Full Text of SB0452 98th General Assembly
SB0452enr 98TH GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning public employee benefits.
| 2 | | Be it enacted by the People of the State of Illinois, | 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Pension Code is amended by changing | 5 | | Section 1-109.1 and by adding Section 1-113.21 as follows:
| 6 | | (40 ILCS 5/1-109.1) (from Ch. 108 1/2, par. 1-109.1)
| 7 | | Sec. 1-109.1. Allocation and Delegation of Fiduciary | 8 | | Duties.
| 9 | | (1) Subject to the provisions of Section 22A-113 of this | 10 | | Code and
subsections (2) and (3) of this Section, the board of | 11 | | trustees of a
retirement system or pension fund established | 12 | | under this Code may:
| 13 | | (a) Appoint one or more investment managers as | 14 | | fiduciaries to manage
(including the power to acquire and | 15 | | dispose of) any assets of the
retirement system or pension | 16 | | fund; and
| 17 | | (b) Allocate duties among themselves and designate | 18 | | others as fiduciaries
to carry out specific fiduciary | 19 | | activities other than the management of the
assets of the | 20 | | retirement system or pension fund.
| 21 | | (2) The board of trustees of a pension fund established | 22 | | under Article 5, 6,
8, 9, 10, 11, 12 or 17 of this Code may not | 23 | | transfer its investment authority,
nor transfer the assets of |
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| 1 | | the fund to any other person or entity for the
purpose of | 2 | | consolidating or merging its assets and management with any | 3 | | other
pension fund or public investment authority, unless the | 4 | | board resolution
authorizing such transfer is submitted for | 5 | | approval to the contributors and
pensioners of the fund at | 6 | | elections held not less than 30 days after the
adoption of such | 7 | | resolution by the board, and such resolution is approved by a
| 8 | | majority of the votes cast on the question in both the | 9 | | contributors election
and the pensioners election. The | 10 | | election procedures and qualifications
governing the election | 11 | | of trustees shall govern the submission of resolutions
for | 12 | | approval under this paragraph, insofar as they may be made | 13 | | applicable.
| 14 | | (3) Pursuant to subsections (h) and (i) of Section 6 of | 15 | | Article VII of
the Illinois Constitution, the investment | 16 | | authority of boards of trustees
of retirement systems and | 17 | | pension funds established under this Code is declared
to be a | 18 | | subject of exclusive State jurisdiction, and the concurrent | 19 | | exercise
by a home rule unit of any power affecting such | 20 | | investment authority is
hereby specifically denied and | 21 | | preempted.
| 22 | | (4) For the purposes of this Code, "emerging investment | 23 | | manager" means a
qualified investment adviser that manages an | 24 | | investment portfolio of at
least $10,000,000 but less than | 25 | | $10,000,000,000 and is a
"minority owned business", "female | 26 | | owned business" or "business owned by a person with a |
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| 1 | | disability" as those terms are
defined in the Business | 2 | | Enterprise for Minorities,
Females, and Persons with | 3 | | Disabilities Act.
| 4 | | It is hereby declared to be the public policy of the State | 5 | | of Illinois to
encourage the trustees of public employee | 6 | | retirement systems, pension funds, and investment boards
to use | 7 | | emerging investment managers in managing their system's | 8 | | assets, encompassing all asset classes, and increase the | 9 | | racial, ethnic, and gender diversity of its fiduciaries, to the
| 10 | | greatest extent feasible within the bounds of financial and | 11 | | fiduciary
prudence, and to take affirmative steps to remove any | 12 | | barriers to the full
participation in investment opportunities
| 13 | | afforded by those retirement systems, pension funds, and | 14 | | investment boards.
