Illinois Legislature Repeals 3% SURS Salary Cap, Paving Way for Return of the 6% Cap

The Illinois House and Senate passed a bill, Senate Bill 1814, which includes a House Amendment that will repeal the current 3% salary cap for State Universities Retirement System (SURS) reportable earnings. If Governor Pritzker signs the bill into law, educational employers that are subject to SURS will once again only be responsible for additional employer payments if they provide a SURS member more than a 6% increase in creditable earnings during the final years of the employee’s career. The Governor is expected to sign the legislation, which would become effective upon signature.

The legislature reduced the cap on end-of-career salary increases from 6% to 3% in 2018. The 6% cap was put in place in 2005 to address rising pension costs. The 3% cap went into effect on July 1, 2018, in Public Act 100-0587. Certain contracts and policies entered into before June 4, 2018, were “grandfathered” under the 6% cap as long as they were not amended and the employer complied with certain reporting requirements.

Almost immediately after the implementation of the 3% cap, critics complained that the real effect of the tightened limits was to penalize educators who wanted to take on more responsibilities at the end of their careers and pushing other educators out of the state.

The relevant House Amendment deletes from the current law the language establishing the 3% cap. The law does not provide for any refund from SURS for any excess salary payments for increases that exceeded 3% since July 1, 2018, and it is not yet known whether SURS will entertain such requests.