Full Text of HB4412 100th General Assembly
HB4412sam001 100TH GENERAL ASSEMBLY | Sen. Elgie R. Sims, Jr. Filed: 5/17/2018
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| 1 | | AMENDMENT TO HOUSE BILL 4412
| 2 | | AMENDMENT NO. ______. Amend House Bill 4412 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 5. The Illinois Pension Code is amended by | 5 | | changing Section 1-109.1 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
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| 1 | | (b) Allocate duties among themselves and designate | 2 | | others as fiduciaries
to carry out specific fiduciary | 3 | | activities other than the management of the
assets of the | 4 | | retirement system or pension fund.
| 5 | | (2) The board of trustees of a pension fund established | 6 | | under Article 5, 6,
8, 9, 10, 11, 12 or 17 of this Code may not | 7 | | transfer its investment authority,
nor transfer the assets of | 8 | | the fund to any other person or entity for the
purpose of | 9 | | consolidating or merging its assets and management with any | 10 | | other
pension fund or public investment authority, unless the | 11 | | board resolution
authorizing such transfer is submitted for | 12 | | approval to the contributors and
pensioners of the fund at | 13 | | elections held not less than 30 days after the
adoption of such | 14 | | resolution by the board, and such resolution is approved by a
| 15 | | majority of the votes cast on the question in both the | 16 | | contributors election
and the pensioners election. The | 17 | | election procedures and qualifications
governing the election | 18 | | of trustees shall govern the submission of resolutions
for | 19 | | approval under this paragraph, insofar as they may be made | 20 | | applicable.
| 21 | | (3) Pursuant to subsections (h) and (i) of Section 6 of | 22 | | Article VII of
the Illinois Constitution, the investment | 23 | | authority of boards of trustees
of retirement systems and | 24 | | pension funds established under this Code is declared
to be a | 25 | | subject of exclusive State jurisdiction, and the concurrent | 26 | | exercise
by a home rule unit of any power affecting such |
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| 1 | | investment authority is
hereby specifically denied and | 2 | | preempted.
| 3 | | (4) For the purposes of this Code, "emerging investment | 4 | | manager" means a
qualified investment adviser that manages an | 5 | | investment portfolio of at
least $10,000,000 but less than | 6 | | $10,000,000,000 and is a
"minority-owned business", | 7 | | "women-owned business" or "business owned by a person with a | 8 | | disability" as those terms are
defined in the Business | 9 | | Enterprise for Minorities, Women, and Persons with | 10 | | Disabilities Act.
| 11 | | It is hereby declared to be the public policy of the State | 12 | | of Illinois to
encourage the trustees of public employee | 13 | | retirement systems, pension funds, and investment boards
to use | 14 | | emerging investment managers in managing their system's | 15 | | assets, encompassing all asset classes, and increase the | 16 | | racial, ethnic, and gender diversity of its fiduciaries, to the
| 17 | | greatest extent feasible within the bounds of financial and | 18 | | fiduciary
prudence, and to take affirmative steps to remove any | 19 | | barriers to the full
participation in investment opportunities
| 20 | | afforded by those retirement systems, pension funds, and | 21 | | investment boards.
