99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
SB3317

 

Introduced 2/19/2016, by Sen. Dan Duffy

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Amends the Illinois Pension Code. Moves the investment power for eligible downstate police and downstate firefighter pension funds to the Illinois State Board of Investment. Reduces the amount of training required for trustees of those pension funds. Makes conforming changes. Changes all downstate police and firefighter pension funds to a fiscal year beginning May 1. Doubles the annual compliance fee paid by the funds to the Department of Insurance. Requires the Department of Insurance to impose penalties of up to $2,000 per day for noncompliance with certain provisions relating to the transfer of investment assets. Authorizes emergency rulemaking and amends the Illinois Administrative Procedure Act to add a conforming provision. Amends the State Mandates Act to require implementation without reimbursement.


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FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

 

 

A BILL FOR

 

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1    AN ACT concerning public employee benefits.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 3. The Illinois Administrative Procedure Act is
5amended by changing Section 5-45 as follows:
 
6    (5 ILCS 100/5-45)  (from Ch. 127, par. 1005-45)
7    Sec. 5-45. Emergency rulemaking.
8    (a) "Emergency" means the existence of any situation that
9any agency finds reasonably constitutes a threat to the public
10interest, safety, or welfare.
11    (b) If any agency finds that an emergency exists that
12requires adoption of a rule upon fewer days than is required by
13Section 5-40 and states in writing its reasons for that
14finding, the agency may adopt an emergency rule without prior
15notice or hearing upon filing a notice of emergency rulemaking
16with the Secretary of State under Section 5-70. The notice
17shall include the text of the emergency rule and shall be
18published in the Illinois Register. Consent orders or other
19court orders adopting settlements negotiated by an agency may
20be adopted under this Section. Subject to applicable
21constitutional or statutory provisions, an emergency rule
22becomes effective immediately upon filing under Section 5-65 or
23at a stated date less than 10 days thereafter. The agency's

 

 

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1finding and a statement of the specific reasons for the finding
2shall be filed with the rule. The agency shall take reasonable
3and appropriate measures to make emergency rules known to the
4persons who may be affected by them.
5    (c) An emergency rule may be effective for a period of not
6longer than 150 days, but the agency's authority to adopt an
7identical rule under Section 5-40 is not precluded. No
8emergency rule may be adopted more than once in any 24 month
9period, except that this limitation on the number of emergency
10rules that may be adopted in a 24 month period does not apply
11to (i) emergency rules that make additions to and deletions
12from the Drug Manual under Section 5-5.16 of the Illinois
13Public Aid Code or the generic drug formulary under Section
143.14 of the Illinois Food, Drug and Cosmetic Act, (ii)
15emergency rules adopted by the Pollution Control Board before
16July 1, 1997 to implement portions of the Livestock Management
17Facilities Act, (iii) emergency rules adopted by the Illinois
18Department of Public Health under subsections (a) through (i)
19of Section 2 of the Department of Public Health Act when
20necessary to protect the public's health, (iv) emergency rules
21adopted pursuant to subsection (n) of this Section, (v)
22emergency rules adopted pursuant to subsection (o) of this
23Section, or (vi) emergency rules adopted pursuant to subsection
24(c-5) of this Section. Two or more emergency rules having
25substantially the same purpose and effect shall be deemed to be
26a single rule for purposes of this Section.

 

 

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1    (c-5) To facilitate the maintenance of the program of group
2health benefits provided to annuitants, survivors, and retired
3employees under the State Employees Group Insurance Act of
41971, rules to alter the contributions to be paid by the State,
5annuitants, survivors, retired employees, or any combination
6of those entities, for that program of group health benefits,
7shall be adopted as emergency rules. The adoption of those
8rules shall be considered an emergency and necessary for the
9public interest, safety, and welfare.
10    (d) In order to provide for the expeditious and timely
11implementation of the State's fiscal year 1999 budget,
12emergency rules to implement any provision of Public Act 90-587
13or 90-588 or any other budget initiative for fiscal year 1999
14may be adopted in accordance with this Section by the agency
15charged with administering that provision or initiative,
16except that the 24-month limitation on the adoption of
17emergency rules and the provisions of Sections 5-115 and 5-125
18do not apply to rules adopted under this subsection (d). The
19adoption of emergency rules authorized by this subsection (d)
20shall be deemed to be necessary for the public interest,
21safety, and welfare.
22    (e) In order to provide for the expeditious and timely
23implementation of the State's fiscal year 2000 budget,
24emergency rules to implement any provision of Public Act 91-24
25this amendatory Act of the 91st General Assembly or any other
26budget initiative for fiscal year 2000 may be adopted in

 

 

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1accordance with this Section by the agency charged with
2administering that provision or initiative, except that the
324-month limitation on the adoption of emergency rules and the
4provisions of Sections 5-115 and 5-125 do not apply to rules
5adopted under this subsection (e). The adoption of emergency
6rules authorized by this subsection (e) shall be deemed to be
7necessary for the public interest, safety, and welfare.
8    (f) In order to provide for the expeditious and timely
9implementation of the State's fiscal year 2001 budget,
10emergency rules to implement any provision of Public Act 91-712
11this amendatory Act of the 91st General Assembly or any other
12budget initiative for fiscal year 2001 may be adopted in
13accordance with this Section by the agency charged with
14administering that provision or initiative, except that the
1524-month limitation on the adoption of emergency rules and the
16provisions of Sections 5-115 and 5-125 do not apply to rules
17adopted under this subsection (f). The adoption of emergency
18rules authorized by this subsection (f) shall be deemed to be
19necessary for the public interest, safety, and welfare.
20    (g) In order to provide for the expeditious and timely
21implementation of the State's fiscal year 2002 budget,
22emergency rules to implement any provision of Public Act 92-10
23this amendatory Act of the 92nd General Assembly or any other
24budget initiative for fiscal year 2002 may be adopted in
25accordance with this Section by the agency charged with
26administering that provision or initiative, except that the

 

 

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124-month limitation on the adoption of emergency rules and the
2provisions of Sections 5-115 and 5-125 do not apply to rules
3adopted under this subsection (g). The adoption of emergency
4rules authorized by this subsection (g) shall be deemed to be
5necessary for the public interest, safety, and welfare.
6    (h) In order to provide for the expeditious and timely
7implementation of the State's fiscal year 2003 budget,
8emergency rules to implement any provision of Public Act 92-597
9this amendatory Act of the 92nd General Assembly or any other
10budget initiative for fiscal year 2003 may be adopted in
11accordance with this Section by the agency charged with
12administering that provision or initiative, except that the
1324-month limitation on the adoption of emergency rules and the
14provisions of Sections 5-115 and 5-125 do not apply to rules
15adopted under this subsection (h). The adoption of emergency
16rules authorized by this subsection (h) shall be deemed to be
17necessary for the public interest, safety, and welfare.
18    (i) In order to provide for the expeditious and timely
19implementation of the State's fiscal year 2004 budget,
20emergency rules to implement any provision of Public Act 93-20
21this amendatory Act of the 93rd General Assembly or any other
22budget initiative for fiscal year 2004 may be adopted in
23accordance with this Section by the agency charged with
24administering that provision or initiative, except that the
2524-month limitation on the adoption of emergency rules and the
26provisions of Sections 5-115 and 5-125 do not apply to rules

 

 

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1adopted under this subsection (i). The adoption of emergency
2rules authorized by this subsection (i) shall be deemed to be
3necessary for the public interest, safety, and welfare.
4    (j) In order to provide for the expeditious and timely
5implementation of the provisions of the State's fiscal year
62005 budget as provided under the Fiscal Year 2005 Budget
7Implementation (Human Services) Act, emergency rules to
8implement any provision of the Fiscal Year 2005 Budget
9Implementation (Human Services) Act may be adopted in
10accordance with this Section by the agency charged with
11administering that provision, except that the 24-month
12limitation on the adoption of emergency rules and the
13provisions of Sections 5-115 and 5-125 do not apply to rules
14adopted under this subsection (j). The Department of Public Aid
15may also adopt rules under this subsection (j) necessary to
16administer the Illinois Public Aid Code and the Children's
17Health Insurance Program Act. The adoption of emergency rules
18authorized by this subsection (j) shall be deemed to be
19necessary for the public interest, safety, and welfare.
20    (k) In order to provide for the expeditious and timely
21implementation of the provisions of the State's fiscal year
222006 budget, emergency rules to implement any provision of
23Public Act 94-48 this amendatory Act of the 94th General
24Assembly or any other budget initiative for fiscal year 2006
25may be adopted in accordance with this Section by the agency
26charged with administering that provision or initiative,

 

 

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1except that the 24-month limitation on the adoption of
2emergency rules and the provisions of Sections 5-115 and 5-125
3do not apply to rules adopted under this subsection (k). The
4Department of Healthcare and Family Services may also adopt
5rules under this subsection (k) necessary to administer the
6Illinois Public Aid Code, the Senior Citizens and Persons with
7Disabilities Property Tax Relief Act, the Senior Citizens and
8Disabled Persons Prescription Drug Discount Program Act (now
9the Illinois Prescription Drug Discount Program Act), and the
10Children's Health Insurance Program Act. The adoption of
11emergency rules authorized by this subsection (k) shall be
12deemed to be necessary for the public interest, safety, and
13welfare.
14    (l) In order to provide for the expeditious and timely
15implementation of the provisions of the State's fiscal year
162007 budget, the Department of Healthcare and Family Services
17may adopt emergency rules during fiscal year 2007, including
18rules effective July 1, 2007, in accordance with this
19subsection to the extent necessary to administer the
20Department's responsibilities with respect to amendments to
21the State plans and Illinois waivers approved by the federal
22Centers for Medicare and Medicaid Services necessitated by the
23requirements of Title XIX and Title XXI of the federal Social
24Security Act. The adoption of emergency rules authorized by
25this subsection (l) shall be deemed to be necessary for the
26public interest, safety, and welfare.

 

 

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1    (m) In order to provide for the expeditious and timely
2implementation of the provisions of the State's fiscal year
32008 budget, the Department of Healthcare and Family Services
4may adopt emergency rules during fiscal year 2008, including
5rules effective July 1, 2008, in accordance with this
6subsection to the extent necessary to administer the
7Department's responsibilities with respect to amendments to
8the State plans and Illinois waivers approved by the federal
9Centers for Medicare and Medicaid Services necessitated by the
10requirements of Title XIX and Title XXI of the federal Social
11Security Act. The adoption of emergency rules authorized by
12this subsection (m) shall be deemed to be necessary for the
13public interest, safety, and welfare.
14    (n) In order to provide for the expeditious and timely
15implementation of the provisions of the State's fiscal year
162010 budget, emergency rules to implement any provision of
17Public Act 96-45 this amendatory Act of the 96th General
18Assembly or any other budget initiative authorized by the 96th
19General Assembly for fiscal year 2010 may be adopted in
20accordance with this Section by the agency charged with
21administering that provision or initiative. The adoption of
22emergency rules authorized by this subsection (n) shall be
23deemed to be necessary for the public interest, safety, and
24welfare. The rulemaking authority granted in this subsection
25(n) shall apply only to rules promulgated during Fiscal Year
262010.

