TITLE 74: PUBLIC FINANCE
CHAPTER VII: ILLINOIS STATE BOARD OF INVESTMENT
PART 800 RULES AND REGULATIONS OF THE BOARD
SECTION 800.140 COMMITTEES

 

Section 800.140  Committees

 

a)         Executive Committee

 

1)         There shall be an Executive Committee of the Board, consisting of the Chair, Vice Chair, and Recording Secretary and one other member of the Board, who shall serve for a two-year term and who shall be elected at an annual meeting following the election of officers. The Recording Secretary shall serve as Secretary of the Committee.

 

2)         The Executive Committee has the authority to conduct all business of the Board during the interim between Board meetings and report that business at the next Board meeting for ratification by the Board. The Executive Committee shall resolve any questions of procedure in the interim between meetings of the Board, propose to the Board changes in policy, and recommend to the Board changes in the statute governing the Board with the view of bringing about improved total return on investments consistent with the high standards of safety required in the investment of public funds. Recommendations may also be made by the Committee for possible extension of the scope of authority of the Board to include other pension or trust funds.

 

b)         Audit and Compliance Committee

 

1)         There shall be an Audit and Compliance Committee of the Board, consisting of such members of the Board as the Chair of the Board shall appoint, and who shall serve a term to end at the time of the next annual meeting of the Board following the election of officers. The Board shall determine delegation of Committee responsibilities. (Examples of such delegation include formally communicating with the Illinois Auditor General, creating the Board's internal ethics code, and ensuring compliance with Illinois ethics laws.)

 

2)         The Committee will elect a Committee Chair to whom the Committee may delegate only those responsibilities as have been approved in advance by the Board.

 

3)         Additional responsibilities of the Audit and Compliance Committee shall be to maintain supervision over all accounting related activities of the Board, including but not limited to regular liaison with the Office of the Auditor General, independent auditors and accounting consultants to the Board. In addition, the Committee will participate in the review of the Board's activities by the Legislative Audit Commission and the Auditor General.

 

4)         The Audit and Compliance Committee shall have oversight responsibility for all matters relating to the Illinois Ethics Act.  The Chair of the Committee shall be the designated Ethics Officer for Board members and staff.  The Committee shall develop and make recommendations to the Board regarding policies and procedures for internal codes of ethics for both the Board and Staff members, consistent with the State Officials and Employees Ethics Act [5 ILCS 430].

 

5)         The Committee will recommend changes in accounting policy for Board consideration.

 

6)         The Committee shall meet as often as necessary in the discretion of the Board or the Chair of the Committee, so long as the meeting is in compliance with the Open Meetings Act.  All Board members shall be encouraged to attend and participate.

 

c)         Investment Policy Committee

 

1)         There shall be an Investment Policy Committee of the Board, consisting of such members of the Board as the Chair of the Board shall appoint, and who shall serve a term to end at the time of the next annual meeting of the Board following the election of officers. The Board shall determine delegation of Committee responsibilities. (Examples of such delegation include interviewing investment management firms that are finalists in the Board's competitive bidding process and recommending policies pertaining to the Board's investments, such as the Board's asset allocation study.)

 

2)         It shall be the responsibility of the Committee:

 

A)        to recommend investment policy to the Board, both at its regularly scheduled meetings and whenever recommendations appear, in the judgment of the Committee, to be necessary or desirable;

 

B)        for the ongoing and specific supervision of the internal investment process, including but not limited to advance approval of all long-term investment transactions not falling within certain delegatory guidelines established by Board action; and

 

C)        for ongoing liaison with external investment advisors, together with recommendations concerning the tenure, compensation, fund direction, and retention of the advisors.

 

3)         The Investment Policy Committee shall elect a Chair and a Vice Chair, to whom the Committee may delegate only those responsibilities as have been approved in advance by the Board.

 

4)         The Committee shall meet as often as necessary in the discretion of the Board or the Chair of the Committee, so long as the meeting is in compliance with the Open Meetings Act.  All Board members shall be encouraged to attend and participate.

 

5)         The Committee shall advise  the Board when the Committee believes it is appropriate that non-Board members with investment and economic expertise participate in Committee affairs.

 

6)         The Board Chair will be an ex-officio, voting member of the Committee.

 

            d)         Emerging Manager Committee

 

1)         There shall be an Emerging Manager Committee of the Board, consisting of such members of the Board as the Chair of the Board shall appoint, and who shall serve a term to end at the next annual meeting of the Board following the election of officers.  The Board shall determine the Committee's responsibilities.  (Examples of such delegation include interviewing emerging managers and recommending policies pertaining to the Board's investments, such as the Board's Minority Brokerage Policy or Targeted Investment Policy.)

 

2)         An "emerging manager" is a qualified investment adviser that manages an investment portfolio of at least $10,000,000, but less than $10,000,000,000, and is a "minority owned business", "female owned business" or business owned by a person with a disability, as those terms are defined in the Business Enterprise for Minorities, Females and Persons with Disabilities Act [30 ILCS 575/2(A)(3), (4) and (4.1).

 

3)         It shall be the policy of the Committee:

 

A)        to increase access to and business with emerging managers;

 

B)         to allocate at least 5% of fund assets to emerging managers, consistent with statutes;

 

C)         to encourage emerging managers to grow assets under their management, outperform the applicable benchmark index, and eventually move into the core portfolio.

 

4)         It shall be the responsibility of the Committee:

 

A)         to interview emerging manager applicants for specific asset classes;

 

B)         to function as ongoing liaison with emerging managers, together with recommendations concerning the tenure, compensation, fund direction, and retention of emerging managers;

 

C)         to recommend emerging manager policy to the Board, both at its regularly scheduled meetings and whenever those recommendations appear, in the judgment of the Committee, to be necessary or desirable;

 

D)         to conduct other duties as assigned by the Board.

 

5)         The Committee will elect a Chair to whom the Committee may delegate only those responsibilities as have been approved in advance by the Board.

 

6)         The Committee shall meet as often as necessary, in the discretion of the Board or the Chair of the Committee, so long as the meetings are in compliance with the Open Meeting Act.  All Board members shall be encouraged to attend and participate.

 

(Source:  Amended at 35 Ill. Reg. 13915, effective August 1, 2011)