Bill Text: IL SB3750 | 2019-2020 | 101st General Assembly | Introduced

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Bill Title: Amends the General Provisions Article of the Illinois Pension Code. Provides that "emerging investment manager" means a qualified investment adviser that manages an investment portfolio of at least $10,000,000 but less than $20,000,000,000 (rather than at least $10,000,000 but less than $10,000,000,000) at the time of the initial contract with the retirement system, pension fund, or investment board and is a minority-owned business, women-owned business, or business owned by a person with a disability. Effective January 1, 2021.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2021-01-13 - Session Sine Die [SB3750 Detail]

Download: Illinois-2019-SB3750-Introduced.html

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101ST GENERAL ASSEMBLY State of Illinois 2019 and 2020 SB3750 Introduced 2/14/2020, 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. Provides that "emerging investment manager" means a qualified investment adviser that manages an investment portfolio of at least $10,000,000 but less than $20,000,000,000 (rather than at least $10,000,000 but less than $10,000,000,000) at the time of the initial contract with the retirement system, pension fund, or investment board and is a minority-owned business, women-owned business, or business owned by a person with a disability. Effective January 1, 2021.
LRB101 20277 RPS 69819 b
FISCAL NOTE ACT MAY APPLY PENSION IMPACT NOTE ACT MAY APPLY
A BILL FOR
SB3750 LRB101 20277 RPS 69819 b
AN ACT concerning public employee benefits.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Pension Code is amended by changing
Section 1-109.1 as follows:
(40 ILCS 5/1-109.1) (from Ch. 108 1/2, par. 1-109.1)
Sec. 1-109.1. Allocation and delegation of fiduciary
duties.
(1) Subject to the provisions of Section 22A-113 of this
Code and subsections (2) and (3) of this Section, the board of
trustees of a retirement system or pension fund established
under this Code may:
(a) Appoint one or more investment managers as
fiduciaries to manage (including the power to acquire and
dispose of) any assets of the retirement system or pension
fund; and
(b) Allocate duties among themselves and designate
others as fiduciaries to carry out specific fiduciary
activities other than the management of the assets of the
retirement system or pension fund.
(2) The board of trustees of a pension fund established
under Article 5, 6, 8, 9, 10, 11, 12 or 17 of this Code may not
transfer its investment authority, nor transfer the assets of

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

SB3750 - 3 - LRB101 20277 RPS 69819 b
$10,000,000,000 and is a "minority-owned business",
"women-owned business" or "business owned by a person with a
disability" as those terms are defined in the Business
Enterprise for Minorities, Women, and Persons with
Disabilities Act.
It is hereby declared to be the public policy of the State
of Illinois to encourage the trustees of public employee
retirement systems, pension funds, and investment boards to use
emerging investment managers in managing their system's
assets, encompassing all asset classes, and increase the
racial, ethnic, and gender diversity of its fiduciaries, to the
greatest extent feasible within the bounds of financial and
fiduciary prudence, and to take affirmative steps to remove any
barriers to the full participation in investment opportunities
afforded by those retirement systems, pension funds, and
investment boards.
On or before January 1, 2010, a retirement system, pension
fund, or investment board subject to this Code, except those
whose investments are restricted by Section 1-113.2 of this
Code, shall adopt a policy that sets forth goals for
utilization of emerging investment managers. This policy shall
include quantifiable goals for the management of assets in
specific asset classes by emerging investment managers. The
retirement system, pension fund, or investment board shall
establish 3 separate goals for: (i) emerging investment
managers that are minority-owned businesses; (ii) emerging

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investment managers that are women-owned businesses; and (iii)
emerging investment managers that are businesses owned by a
person with a disability. The goals established shall be based
on the percentage of total dollar amount of investment service
contracts let to minority-owned businesses, women-owned
businesses, and businesses owned by a person with a disability,
as those terms are defined in the Business Enterprise for
Minorities, Women, and Persons with Disabilities Act. The
retirement system, pension fund, or investment board shall
annually review the goals established under this subsection.
If in any case an emerging investment manager meets the
criteria established by a board for a specific search and meets
the criteria established by a consultant for that search, then
that emerging investment manager shall receive an invitation by
the board of trustees, or an investment committee of the board
of trustees, to present his or her firm for final consideration
of a contract. In the case where multiple emerging investment
managers meet the criteria of this Section, the staff may
choose the most qualified firm or firms to present to the
board.
The use of an emerging investment manager does not
constitute a transfer of investment authority for the purposes
of subsection (2) of this Section.
(5) Each retirement system, pension fund, or investment
board subject to this Code, except those whose investments are
restricted by Section 1-113.2 of this Code, shall establish a

SB3750 - 5 - LRB101 20277 RPS 69819 b
policy that sets forth goals for increasing the racial, ethnic,
and gender diversity of its fiduciaries, including its
consultants and senior staff. Each retirement system, pension
fund, or investment board shall make its best efforts to ensure
that the racial and ethnic makeup of its senior administrative
staff represents the racial and ethnic makeup of its
membership. Each system, fund, and investment board shall
annually review the goals established under this subsection.
(6) On or before January 1, 2010, a retirement system,
pension fund, or investment board subject to this Code, except
those whose investments are restricted by Section 1-113.2 of
this Code, shall adopt a policy that sets forth goals for
utilization of businesses owned by minorities, women, and
persons with disabilities for all contracts and services. The
goals established shall be based on the percentage of total
dollar amount of all contracts let to minority-owned
businesses, women-owned businesses, and businesses owned by a
person with a disability, as those terms are defined in the
Business Enterprise for Minorities, Women, and Persons with
Disabilities Act. The retirement system, pension fund, or
investment board shall annually review the goals established
under this subsection.
(7) On or before January 1, 2010, a retirement system,
pension fund, or investment board subject to this Code, except
those whose investments are restricted by Section 1-113.2 of
this Code, shall adopt a policy that sets forth goals for

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

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

SB3750 - 8 - LRB101 20277 RPS 69819 b
managers that are minority-owned businesses; (ii) minority
investment managers that are women-owned businesses; and (iii)
minority investment managers that are businesses owned by a
person with a disability. The retirement system, pension fund,
or investment board shall annually review the goals established
under this Section.
If in any case a minority investment manager meets the
criteria established by a board for a specific search and meets
the criteria established by a consultant for that search, then
that minority investment manager shall receive an invitation by
the board of trustees, or an investment committee of the board
of trustees, to present his or her firm for final consideration
of a contract. In the case where multiple minority investment
managers meet the criteria of this Section, the staff may
choose the most qualified firm or firms to present to the
board.
The use of a minority investment manager does not
constitute a transfer of investment authority for the purposes
of subsection (2) of this Section.
(10) Beginning January 1, 2016, it shall be the
aspirational goal for a retirement system, pension fund, or
investment board subject to this Code to use emerging
investment managers for not less than 20% of the total funds
under management. Furthermore, it shall be the aspirational
goal that not less than 20% of investment advisors be
minorities, women, and persons with disabilities as those terms

SB3750 - 9 - LRB101 20277 RPS 69819 b
are defined in the Business Enterprise for Minorities, Women,
and Persons with Disabilities Act. It shall be the aspirational
goal to utilize businesses owned by minorities, women, and
persons with disabilities for not less than 20% of contracts
awarded for "information technology services", "accounting
services", "insurance brokers", "architectural and engineering
services", and "legal services" as those terms are defined in
the Act.
(Source: P.A. 99-462, eff. 8-25-15; 100-391, eff. 8-25-17;
100-902, eff. 8-17-18.)
Section 99. Effective date. This Act takes effect January
1, 2021.