Illinois General Assembly - Full Text of HB4412
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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
3everything after the enacting clause with the following:
 
4    "Section 5. The Illinois Pension Code is amended by
5changing 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
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

 

 

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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
6under Article 5, 6, 8, 9, 10, 11, 12 or 17 of this Code may not
7transfer its investment authority, nor transfer the assets of
8the fund to any other person or entity for the purpose of
9consolidating or merging its assets and management with any
10other pension fund or public investment authority, unless the
11board resolution authorizing such transfer is submitted for
12approval to the contributors and pensioners of the fund at
13elections held not less than 30 days after the adoption of such
14resolution by the board, and such resolution is approved by a
15majority of the votes cast on the question in both the
16contributors election and the pensioners election. The
17election procedures and qualifications governing the election
18of trustees shall govern the submission of resolutions for
19approval under this paragraph, insofar as they may be made
20applicable.
21    (3) Pursuant to subsections (h) and (i) of Section 6 of
22Article VII of the Illinois Constitution, the investment
23authority of boards of trustees of retirement systems and
24pension funds established under this Code is declared to be a
25subject of exclusive State jurisdiction, and the concurrent
26exercise by a home rule unit of any power affecting such

 

 

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

 

 

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1include quantifiable goals for the management of assets in
2specific asset classes by emerging investment managers. The
3retirement system, pension fund, or investment board shall
4establish 3 separate goals for: (i) emerging investment
5managers that are minority-owned businesses; (ii) emerging
6investment managers that are women-owned businesses; and (iii)
7emerging investment managers that are businesses owned by a
8person with a disability. The goals established shall be based
9on the percentage of total dollar amount of investment service
10contracts let to minority-owned businesses, women-owned
11businesses, and businesses owned by a person with a disability,
12as those terms are defined in the Business Enterprise for
13Minorities, Women, and Persons with Disabilities Act. The
14retirement system, pension fund, or investment board shall
15annually review the goals established under this subsection.
16    If in any case an emerging investment manager meets the
17criteria established by a board for a specific search and meets
18the criteria established by a consultant for that search, then
19that emerging investment manager shall receive an invitation by
20the board of trustees, or an investment committee of the board
21of trustees, to present his or her firm for final consideration
22of a contract. In the case where multiple emerging investment
23managers meet the criteria of this Section, the staff may
24choose the most qualified firm or firms to present to the
25board.
26    The use of an emerging investment manager does not

 

 

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

 

 

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1under this subsection.
2    (7) On or before January 1, 2010, a retirement system,
3pension fund, or investment board subject to this Code, except
4those whose investments are restricted by Section 1-113.2 of
5this Code, shall adopt a policy that sets forth goals for
6increasing the utilization of minority broker-dealers. For the
7purposes of this Code, "minority broker-dealer" means a
8qualified 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
11are defined in the Business Enterprise for Minorities, Women,
12and Persons with Disabilities Act. The retirement system,
13pension fund, or investment board shall annually review the
14goals established under this Section.
15    (8) Each retirement system, pension fund, and investment
16board subject to this Code, except those whose investments are
17restricted by Section 1-113.2 of this Code, shall submit a
18report to the Governor and the General Assembly by January 1 of
19each year that includes the following: (i) the policy adopted
20under subsection (4) of this Section, including the names and
21addresses of the emerging investment managers used, percentage
22of the assets under the investment control of emerging
23investment managers for the 3 separate goals, and the actions
24it has undertaken to increase the use of emerging investment
25managers, including encouraging other investment managers to
26use emerging investment managers as subcontractors when the

 

 

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

 

 

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1barriers to the full participation in investment opportunities
2afforded by those retirement systems, pension funds, and
3investment boards.
4    The retirement system, pension fund, or investment board
5shall establish 3 separate goals for: (i) minority investment
6managers that are minority-owned businesses; (ii) minority
7investment managers that are women-owned businesses; and (iii)
8minority investment managers that are businesses owned by a
9person with a disability. The retirement system, pension fund,
10or investment board shall annually review the goals established
11under this Section.
12    If in any case a minority investment manager meets the
13criteria established by a board for a specific search and meets
14the criteria established by a consultant for that search, then
15that minority investment manager shall receive an invitation by
16the board of trustees, or an investment committee of the board
17of trustees, to present his or her firm for final consideration
18of a contract. In the case where multiple minority investment
19managers meet the criteria of this Section, the staff may
20choose the most qualified firm or firms to present to the
21board.
22    The use of a minority investment manager does not
23constitute a transfer of investment authority for the purposes
24of subsection (2) of this Section.
25    (10) Beginning January 1, 2016, it shall be the
26aspirational goal for a retirement system, pension fund, or

 

 

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1investment board subject to this Code to use emerging
2investment managers for not less than 20% of the total funds
3under management. Furthermore, it shall be the aspirational
4goal that not less than 20% of investment advisors be
5minorities, women, and persons with disabilities as those terms
6are defined in the Business Enterprise for Minorities, Women,
7and Persons with Disabilities Act. It shall be the aspirational
8goal to utilize businesses owned by minorities, women, and
9persons with disabilities for not less than 20% of contracts
10awarded for "information technology services", "accounting
11services", "insurance brokers", "architectural and engineering
12services", and "legal services" as those terms are defined in
13the 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
16becoming law.".