 

 

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1    (o) In order to provide for the expeditious and timely
2implementation of the provisions of the State's fiscal year
32011 budget, emergency rules to implement any provision of
4Public Act 96-958 this amendatory Act of the 96th General
5Assembly or any other budget initiative authorized by the 96th
6General Assembly for fiscal year 2011 may be adopted in
7accordance with this Section by the agency charged with
8administering that provision or initiative. The adoption of
9emergency rules authorized by this subsection (o) is deemed to
10be necessary for the public interest, safety, and welfare. The
11rulemaking authority granted in this subsection (o) applies
12only to rules promulgated on or after the effective date of
13Public Act 96-958 this amendatory Act of the 96th General
14Assembly through June 30, 2011.
15    (p) In order to provide for the expeditious and timely
16implementation of the provisions of Public Act 97-689,
17emergency rules to implement any provision of Public Act 97-689
18may be adopted in accordance with this subsection (p) by the
19agency charged with administering that provision or
20initiative. The 150-day limitation of the effective period of
21emergency rules does not apply to rules adopted under this
22subsection (p), and the effective period may continue through
23June 30, 2013. The 24-month limitation on the adoption of
24emergency rules does not apply to rules adopted under this
25subsection (p). The adoption of emergency rules authorized by
26this subsection (p) is deemed to be necessary for the public

 

 

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1interest, safety, and welfare.
2    (q) In order to provide for the expeditious and timely
3implementation of the provisions of Articles 7, 8, 9, 11, and
412 of Public Act 98-104 this amendatory Act of the 98th General
5Assembly, emergency rules to implement any provision of
6Articles 7, 8, 9, 11, and 12 of Public Act 98-104 this
7amendatory Act of the 98th General Assembly may be adopted in
8accordance with this subsection (q) by the agency charged with
9administering that provision or initiative. The 24-month
10limitation on the adoption of emergency rules does not apply to
11rules adopted under this subsection (q). The adoption of
12emergency rules authorized by this subsection (q) is deemed to
13be necessary for the public interest, safety, and welfare.
14    (r) In order to provide for the expeditious and timely
15implementation of the provisions of Public Act 98-651 this
16amendatory Act of the 98th General Assembly, emergency rules to
17implement Public Act 98-651 this amendatory Act of the 98th
18General Assembly may be adopted in accordance with this
19subsection (r) by the Department of Healthcare and Family
20Services. The 24-month limitation on the adoption of emergency
21rules does not apply to rules adopted under this subsection
22(r). The adoption of emergency rules authorized by this
23subsection (r) is deemed to be necessary for the public
24interest, safety, and welfare.
25    (s) In order to provide for the expeditious and timely
26implementation of the provisions of Sections 5-5b.1 and 5A-2 of

 

 

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1the Illinois Public Aid Code, emergency rules to implement any
2provision of Section 5-5b.1 or Section 5A-2 of the Illinois
3Public Aid Code may be adopted in accordance with this
4subsection (s) by the Department of Healthcare and Family
5Services. The rulemaking authority granted in this subsection
6(s) shall apply only to those rules adopted prior to July 1,
72015. Notwithstanding any other provision of this Section, any
8emergency rule adopted under this subsection (s) shall only
9apply to payments made for State fiscal year 2015. The adoption
10of emergency rules authorized by this subsection (s) is deemed
11to be necessary for the public interest, safety, and welfare.
12    (t) In order to provide for the expeditious and timely
13implementation of the provisions of Article II of Public Act
1499-6 this amendatory Act of the 99th General Assembly,
15emergency rules to implement the changes made by Article II of
16Public Act 99-6 this amendatory Act of the 99th General
17Assembly to the Emergency Telephone System Act may be adopted
18in accordance with this subsection (t) by the Department of
19State Police. The rulemaking authority granted in this
20subsection (t) shall apply only to those rules adopted prior to
21July 1, 2016. The 24-month limitation on the adoption of
22emergency rules does not apply to rules adopted under this
23subsection (t). The adoption of emergency rules authorized by
24this subsection (t) is deemed to be necessary for the public
25interest, safety, and welfare.
26    (u) (t) In order to provide for the expeditious and timely

 

 

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1implementation of the provisions of the Burn Victims Relief
2Act, emergency rules to implement any provision of the Act may
3be adopted in accordance with this subsection (u) (t) by the
4Department of Insurance. The rulemaking authority granted in
5this subsection (u) (t) shall apply only to those rules adopted
6prior to December 31, 2015. The adoption of emergency rules
7authorized by this subsection (u) (t) is deemed to be necessary
8for the public interest, safety, and welfare.
9    (v) In order to provide for the expeditious and timely
10implementation of the provisions of this amendatory Act of the
1199th General Assembly, emergency rules to implement this
12amendatory Act may be adopted in accordance with this
13subsection (v) by the Illinois State Board of Investment. The
1424-month limitation on the adoption of emergency rules does not
15apply to rules adopted under this subsection (v). The adoption
16of emergency rules authorized by this subsection (v) is deemed
17to be necessary for the public interest, safety, and welfare.
18(Source: P.A. 98-104, eff. 7-22-13; 98-463, eff. 8-16-13;
1998-651, eff. 6-16-14; 99-2, eff. 3-26-15; 99-6, eff. 1-1-16;
2099-143, eff. 7-27-15; 99-455, eff. 1-1-16; revised 10-15-15.)
 
21    Section 5. The Illinois Pension Code is amended by changing
22Sections 1-109.3, 1-113.1, 1-113.2, 1-113.3, 1-113.4,
231-113.4a, 1-113.5, 1-113.6, 1-113.7, 1A-112, 1A-113, 3-125,
243-127, 3-132, 3-135, 4-118, 4-120, 4-123, 4-128, 22A-113,
2522A-113.1, 22A-115, and by adding Sections 1-101.6, 1-101.7,

 

 

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11-113.05, 1-136, 3-135.1, 3-135.2, 4-123.1, 4-128.1, 4-128.2,
222A-110.1, 22A-113.4, and 22A-115.1 as follows:
 
3    (40 ILCS 5/1-101.6 new)
4    Sec. 1-101.6. Eligible pension fund. "Eligible pension
5fund" means a pension fund established pursuant to Article 3 or
6Article 4 of this Code that has net assets in trust that exceed
7the threshold amount defined in Section 1-101.7 of this Code.
8The status of "eligible pension fund", once established,
9continues in effect without regard to subsequent variations in
10the net assets of the pension fund.
 
11    (40 ILCS 5/1-101.7 new)
12    Sec. 1-101.7. Threshold amount. "Threshold amount", when
13used in relation to the financial assets of a pension fund
14established under Article 3 or Article 4 of this Code, means an
15amount equal to 3 months of current liabilities of the pension
16fund, including benefit payments owed to annuitants and
17beneficiaries of the pension fund and reasonable operational
18expenses.
 
19    (40 ILCS 5/1-109.3)
20    Sec. 1-109.3. Training requirement for Article 3 and
21Article 4 pension trustees.
22    (a) All elected and appointed trustees under Article 3 and
234 of this Code must participate in a mandatory trustee

 

 

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1certification training seminar that consists of at least 8 32
2hours of initial trustee certification at a training seminar
3facility that is accredited and affiliated with a State of
4Illinois certified college or university or approved by the
5Illinois Department of Insurance. This training must include
6without limitation both all of the following:
7        (1) Duties and liabilities of a fiduciary under Article
8    1 of the Illinois Pension Code.
9        (2) Duties of a pension board trustee under Article 3
10    or Article 4, as applicable, of the Illinois Pension Code.
11    Adjudication of pension claims.
12        (3) Basic accounting and actuarial training.
13        (4) Trustee ethics.
14        (5) The Illinois Open Meetings Act.
15        (6) The Illinois Freedom of Information Act.
16    The training required under this subsection (a) must be
17completed within the first year that a trustee is elected or
18appointed under an Article 3 or 4 pension fund. The elected and
19appointed trustees of an Article 3 or 4 pension fund who are
20police officers (as defined in Section 3-106 of this Code) or
21firefighters (as defined in Section 4-106 of this Code) or are
22employed by the municipality shall be permitted time away from
23their duties to attend such training without reduction of
24accrued leave or benefit time. Active or appointed trustees
25serving on the effective date of this amendatory Act of the
2696th General Assembly shall not be required to attend the

 

 

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1training required under this subsection (a).
2    (b) In addition to the initial trustee certification
3training required under subsection (a), all elected and
4appointed trustees under Article 3 and 4 of this Code,
5including trustees serving on the effective date of this
6amendatory Act of the 99th 96th General Assembly, shall also
7participate in a minimum of 4 16 hours of continuing trustee
8education each year after the first year that the trustee is
9elected or appointed. The continuing trustee education
10training must include without limitation both of the following:
11        (1) Duties and liabilities of a fiduciary under Article
12    1 of the Illinois Pension Code.
13        (2) Duties of a pension board trustee under Article 3
14    or Article 4, as applicable, of the Illinois Pension Code.
15    (c) The training required under this Section shall be paid
16for by the pension fund.
17    (d) Any board member who does not timely complete the
18training required under this Section is not eligible to serve
19on the board of trustees of an Article 3 or 4 pension fund,
20unless the board member completes the missed training within 6
21months after the date the member failed to complete the
22required training. In the event of a board member's failure to
23complete the required training, a successor shall be appointed
24or elected, as applicable, for the unexpired term. A successor
25who is elected under such circumstances must be elected at a
26special election called by the board and conducted in the same

 

 

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1manner as a regular election under Article 3 or 4, as
2applicable.
3(Source: P.A. 96-429, eff. 8-13-09.)
 
4    (40 ILCS 5/1-113.05 new)
5    Sec. 1-113.05. Transfer of investment authority of certain
6pension funds established under Article 3 or 4. Upon receiving
7a certified investment asset list from the Department of
8Insurance pursuant to Section 3-135.1 or Section 4-128.1 of
9this Code, the board of trustees of an eligible pension fund
10established under Article 3 or 4 of this Code shall cease
11investment activities and shall transfer all investment assets
12of the pension fund to the Illinois State Board of Investment
13in the manner prescribed by rules adopted by the Illinois State
14Board of Investment. Upon completion of that transfer, the
15investment authority of the board of trustees shall terminate.
 
