101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB2060

 

Introduced 2/15/2019, by Sen. Iris Y. Martinez

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/1-109.1  from Ch. 108 1/2, par. 1-109.1

    Amends the General Provisions Article of the Illinois Pension Code. In a provision requiring a retirement system, pension fund, or investment board to adopt a policy setting forth goals for the utilization of emerging investment managers, provides that the goals established shall be based on the percentage of total fees paid under (instead of the total dollar amount of) investment contracts let to minority-owned businesses, women-owned businesses, and businesses owned by a person with a disability. Requires the goals to be established on or before January 1, 2020. Effective immediately.


LRB101 06198 RPS 51222 b

FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB2060LRB101 06198 RPS 51222 b

1    AN ACT concerning public employee benefits.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Pension Code is amended by changing
5Section 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
8duties.
9    (1) Subject to the provisions of Section 22A-113 of this
10Code and subsections (2) and (3) of this Section, the board of
11trustees of a retirement system or pension fund established
12under 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
22under Article 5, 6, 8, 9, 10, 11, 12 or 17 of this Code may not
23transfer its investment authority, nor transfer the assets of

 

 

SB2060- 2 -LRB101 06198 RPS 51222 b

1the fund to any other person or entity for the purpose of
2consolidating or merging its assets and management with any
3other pension fund or public investment authority, unless the
4board resolution authorizing such transfer is submitted for
5approval to the contributors and pensioners of the fund at
6elections held not less than 30 days after the adoption of such
7resolution by the board, and such resolution is approved by a
8majority of the votes cast on the question in both the
9contributors election and the pensioners election. The
10election procedures and qualifications governing the election
11of trustees shall govern the submission of resolutions for
12approval under this paragraph, insofar as they may be made
13applicable.
14    (3) Pursuant to subsections (h) and (i) of Section 6 of
15Article VII of the Illinois Constitution, the investment
16authority of boards of trustees of retirement systems and
17pension funds established under this Code is declared to be a
18subject of exclusive State jurisdiction, and the concurrent
19exercise by a home rule unit of any power affecting such
20investment authority is hereby specifically denied and
21preempted.
22    (4) For the purposes of this Code, "emerging investment
23manager" means a qualified investment adviser that manages an
24investment portfolio of at least $10,000,000 but less than
25$10,000,000,000 and is a "minority-owned business",
26"women-owned business" or "business owned by a person with a

 

 

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1disability" as those terms are defined in the Business
2Enterprise for Minorities, Women, and Persons with
3Disabilities Act.
4    It is hereby declared to be the public policy of the State
5of Illinois to encourage the trustees of public employee
6retirement systems, pension funds, and investment boards to use
7emerging investment managers in managing their system's
8assets, encompassing all asset classes, and increase the
9racial, ethnic, and gender diversity of its fiduciaries, to the
10greatest extent feasible within the bounds of financial and
11fiduciary prudence, and to take affirmative steps to remove any
12barriers to the full participation in investment opportunities
13afforded by those retirement systems, pension funds, and
14investment boards.
15    On or before January 1, 2020 2010, a retirement system,
16pension fund, or investment board subject to this Code, except
17those whose investments are restricted by Section 1-113.2 of
18this Code, shall adopt a policy that sets forth goals for
19utilization of emerging investment managers. This policy shall
20include quantifiable goals for the management of assets in
21specific asset classes by emerging investment managers. The
22retirement system, pension fund, or investment board shall
23establish 3 separate goals for: (i) emerging investment
24managers that are minority-owned businesses; (ii) emerging
25investment managers that are women-owned businesses; and (iii)
26emerging investment managers that are businesses owned by a

 

 

SB2060- 4 -LRB101 06198 RPS 51222 b

1person with a disability. The goals established shall be based
2on the percentage of total fees paid under dollar amount of
3investment service contracts let to minority-owned businesses,
4women-owned businesses, and businesses owned by a person with a
5disability, as those terms are defined in the Business
6Enterprise for Minorities, Women, and Persons with
7Disabilities Act. The retirement system, pension fund, or
8investment board shall annually review the goals established
9under this subsection.
10    If in any case an emerging investment manager meets the
11criteria established by a board for a specific search and meets
12the criteria established by a consultant for that search, then
13that emerging investment manager shall receive an invitation by
14the board of trustees, or an investment committee of the board
15of trustees, to present his or her firm for final consideration
16of a contract. In the case where multiple emerging investment
17managers meet the criteria of this Section, the staff may
18choose the most qualified firm or firms to present to the
19board.
20    The use of an emerging investment manager does not
21constitute a transfer of investment authority for the purposes
22of subsection (2) of this Section.
23    (5) Each retirement system, pension fund, or investment
24board subject to this Code, except those whose investments are
25restricted by Section 1-113.2 of this Code, shall establish a
26policy that sets forth goals for increasing the racial, ethnic,

 

 

