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Statehouse update: New restrictions will impact universities’ ability to re-employ annuitants

June 18, 2012
Lori Clark

Lori Clark

Rep. Daniel Biss (D-Evanston) introduced HB 4996  to curb the current practice of Illinois’ public universities rehiring annuitants to work while drawing a pension.

This bill passed both chambers of the Illinois General Assembly, and the governor is expected to sign the bill over the summer.

Biss, who has been actively involved in various efforts of the General Assembly to bring the state’s pension payments to an affordable and predictable level, believes that restricting this practice will save the State Universities Retirement System (SURS) money.

“It is possible under the current law under the current pension code for an employee of the university system … to effectively offload a substantial portion of their compensation from the university to the pension system by kind of artificially retiring and returning to work,” Biss said. “It [HB 4996] attempts to curb some of the more inexcusable instances of this practice.” (State Journal Register, March 28, 2012).

A former University of Chicago math professor, Biss worked closely with the public universities, including NIU, to develop several amendments to the original bill that will help minimize the negative impacts to the universities while still achieving his overall objective.

SURS: State Universities Retirement System of Illinois logoUnder this legislation, for the academic year beginning in August 2013, a public university, such as NIU, will be responsible for the employer contribution to the State Universities Retirement System for affected annuitants.

An “affected annuitant” is defined as one who works more than 18 paid weeks (total, this is not per year) or who earns more than 40 percent of his or her highest annual earnings prior to retirement.

Annuitants who are paid from federal, corporate, foundation, employer trust funds or grants of state funds that identify the principal investigator by name are exempted from this new requirement.

There are a number of reporting requirements and responsibilities to the public universities.

We must notify SURS, within 60 days, if we employ or re-employ a person who is receiving a SURS retirement annuity. This notice must include a copy of the contract of employment; if no written contract of employment exists, then the notice must specify the rate of compensation and the anticipated length of employment. It also must specify whether the annuitant will be compensated from federal, corporate, foundation, or trust funds or grants of State funds that identify the principal investigator by name.

The university must also record, document, and certify to SURS:

  • the number of paid days and paid weeks worked by the annuitant in the academic year;
  • the amount of compensation paid to the annuitant for employment during the academic year; and
  • the amount of compensation, if any, that comes from either federal, corporate, foundation or trust funds or grants of state funds that identify the principal investigator by name. SURS may audit university employment records and payroll.

“There has been a great deal of legislative and public interest in the topic of retiree employment. Representative Biss, the sponsor of this legislation, adopted a responsible public policy approach by preserving options where the universities can maintain cost-effective access to human capital investments, academic expertise and research capacity,” said Steve Cunningham, vice president for Administration and Human Resources.

“For example, exceptions will provide that research projects and specialized academic and professional personnel funded by external grants and private funds can continue to be employed subject to applicable income restrictions.”

The Voices section of NIU Today features opinions and perspectives from across campus. Lori Clark is director of State and Federal Relations for NIU.