| 15 | | On or before January 1, 2010, a retirement system, pension | 16 | | fund, or investment board subject to this Code, except those | 17 | | whose investments are restricted by Section 1-113.2 of this | 18 | | Code, shall adopt a policy that sets forth goals for | 19 | | utilization of emerging investment managers. This policy shall | 20 | | include quantifiable goals for the management of assets in | 21 | | specific asset classes by emerging investment managers. The | 22 | | retirement system, pension fund, or investment board shall | 23 | | establish 3 separate goals for: (i) emerging investment | 24 | | managers that are minority owned businesses; (ii) emerging | 25 | | investment managers that are female owned businesses; and (iii) | 26 | | emerging investment managers that are businesses owned by a |
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| 1 | | person with a disability. The goals established shall be based | 2 | | on the percentage of total dollar amount of investment service | 3 | | contracts let to minority owned businesses, female owned | 4 | | businesses, and businesses owned by a person with a disability, | 5 | | as those terms are defined in the Business Enterprise for | 6 | | Minorities, Females, and Persons with Disabilities Act. The | 7 | | retirement system, pension fund, or investment board shall | 8 | | annually review the goals established under this subsection. | 9 | | If in any case an emerging investment manager meets the | 10 | | criteria established by a board for a specific search and meets | 11 | | the criteria established by a consultant for that search, then | 12 | | that emerging investment manager shall receive an invitation by | 13 | | the board of trustees, or an investment committee of the board | 14 | | of trustees, to present his or her firm for final consideration | 15 | | of a contract. In the case where multiple emerging investment | 16 | | managers meet the criteria of this Section, the staff may | 17 | | choose the most qualified firm or firms to present to the | 18 | | board.
| 19 | | The use of an emerging investment manager does not | 20 | | constitute a transfer
of investment authority for the purposes | 21 | | of subsection (2) of this Section.
| 22 | | (5) Each retirement system, pension fund, or investment | 23 | | board subject to this Code, except those whose investments are | 24 | | restricted by Section 1-113.2 of this Code, shall establish a | 25 | | policy that sets forth goals for increasing the racial, ethnic, | 26 | | and gender diversity of its fiduciaries, including its |
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| 1 | | consultants and senior staff. Each system, fund, and investment | 2 | | board shall annually review the goals established under this | 3 | | subsection. | 4 | | (6) On or before January 1, 2010, a retirement system, | 5 | | pension fund, or investment board subject to this Code, except | 6 | | those whose investments are restricted by Section 1-113.2 of | 7 | | this Code, shall adopt a policy that sets forth goals for | 8 | | utilization of businesses owned by minorities, females, and | 9 | | persons with disabilities for all contracts and services. The | 10 | | goals established shall be based on the percentage of total | 11 | | dollar amount of all contracts let to minority owned | 12 | | businesses, female owned businesses, and businesses owned by a | 13 | | person with a disability, as those terms are defined in the | 14 | | Business Enterprise for Minorities, Females, and Persons with | 15 | | Disabilities Act. The retirement system, pension fund, or | 16 | | investment board shall annually review the goals established | 17 | | under this subsection. | 18 | | (7) On or before January 1, 2010, a retirement system, | 19 | | pension fund, or investment board subject to this Code, except | 20 | | those whose investments are restricted by Section 1-113.2 of | 21 | | this Code, shall adopt a policy that sets forth goals for | 22 | | increasing the utilization of minority broker-dealers. For the | 23 | | purposes of this Code, "minority broker-dealer" means a | 24 | | qualified broker-dealer who meets the definition of "minority | 25 | | owned business", "female owned business", or "business owned by | 26 | | a person with a disability", as those terms are defined in the |
