Illinois-2019-HB1571-Introduced

101ST GENERAL ASSEMBLY State of Illinois 2019 and 2020 HB1571

Introduced , by Rep. Jim Durkin

SYNOPSIS AS INTRODUCED:

See Index

Amends the Illinois Pension Code. Provides that beginning January 1, 2020, the governing body of a municipality with a downstate police pension fund or downstate firefighter pension fund may require the pension fund to transfer its investment authority and assets to the Illinois Municipal Retirement Fund (IMRF) if its nets assets have surpassed a certain threshold. Provides that upon completion of the transfer, the investment authority of the board of trustees of the downstate police pension fund or downstate firefighter pension fund shall terminate. Contains other provisions concerning transfers to IMRF, rulemaking, transfer of investment authority, investments, and auditing. Requires the Commission on Government Forecasting and Accountability to conduct an analysis of the merits and feasibility of transitioning the investment authority of all boards of trustees of downstate police pension funds and downstate firefighter pension funds to IMRF. Makes changes to provisions concerning trustee training. Amends the Property Tax Extension Limitation Law of the Property Tax Code. Beginning January 1, 2021, removes a provision that excludes special purpose extensions made for contributions to a downstate firefighter pension fund from the definition of "aggregate extension". Excludes from the definition of "aggregate extension" special purpose extensions made for contributions to a downstate police or downstate firefighter pension fund that transfers its investment authority to IMRF. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.

LRB101 06714 RPS 51741 b

FISCAL NOTE ACT MAY APPLY

PENSION IMPACT NOTE ACT MAY APPLY

STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

A BILL FOR

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LRB101 06714 RPS 51741 b

1 AN ACT concerning 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 Property Tax Code is amended by changing

5 Section 18-185 as follows:

6 (35 ILCS 200/18-185)

7 Sec. 18-185. Short title; definitions. This Division 5 may

8 be cited as the Property Tax Extension Limitation Law. As used

9 in this Division 5:

10 "Consumer Price Index" means the Consumer Price Index for

11 All Urban Consumers for all items published by the United

12 States Department of Labor.

13 "Extension limitation" means (a) the lesser of 5% or the

14 percentage increase in the Consumer Price Index during the

15 12-month calendar year preceding the levy year or (b) the rate

16 of increase approved by voters under Section 18-205.

17 "Affected county" means a county of 3,000,000 or more

18 inhabitants or a county contiguous to a county of 3,000,000 or

19 more inhabitants.

20 "Taxing district" has the same meaning provided in Section

21 1-150, except as otherwise provided in this Section. For the

22 1991 through 1994 levy years only, "taxing district" includes

23 only each non-home rule taxing district having the majority of

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1 its 1990 equalized assessed value within any county or counties

2 contiguous to a county with 3,000,000 or more inhabitants.

3 Beginning with the 1995 levy year, "taxing district" includes

4 only each non-home rule taxing district subject to this Law

5 before the 1995 levy year and each non-home rule taxing

6 district not subject to this Law before the 1995 levy year

7 having the majority of its 1994 equalized assessed value in an

8 affected county or counties. Beginning with the levy year in

9 which this Law becomes applicable to a taxing district as

10 provided in Section 18-213, "taxing district" also includes

11 those taxing districts made subject to this Law as provided in

12 Section 18-213.

13 "Aggregate extension" for taxing districts to which this

14 Law applied before the 1995 levy year means the annual

15 corporate extension for the taxing district and those special

16 purpose extensions that are made annually for the taxing

17 district, excluding special purpose extensions: (a) made for

18 the taxing district to pay interest or principal on general

19 obligation bonds that were approved by referendum; (b) made for

20 any taxing district to pay interest or principal on general

21 obligation bonds issued before October 1, 1991; (c) made for

22 any taxing district to pay interest or principal on bonds

23 issued to refund or continue to refund those bonds issued

24 before October 1, 1991; (d) made for any taxing district to pay

25 interest or principal on bonds issued to refund or continue to

26 refund bonds issued after October 1, 1991 that were approved by

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1 referendum; (e) made for any taxing district to pay interest or