| 22 | | On or before January 1, 2010, a retirement system, pension | 23 | | fund, or investment board subject to this Code, except those | 24 | | whose investments are restricted by Section 1-113.2 of this | 25 | | Code, shall adopt a policy that sets forth goals for | 26 | | utilization of emerging investment managers. This policy shall |
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| 1 | | include quantifiable goals for the management of assets in | 2 | | specific asset classes by emerging investment managers. The | 3 | | retirement system, pension fund, or investment board shall | 4 | | establish 3 separate goals for: (i) emerging investment | 5 | | managers that are minority-owned businesses; (ii) emerging | 6 | | investment managers that are women-owned businesses; and (iii) | 7 | | emerging investment managers that are businesses owned by a | 8 | | person with a disability. The goals established shall be based | 9 | | on the percentage of total dollar amount of investment service | 10 | | contracts let to minority-owned businesses, women-owned | 11 | | businesses, and businesses owned by a person with a disability, | 12 | | as those terms are defined in the Business Enterprise for | 13 | | Minorities, Women, and Persons with Disabilities Act. The | 14 | | retirement system, pension fund, or investment board shall | 15 | | annually review the goals established under this subsection. | 16 | | If in any case an emerging investment manager meets the | 17 | | criteria established by a board for a specific search and meets | 18 | | the criteria established by a consultant for that search, then | 19 | | that emerging investment manager shall receive an invitation by | 20 | | the board of trustees, or an investment committee of the board | 21 | | of trustees, to present his or her firm for final consideration | 22 | | of a contract. In the case where multiple emerging investment | 23 | | managers meet the criteria of this Section, the staff may | 24 | | choose the most qualified firm or firms to present to the | 25 | | board.
| 26 | | The use of an emerging investment manager does not |
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| 1 | | constitute a transfer
of investment authority for the purposes | 2 | | of subsection (2) of this Section.
| 3 | | (5) Each retirement system, pension fund, or investment | 4 | | board subject to this Code, except those whose investments are | 5 | | restricted by Section 1-113.2 of this Code, shall establish a | 6 | | policy that sets forth goals for increasing the racial, ethnic, | 7 | | and gender diversity of its fiduciaries, including its | 8 | | consultants and senior staff. Each retirement system, pension | 9 | | fund, or
investment board shall make its best efforts to ensure | 10 | | that
the racial and ethnic makeup of its senior administrative
| 11 | | staff represents the racial and ethnic makeup of its
| 12 | | membership. Each system, fund, and investment board shall | 13 | | annually review the goals established under this subsection. | 14 | | (6) On or before January 1, 2010, a retirement system, | 15 | | pension fund, or investment board subject to this Code, except | 16 | | those whose investments are restricted by Section 1-113.2 of | 17 | | this Code, shall adopt a policy that sets forth goals for | 18 | | utilization of businesses owned by minorities, women, and | 19 | | persons with disabilities for all contracts and services. The | 20 | | goals established shall be based on the percentage of total | 21 | | dollar amount of all contracts let to minority-owned | 22 | | businesses, women-owned businesses, and businesses owned by a | 23 | | person with a disability, as those terms are defined in the | 24 | | Business Enterprise for Minorities, Women, and Persons with | 25 | | Disabilities Act. The retirement system, pension fund, or | 26 | | investment board shall annually review the goals established |
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| 1 | | under this subsection. | 2 | | (7) On or before January 1, 2010, a retirement system, | 3 | | pension fund, or investment board subject to this Code, except | 4 | | those whose investments are restricted by Section 1-113.2 of | 5 | | this Code, shall adopt a policy that sets forth goals for | 6 | | increasing the utilization of minority broker-dealers. For the | 7 | | purposes of this Code, "minority broker-dealer" means a | 8 | | qualified broker-dealer who meets the definition of | 9 | | "minority-owned business", "women-owned business", or | 10 | | "business owned by a person with a disability", as those terms | 11 | | are defined in the Business Enterprise for Minorities, Women, | 12 | | and Persons with Disabilities Act. The retirement system, | 13 | | pension fund, or investment board shall annually review the | 14 | | goals established under this Section. | 15 | | (8) Each retirement system, pension fund, and investment | 16 | | board subject to this Code, except those whose investments are | 17 | | restricted by Section 1-113.2 of this Code, shall submit a | 18 | | report to the Governor and the General Assembly by January 1 of | 19 | | each year that includes the following: (i) the policy adopted | 20 | | under subsection (4) of this Section, including the names and | 21 | | addresses of the emerging investment managers used, percentage | 22 | | of the assets under the investment control of emerging | 23 | | investment managers for the 3 separate goals, and the actions | 24 | | it has undertaken to increase the use of emerging investment | 25 | | managers, including encouraging other investment managers to | 26 | | use emerging investment managers as subcontractors when the |