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| 1 | | Business Enterprise for Minorities, Females, and Persons with | 2 | | Disabilities Act. The retirement system, pension fund, or | 3 | | investment board shall annually review the goals established | 4 | | under this Section. | 5 | | (8) Each retirement system, pension fund, and investment | 6 | | board subject to this Code, except those whose investments are | 7 | | restricted by Section 1-113.2 of this Code, shall submit a | 8 | | report to the Governor and the General Assembly by January 1 of | 9 | | each year that includes the following: (i) the policy adopted | 10 | | under subsection (4) of this Section, including the names and | 11 | | addresses of the emerging investment managers used, percentage | 12 | | of the assets under the investment control of emerging | 13 | | investment managers for the 3 separate goals, and the actions | 14 | | it has undertaken to increase the use of emerging investment | 15 | | managers, including encouraging other investment managers to | 16 | | use emerging investment managers as subcontractors when the | 17 | | opportunity arises; (ii) the policy adopted under subsection | 18 | | (5) of this Section; (iii) the policy adopted under subsection | 19 | | (6) of this Section; and (iv) the policy adopted under | 20 | | subsection (7) of this Section, including specific actions | 21 | | undertaken to increase the use of minority broker-dealers ; and | 22 | | (v) the policy adopted under subsection (9) of this Section . | 23 | | (9) On or before February 1, 2015, a retirement system, | 24 | | pension fund, or investment board subject to this Code, except | 25 | | those whose investments are restricted by Section 1-113.2 of | 26 | | this Code, shall adopt a policy that sets forth goals for |
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| 1 | | increasing the utilization of minority investment managers. | 2 | | For the purposes of this Code, "minority investment manager" | 3 | | means a qualified investment manager that manages an investment | 4 | | portfolio and meets the definition of "minority owned | 5 | | business", "female owned business", or "business owned by a | 6 | | person with a disability", as those terms are defined in the | 7 | | Business Enterprise for Minorities, Females, and Persons with | 8 | | Disabilities Act. | 9 | | It is hereby declared to be the public policy of the State | 10 | | of Illinois to
encourage the trustees of public employee | 11 | | retirement systems, pension funds, and investment boards
to use | 12 | | minority investment managers in managing their systems' | 13 | | assets, encompassing all asset classes, and to increase the | 14 | | racial, ethnic, and gender diversity of their fiduciaries, to | 15 | | the
greatest extent feasible within the bounds of financial and | 16 | | fiduciary
prudence, and to take affirmative steps to remove any | 17 | | barriers to the full
participation in investment opportunities
| 18 | | afforded by those retirement systems, pension funds, and | 19 | | investment boards. | 20 | | The retirement system, pension fund, or investment board | 21 | | shall establish 3 separate goals for: (i) minority investment | 22 | | managers that are minority owned businesses; (ii) minority | 23 | | investment managers that are female owned businesses; and (iii) | 24 | | minority investment managers that are businesses owned by a | 25 | | person with a disability. The retirement system, pension fund, | 26 | | or investment board shall annually review the goals established |
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| 1 | | under this Section. | 2 | | If in any case a minority investment manager meets the | 3 | | criteria established by a board for a specific search and meets | 4 | | the criteria established by a consultant for that search, then | 5 | | that minority investment manager shall receive an invitation by | 6 | | the board of trustees, or an investment committee of the board | 7 | | of trustees, to present his or her firm for final consideration | 8 | | of a contract. In the case where multiple minority investment | 9 | | managers meet the criteria of this Section, the staff may | 10 | | choose the most qualified firm or firms to present to the | 11 | | board. | 12 | | The use of a minority investment manager does not | 13 | | constitute a transfer
of investment authority for the purposes | 14 | | of subsection (2) of this Section. | 15 | | (Source: P.A. 96-6, eff. 4-3-09.)