16    (40 ILCS 5/1-113.1)
17    Sec. 1-113.1. Investment authority of certain pension
18funds established under Article 3 or 4.
19    (a) Beginning 18 months after the effective date of this
20amendatory Act of the 99th General Assembly, or when the
21transfer of investment authority is made pursuant to Section
221-113.05, whichever occurs first, subsection (b) of this
23Section does not apply to any pension fund that is an eligible
24pension fund as defined in Section 1-101.6.

 

 

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1    This Section continues to apply to any pension fund
2established under Article 3 or 4 that is not an eligible
3pension fund as defined in Section 1-101.6.
4    (b) The board of trustees of a police pension fund
5established under Article 3 of this Code or firefighter pension
6fund established under Article 4 of this Code shall draw
7pension funds from the treasurer of the municipality and,
8beginning January 1, 1998, invest any part thereof in the name
9of the board in the items listed in Sections 1-113.2 through
101-113.4 according to the limitations and requirements of this
11Article. These investments shall be made with the care, skill,
12prudence, and diligence that a prudent person acting in like
13capacity and familiar with such matters would use in the
14conduct of an enterprise of like character with like aims.
15    Interest and any other income from the investments shall be
16credited to the pension fund.
17    For the purposes of Sections 1-113.2 through 1-113.11, the
18"net assets" of a pension fund include both the cash and
19invested assets of the pension fund.
20(Source: P.A. 90-507, eff. 8-22-97.)
 
21    (40 ILCS 5/1-113.2)
22    Sec. 1-113.2. List of permitted investments for certain all
23Article 3 or 4 pension funds.
24    (a) Beginning 18 months after the effective date of this
25amendatory Act of the 99th General Assembly, or when the

 

 

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1transfer of investment authority is made pursuant to Section
21-113.05, whichever occurs first, subsection (b) of this
3Section does not apply to any pension fund that is an eligible
4pension fund as defined in Section 1-101.6.
5    (b) Except as provided in subsection (a), any Any pension
6fund established under Article 3 or 4 may invest in the
7following items:
8    (1) Interest bearing direct obligations of the United
9States of America.
10    (2) Interest bearing obligations to the extent that they
11are fully guaranteed or insured as to payment of principal and
12interest by the United States of America.
13    (3) Interest bearing bonds, notes, debentures, or other
14similar obligations of agencies of the United States of
15America. For the purposes of this Section, "agencies of the
16United States of America" includes: (i) the Federal National
17Mortgage Association and the Student Loan Marketing
18Association; (ii) federal land banks, federal intermediate
19credit banks, federal farm credit banks, and any other entity
20authorized to issue direct debt obligations of the United
21States of America under the Farm Credit Act of 1971 or
22amendments to that Act; (iii) federal home loan banks and the
23Federal Home Loan Mortgage Corporation; and (iv) any agency
24created by Act of Congress that is authorized to issue direct
25debt obligations of the United States of America.
26    (4) Interest bearing savings accounts or certificates of

 

 

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1deposit, issued by federally chartered banks or savings and
2loan associations, to the extent that the deposits are insured
3by agencies or instrumentalities of the federal government.
4    (5) Interest bearing savings accounts or certificates of
5deposit, issued by State of Illinois chartered banks or savings
6and loan associations, to the extent that the deposits are
7insured by agencies or instrumentalities of the federal
8government.
9    (6) Investments in credit unions, to the extent that the
10investments are insured by agencies or instrumentalities of the
11federal government.
12    (7) Interest bearing bonds of the State of Illinois.
13    (8) Pooled interest bearing accounts managed by the
14Illinois Public Treasurer's Investment Pool in accordance with
15the Deposit of State Moneys Act, interest bearing funds or
16pooled accounts of the Illinois Metropolitan Investment Funds,
17and interest bearing funds or pooled accounts managed,
18operated, and administered by banks, subsidiaries of banks, or
19subsidiaries of bank holding companies in accordance with the
20laws of the State of Illinois.
21    (9) Interest bearing bonds or tax anticipation warrants of
22any county, township, or municipal corporation of the State of
23Illinois.
24    (10) Direct obligations of the State of Israel, subject to
25the conditions and limitations of item (5.1) of Section 1-113.
26    (11) Money market mutual funds managed by investment

 

 

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1companies that are registered under the federal Investment
2Company Act of 1940 and the Illinois Securities Law of 1953 and
3are diversified, open-ended management investment companies;
4provided that the portfolio of the money market mutual fund is
5limited to the following:
6        (i) bonds, notes, certificates of indebtedness,
7    treasury bills, or other securities that are guaranteed by
8    the full faith and credit of the United States of America
9    as to principal and interest;
10        (ii) bonds, notes, debentures, or other similar
11    obligations of the United States of America or its
12    agencies; and
13        (iii) short term obligations of corporations organized
14    in the United States with assets exceeding $400,000,000,
15    provided that (A) the obligations mature no later than 180
16    days from the date of purchase, (B) at the time of
17    purchase, the obligations are rated by at least 2 standard
18    national rating services at one of their 3 highest
19    classifications, and (C) the obligations held by the mutual
20    fund do not exceed 10% of the corporation's outstanding
21    obligations.
22    (12) General accounts of life insurance companies
23authorized to transact business in Illinois.
24    (13) Any combination of the following, not to exceed 10% of
25the pension fund's net assets:
26        (i) separate accounts that are managed by life

 

 

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1    insurance companies authorized to transact business in
2    Illinois and are comprised of diversified portfolios
3    consisting of common or preferred stocks, bonds, or money
4    market instruments;
5        (ii) separate accounts that are managed by insurance
6    companies authorized to transact business in Illinois, and
7    are comprised of real estate or loans upon real estate
8    secured by first or second mortgages; and
9        (iii) mutual funds that meet the following
10    requirements:
11            (A) the mutual fund is managed by an investment
12        company as defined and registered under the federal
13        Investment Company Act of 1940 and registered under the
14        Illinois Securities Law of 1953;
15            (B) the mutual fund has been in operation for at
16        least 5 years;
17            (C) the mutual fund has total net assets of $250
18        million or more; and
19            (D) the mutual fund is comprised of diversified
20        portfolios of common or preferred stocks, bonds, or
21        money market instruments.
22    (14) Corporate bonds managed through an investment advisor
23must meet all of the following requirements:
24        (1) The bonds must be rated as investment grade by one
25    of the 2 largest rating services at the time of purchase.
26        (2) If subsequently downgraded below investment grade,

 

 

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1    the bonds must be liquidated from the portfolio within 90
2    days after being downgraded by the manager.
3(Source: P.A. 96-1495, eff. 1-1-11.)
 
4    (40 ILCS 5/1-113.3)
5    Sec. 1-113.3. List of additional permitted investments for
6certain pension funds with net assets of $2,500,000 or more.
7    (a) Beginning 18 months after the effective date of this
8amendatory Act of the 99th General Assembly, or when the
9transfer of investment authority is made pursuant to Section
101-113.05, whichever occurs first, subsection (a-5) of this
11Section does not apply to any pension fund that is an eligible
12pension fund as defined in Section 1-101.6.
13    (a-5) Except as provided in subsection (a), in (a) In
14addition to the items in Section 3-113.2, a pension fund
15established under Article 3 or 4 that has net assets of at
16least $2,500,000 may invest a portion of its net assets in the
17following items:
18        (1) Separate accounts that are managed by life
19    insurance companies authorized to transact business in
20    Illinois and are comprised of diversified portfolios
21    consisting of common or preferred stocks, bonds, or money
22    market instruments.
23        (2) Mutual funds that meet the following requirements:
24            (i) the mutual fund is managed by an investment
25        company as defined and registered under the federal

 

 

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1        Investment Company Act of 1940 and registered under the
2        Illinois Securities Law of 1953;
3            (ii) the mutual fund has been in operation for at
4        least 5 years;
5            (iii) the mutual fund has total net assets of $250
6        million or more; and
7            (iv) the mutual fund is comprised of diversified
8        portfolios of common or preferred stocks, bonds, or
9        money market instruments.
10    (b) A pension fund's total investment in the items
11authorized under this Section shall not exceed 35% of the
12market value of the pension fund's net present assets stated in
13its most recent annual report on file with the Illinois
14Department of Insurance.
15(Source: P.A. 90-507, eff. 8-22-97.)
 
16    (40 ILCS 5/1-113.4)
17    Sec. 1-113.4. List of additional permitted investments for
18certain pension funds with net assets of $5,000,000 or more.
19    (a) Beginning 18 months after the effective date of this
20amendatory Act of the 99th General Assembly, or when the
21transfer of investment authority is made pursuant to Section
221-113.05, whichever occurs first, subsection (a-5) of this
23Section does not apply to any pension fund that is an eligible
24pension fund as defined in Section 1-101.6.
25    (a-5) Except as provided in subsection (a), in (a) In

 

 

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1addition to the items in Sections 1-113.2 and 1-113.3, a
2pension fund established under Article 3 or 4 that has net
3assets of at least $5,000,000 and has appointed an investment
4adviser under Section 1-113.5 may, through that investment
5adviser, invest a portion of its assets in common and preferred
6stocks authorized for investments of trust funds under the laws
7of the State of Illinois. The stocks must meet all of the
8following requirements:
9        (1) The common stocks are listed on a national
10    securities exchange or board of trade (as defined in the
11    federal Securities Exchange Act of 1934 and set forth in
12    Section 3.G of the Illinois Securities Law of 1953) or
13    quoted in the National Association of Securities Dealers
14    Automated Quotation System National Market System (NASDAQ
15    NMS).
16        (2) The securities are of a corporation created or
17    existing under the laws of the United States or any state,
18    district, or territory thereof and the corporation has been
19    in existence for at least 5 years.
20        (3) The corporation has not been in arrears on payment
21    of dividends on its preferred stock during the preceding 5
22    years.
23        (4) The market value of stock in any one corporation
24    does not exceed 5% of the cash and invested assets of the
25    pension fund, and the investments in the stock of any one
26    corporation do not exceed 5% of the total outstanding stock

 

 

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1    of that corporation.
2        (5) The straight preferred stocks or convertible
3    preferred stocks are issued or guaranteed by a corporation
4    whose common stock qualifies for investment by the board.
5        (6) The issuer of the stocks has been subject to the
6    requirements of Section 12 of the federal Securities
7    Exchange Act of 1934 and has been current with the filing
8    requirements of Sections 13 and 14 of that Act during the
9    preceding 3 years.
10    (b) A pension fund's total investment in the items
11authorized under this Section and Section 1-113.3 shall not
12exceed 35% of the market value of the pension fund's net
13present assets stated in its most recent annual report on file
14with the Illinois Department of Insurance.
15    (c) A pension fund that invests funds under this Section
16shall electronically file with the Division any reports of its
17investment activities that the Division may require, at the
18times and in the format required by the Division.
19(Source: P.A. 90-507, eff. 8-22-97.)
 
