HB4737 94TH GENERAL ASSEMBLY

LRB094 15647 AMC 50853 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
HB4737

Introduced 01/12/06, by Rep. John E. Bradley

SYNOPSIS AS INTRODUCED:

40 ILCS 5/1A-108.5 new
40 ILCS 5/15-167	from Ch. 108 1/2, par. 15-167

Amends the Illinois Pension Code. Provides that it is the public policy of the State of Illinois to encourage the pension funds, and any State agency investing funds on behalf of pension funds, to promote the economy of Illinois through the use of economic opportunity investments while managing their assets to the greatest extent feasible within the bounds of financial and fiduciary prudence. Provides that each pension fund, except pension funds created under the Downstate Police and Firefighters Articles of the Code, shall submit a report to the Governor and the General Assembly by September 1 of each year that identifies the economic opportunity investments made by the fund, the primary location of the business or project, the percentage of the fund's assets in economic opportunity investments, and the actions that the fund has undertaken to increase the use of economic opportunity investments, including encouraging other investment managers to make economic opportunity investments through subcontractors. Requires certain pension funds, and any State agency investing funds on behalf of those pension funds, to make all reasonable efforts to invest a minimum of 5% of pension fund assets in economic opportunity investments. Effective immediately.

FISCAL NOTE ACT MAY APPLY

PENSION IMPACT NOTE ACT MAY APPLY

STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

A BILL FOR

AN ACT concerning public employee benefits.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Pension Code is amended by adding Section 1A-108.5 and by changing Section 15-167 as follows:

(40 ILCS 5/1A-108.5 new)

Sec. 1A-108.5. Economic opportunity investments.

(a) For the purposes of this Section:

"Economic opportunity investment" means a qualified investment, managed passively or actively by the pension fund, that promotes economic development within the State of Illinois through investments in companies, individuals, partnerships, projects, and financially prudent investment opportunities in Illinois businesses or Illinois-based projects that promote the economy of the State or a region of the State, including without limitation promotion of venture capital programs, coal and other natural resource development, tourism development, infrastructure development, real estate development, and job development within the State of Illinois, while producing a competitive rate of return commensurate with the risk of investment.

"Illinois business" means a business that meets any of the following criteria:

(1) Conducts 25% or more of its business within the State.

(2) Fifty percent or more of its employees are employed in Illinois.

(3) Twenty-five percent of the real property owned by the business is located within the State.

"Illinois-based project" means an individual project of a business that will result in the conduct of business within the State, the employment of individuals within the State, or the acquisition of real property located within the State.

(b) It is the public policy of the State of Illinois to encourage the pension funds, and any State agency investing funds on behalf of pension funds, to promote the economy of Illinois through the use of economic opportunity investments while managing their assets to the greatest extent feasible within the bounds of financial and fiduciary prudence.

(c) Each pension fund, except pension funds created under Articles 3 and 4 of this Code, shall submit a report to the Governor and the General Assembly by September 1 of each year that identifies the economic opportunity investments made by the fund, the primary location of the business or project, the percentage of the fund's assets in economic opportunity investments, and the actions that the fund has undertaken to increase the use of economic opportunity investments, including encouraging other investment managers to make economic opportunity investments through subcontractors.

(d) Pension funds created under Articles 2, 14, 15, 16, and 18 of this Act, and any State agency investing funds on behalf of those pension funds, must make all reasonable efforts to invest a minimum of 5% of pension fund assets in economic opportunity investments. If a pension fund invests less than 5% of pension fund assets in economic opportunity investments, then the pension fund must include the reason it could not meet this minimum in the report required under subsection (c).

(e) In making economic opportunity investments, trustees and fiduciaries must comply with the relevant requirements and restrictions set forth in Sections 1-109, 1-109.1, 1-109.2, 1-110, and 1-111 of this Code. Economic opportunity investments that otherwise comply with this Code shall not be deemed imprudent solely because it is an investment in an Illinois business or Illinois-based project.

(40 ILCS 5/15-167) (from Ch. 108 1/2, par. 15-167)

Sec. 15-167. To invest money. To invest the funds of the system, subject to the requirements and restrictions set forth in Sections 1-108.5, 1-109, 1-109.1, 1-109.2, 1-110, 1-111, 1-114, 1-115, and 15-158.2(d) of this Code and to invest in real estate acquired by purchase, gift, condemnation or otherwise, and any office building or buildings existing or to be constructed thereon, including any additions thereto or expansions thereof, for the use of the system. The board may lease surplus space in any of the buildings and use rental proceeds for operation, maintenance, improving, expanding and furnishing of the buildings or for any other lawful system purpose.

No bank or savings and loan association shall receive investment funds as permitted by this Section, unless it has complied with the requirements established pursuant to Section 6 of "An Act relating to certain investments of public funds by public agencies", approved July 23, 1943, as now or hereafter amended. The limitations set forth in such Section 6 shall be applicable only at the time of investment and shall not require the liquidation of any investment at any time.

The board shall have the authority to enter into such agreements and to execute such documents as it determines to be necessary to complete any investment transaction.

All investments shall be clearly held and accounted for to indicate ownership by the board. The board may direct the registration of securities in its own name or in the name of a nominee created for the express purpose of registration of securities by a national or state bank or trust company authorized to conduct a trust business in the State of Illinois.

Investments shall be carried at cost or at a value determined in accordance with generally accepted accounting principles and accounting procedures approved by the Board.

All additions to assets from income, interest, and dividends from investments shall be used to pay benefits, operating and administrative expenses of the system, debt service, including any redemption premium, on any bonds issued by the board, expenses incurred or deposits required in connection with such bonds, and such other costs as may be provided in accordance with this Article.

(Source: P.A. 90-19, eff. 6-20-97; 90-766, eff. 8-14-98.)

Section 99. Effective date. This Act takes effect upon becoming law.