2 principal on revenue bonds issued before October 1, 1991 for

3 payment of which a property tax levy or the full faith and

4 credit of the unit of local government is pledged; however, a

5 tax for the payment of interest or principal on those bonds

6 shall be made only after the governing body of the unit of

7 local government finds that all other sources for payment are

8 insufficient to make those payments; (f) made for payments

9 under a building commission lease when the lease payments are

10 for the retirement of bonds issued by the commission before

11 October 1, 1991, to pay for the building project; (g) made for

12 payments due under installment contracts entered into before

13 October 1, 1991; (h) made for payments of principal and

14 interest on bonds issued under the Metropolitan Water

15 Reclamation District Act to finance construction projects

16 initiated before October 1, 1991; (i) made for payments of

17 principal and interest on limited bonds, as defined in Section

18 3 of the Local Government Debt Reform Act, in an amount not to

19 exceed the debt service extension base less the amount in items

20 (b), (c), (e), and (h) of this definition for non-referendum

21 obligations, except obligations initially issued pursuant to

22 referendum; (j) made for payments of principal and interest on

23 bonds issued under Section 15 of the Local Government Debt

24 Reform Act; (k) made by a school district that participates in

25 the Special Education District of Lake County, created by

26 special education joint agreement under Section 10-22.31 of the

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1 School Code, for payment of the school district's share of the

2 amounts required to be contributed by the Special Education

3 District of Lake County to the Illinois Municipal Retirement

4 Fund under Article 7 of the Illinois Pension Code; the amount

5 of any extension under this item (k) shall be certified by the

6 school district to the county clerk; (l) made to fund expenses

7 of providing joint recreational programs for persons with

8 disabilities under Section 5-8 of the Park District Code or

9 Section 11-95-14 of the Illinois Municipal Code; (m) made for

10 temporary relocation loan repayment purposes pursuant to

11 Sections 2-3.77 and 17-2.2d of the School Code; (n) made for

12 payment of principal and interest on any bonds issued under the

13 authority of Section 17-2.2d of the School Code; (o) made

14 before January 1, 2021 for contributions to a firefighter's

15 pension fund created under Article 4 of the Illinois Pension

16 Code, to the extent of the amount certified under item (5) of

17 Section 4-134 of the Illinois Pension Code; ~~and~~ (p) made for

18 road purposes in the first year after a township assumes the

19 rights, powers, duties, assets, property, liabilities,

20 obligations, and responsibilities of a road district abolished

21 under the provisions of Section 6-133 of the Illinois Highway

22 Code; and (q) made for contributions to an eligible pension

23 fund as defined under Section 1-101.6 of the Illinois Pension

24 Code.

25 "Aggregate extension" for the taxing districts to which

26 this Law did not apply before the 1995 levy year (except taxing

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1 districts subject to this Law in accordance with Section

2 18-213) means the annual corporate extension for the taxing

3 district and those special purpose extensions that are made

4 annually for the taxing district, excluding special purpose

5 extensions: (a) made for the taxing district to pay interest or

6 principal on general obligation bonds that were approved by

7 referendum; (b) made for any taxing district to pay interest or

8 principal on general obligation bonds issued before March 1,

9 1995; (c) made for any taxing district to pay interest or

10 principal on bonds issued to refund or continue to refund those

11 bonds issued before March 1, 1995; (d) made for any taxing

12 district to pay interest or principal on bonds issued to refund

13 or continue to refund bonds issued after March 1, 1995 that

14 were approved by referendum; (e) made for any taxing district

15 to pay interest or principal on revenue bonds issued before

16 March 1, 1995 for payment of which a property tax levy or the

17 full faith and credit of the unit of local government is

18 pledged; however, a tax for the payment of interest or

19 principal on those bonds shall be made only after the governing

20 body of the unit of local government finds that all other

21 sources for payment are insufficient to make those payments;

22 (f) made for payments under a building commission lease when

23 the lease payments are for the retirement of bonds issued by

24 the commission before March 1, 1995 to pay for the building

25 project; (g) made for payments due under installment contracts

26 entered into before March 1, 1995; (h) made for payments of

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1 principal and interest on bonds issued under the Metropolitan

2 Water Reclamation District Act to finance construction

3 projects initiated before October 1, 1991; (h-4) made for

4 stormwater management purposes by the Metropolitan Water

5 Reclamation District of Greater Chicago under Section 12 of the

6 Metropolitan Water Reclamation District Act; (i) made for

7 payments of principal and interest on limited bonds, as defined

8 in Section 3 of the Local Government Debt Reform Act, in an

9 amount not to exceed the debt service extension base less the

10 amount in items (b), (c), and (e) of this definition for

11 non-referendum obligations, except obligations initially

12 issued pursuant to referendum and bonds described in subsection

13 (h) of this definition; (j) made for payments of principal and

14 interest on bonds issued under Section 15 of the Local

15 Government Debt Reform Act; (k) made for payments of principal

16 and interest on bonds authorized by Public Act 88-503 and

17 issued under Section 20a of the Chicago Park District Act for

18 aquarium or museum projects; (l) made for payments of principal

19 and interest on bonds authorized by Public Act 87-1191 or

20 93-601 and (i) issued pursuant to Section 21.2 of the Cook

21 County Forest Preserve District Act, (ii) issued under Section

22 42 of the Cook County Forest Preserve District Act for

23 zoological park projects, or (iii) issued under Section 44.1 of

24 the Cook County Forest Preserve District Act for botanical

25 gardens projects; (m) made pursuant to Section 34-53.5 of the

26 School Code, whether levied annually or not; (n) made to fund

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1 expenses of providing joint recreational programs for persons

