Legislature Passes 3% TRS Salary “Cap”

By June 6, 2018June 12th, 2018News, Uncategorized

On June 4, 2018, the budget implementation bill (Public Act 100-0587) was signed into law. Among its many implications for school districts is a modification to the 6% salary “cap” for TRS reportable earnings, reducing it to 3% for school years commencing July 1, 2018.  As before, a salary paid to TRS members in excess of the “cap” will result in significant additional employer payments to TRS if such earnings are used to determine the final average salary upon retirement.  As defined by statute, “salary” includes all forms of compensation reportable under TRS rules.  It appears that prospective salaries will be subject to this Act unless they were paid under a contract or collective bargaining agreement entered into prior to the Act’s effective date.  TRS will be issuing rules which should address open issues, such as of what constitutes a “contract” and when a contract is “entered into” based on specific sets of facts.  Boards should consult with their legal counsel regarding any employment contracts or collective bargaining agreements pending board approval to determine whether they will be affected by this Act.


Read the Act HERE.