20    (40 ILCS 5/1-113.4a)
21    Sec. 1-113.4a. List of additional permitted investments
22for certain Article 3 and 4 pension funds with net assets of
23$10,000,000 or more.
24    (a) Beginning 18 months after the effective date of this
25amendatory Act of the 99th General Assembly, or when the

 

 

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1transfer of investment authority is made pursuant to Section
21-113.05, whichever occurs first, subsection (a-5) of this
3Section does not apply to any pension fund that is an eligible
4pension fund as defined in Section 1-101.6.
5    (a-5) Except as provided in subsection (a), in (a) In
6addition to the items in Sections 1-113.2 and 1-113.3, a
7pension fund established under Article 3 or 4 that has net
8assets of at least $10,000,000 and has appointed an investment
9adviser, as defined under Sections 1-101.4 and 1-113.5, may,
10through that investment adviser, invest an additional portion
11of its assets in common and preferred stocks and mutual funds.
12    (b) The stocks must meet all of the following requirements:
13        (1) The common stocks must be listed on a national
14    securities exchange or board of trade (as defined in the
15    Federal Securities Exchange Act of 1934 and set forth in
16    paragraph G of Section 3 of the Illinois Securities Law of
17    1953) or quoted in the National Association of Securities
18    Dealers Automated Quotation System National Market System.
19        (2) The securities must be of a corporation in
20    existence for at least 5 years.
21        (3) The market value of stock in any one corporation
22    may not exceed 5% of the cash and invested assets of the
23    pension fund, and the investments in the stock of any one
24    corporation may not exceed 5% of the total outstanding
25    stock of that corporation.
26        (4) The straight preferred stocks or convertible

 

 

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1    preferred stocks must be issued or guaranteed by a
2    corporation whose common stock qualifies for investment by
3    the board.
4    (c) The mutual funds must meet the following requirements:
5        (1) The mutual fund must be managed by an investment
6    company registered under the Federal Investment Company
7    Act of 1940 and registered under the Illinois Securities
8    Law of 1953.
9        (2) The mutual fund must have been in operation for at
10    least 5 years.
11        (3) The mutual fund must have total net assets of
12    $250,000,000 or more.
13        (4) The mutual fund must be comprised of a diversified
14    portfolio of common or preferred stocks, bonds, or money
15    market instruments.
16    (d) A pension fund's total investment in the items
17authorized under this Section and Section 1-113.3 shall not
18exceed 50% effective July 1, 2011 and 55% effective July 1,
192012 of the market value of the pension fund's net present
20assets stated in its most recent annual report on file with the
21Department of Insurance.
22    (e) A pension fund that invests funds under this Section
23shall electronically file with the Division any reports of its
24investment activities that the Division may require, at the
25time and in the format required by the Division.
26(Source: P.A. 96-1495, eff. 1-1-11.)
 

 

 

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1    (40 ILCS 5/1-113.5)
2    Sec. 1-113.5. Investment advisers and investment services
3for certain all Article 3 or 4 pension funds.
4    (a) Beginning 18 months after the effective date of this
5amendatory Act of the 99th General Assembly, or when the
6transfer of investment authority is made pursuant to Section
71-113.05, whichever occurs first, subsection (a-1) of this
8Section does not apply to any pension fund that is an eligible
9pension fund as defined in Section 1-101.6.
10    (a-1) Except as provided in subsection (a), the (a) The
11board of trustees of a pension fund established under Article 3
12or 4 of this Code may appoint investment advisers as defined in
13Section 1-101.4. The board of any pension fund investing in
14common or preferred stock under Section 1-113.4 shall appoint
15an investment adviser before making such investments.
16    The investment adviser or consultant shall be a fiduciary,
17as defined in Section 1-101.2, with respect to the pension fund
18and shall be one of the following:
19        (1) an investment adviser registered under the federal
20    Investment Advisers Act of 1940 and the Illinois Securities
21    Law of 1953;
22        (2) a bank or trust company authorized to conduct a
23    trust business in Illinois;
24        (3) a life insurance company authorized to transact
25    business in Illinois; or

 

 

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1        (4) an investment company as defined and registered
2    under the federal Investment Company Act of 1940 and
3    registered under the Illinois Securities Law of 1953.
4    (a-5) Notwithstanding any other provision of law, a person
5or entity that provides consulting services (referred to as a
6"consultant" in this Section) to a pension fund with respect to
7the selection of fiduciaries may not be awarded a contract to
8provide those consulting services that is more than 5 years in
9duration. No contract to provide such consulting services may
10be renewed or extended. At the end of the term of a contract,
11however, the contractor is eligible to compete for a new
12contract. No person shall attempt to avoid or contravene the
13restrictions of this subsection by any means. All offers from
14responsive offerors shall be accompanied by disclosure of the
15names and addresses of the following:
16        (1) The offeror.
17        (2) Any entity that is a parent of, or owns a
18    controlling interest in, the offeror.
19        (3) Any entity that is a subsidiary of, or in which a
20    controlling interest is owned by, the offeror.
21    Beginning on July 1, 2008, a person, other than a trustee
22or an employee of a pension fund or retirement system, may not
23act as a consultant under this Section unless that person is at
24least one of the following: (i) registered as an investment
25adviser under the federal Investment Advisers Act of 1940 (15
26U.S.C. 80b-1, et seq.); (ii) registered as an investment

 

 

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1adviser under the Illinois Securities Law of 1953; (iii) a
2bank, as defined in the Investment Advisers Act of 1940; or
3(iv) an insurance company authorized to transact business in
4this State.
5    (b) All investment advice and services provided by an
6investment adviser or a consultant appointed under this Section
7shall be rendered pursuant to a written contract between the
8investment adviser and the board, and in accordance with the
9board's investment policy.
10    The contract shall include all of the following:
11        (1) acknowledgement in writing by the investment
12    adviser that he or she is a fiduciary with respect to the
13    pension fund;
14        (2) the board's investment policy;
15        (3) full disclosure of direct and indirect fees,
16    commissions, penalties, and any other compensation that
17    may be received by the investment adviser, including
18    reimbursement for expenses; and
19        (4) a requirement that the investment adviser submit
20    periodic written reports, on at least a quarterly basis,
21    for the board's review at its regularly scheduled meetings.
22    All returns on investment shall be reported as net returns
23    after payment of all fees, commissions, and any other
24    compensation.
25    (b-5) Each contract described in subsection (b) shall also
26include (i) full disclosure of direct and indirect fees,

 

 

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1commissions, penalties, and other compensation, including
2reimbursement for expenses, that may be paid by or on behalf of
3the investment adviser or consultant in connection with the
4provision of services to the pension fund and (ii) a
5requirement that the investment adviser or consultant update
6the disclosure promptly after a modification of those payments
7or an additional payment.
8    Within 30 days after the effective date of this amendatory
9Act of the 95th General Assembly, each investment adviser and
10consultant providing services on the effective date or subject
11to an existing contract for the provision of services must
12disclose to the board of trustees all direct and indirect fees,
13commissions, penalties, and other compensation paid by or on
14behalf of the investment adviser or consultant in connection
15with the provision of those services and shall update that
16disclosure promptly after a modification of those payments or
17an additional payment.
18    A person required to make a disclosure under subsection (d)
19is also required to disclose direct and indirect fees,
20commissions, penalties, or other compensation that shall or may
21be paid by or on behalf of the person in connection with the
22rendering of those services. The person shall update the
23disclosure promptly after a modification of those payments or
24an additional payment.
25    The disclosures required by this subsection shall be in
26writing and shall include the date and amount of each payment

 

 

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1and the name and address of each recipient of a payment.
2    (c) Within 30 days after appointing an investment adviser
3or consultant, the board shall submit a copy of the contract to
4the Division of Insurance of the Department of Financial and
5Professional Regulation.
6    (d) Investment services provided by a person other than an
7investment adviser appointed under this Section, including but
8not limited to services provided by the kinds of persons listed
9in items (1) through (4) of subsection (a), shall be rendered
10only after full written disclosure of direct and indirect fees,
11commissions, penalties, and any other compensation that shall
12or may be received by the person rendering those services.
13    (e) The board of trustees of each pension fund shall retain
14records of investment transactions in accordance with the rules
15of the Department of Financial and Professional Regulation.
16    (f) Upon the initial transfer of assets and investment
17authority of an eligible pension fund under subsection (b) of
18Section 3-135 or subsection (b) of Section 4-128 of this Code,
19and thereafter in perpetuity, the Illinois State Board of
20Investment shall provide all investment services for that
21eligible pension fund.
22    The Illinois State Board of Investment shall not be held
23liable by or indemnify any individual annuitant or beneficiary
24of any eligible pension fund established under Article 3 or
25Article 4 of this Code for nonpayment of benefits by the
26eligible pension fund.

 

 

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1(Source: P.A. 95-950, eff. 8-29-08; 96-6, eff. 4-3-09.)
 
2    (40 ILCS 5/1-113.6)
3    Sec. 1-113.6. Investment policies.
4    (a) Except as provided in subsection (b), every Every board
5of trustees of a pension fund shall adopt a written investment
6policy and file a copy of that policy with the Department of
7Insurance within 30 days after its adoption. Whenever a board
8changes its investment policy, it shall file a copy of the new
9policy with the Department within 30 days.
10    (b) Beginning 18 months after the effective date of this
11amendatory Act of the 99th General Assembly, or upon the
12transfer of its investment authority under Section 1-113.05,
13whichever occurs first, the requirement to maintain and file an
14investment policy under subsection (a) ceases to apply to the
15board of trustees of an eligible pension fund established under
16Article 3 or Article 4 of this Code.
17(Source: P.A. 90-507, eff. 8-22-97.)
 