| 16 | | (40 ILCS 5/1-113.21 new) | 17 | | Sec. 1-113.21. Contracts for services. | 18 | | (a) Beginning January 1, 2015, no contract, oral or | 19 | | written, for investment services, consulting services, or | 20 | | commitment to a private market fund shall be awarded by a | 21 | | retirement system, pension fund, or investment board | 22 | | established under this Code unless the investment advisor, | 23 | | consultant, or private market fund first discloses: | 24 | | (1) the number of its investment and senior staff and | 25 | | the percentage of its investment and senior staff who are |
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| 1 | | (i) a minority person, (ii) a female, and (iii) a person | 2 | | with a disability; and | 3 | | (2) the number of contracts, oral or written, for | 4 | | investment services, consulting services, and professional | 5 | | and artistic services that the investment advisor, | 6 | | consultant, or private market fund has with (i) a minority | 7 | | owned business, (ii) a female owned business, or (iii) a | 8 | | business owned by a person with a disability; and | 9 | | (3) the number of contracts, oral or written, for | 10 | | investment services, consulting services, and professional | 11 | | and artistic services the investment advisor, consultant, | 12 | | or private market fund has with a business other than (i) a | 13 | | minority owned business, (ii) a female owned business or | 14 | | (iii) a business owned by a person with a disability, if | 15 | | more than 50% of services performed pursuant to the | 16 | | contract are performed by (i) a minority person, (ii) a | 17 | | female, and (iii) a person with a disability. | 18 | | (b) The disclosures required by this Section shall be | 19 | | considered, within the bounds of financial and fiduciary | 20 | | prudence, prior to the awarding of a contract, oral or written, | 21 | | for investment services, consulting services, or commitment to | 22 | | a private market fund. | 23 | | (c) For the purposes of this Section, the terms "minority | 24 | | person", "female", "person
with a disability", "minority owned | 25 | | business", "female owned business", and
"business owned by a | 26 | | person with a disability" have the same meaning as those
terms |
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| 1 | | have in the Business Enterprise for Minorities, Females, and | 2 | | Persons
with Disabilities Act. | 3 | | (d) For purposes of this Section, the term "private market | 4 | | fund" means any private equity fund, private equity fund of | 5 | | funds, venture capital fund, hedge fund, hedge fund of funds, | 6 | | real estate fund, or other investment vehicle that is not | 7 | | publicly traded. | 8 | | Section 10. The Illinois Prepaid Tuition Act is amended by | 9 | | changing Section 30 as follows:
| 10 | | (110 ILCS 979/30)
| 11 | | Sec. 30. Investment Advisory Panel duties and | 12 | | responsibilities.
| 13 | | (a) Advice and review. The panel shall offer advice and | 14 | | counseling
regarding
the
investments of the Illinois prepaid | 15 | | tuition program with the objective of
obtaining the best | 16 | | possible return on investments consistent with actuarial
| 17 | | soundness of the
program. The panel is required to annually | 18 | | review and advise the Commission
on provisions of the strategic | 19 | | investment plan for the prepaid tuition program.
The panel is | 20 | | also charged with reviewing and advising the Commission with
| 21 | | regard to the annual report that describes the current | 22 | | financial condition of
the program. The panel at its own | 23 | | discretion also may advise the Commission on
other aspects of | 24 | | the program.
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| 1 | | (b) Investment plan. The Commission annually shall adopt
a | 2 | | comprehensive investment plan for purposes of this Section. The
| 3 | | comprehensive investment plan shall specify the investment | 4 | | policies to be
utilized by the Commission in its administration | 5 | | of the Illinois Prepaid
Tuition Trust
Fund created by Section | 6 | | 35. The Commission may direct that assets of those
Funds be | 7 | | placed in
savings accounts or may use the same to purchase | 8 | | fixed or variable life
insurance or annuity contracts, | 9 | | securities, evidence of indebtedness, or other
investment | 10 | | products pursuant to the comprehensive investment plan and in | 11 | | such
proportions as may be designated or approved under that | 12 | | plan.
The Commission shall invest such assets with the care, | 13 | | skill, prudence, and
diligence under the circumstances then | 14 | | prevailing that a prudent man acting in
a like capacity and | 15 | | familiar with such matters would use in the conduct of an
| 16 | | enterprise of a like character with like aims, and the | 17 | | Commission shall
diversify the investments of such assets so as | 18 | | to minimize the risk of large
losses, unless under the | 19 | | circumstances it is clearly prudent not to do so.
Those | 20 | | insurance,
annuity, savings, and investment products shall be | 21 | | underwritten and offered in
compliance with applicable federal | 22 | | and State laws, rules, and regulations
by persons who are | 23 | | authorized thereunder to provide those services. The
| 24 | | Commission shall delegate responsibility for preparing the | 25 | | comprehensive
investment plan to the Executive Director of the | 26 | | Commission. Nothing in this
Section shall
preclude the |
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| 1 | | Commission from contracting with a private corporation or
| 2 | | institution to provide such services as may be a part of the | 3 | | comprehensive
investment plan or as may be deemed necessary for | 4 | | implementation of the
comprehensive investment plan, | 5 | | including, but not limited to, providing
consolidated billing, | 6 | | individual and collective record keeping and accounting,
and | 7 | | asset purchase, control, and safekeeping.