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| 1 | | opportunity arises; (ii) the policy adopted under subsection | 2 | | (5) of this Section; (iii) the policy adopted under subsection | 3 | | (6) of this Section; (iv) the policy adopted under subsection | 4 | | (7) of this Section, including specific actions undertaken to | 5 | | increase the use of minority broker-dealers; and (v) the policy | 6 | | adopted under subsection (9) of this Section. | 7 | | (9) On or before February 1, 2015, a retirement system, | 8 | | pension fund, or investment board subject to this Code, except | 9 | | those whose investments are restricted by Section 1-113.2 of | 10 | | this Code, shall adopt a policy that sets forth goals for | 11 | | increasing the utilization of minority investment managers. | 12 | | For the purposes of this Code, "minority investment manager" | 13 | | means a qualified investment manager that manages an investment | 14 | | portfolio and meets the definition of "minority-owned | 15 | | business", "women-owned business", or "business owned by a | 16 | | person with a disability", as those terms are defined in the | 17 | | Business Enterprise for Minorities, Women, and Persons with | 18 | | Disabilities Act. | 19 | | It is hereby declared to be the public policy of the State | 20 | | of Illinois to
encourage the trustees of public employee | 21 | | retirement systems, pension funds, and investment boards
to use | 22 | | minority investment managers in managing their systems' | 23 | | assets, encompassing all asset classes, and to increase the | 24 | | racial, ethnic, and gender diversity of their fiduciaries, to | 25 | | the
greatest extent feasible within the bounds of financial and | 26 | | fiduciary
prudence, and to take affirmative steps to remove any |
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| 1 | | barriers to the full
participation in investment opportunities
| 2 | | afforded by those retirement systems, pension funds, and | 3 | | investment boards. | 4 | | The retirement system, pension fund, or investment board | 5 | | shall establish 3 separate goals for: (i) minority investment | 6 | | managers that are minority-owned businesses; (ii) minority | 7 | | investment managers that are women-owned businesses; and (iii) | 8 | | minority investment managers that are businesses owned by a | 9 | | person with a disability. The retirement system, pension fund, | 10 | | or investment board shall annually review the goals established | 11 | | under this Section. | 12 | | If in any case a minority investment manager meets the | 13 | | criteria established by a board for a specific search and meets | 14 | | the criteria established by a consultant for that search, then | 15 | | that minority investment manager shall receive an invitation by | 16 | | the board of trustees, or an investment committee of the board | 17 | | of trustees, to present his or her firm for final consideration | 18 | | of a contract. In the case where multiple minority investment | 19 | | managers meet the criteria of this Section, the staff may | 20 | | choose the most qualified firm or firms to present to the | 21 | | board. | 22 | | The use of a minority investment manager does not | 23 | | constitute a transfer
of investment authority for the purposes | 24 | | of subsection (2) of this Section. | 25 | | (10) Beginning January 1, 2016, it shall be the | 26 | | aspirational goal for a retirement system, pension fund, or |
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| 1 | | investment board subject to this Code to use emerging | 2 | | investment managers for not less than 20% of the total funds | 3 | | under management. Furthermore, it shall be the aspirational | 4 | | goal that not less than 20% of investment advisors be | 5 | | minorities, women, and persons with disabilities as those terms | 6 | | are defined in the Business Enterprise for Minorities, Women, | 7 | | and Persons with Disabilities Act. It shall be the aspirational | 8 | | goal to utilize businesses owned by minorities, women, and | 9 | | persons with disabilities for not less than 20% of contracts | 10 | | awarded for "information technology services", "accounting | 11 | | services", "insurance brokers", "architectural and engineering | 12 | | services", and "legal services" as those terms are defined in | 13 | | the Act. | 14 | | (Source: P.A. 99-462, eff. 8-25-15; 100-391, eff. 8-25-17.)
| 15 | | Section 99. Effective date. This Act takes effect upon | 16 | | becoming law.".
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