18    (40 ILCS 5/1-113.7)
19    Sec. 1-113.7. Registration of investments; custody and
20safekeeping.
21    This Section does not apply to investments that have been
22transferred under Section 1-113.05.
23    The board of trustees may register the investments of its
24pension fund in the name of the pension fund, in the nominee

 

 

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1name of a bank or trust company authorized to conduct a trust
2business in Illinois, or in the nominee name of the Illinois
3Public Treasurer's Investment Pool.
4    The assets of the pension fund and ownership of its
5investments shall be protected through third-party custodial
6safekeeping. The board of trustees may appoint as custodian of
7the investments of its pension fund the treasurer of the
8municipality, a bank or trust company authorized to conduct a
9trust business in Illinois, or the Illinois Public Treasurer's
10Investment Pool.
11    A dealer may not maintain possession of or control over
12securities of a pension fund subject to the provisions of this
13Section unless it is registered as a broker-dealer with the
14U.S. Securities and Exchange Commission and is a member in good
15standing of the National Association of Securities Dealers, and
16(1) with respect to securities that are not issued only in
17book-entry form, (A) all such securities of each fund are
18either held in safekeeping in a place reasonably free from risk
19of destruction or held in custody by a securities depository
20that is a "clearing agency" registered with the U.S. Securities
21and Exchange Commission, (B) the dealer is a member of the
22Securities Investor Protection Corporation, (C) the dealer
23sends to each fund, no less frequently than each calendar
24quarter, an itemized statement showing the moneys and
25securities in the custody or possession of the dealer at the
26end of such period, and (D) an independent certified public

 

 

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1accountant conducts an audit, no less frequently than each
2calendar year, that reviews the dealer's internal accounting
3controls and procedures for safeguarding securities; and (2)
4with respect to securities that are issued only in book-entry
5form, (A) all such securities of each fund are held either in a
6securities depository that is a "clearing agency" registered
7with the U.S. Securities and Exchange Commission or in a bank
8that is a member of the Federal Reserve System, (B) the dealer
9records the ownership interest of the funds in such securities
10on the dealer's books and records, (C) the dealer is a member
11of the Securities Investor Protection Corporation, (D) the
12dealer sends to each fund, no less frequently than each
13calendar quarter, an itemized statement showing the moneys and
14securities in the custody or possession of the dealer at the
15end of such period, and (E) the dealer's financial statement
16(which shall contain among other things a statement of the
17dealer's net capital and its required net capital computed in
18accordance with Rule 15c3-1 under the Securities Exchange Act
19of 1934) is audited annually by an independent certified public
20accountant, and the dealer's most recent audited financial
21statement is furnished to the fund. No broker-dealer serving as
22a custodian for any public pension fund as provided by this Act
23shall be authorized to serve as an investment advisor for that
24same public pension fund as described in Section 1-101.4 of
25this Code, to the extent that the investment advisor acquires
26or disposes of any asset of that same public pension fund.

 

 

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1Notwithstanding the foregoing, in no event may a broker or
2dealer that is a natural person maintain possession of or
3control over securities or other assets of a pension fund
4subject to the provisions of this Section. In maintaining
5securities of a pension fund subject to the provisions of this
6Section, each dealer must maintain those securities in
7conformity with the provisions of Rule 15c3-3(b) of the
8Securities Exchange Act of 1934 (Physical Possession or Control
9of Securities). The Director of the Department of Insurance may
10adopt such rules and regulations as shall be necessary and
11appropriate in his or her judgment to effectuate the purposes
12of this Section.
13    A bank or trust company authorized to conduct a trust
14business in Illinois shall register, deposit, or hold
15investments for safekeeping, all in accordance with the
16obligations and subject to the limitations of the Securities in
17Fiduciary Accounts Act.
18(Source: P.A. 92-651, eff. 7-11-02.)
 
19    (40 ILCS 5/1-136 new)
20    Sec. 1-136. Fiscal year for Article 3 and Article 4 pension
21funds. For every pension fund established under Article 3 or
22Article 4 of this Code, by April 30, 2017, the fiscal year of
23the fund shall be transitioned to a fiscal year ending April
2430, 2017, so that the fund thereafter operates on a May 1st to
25April 30th fiscal year.
 

 

 

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1    (40 ILCS 5/1A-112)
2    Sec. 1A-112. Fees.
3    (a) Every pension fund that is required to file an annual
4statement under Section 1A-109 shall pay to the Department an
5annual compliance fee. In the case of a pension fund under
6Article 3 or 4 of this Code, the annual compliance fee shall be
70.04% 0.02% (4 2 basis points) of the total assets of the
8pension fund, as reported in the most current annual statement
9of the fund, but not more than $16,000 $8,000. In the case of
10all other pension funds and retirement systems, the annual
11compliance fee shall be $16,000 $8,000.
12    (b) The annual compliance fee shall be due on June 30 for
13the following State fiscal year, except that the fee payable in
141997 for fiscal year 1998 shall be due no earlier than 30 days
15following the effective date of this amendatory Act of 1997.
16    (c) Any information obtained by the Division that is
17available to the public under the Freedom of Information Act
18and is either compiled in published form or maintained on a
19computer processible medium shall be furnished upon the written
20request of any applicant and the payment of a reasonable
21information services fee established by the Director,
22sufficient to cover the total cost to the Division of
23compiling, processing, maintaining, and generating the
24information. The information may be furnished by means of
25published copy or on a computer processed or computer

 

 

SB3317- 38 -LRB099 20237 EFG 44707 b

1processible medium.
2    No fee may be charged to any person for information that
3the Division is required by law to furnish to that person.
4    (d) Except as otherwise provided in this Section, all fees
5and penalties collected by the Department under this Code shall
6be deposited into the Public Pension Regulation Fund.
7    (e) Fees collected under subsection (c) of this Section and
8money collected under Section 1A-107 shall be deposited into
9the Department's Statistical Services Revolving Fund and
10credited to the account of the Public Pension Division. This
11income shall be used exclusively for the purposes set forth in
12Section 1A-107. Notwithstanding the provisions of Section
13408.2 of the Illinois Insurance Code, no surplus funds
14remaining in this account shall be deposited in the Insurance
15Financial Regulation Fund. All money in this account that the
16Director certifies is not needed for the purposes set forth in
17Section 1A-107 of this Code shall be transferred to the Public
18Pension Regulation Fund.
19    (f) Nothing in this Code prohibits the General Assembly
20from appropriating funds from the General Revenue Fund to the
21Department for the purpose of administering or enforcing this
22Code.
23(Source: P.A. 93-32, eff. 7-1-03.)
 
24    (40 ILCS 5/1A-113)
25    Sec. 1A-113. Penalties.

 

 

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1    (a) A pension fund that fails, without just cause, to file
2its annual statement within the time prescribed under Section
31A-109 shall pay to the Department a penalty to be determined
4by the Department, which shall not exceed $100 for each day's
5delay.
6    (b) A pension fund that fails, without just cause, to file
7its actuarial statement within the time prescribed under
8Section 1A-110 or 1A-111 shall pay to the Department a penalty
9to be determined by the Department, which shall not exceed $100
10for each day's delay.
11    (c) A pension fund that fails to pay a fee within the time
12prescribed under Section 1A-112 shall pay to the Department a
13penalty of 5% of the amount of the fee for each month or part of
14a month that the fee is late. The entire penalty shall not
15exceed 25% of the fee due.
16    (c-5) Whenever the Director determines that a pension fund
17is not in compliance with Section 3-132, 3-135, 3-135.2, 4-123,
184-128.1, or 4-128.2 of this Code:
19        (1) The Director shall notify the pension fund board of
20    trustees in writing of the noncompliance.
21        (2) The board of trustees of the pension fund shall
22    take immediate steps to come into compliance with the
23    applicable provisions of the Code within 15 days of the
24    date of the notice of noncompliance.
25        (3) If the pension fund does not come into compliance
26    with the applicable provisions of the Code within 15 days

 

 

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1    of the notice, the Department shall assess a penalty of up
2    to $2,000 per day of noncompliance, to be paid by the Fund
3    within 21 days of the date of the order assessing the
4    penalty.
5        (4) A board so notified and assessed may request a
6    hearing on the noncompliance alleged in the notice within
7    15 days of the notice.
8    Any hearing held under this subsection (c-5) shall be held
9in accordance with the rules of the Illinois Department of
10Insurance.
11    (d) This subsection applies to any governmental unit or
12pension fund, as defined in Section 1A-102, that is subject to
13any law establishing a pension fund or retirement system for
14the benefit of employees of the governmental unit.
15    Whenever the Division determines by examination,
16investigation, or in any other manner that the governing body
17or any elected or appointed officer or official of a
18governmental unit has failed to comply with any provision of
19this Code that law:
20        (1) The Director shall notify in writing the governing
21    body, officer, or official of the specific provision or
22    provisions of the law with which the person has failed to
23    comply.
24        (2) Upon receipt of the notice, the person notified
25    shall take immediate steps to comply with the provisions of
26    law specified in the notice.

 

 

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1        (3) If the person notified fails to comply within a
2    reasonable time after receiving the notice, the Director
3    may hold a hearing at which the person notified may show
4    cause for noncompliance with the law.
5        (4) If upon hearing the Director determines that good
6    and sufficient cause for noncompliance has not been shown,
7    the Director may order the person to submit evidence of
8    compliance within a specified period of not less than 30
9    days.
10        (5) If evidence of compliance has not been submitted to
11    the Director within the period of time prescribed in the
12    order and no administrative appeal from the order has been
13    initiated, the Director may assess a civil penalty of up to
14    $2,000 against the governing body, officer, or official for
15    each noncompliance with an order of the Director.
16    The Director shall develop by rule, with as much
17specificity as practicable, the standards and criteria to be
18used in assessing penalties and their amounts. The standards
19and criteria shall include, but need not be limited to,
20consideration of evidence of efforts made in good faith to
21comply with applicable legal requirements. This rulemaking is
22subject to the provisions of the Illinois Administrative
23Procedure Act.
24    If a penalty is not paid within 30 days of the date of
25assessment, the Director without further notice shall report
26the act of noncompliance to the Attorney General of this State.

 

 

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1It shall be the duty of the Attorney General or, if the
2Attorney General so designates, the State's Attorney of the
3county in which the governmental unit is located to apply
4promptly by complaint on relation of the Director of Insurance
5in the name of the people of the State of Illinois, as
6plaintiff, to the circuit court of the county in which the
7governmental unit is located for enforcement of the penalty
8prescribed in this subsection or for such additional relief as
9the nature of the case and the interest of the employees of the
10governmental unit or the public may require.
11    (e) Whoever knowingly makes a false certificate, entry, or
12memorandum upon any of the books or papers pertaining to any
13pension fund or upon any statement, report, or exhibit filed or
14offered for file with the Division or the Director of Insurance
15in the course of any examination, inquiry, or investigation,
16with intent to deceive the Director, the Division, or any of
17its employees is guilty of a Class A misdemeanor.
18(Source: P.A. 90-507, eff. 8-22-97.)
 