2 with disabilities under Section 5-8 of the Park District Code

3 or Section 11-95-14 of the Illinois Municipal Code; (o) made by

4 the Chicago Park District for recreational programs for persons

5 with disabilities under subsection (c) of Section 7.06 of the

6 Chicago Park District Act; (p) made before January 1, 2021 for

7 contributions to a firefighter's pension fund created under

8 Article 4 of the Illinois Pension Code, to the extent of the

9 amount certified under item (5) of Section 4-134 of the

10 Illinois Pension Code; (q) made by Ford Heights School District

11 169 under Section 17-9.02 of the School Code; ~~and~~ (r) made for

12 the purpose of making employer contributions to the Public

13 School Teachers' Pension and Retirement Fund of Chicago under

14 Section 34-53 of the School Code; and (s) made for

15 contributions to an eligible pension fund as defined under

16 Section 1-101.6 of the Illinois Pension Code.

17 "Aggregate extension" for all taxing districts to which

18 this Law applies in accordance with Section 18-213, except for

19 those taxing districts subject to paragraph (2) of subsection

20 (e) of Section 18-213, means the annual corporate extension for

21 the taxing district and those special purpose extensions that

22 are made annually for the taxing district, excluding special

23 purpose extensions: (a) made for the taxing district to pay

24 interest or principal on general obligation bonds that were

25 approved by referendum; (b) made for any taxing district to pay

26 interest or principal on general obligation bonds issued before

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LRB101 06714 RPS 51741 b

1 the date on which the referendum making this Law applicable to

2 the taxing district is held; (c) made for any taxing district

3 to pay interest or principal on bonds issued to refund or

4 continue to refund those bonds issued before the date on which

5 the referendum making this Law applicable to the taxing

6 district is held; (d) made for any taxing district to pay

7 interest or principal on bonds issued to refund or continue to

8 refund bonds issued after the date on which the referendum

9 making this Law applicable to the taxing district is held if

10 the bonds were approved by referendum after the date on which

11 the referendum making this Law applicable to the taxing

12 district is held; (e) made for any taxing district to pay

13 interest or principal on revenue bonds issued before the date

14 on which the referendum making this Law applicable to the

15 taxing district is held for payment of which a property tax

16 levy or the full faith and credit of the unit of local

17 government is pledged; however, a tax for the payment of

18 interest or principal on those bonds shall be made only after

19 the governing body of the unit of local government finds that

20 all other sources for payment are insufficient to make those

21 payments; (f) made for payments under a building commission

22 lease when the lease payments are for the retirement of bonds

23 issued by the commission before the date on which the

24 referendum making this Law applicable to the taxing district is

25 held to pay for the building project; (g) made for payments due

26 under installment contracts entered into before the date on

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1 which the referendum making this Law applicable to the taxing

