Section 40 ILCS 5/7-204 - Municipality reserves(a) Except as provided in paragraph (b) of this Section, each participating municipality and its instrumentalities, and each participating instrumentality, shall be treated as an independent unit within the fund, except that if it has any sheriff's law enforcement employees, it shall be treated as 2 independent units, one for its sheriff's law enforcement employees and the second for its other employees. Separate municipality reserves shall be maintained in such form and detail as is necessary to show the net accumulated balances of each municipality, created or arising under this Article.(b) In the event of termination and dissolution of any participating municipality or participating instrumentality and its obligations are not assumed or transferred by law to another municipality, any net debit or credit balance remaining in the reserve account of such municipality, or participating instrumentality, shall be transferred to a Terminated Municipality Reserve Account which shall be used to fund any future benefits of its employees arising out of service with the terminated municipality or participating instrumentality. Any deficiency arising in the Terminated Municipality Reserve Account shall be eliminated by a contribution by all remaining municipalities and participating instrumentalities at a uniform percent of payroll, to be determined, collected with other contributions required under Section 7-172.
(c) The municipality reserve for each municipality or participating instrumentality that has any sheriff's law enforcement employees shall be divided into 2 reserves. A reserve for the sheriff's law enforcement employees shall be allocated an amount in the same proportion to the total amount in reserve as the total number of sheriff's law enforcement employees is to the total participating employees of the municipality or participating instrumentality at that date. The remainder shall be allocated to the reserve for other employees.