19    (40 ILCS 5/3-125)  (from Ch. 108 1/2, par. 3-125)
20    Sec. 3-125. Financing.
21    (a) The city council or the board of trustees of the
22municipality shall annually levy a tax upon all the taxable
23property of the municipality at the rate on the dollar which
24will produce an amount which, when added to the deductions from
25the salaries or wages of police officers, and revenues

 

 

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1available from other sources, will equal a sum sufficient to
2meet the annual requirements of the police pension fund. The
3annual requirements to be provided by such tax levy are equal
4to (1) the normal cost of the pension fund for the year
5involved, plus (2) an amount sufficient to bring the total
6assets of the pension fund up to 90% of the total actuarial
7liabilities of the pension fund by the end of municipal fiscal
8year 2040, as annually updated and determined by an enrolled
9actuary employed by the Illinois Department of Insurance or by
10an enrolled actuary retained by the pension fund or the
11municipality. In making these determinations, the required
12minimum employer contribution shall be calculated each year as
13a level percentage of payroll over the years remaining up to
14and including fiscal year 2040 and shall be determined under
15the entry age normal projected unit credit actuarial cost
16method and utilizing the rate of return and asset total
17determined under Article 22A of this Code. The tax shall be
18levied and collected in the same manner as the general taxes of
19the municipality, and in addition to all other taxes now or
20hereafter authorized to be levied upon all property within the
21municipality, and shall be in addition to the amount authorized
22to be levied for general purposes as provided by Section 8-3-1
23of the Illinois Municipal Code, approved May 29, 1961, as
24amended. The tax shall be forwarded directly to the treasurer
25of the board within 30 business days after receipt by the
26county.

 

 

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1    (b) For purposes of determining the required employer
2contribution to a pension fund, the value of the pension fund's
3assets shall be equal to the actuarial value of the pension
4fund's assets, which shall be calculated as follows:
5        (1) On March 30, 2011, the actuarial value of a pension
6    fund's assets shall be equal to the market value of the
7    assets as of that date.
8        (2) In determining the actuarial value of the System's
9    assets for fiscal years after March 30, 2011, any actuarial
10    gains or losses from investment return incurred in a fiscal
11    year shall be recognized in equal annual amounts over the
12    5-year period following that fiscal year.
13    (c) If a participating municipality fails to transmit to
14the fund contributions required of it under this Article for
15more than 90 days after the payment of those contributions is
16due, the fund may, after giving notice to the municipality,
17apply to the Director of the Illinois Department of Insurance
18for intercept. The Illinois Department of Insurance shall
19certify to the State Comptroller the amounts of the delinquent
20payments in accordance with any applicable rules of the
21Illinois Department of Insurance Comptroller, and the
22Comptroller must, beginning in fiscal year 2016, deduct and
23remit to the fund the certified amounts or a portion of those
24amounts from the following proportions of payments of State
25funds to the municipality:
26        (1) in fiscal year 2016, one-third of the total amount

 

 

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1    of any payments of State funds to the municipality;
2        (2) in fiscal year 2017, two-thirds of the total amount
3    of any payments of State funds to the municipality; and
4        (3) in fiscal year 2018 and each fiscal year
5    thereafter, the total amount of any payments of State funds
6    to the municipality.
7    The State Comptroller may not deduct from any payments of
8State funds to the municipality more than the amount of
9delinquent payments certified to the State Comptroller by the
10fund.
11    (d) The police pension fund shall consist of the following
12moneys which shall be set apart by the treasurer of the
13municipality:
14        (1) All moneys derived from the taxes levied hereunder;
15        (2) Contributions by police officers under Section
16    3-125.1;
17        (3) All moneys accumulated by the municipality under
18    any previous legislation establishing a fund for the
19    benefit of disabled or retired police officers;
20        (4) Donations, gifts or other transfers authorized by
21    this Article.
22    (e) The Commission on Government Forecasting and
23Accountability shall conduct a study of all funds established
24under this Article and shall report its findings to the General
25Assembly on or before January 1, 2013. To the fullest extent
26possible, the study shall include, but not be limited to, the

 

 

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1following:
2        (1) fund balances;
3        (2) historical employer contribution rates for each
4    fund;
5        (3) the actuarial formulas used as a basis for employer
6    contributions, including the actual assumed rate of return
7    for each year, for each fund;
8        (4) available contribution funding sources;
9        (5) the impact of any revenue limitations caused by
10    PTELL and employer home rule or non-home rule status; and
11        (6) existing statutory funding compliance procedures
12    and funding enforcement mechanisms for all municipal
13    pension funds.
14(Source: P.A. 99-8, eff. 7-9-15.)
 
15    (40 ILCS 5/3-127)  (from Ch. 108 1/2, par. 3-127)
16    Sec. 3-127. Reserves.
17    (a) The board shall establish and maintain a reserve to
18insure the payment of all obligations incurred under this
19Article excluding retirement annuities established under
20Section 3-109.3. The reserve to be accumulated shall be equal
21to the estimated total actuarial requirements of the fund.
22    (b) In the case of an eligible pension fund that has
23transferred its investment authority to the Illinois State
24Board of Investment under Section 1-113.05 of this Code, the
25assets invested by the Illinois State Board of Investment on

 

 

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1behalf of the pension fund, and the dividends and other
2investment earnings attributable thereto, shall be considered
3as part of the reserve for the purposes of this Section.
4    The Illinois State Board of Investment shall report to the
5board of each such fund at least annually the financial
6information on the invested assets and earnings attributable to
7that pension fund so that the board may make the determinations
8required under this Article.
9    (c) If a pension fund has a reserve of less than the
10accrued liabilities of the fund, the board of the pension fund,
11in making its annual report to the city council or board of
12trustees of the municipality, shall designate the amount,
13calculated as a level percentage of payroll, needed annually to
14insure the accumulation of the reserve to the level of the
15fund's accrued liabilities over a period of 40 years from July
161, 1993 for pension funds then in operation, or from the date
17of establishment in the case of a fund created thereafter, so
18that the necessary reserves will be attained over such a
19period.
20(Source: P.A. 91-939, eff. 2-1-01.)
 
21    (40 ILCS 5/3-132)  (from Ch. 108 1/2, par. 3-132)
22    Sec. 3-132. To control and manage the Pension Fund.
23    (a) In accordance with the applicable provisions of
24Articles 1 and 1A and this Article, the board of trustees of
25the pension fund shall have the authority to control and

 

 

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1manage, exclusively, the following:
2        (1) the pension fund, and
3        (2) investment expenditures and income, including
4    interest dividends, capital gains and other distributions
5    on the investments, and
6        (2) (3) all money donated, paid, assessed, or provided
7    by law for the pensioning of disabled and retired police
8    officers, their surviving spouses, minor children, and
9    dependent parents. All such money received or collected
10    shall be credited by the treasurer of the municipality to
11    the State Treasurer's account of the pension fund and held
12    by the State for purposes of investment pursuant to Article
13    22A of this Code.
14    (b) Pursuant to rules adopted under Article 22A of this
15Code, the board of trustees of an eligible pension fund shall
16make periodic written application to the Illinois State Board
17of Investment for receipt and deposit of reserves into the
18pension fund. Reserves in the amount of 3 months' current
19liabilities, including annuity and benefit payments and
20operational expenses owed by the fund, shall be held by the
21treasurer of the municipality subject to the order and control
22of the board. The treasurer of the municipality shall maintain
23a record of all money received, transferred, and held for the
24account of the board.
25    (c) In case of any dispute that may arise between the board
26of trustees of the eligible pension fund and the Illinois State

 

 

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1Board of Investment pursuant to subsection (b) of this Section,
2the board of trustees of the eligible pension fund shall appeal
3the dispute to the Director of the Illinois Department of
4Insurance. If the Director finds that there exists a good faith
5dispute between the parties, the Director may hold a hearing in
6accordance with the rules of the Illinois Department of
7Insurance.
8(Source: P.A. 90-507, eff. 8-22-97.)
 
9    (40 ILCS 5/3-135)  (from Ch. 108 1/2, par. 3-135)
10    Sec. 3-135. To invest, manage, and transfer funds.
11    (a) Except as provided in subsection (b), Beginning January
121, 1998, the board shall invest funds in accordance with
13Sections 1-113.1 through 1-113.10 of this Code.
14     Any pension fund that does not meet the definition of
15eligible pension fund under Section 1-101.6 of this Code shall
16retain the authority to control and manage investment
17expenditures and income, including interest, dividends,
18capital gains, and other distributions on the investments.
19    (b) The board of an eligible pension fund that receives a
20certified investment asset list under Section 3-135.1 shall
21cease investment activities upon receiving the certified
22investment asset list and shall transfer all investment assets,
23minus assets needed to comply with subsection (b) of Section
243-132, to the Illinois State Board of Investment in the manner
25prescribed by rules adopted by the Illinois State Board of

 

 

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1Investment under Article 22A. Upon completion of the transfer
2described in this subsection, the investment authority of the
3board shall terminate.
4(Source: P.A. 90-507, eff. 8-22-97.)
 
5    (40 ILCS 5/3-135.1 new)
6    Sec. 3-135.1. Certified investment asset list.
7    (a) Within 18 months of the effective date of this
8amendatory Act of the 99th General Assembly, the Department of
9Insurance shall audit the investment assets of each eligible
10pension fund established under this Article to determine a
11certified investment asset list. The audit shall be performed
12by a certified public accountant. The board of the pension fund
13shall defray the expense of the audit.
14    (b) Upon completion of the audit, the Department shall
15provide the certified investment asset list to the eligible
16pension fund and the Illinois State Board of Investment. The
17Department may adopt rules governing the g=creation and
18distribution of the certified investment asset list.
 
19    (40 ILCS 5/3-135.2 new)
20    Sec. 3-135.2. To transfer investment funds. At each
21quarterly meeting of the Board, the Board of trustees of any
22eligible pension fund shall transfer any available funds for
23investment to the Illinois State Board of Investment in
24accordance with provisions of Article 22A of this Code. Each

 

 

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1transfer shall be made within 30 days of the end of the fiscal
2year quarter and written notice of the transfer shall be given
3to the Illinois State Board of Investment.
 