2 district is held; (h) made for payments of principal and

3 interest on limited bonds, as defined in Section 3 of the Local

4 Government Debt Reform Act, in an amount not to exceed the debt

5 service extension base less the amount in items (b), (c), and

6 (e) of this definition for non-referendum obligations, except

7 obligations initially issued pursuant to referendum; (i) made

8 for payments of principal and interest on bonds issued under

9 Section 15 of the Local Government Debt Reform Act; (j) made

10 for a qualified airport authority to pay interest or principal

11 on general obligation bonds issued for the purpose of paying

12 obligations due under, or financing airport facilities

13 required to be acquired, constructed, installed or equipped

14 pursuant to, contracts entered into before March 1, 1996 (but

15 not including any amendments to such a contract taking effect

16 on or after that date); (k) made to fund expenses of providing

17 joint recreational programs for persons with disabilities

18 under Section 5-8 of the Park District Code or Section 11-95-14

19 of the Illinois Municipal Code; (l) made before January 1, 2021

20 for contributions to a firefighter's pension fund created under

21 Article 4 of the Illinois Pension Code, to the extent of the

22 amount certified under item (5) of Section 4-134 of the

23 Illinois Pension Code; ~~and~~ (m) made for the taxing district to

24 pay interest or principal on general obligation bonds issued

25 pursuant to Section 19-3.10 of the School Code; and (n) made

26 for contributions to an eligible pension fund as defined under

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LRB101 06714 RPS 51741 b

1 Section 1-101.6 of the Illinois Pension Code.

2 "Aggregate extension" for all taxing districts to which

3 this Law applies in accordance with paragraph (2) of subsection

4 (e) of Section 18-213 means the annual corporate extension for

5 the taxing district and those special purpose extensions that

6 are made annually for the taxing district, excluding special

7 purpose extensions: (a) made for the taxing district to pay

8 interest or principal on general obligation bonds that were

9 approved by referendum; (b) made for any taxing district to pay

10 interest or principal on general obligation bonds issued before

11 the effective date of this amendatory Act of 1997; (c) made for

12 any taxing district to pay interest or principal on bonds

13 issued to refund or continue to refund those bonds issued

14 before the effective date of this amendatory Act of 1997; (d)

15 made for any taxing district to pay interest or principal on

16 bonds issued to refund or continue to refund bonds issued after

17 the effective date of this amendatory Act of 1997 if the bonds

18 were approved by referendum after the effective date of this

19 amendatory Act of 1997; (e) made for any taxing district to pay

20 interest or principal on revenue bonds issued before the

21 effective date of this amendatory Act of 1997 for payment of

22 which a property tax levy or the full faith and credit of the

23 unit of local government is pledged; however, a tax for the

24 payment of interest or principal on those bonds shall be made

25 only after the governing body of the unit of local government

26 finds that all other sources for payment are insufficient to

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1 make those payments; (f) made for payments under a building

2 commission lease when the lease payments are for the retirement

3 of bonds issued by the commission before the effective date of

4 this amendatory Act of 1997 to pay for the building project;

5 (g) made for payments due under installment contracts entered

6 into before the effective date of this amendatory Act of 1997;

7 (h) made for payments of principal and interest on limited

8 bonds, as defined in Section 3 of the Local Government Debt

9 Reform Act, in an amount not to exceed the debt service

10 extension base less the amount in items (b), (c), and (e) of

11 this definition for non-referendum obligations, except

12 obligations initially issued pursuant to referendum; (i) made

13 for payments of principal and interest on bonds issued under

14 Section 15 of the Local Government Debt Reform Act; (j) made

15 for a qualified airport authority to pay interest or principal

16 on general obligation bonds issued for the purpose of paying

17 obligations due under, or financing airport facilities

18 required to be acquired, constructed, installed or equipped

19 pursuant to, contracts entered into before March 1, 1996 (but

20 not including any amendments to such a contract taking effect

21 on or after that date); (k) made to fund expenses of providing

22 joint recreational programs for persons with disabilities

23 under Section 5-8 of the Park District Code or Section 11-95-14

24 of the Illinois Municipal Code; ~~and~~ (l) made before January 1,

25 2021 for contributions to a firefighter's pension fund created

26 under Article 4 of the Illinois Pension Code, to the extent of

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1 the amount certified under item (5) of Section 4-134 of the

2 Illinois Pension Code; and (m) made for contributions to an

3 eligible pension fund as defined under Section 1-101.6 of the

4 Illinois Pension Code.

5 "Debt service extension base" means an amount equal to that

6 portion of the extension for a taxing district for the 1994

7 levy year, or for those taxing districts subject to this Law in

8 accordance with Section 18-213, except for those subject to

9 paragraph (2) of subsection (e) of Section 18-213, for the levy

10 year in which the referendum making this Law applicable to the

11 taxing district is held, or for those taxing districts subject

12 to this Law in accordance with paragraph (2) of subsection (e)

13 of Section 18-213 for the 1996 levy year, constituting an

14 extension for payment of principal and interest on bonds issued

15 by the taxing district without referendum, but not including

16 excluded non-referendum bonds. For park districts (i) that were

17 first subject to this Law in 1991 or 1995 and (ii) whose

18 extension for the 1994 levy year for the payment of principal

19 and interest on bonds issued by the park district without

20 referendum (but not including excluded non-referendum bonds)

21 was less than 51% of the amount for the 1991 levy year

22 constituting an extension for payment of principal and interest

23 on bonds issued by the park district without referendum (but

24 not including excluded non-referendum bonds), "debt service

25 extension base" means an amount equal to that portion of the

26 extension for the 1991 levy year constituting an extension for

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1 payment of principal and interest on bonds issued by the park

