093_SB0518

 
                                     LRB093 09288 EFG 09521 b

 1        AN ACT in relation to 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
 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
11    of  trustees  of  a  retirement  system   or   pension   fund
12    established 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
16        pension 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
23    not  transfer  its  investment  authority,  nor  transfer the
24    assets of the fund to any other  person  or  entity  for  the
25    purpose of consolidating or merging its assets and management
26    with  any  other pension fund or public investment authority,
27    unless the board  resolution  authorizing  such  transfer  is
28    submitted  for approval to the contributors and pensioners of
29    the fund at elections held not less than 30  days  after  the
30    adoption of such resolution by the board, and such resolution
31    is  approved  by a majority of the votes cast on the question
 
                            -2-      LRB093 09288 EFG 09521 b
 1    in  both  the  contributors  election  and   the   pensioners
 2    election.    The   election   procedures  and  qualifications
 3    governing  the  election  of  trustees   shall   govern   the
 4    submission  of resolutions for approval under this paragraph,
 5    insofar as they may be made applicable.
 6        (3)   Pursuant to subsections (h) and (i) of Section 6 of
 7    Article VII of  the  Illinois  Constitution,  the  investment
 8    authority  of  boards  of  trustees of retirement systems and
 9    pension funds established under this Code is declared to be a
10    subject of exclusive State jurisdiction, and  the  concurrent
11    exercise  by  a  home  rule  unit of any power affecting such
12    investment  authority  is  hereby  specifically  denied   and
13    preempted.
14        (4)  For  the purposes of this Code, "emerging investment
15    manager" means a qualified investment adviser that manages an
16    investment portfolio of at least $10,000,000  but  less  than
17    $400,000,000  on  January  1,  1993  and is a "minority owned
18    business" or "female  owned  business"  as  those  terms  are
19    defined  in  the Business Enterprise for Minorities, Females,
20    and Persons with Disabilities Act.
21        It is hereby declared to be  the  public  policy  of  the
22    State  of  Illinois  to  encourage  the  trustees  of  public
23    employee   retirement  systems  to  use  emerging  investment
24    managers in managing their system's assets  to  the  greatest
25    extent  feasible within the bounds of financial and fiduciary
26    prudence,  and  to  take  affirmative  steps  to  remove  any
27    barriers to the full  participation  of  emerging  investment
28    managers   in  investment  opportunities  afforded  by  those
29    retirement systems.
30        Each retirement system subject to this Code shall prepare
31    a report to be submitted to  the  Governor  and  the  General
32    Assembly  by  September  1  of  each  year.  The report shall
33    identify the emerging investment managers used by the system,
34    the percentage of the system's assets  under  the  investment
 
                            -3-      LRB093 09288 EFG 09521 b
 1    control  of  emerging investment managers, and the actions it
 2    has undertaken to increase the  use  of  emerging  investment
 3    managers,  including encouraging other investment managers to
 4    use emerging investment managers as subcontractors  when  the
 5    opportunity arises.
 6        The  use  of  an  emerging  investment  manager  does not
 7    constitute  a  transfer  of  investment  authority  for   the
 8    purposes of subsection (2) of this Section.
 9        (5)  Beginning  no  later than July 1, 2004, the Illinois
10    State Board of Investment and the board of trustees  of  each
11    retirement system or pension fund established under this Code
12    shall allocate its brokerage business, on an annual basis, as
13    follows:
14             (i)  At least 30% of its brokerage business shall be
15        allocated  to  Illinois  brokerage  or investment banking
16        firms.
17             (ii)  At least 25% of its brokerage  business  shall
18        be  allocated to Illinois brokerage or investment banking
19        firms that are minority owned businesses  as  defined  in
20        the  Business  Enterprise  for  Minorities,  Females, and
21        Persons with Disabilities Act.
22             (iii)  At least 5% of its brokerage  business  shall
23        be  allocated to Illinois brokerage or investment banking
24        firms that are female owned businesses as defined in  the
25        Business  Enterprise for Minorities, Females, and Persons
26        with Disabilities Act.
27             (iv)  To the extent practicable, at least 25% of its
28        non-Illinois brokerage business  shall  be  allocated  to
29        brokerage  or  investment banking firms that are minority
30        owned businesses or female owned businesses as defined in
31        the Business  Enterprise  for  Minorities,  Females,  and
32        Persons with Disabilities Act.
33    (Source: P.A. 92-16, eff. 6-28-01.)
 
                            -4-      LRB093 09288 EFG 09521 b
 1        Section  99.  Effective date.  This Act takes effect upon
 2    becoming law.