4    (40 ILCS 5/4-118)  (from Ch. 108 1/2, par. 4-118)
5    Sec. 4-118. Financing.
6    (a) The city council or the board of trustees of the
7municipality shall annually levy a tax upon all the taxable
8property of the municipality at the rate on the dollar which
9will produce an amount which, when added to the deductions from
10the salaries or wages of firefighters and revenues available
11from other sources, will equal a sum sufficient to meet the
12annual actuarial requirements of the pension fund, as
13determined by an enrolled actuary employed by the Illinois
14Department of Insurance or by an enrolled actuary retained by
15the pension fund or municipality. For the purposes of this
16Section, the annual actuarial requirements of the pension fund
17are equal to (1) the normal cost of the pension fund, or 17.5%
18of the salaries and wages to be paid to firefighters for the
19year involved, whichever is greater, plus (2) an annual amount
20sufficient to bring the total assets of the pension fund up to
2190% of the total actuarial liabilities of the pension fund by
22the end of municipal fiscal year 2040, as annually updated and
23determined by an enrolled actuary employed by the Illinois
24Department of Insurance or by an enrolled actuary retained by
25the pension fund or the municipality. In making these

 

 

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1determinations, the required minimum employer contribution
2shall be calculated each year as a level percentage of payroll
3over the years remaining up to and including fiscal year 2040
4and shall be determined under the entry age normal projected
5unit credit actuarial cost method and utilizing the rate of
6return and asset total determined under Article 22A of this
7Code. The amount to be applied towards the amortization of the
8unfunded accrued liability in any year shall not be less than
9the annual amount required to amortize the unfunded accrued
10liability, including interest, as a level percentage of payroll
11over the number of years remaining in the 40 year amortization
12period.
13    (a-5) For purposes of determining the required employer
14contribution to a pension fund, the value of the pension fund's
15assets shall be equal to the actuarial value of the pension
16fund's assets, which shall be calculated as follows:
17        (1) On March 30, 2011, the actuarial value of a pension
18    fund's assets shall be equal to the market value of the
19    assets as of that date.
20        (2) In determining the actuarial value of the pension
21    fund's assets for fiscal years after March 30, 2011, any
22    actuarial gains or losses from investment return incurred
23    in a fiscal year shall be recognized in equal annual
24    amounts over the 5-year period following that fiscal year.
25    (b) The tax shall be levied and collected in the same
26manner as the general taxes of the municipality, and shall be

 

 

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1in addition to all other taxes now or hereafter authorized to
2be levied upon all property within the municipality, and in
3addition to the amount authorized to be levied for general
4purposes, under Section 8-3-1 of the Illinois Municipal Code or
5under Section 14 of the Fire Protection District Act. The tax
6shall be forwarded directly to the treasurer of the board
7within 30 business days of receipt by the county (or, in the
8case of amounts added to the tax levy under subsection (f),
9used by the municipality to pay the employer contributions
10required under subsection (b-1) of Section 15-155 of this
11Code).
12    (b-5) If a participating municipality fails to transmit to
13the fund contributions required of it under this Article for
14more than 90 days after the payment of those contributions is
15due, the fund may, after giving notice to the municipality,
16apply to the Director of the Illinois Department of Insurance
17for intercept. The Illinois Department of Insurance shall
18certify to the State Comptroller the amounts of the delinquent
19payments in accordance with any applicable rules of the
20Illinois Department of Insurance Comptroller, and the
21Comptroller must, beginning in fiscal year 2016, deduct and
22remit to the fund the certified amounts or a portion of those
23amounts from the following proportions of payments of State
24funds to the municipality:
25        (1) in fiscal year 2016, one-third of the total amount
26    of any payments of State funds to the municipality;

 

 

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1        (2) in fiscal year 2017, two-thirds of the total amount
2    of any payments of State funds to the municipality; and
3        (3) in fiscal year 2018 and each fiscal year
4    thereafter, the total amount of any payments of State funds
5    to the municipality.
6    The State Comptroller may not deduct from any payments of
7State funds to the municipality more than the amount of
8delinquent payments certified to the State Comptroller by the
9fund.
10    (c) The board shall make available to the membership and
11the general public for inspection and copying at reasonable
12times the most recent Actuarial Valuation Balance Sheet and Tax
13Levy Requirement issued to the fund by the Department of
14Insurance.
15    (d) The firefighters' pension fund shall consist of the
16following moneys which shall be set apart by the treasurer of
17the municipality: (1) all moneys derived from the taxes levied
18hereunder; (2) contributions by firefighters as provided under
19Section 4-118.1; (3) all rewards in money, fees, gifts, and
20emoluments that may be paid or given for or on account of
21extraordinary service by the fire department or any member
22thereof, except when allowed to be retained by competitive
23awards; and (4) any money, real estate or personal property
24received by the board.
25    (e) For the purposes of this Section, "enrolled actuary"
26means an actuary: (1) who is a member of the Society of

 

 

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1Actuaries or the American Academy of Actuaries; and (2) who is
2enrolled under Subtitle C of Title III of the Employee
3Retirement Income Security Act of 1974, or who has been engaged
4in providing actuarial services to one or more public
5retirement systems for a period of at least 3 years as of July
61, 1983.
7    (f) The corporate authorities of a municipality that
8employs a person who is described in subdivision (d) of Section
94-106 may add to the tax levy otherwise provided for in this
10Section an amount equal to the projected cost of the employer
11contributions required to be paid by the municipality to the
12State Universities Retirement System under subsection (b-1) of
13Section 15-155 of this Code.
14    (g) The Commission on Government Forecasting and
15Accountability shall conduct a study of all funds established
16under this Article and shall report its findings to the General
17Assembly on or before January 1, 2013. To the fullest extent
18possible, the study shall include, but not be limited to, the
19following:
20        (1) fund balances;
21        (2) historical employer contribution rates for each
22    fund;
23        (3) the actuarial formulas used as a basis for employer
24    contributions, including the actual assumed rate of return
25    for each year, for each fund;
26        (4) available contribution funding sources;

 

 

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1        (5) the impact of any revenue limitations caused by
2    PTELL and employer home rule or non-home rule status; and
3        (6) existing statutory funding compliance procedures
4    and funding enforcement mechanisms for all municipal
5    pension funds.
6(Source: P.A. 99-8, eff. 7-9-15.)
 
7    (40 ILCS 5/4-120)  (from Ch. 108 1/2, par. 4-120)
8    Sec. 4-120. Reserves.
9    (a) The board shall establish and maintain a reserve to
10insure the payment of all obligations incurred under this
11Article. The reserve to be accumulated shall be equal to the
12estimated total actuarial requirements of the Fund.
13    (b) In the case of an eligible pension fund that has
14transferred its investment authority to the Illinois State
15Board of Investment under Section 1-113.05 of this Code, the
16assets invested by the Illinois State Board of Investment on
17behalf of the pension fund, and the dividends and other
18investment earnings attributable thereto, shall be considered
19as part of the reserve for the purposes of this Section.
20    The Illinois State Board of Investment shall report to the
21board of each such fund at least annually the financial
22information on the invested assets and earnings to that pension
23fund so that the board may make the determinations required
24under this Article.
25(Source: P.A. 83-1440.)
 

 

 

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1    (40 ILCS 5/4-123)  (from Ch. 108 1/2, par. 4-123)
2    Sec. 4-123. To control and manage the Pension Fund.
3    (a) In accordance with the applicable provisions of
4Articles 1 and 1A and this Article the board of trustees of the
5pension fund shall have the authority, to control and manage,
6exclusively, the following:
7        (1) the pension fund, and
8        (2) investment expenditures and income, including
9    interest dividends, capital gains, and other distributions
10    on the investments, and
11        (2) (3) all money donated, paid, assessed, or provided
12    by law for the pensioning of disabled and retired
13    firefighters, their surviving spouses, minor children, and
14    dependent parents. All such money received or collected
15    shall be credited by the treasurer of the municipality to
16    the State Treasurer's account of the pension fund and held
17    by the State for purposes of investment pursuant to Article
18    22A of this Code.
19    (b) Pursuant to rules adopted under Article 22A of this
20Code, the board of trustees of an eligible pension fund shall
21make periodic written application to the Illinois State Board
22of Investment for receipt and deposit of reserves into the
23pension fund. Reserves in the amount of 3 months' current
24liabilities, including annuity and benefit payments and
25operational expenses owed by the fund, shall be held by the

 

 

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1treasurer of the municipality subject to the order and control
2of the board. The treasurer of the municipality shall maintain
3a record of all money received, transferred, and held for the
4account of the board.
5    (c) In case of any dispute that may arise between the board
6of trustees of any eligible pension fund and the Illinois State
7Board of Investment pursuant to subsection (b) of this Section,
8the board of trustees of the pension fund shall appeal the
9dispute to the Director of the Illinois Department of
10Insurance. If the Director finds good faith dispute between the
11parties, the Director may hold a hearing in accordance with the
12rules of the Illinois Department of Insurance.
13(Source: P.A. 90-507, eff. 8-22-97.)
 
14    (40 ILCS 5/4-128)  (from Ch. 108 1/2, par. 4-128)
15    Sec. 4-128. To invest and transfer funds.
16    (a) Except as provided in subsection (b), Beginning January
171, 1998, the board shall invest funds in accordance with
18Sections 1-113.1 through 1-113.10 of this Code.
19     Any pension fund that does not meet the definition of
20eligible pension fund under Section 1-101.6 of this Code shall
21retain the authority to control and manage investment
22expenditures and income, including interest, dividends,
23capital gains, and other distributions on the investments.
24    (b) The board of an eligible pension fund that receives a
25certified investment asset list under Section 4-128.1 shall

 

 

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1cease investment activities upon receiving the certified
2investment asset list and shall transfer all investment assets,
3minus assets needed to comply with subsection (b) of Section
44-123, to the Illinois State Board of Investment in the manner
5prescribed by rules adopted by the Illinois State Board of
6Investment under Article 22A. Upon completion of the transfer
7described in this subsection, the investment authority of the
8board shall terminate.
9(Source: P.A. 90-507, eff. 8-22-97.)
 
10    (40 ILCS 5/4-128.1 new)
11    Sec. 4-128.1. Certified investment asset list.
12    (a) Within 18 months of the effective date of this
13amendatory Act of the 99th General Assembly, the Department of
14Insurance shall audit the investment assets of each eligible
15pension fund established under this Article to determine a
16certified investment asset list. The audit shall be performed
17by a certified public accountant. The board of the pension fund
18shall defray the expense of the audit.
19    (b) Upon completion of the audit, the Department shall
20provide the certified investment asset list to the eligible
21pension fund and the Illinois State Board of Investment. The
22Department may adopt rules governing the creation and
23distribution of the certified investment asset list.
 
