by a bargaining agreement or an employment contract, TRS will accept employment policies for grandfathering if notice was provided as required by the employment policy prior to June 4, 2018 and payments are made pursuant to the term of the policy prior to June 30, 2022.

 Now, in order to help it administer the new law, TRS has launched a CBA/Contract Collection Portal and is requiring school districts to submit all grandfathered employment contracts and collective bargaining agreements to TRS via this online portal by March 29, 2019.  Employees covered by grandfathered retirement policies also need to be identified through the portal.  According to TRS, “[i]f the required information is not received by TRS, any year-over-year salary increases in the 2018-19 and future years will be subject to the 3 percent threshold.”  Districts can access the portal here.

 To avoid any unforeseen TRS excess cost penalties, we recommend that your district comply with this mandate.  Should you have any questions regarding these new TRS obligations, your attorneys at Scariano, Himes and Petrarca, Chtd. stand ready to assist.

Tags     Personnel; Pensions