SB2060- 5 -LRB101 06198 RPS 51222 b

1and gender diversity of its fiduciaries, including its
2consultants and senior staff. Each retirement system, pension
3fund, or investment board shall make its best efforts to ensure
4that the racial and ethnic makeup of its senior administrative
5staff represents the racial and ethnic makeup of its
6membership. Each system, fund, and investment board shall
7annually review the goals established under this subsection.
8    (6) On or before January 1, 2010, a retirement system,
9pension fund, or investment board subject to this Code, except
10those whose investments are restricted by Section 1-113.2 of
11this Code, shall adopt a policy that sets forth goals for
12utilization of businesses owned by minorities, women, and
13persons with disabilities for all contracts and services. The
14goals established shall be based on the percentage of total
15dollar amount of all contracts let to minority-owned
16businesses, women-owned businesses, and businesses owned by a
17person with a disability, as those terms are defined in the
18Business Enterprise for Minorities, Women, and Persons with
19Disabilities Act. The retirement system, pension fund, or
20investment board shall annually review the goals established
21under this subsection.
22    (7) On or before January 1, 2010, a retirement system,
23pension fund, or investment board subject to this Code, except
24those whose investments are restricted by Section 1-113.2 of
25this Code, shall adopt a policy that sets forth goals for
26increasing the utilization of minority broker-dealers. For the

 

 

SB2060- 6 -LRB101 06198 RPS 51222 b

1purposes of this Code, "minority broker-dealer" means a
2qualified broker-dealer who meets the definition of
3"minority-owned business", "women-owned business", or
4"business owned by a person with a disability", as those terms
5are defined in the Business Enterprise for Minorities, Women,
6and Persons with Disabilities Act. The retirement system,
7pension fund, or investment board shall annually review the
8goals established under this Section.
9    (8) Each retirement system, pension fund, and investment
10board subject to this Code, except those whose investments are
11restricted by Section 1-113.2 of this Code, shall submit a
12report to the Governor and the General Assembly by January 1 of
13each year that includes the following: (i) the policy adopted
14under subsection (4) of this Section, including the names and
15addresses of the emerging investment managers used, percentage
16of the assets under the investment control of emerging
17investment managers for the 3 separate goals, and the actions
18it has undertaken to increase the use of emerging investment
19managers, including encouraging other investment managers to
20use emerging investment managers as subcontractors when the
21opportunity arises; (ii) the policy adopted under subsection
22(5) of this Section; (iii) the policy adopted under subsection
23(6) of this Section; (iv) the policy adopted under subsection
24(7) of this Section, including specific actions undertaken to
25increase the use of minority broker-dealers; and (v) the policy
26adopted under subsection (9) of this Section.

 

 

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1    (9) On or before February 1, 2015, a retirement system,
2pension fund, or investment board subject to this Code, except
3those whose investments are restricted by Section 1-113.2 of
4this Code, shall adopt a policy that sets forth goals for
5increasing the utilization of minority investment managers.
6For the purposes of this Code, "minority investment manager"
7means a qualified investment manager that manages an investment
8portfolio and meets the definition of "minority-owned
9business", "women-owned business", or "business owned by a
10person with a disability", as those terms are defined in the
11Business Enterprise for Minorities, Women, and Persons with
12Disabilities Act.
13    It is hereby declared to be the public policy of the State
14of Illinois to encourage the trustees of public employee
15retirement systems, pension funds, and investment boards to use
16minority investment managers in managing their systems'
17assets, encompassing all asset classes, and to increase the
18racial, ethnic, and gender diversity of their fiduciaries, to
19the greatest extent feasible within the bounds of financial and
20fiduciary prudence, and to take affirmative steps to remove any
21barriers to the full participation in investment opportunities
22afforded by those retirement systems, pension funds, and
23investment boards.
24    The retirement system, pension fund, or investment board
25shall establish 3 separate goals for: (i) minority investment
26managers that are minority-owned businesses; (ii) minority

 

 

SB2060- 8 -LRB101 06198 RPS 51222 b

1investment managers that are women-owned businesses; and (iii)
2minority investment managers that are businesses owned by a
3person with a disability. The retirement system, pension fund,
4or investment board shall annually review the goals established
5under this Section.
6    If in any case a minority investment manager meets the
7criteria established by a board for a specific search and meets
8the criteria established by a consultant for that search, then
9that minority investment manager shall receive an invitation by
10the board of trustees, or an investment committee of the board
11of trustees, to present his or her firm for final consideration
12of a contract. In the case where multiple minority investment
13managers meet the criteria of this Section, the staff may
14choose the most qualified firm or firms to present to the
15board.
16    The use of a minority investment manager does not
17constitute a transfer of investment authority for the purposes
18of subsection (2) of this Section.
19    (10) Beginning January 1, 2016, it shall be the
20aspirational goal for a retirement system, pension fund, or
21investment board subject to this Code to use emerging
22investment managers for not less than 20% of the total funds
23under management. Furthermore, it shall be the aspirational
24goal that not less than 20% of investment advisors be
25minorities, women, and persons with disabilities as those terms
26are defined in the Business Enterprise for Minorities, Women,

 

 

SB2060- 9 -LRB101 06198 RPS 51222 b

1and Persons with Disabilities Act. It shall be the aspirational
2goal to utilize businesses owned by minorities, women, and
3persons with disabilities for not less than 20% of contracts
4awarded for "information technology services", "accounting
5services", "insurance brokers", "architectural and engineering
6services", and "legal services" as those terms are defined in
7the Act.
8(Source: P.A. 99-462, eff. 8-25-15; 100-391, eff. 8-25-17;
9100-902, eff. 8-17-18.)
 
10    Section 99. Effective date. This Act takes effect upon
11becoming law.