24    (40 ILCS 5/4-128.2 new)

 

 

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1    Sec. 4-128.2. To transfer investment funds. At each
2quarterly meeting of the Board, the Board of trustees of any
3eligible pension fund shall transfer any available funds for
4investment to the Illinois State Board of Investment in
5accordance with provisions of Article 22A of this Code. Each
6transfer shall be made within 30 days of the end of the fiscal
7year quarter and written notice of the transfer shall be given
8to the Illinois State Board of Investment.
 
9    (40 ILCS 5/22A-110.1 new)
10    Sec. 22A-110.1. Emergency rulemaking. In order to provide
11for the expeditious and timely implementation of the provisions
12of this amendatory Act of the 99th General Assembly, emergency
13rules to implement the changes made may be adopted by the
14Illinois State Board of Investment.
 
15    (40 ILCS 5/22A-113)  (from Ch. 108 1/2, par. 22A-113)
16    Sec. 22A-113. Transfer of securities and investment
17functions. (a) As soon as possible or practicable following the
18enactment of this Article and prior to July 1, 1970, the
19trustees of the State Employees' Retirement System, the General
20Assembly Retirement System and the Judges Retirement System,
21shall transfer to this board for management and investment all
22of their securities or for which commitments have been made,
23and all funds, assets or moneys representing permanent or
24temporary investments, or cash reserves maintained for the

 

 

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1purpose of obtaining income thereon.
2    (b) The board of trustees or retirement board of any
3pension fund or retirement system, other than those established
4under Article 3 or Article 4 of this Code, electing to come
5under the authority of the Illinois State Board of Investment
6for the management of its investments and the performance of
7investment functions previously performed by such board of that
8pension fund or retirement system shall effect a transfer of
9securities and other assets thereof not later than the first
10day of the 4th month next following the date of such election
11after completion of an audit by a certified public accountant
12of such securities and other assets as authorized by the
13Illinois State Board of Investment and approved by the Auditor
14General of the State, the expense of which shall be assumed by
15the pension fund or retirement system. Upon such transfer, the
16authority of The Illinois State Board of Investment in the case
17of such pension fund or retirement system is effective. These
18transfers shall be receipted for in detail by the Chairman and
19director of the board.
20    (c) The board of trustees or retirement board of any
21pension fund or retirement system, other than those established
22under Article 3 or Article 4 of this Code, authorized under the
23Illinois Pension Code to participate in any commingled
24investment fund or funds established and managed by the
25Illinois State Board of Investment under this Article may
26invest in such commingled investment fund or funds upon written

 

 

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1notice to the Illinois State Board of Investment. The board of
2trustees of the Illinois Bank Examiners' Education Foundation
3is authorized to participate in any commingled investment fund
4or funds established and managed by the Illinois State Board of
5Investment upon providing written notice to the Illinois State
6Board of Investment. Any participation in a commingled fund and
7the management thereof shall be in accordance with the
8governing law and the rules, policies and directives of the
9Illinois State Board of Investment.
10(Source: P.A. 84-1127.)
 
11    (40 ILCS 5/22A-113.1)  (from Ch. 108 1/2, par. 22A-113.1)
12    Sec. 22A-113.1. Investable funds.
13    (a) Each retirement system under the management of the
14Illinois State Board of Investment, except those established
15pursuant to Articles 3 and 4 of this Code, shall report to the
16board from time to time the amounts of funds available for
17investment. These amounts shall be transferred immediately to
18the State Treasurer or his authorized agent for the account of
19the board to be applied for investment by the board. Notice to
20the Illinois State Board of Investment of each such transfer
21shall be given by the retirement system as the transfer occurs.
22    (b) Each pension fund established under Article 3 and 4 of
23this Code that is under the investment authority of the board
24shall report to the Illinois State Board of Investment, at the
25end of each quarter of the pension fund's fiscal year, the

 

 

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1amount of funds available for investment. These amounts shall
2be transferred within 30 days of the end of the quarter to the
3Illinois State Board of Investment in a manner prescribed by
4the board. Notice to the Illinois State Board of Investment of
5each such transfer shall be given by the pension fund as the
6transfer occurs.
7(Source: P.A. 78-646.)
 
8    (40 ILCS 5/22A-113.4 new)
9    Sec. 22A-113.4. Transfer from Article 3 or 4 fund.
10    (a) Upon receipt of a certified investment asset list
11provided under Section 3-135.1 or 4-128.1 of this Code for an
12eligible pension fund, the Illinois State Board of Investment
13shall, as soon as practicable, initiate the transfer of assets
14from the board of trustees of that fund, and the board shall
15transfer to the Illinois State Board of Investment for
16management and investment all of its securities including
17securities for which commitments have been made, and all funds,
18assets, or money representing permanent or temporary
19investments, and cash reserves maintained for the purpose of
20obtaining income thereon.
21    (b) Upon the transfer of securities and assets from a board
22of trustees under this Section, the custody and control of the
23Illinois State Board of Investment over the present and future
24assets of the pension fund shall take effect. The transfer
25shall be receipted for in detail by the Illinois State Board of

 

 

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1Investment and the receipt shall be provided to the board of
2trustees of the pension fund within 30 days of the effective
3date of the transfer.
 
4    (40 ILCS 5/22A-115)  (from Ch. 108 1/2, par. 22A-115)
5    Sec. 22A-115. Audits and reports.
6    (1) At least annually, the books, records, accounts and
7securities of the board shall be audited by a certified public
8accountant designated by the Auditor General of the State. The
9audit opinion shall be published as a part of the annual report
10of the board.
11    (2) For the quarterly periods ending September 30, December
1231, and March 31, the board shall submit to each pension fund,
13retirement system or education fund under its jurisdiction,
14other than a pension fund established under Article 3 or 4 of
15this Code, a report embracing, among other things, the
16following information: (a) a full description of the
17investments acquired, showing average costs; (b) a full
18description of the securities sold or exchanged, showing
19average proceeds or other conditions of an exchange; (c) gains
20or losses realized during the period; (d) income from
21investments; (e) administrative expenses of the board; and (f)
22the proportion of administrative expenses allocable to each
23pension fund, retirement system or education fund.
24    (3) An annual report shall be prepared by the board for
25submission to each pension fund, retirement system or education

 

 

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1fund under its jurisdiction within 6 months after the close of
2each fiscal year. A fiscal year shall date from July 1 of one
3year to June 30 of the year next following. This report shall
4embody full information concerning the results of investment
5operations of the board for the year, including the foregoing
6information and, in addition thereto, the following:
7        (a) a listing of the investments held by the board as
8    at the end of the year showing their book values and market
9    values and their income yields on market values;
10        (b) the amounts as determined under paragraph (a) above
11    allocable to each pension fund or education fund managed by
12    the board;
13        (c) comments on the pertinent factors affecting the
14    operations of the board for the year;
15        (d) a review of the policies maintained by the board
16    and any changes therein that occurred during the year;
17        (e) a copy of the audited financial statements for the
18    year;
19        (f) recommendations for possible changes in the law
20    governing the operations of the board; and
21        (g) a listing of the names of securities brokers and
22    dealers dealt with during the year showing the total amount
23    of commissions received by each on transactions with the
24    board.
25A copy of the annual report shall be filed with the Illinois
26Department of Insurance, Public Pension Division.

 

 

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1(Source: P.A. 84-1127.)
 
2    (40 ILCS 5/22A-115.1 new)
3    Sec. 22A-115.1. Audit of transition. Within 6 months of the
4transfer of investment assets from an eligible pension fund
5established under Article 3 or 4 of this Code to the control of
6the Board, the books, records, accounts, and securities of the
7board shall be audited by a certified public accountant
8designated by the Illinois Auditor General. The audit shall
9include, but is not limited to, the following:
10        (i) a full description of the investments acquired,
11    showing average costs;
12        (ii) a full description of the securities sold or
13    exchanged, showing average proceeds or other conditions of
14    an exchange;
15        (iii) gains or losses realized during the period;
16        (iv) income from investments;
17        (v) administrative expenses of the board; and
18        (vi) the proportion of administrative expenses
19    allocable to each pension fund.
20    The audit report shall be published on the Board's website
21and filed with the Illinois Department of Insurance.
 
22    Section 90. The State Mandates Act is amended by adding
23Section 8.40 as follows:
 

 

 

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1    (30 ILCS 805/8.40 new)
2    Sec. 8.40. Exempt mandate. Notwithstanding Sections 6 and 8
3of this Act, no reimbursement by the State is required for the
4implementation of any mandate created by this amendatory Act of
5the 99th General Assembly.

 

 

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1 INDEX
2 Statutes amended in order of appearance
3    5 ILCS 100/5-45from Ch. 127, par. 1005-45
4    40 ILCS 5/1-101.6 new
5    40 ILCS 5/1-101.7 new
6    40 ILCS 5/1-109.3
7    40 ILCS 5/1-113.05 new
8    40 ILCS 5/1-113.1
9    40 ILCS 5/1-113.2
10    40 ILCS 5/1-113.3
11    40 ILCS 5/1-113.4
12    40 ILCS 5/1-113.4a
13    40 ILCS 5/1-113.5
14    40 ILCS 5/1-113.6
15    40 ILCS 5/1-113.7
16    40 ILCS 5/1-136 new
17    40 ILCS 5/1A-112
18    40 ILCS 5/1A-113
19    40 ILCS 5/3-125from Ch. 108 1/2, par. 3-125
20    40 ILCS 5/3-127from Ch. 108 1/2, par. 3-127
21    40 ILCS 5/3-132from Ch. 108 1/2, par. 3-132
22    40 ILCS 5/3-135from Ch. 108 1/2, par. 3-135
23    40 ILCS 5/3-135.1 new
24    40 ILCS 5/3-135.2 new
25    40 ILCS 5/4-118from Ch. 108 1/2, par. 4-118

 

 

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1    40 ILCS 5/4-120from Ch. 108 1/2, par. 4-120
2    40 ILCS 5/4-123from Ch. 108 1/2, par. 4-123
3    40 ILCS 5/4-128from Ch. 108 1/2, par. 4-128
4    40 ILCS 5/4-128.1 new
5    40 ILCS 5/4-128.2 new
6    40 ILCS 5/22A-110.1 new
7    40 ILCS 5/22A-113from Ch. 108 1/2, par. 22A-113
8    40 ILCS 5/22A-113.1from Ch. 108 1/2, par. 22A-113.1
9    40 ILCS 5/22A-113.4 new
10    40 ILCS 5/22A-115from Ch. 108 1/2, par. 22A-115
11    40 ILCS 5/22A-115.1 new
12    30 ILCS 805/8.40 new