| 8 | | (b-5) Investment duties. Beginning January 1, 2015, with | 9 | | respect to any investments for which it is responsible under | 10 | | this Section or any other law, the Commission shall be subject | 11 | | to the same requirements as are imposed upon the board of | 12 | | trustees of a
retirement system under Sections 1-109.1(5.1), | 13 | | 1-109.1(9), and 1-113.21 of the Illinois Pension Code, to the | 14 | | extent that those requirements are not in direct conflict with | 15 | | any other requirement of law to which the Commission is | 16 | | subject. | 17 | | (c) Program management. The Commission may not delegate its
| 18 | | management functions, but may arrange to compensate for | 19 | | personalized investment
advisory services rendered with | 20 | | respect to any or all of the investments under
its control an | 21 | | investment advisor registered under Section 8 of the Illinois
| 22 | | Securities Law of 1953 or any bank or other entity authorized | 23 | | by law to provide
those services. Nothing contained herein | 24 | | shall preclude the Commission from
subscribing to general | 25 | | investment research services available for
purchase or use by | 26 | | others. The Commission also shall have authority to
compensate
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| 1 | | for accounting, computing, and other necessary services.
| 2 | | (d) Annual report. The Commission shall annually prepare or | 3 | | cause to be
prepared a report setting forth in appropriate
| 4 | | detail an accounting of all Illinois prepaid tuition program | 5 | | funds and a
description of the financial condition of the | 6 | | program at the close of each
fiscal year. Included in this | 7 | | report shall be an evaluation by at least one
nationally | 8 | | recognized
actuary of the financial viability of the program. | 9 | | This report
shall be submitted to the Governor, the President | 10 | | of
the Senate, the Speaker of the House of Representatives, the | 11 | | Auditor General,
and the Board of Higher Education on or before | 12 | | March 1 of the subsequent fiscal
year. This report also shall | 13 | | be made available to purchasers of Illinois
prepaid tuition | 14 | | contracts and shall contain complete Illinois prepaid tuition
| 15 | | contract sales information,
including, but not limited to, | 16 | | projected postsecondary enrollment data for
qualified | 17 | | beneficiaries.
| 18 | | (e) Marketing plan. Selection of a marketing agent for the | 19 | | Illinois
prepaid tuition program must be approved by the | 20 | | Commission. At least once
every 3
years, the Commission shall | 21 | | solicit proposals
for marketing of the Illinois prepaid tuition | 22 | | program in accordance with the
Illinois Securities Law of 1953 | 23 | | and any applicable provisions of federal law.
The entity | 24 | | designated pursuant to this paragraph shall serve as a | 25 | | centralized
marketing agent for the program and shall have | 26 | | exclusive responsibility for
marketing the program. No |
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| 1 | | contract for marketing the Illinois prepaid tuition
program | 2 | | shall extend for longer than 3 years. Any materials produced | 3 | | for the
purpose of marketing the program shall be submitted to | 4 | | the Executive Director
of the Commission for approval before | 5 | | they are made public. Any eligible
institution may distribute | 6 | | marketing materials produced for the program, so
long as the | 7 | | Executive Director of the Commission approves the distribution | 8 | | in
advance. Neither
the State nor the Commission shall be | 9 | | liable for
misrepresentation of the program by a marketing | 10 | | agent.
| 11 | | (f) Accounting and audit. The Commission shall annually | 12 | | cause to be
prepared an accounting of the trust and shall | 13 | | transmit a copy of the accounting
to the Governor, the | 14 | | President of the Senate, the Speaker of the
House, and the | 15 | | minority leaders of the Senate and House of
Representatives. | 16 | | The Commission shall also make available this accounting of
the | 17 | | trust to any purchaser of an Illinois prepaid tuition contract, | 18 | | upon
request. The accounts of the Illinois prepaid tuition | 19 | | program shall be subject
to annual audits by the Auditor | 20 | | General or a certified public accountant
appointed by the | 21 | | Auditor General.
| 22 | | (Source: P.A. 96-1282, eff. 7-26-10.)
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