2 district without referendum (but not including excluded

3 non-referendum bonds). A debt service extension base

4 established or increased at any time pursuant to any provision

5 of this Law, except Section 18-212, shall be increased each

6 year commencing with the later of (i) the 2009 levy year or

7 (ii) the first levy year in which this Law becomes applicable

8 to the taxing district, by the lesser of 5% or the percentage

9 increase in the Consumer Price Index during the 12-month

10 calendar year preceding the levy year. The debt service

11 extension base may be established or increased as provided

12 under Section 18-212. "Excluded non-referendum bonds" means

13 (i) bonds authorized by Public Act 88-503 and issued under

14 Section 20a of the Chicago Park District Act for aquarium and

15 museum projects; (ii) bonds issued under Section 15 of the

16 Local Government Debt Reform Act; or (iii) refunding

17 obligations issued to refund or to continue to refund

18 obligations initially issued pursuant to referendum.

19 "Special purpose extensions" include, but are not limited

20 to, extensions for levies made on an annual basis for

21 unemployment and workers' compensation, self-insurance,

22 contributions to pension plans, and extensions made pursuant to

23 Section 6-601 of the Illinois Highway Code for a road

24 district's permanent road fund whether levied annually or not.

25 The extension for a special service area is not included in the

26 aggregate extension.

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LRB101 06714 RPS 51741 b

1 "Aggregate extension base" means the taxing district's

2 last preceding aggregate extension as adjusted under Sections

3 18-135, 18-215, 18-230, and 18-206. An adjustment under Section

4 18-135 shall be made for the 2007 levy year and all subsequent

5 levy years whenever one or more counties within which a taxing

6 district is located (i) used estimated valuations or rates when

7 extending taxes in the taxing district for the last preceding

8 levy year that resulted in the over or under extension of

9 taxes, or (ii) increased or decreased the tax extension for the

10 last preceding levy year as required by Section 18-135(c).

11 Whenever an adjustment is required under Section 18-135, the

12 aggregate extension base of the taxing district shall be equal

13 to the amount that the aggregate extension of the taxing

14 district would have been for the last preceding levy year if

15 either or both (i) actual, rather than estimated, valuations or

16 rates had been used to calculate the extension of taxes for the

17 last levy year, or (ii) the tax extension for the last

18 preceding levy year had not been adjusted as required by

19 subsection (c) of Section 18-135.

20 Notwithstanding any other provision of law, for levy year

21 2012, the aggregate extension base for West Northfield School

22 District No. 31 in Cook County shall be $12,654,592.

23 "Levy year" has the same meaning as "year" under Section

24 1-155.

25 "New property" means (i) the assessed value, after final

26 board of review or board of appeals action, of new improvements

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1 or additions to existing improvements on any parcel of real

2 property that increase the assessed value of that real property

3 during the levy year multiplied by the equalization factor

4 issued by the Department under Section 17-30, (ii) the assessed

5 value, after final board of review or board of appeals action,

6 of real property not exempt from real estate taxation, which

7 real property was exempt from real estate taxation for any

8 portion of the immediately preceding levy year, multiplied by

9 the equalization factor issued by the Department under Section

10 17-30, including the assessed value, upon final stabilization

11 of occupancy after new construction is complete, of any real

12 property located within the boundaries of an otherwise or

13 previously exempt military reservation that is intended for

14 residential use and owned by or leased to a private corporation

15 or other entity, (iii) in counties that classify in accordance

16 with Section 4 of Article IX of the Illinois Constitution, an

17 incentive property's additional assessed value resulting from

18 a scheduled increase in the level of assessment as applied to

19 the first year final board of review market value, and (iv) any

20 increase in assessed value due to oil or gas production from an

21 oil or gas well required to be permitted under the Hydraulic

22 Fracturing Regulatory Act that was not produced in or accounted

23 for during the previous levy year. In addition, the county

24 clerk in a county containing a population of 3,000,000 or more

25 shall include in the 1997 recovered tax increment value for any

26 school district, any recovered tax increment value that was

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1 applicable to the 1995 tax year calculations.

2 "Qualified airport authority" means an airport authority

3 organized under the Airport Authorities Act and located in a

4 county bordering on the State of Wisconsin and having a

5 population in excess of 200,000 and not greater than 500,000.

6 "Recovered tax increment value" means, except as otherwise

7 provided in this paragraph, the amount of the current year's

8 equalized assessed value, in the first year after a

9 municipality terminates the designation of an area as a

10 redevelopment project area previously established under the

11 Tax Increment Allocation Development Act in the Illinois

12 Municipal Code, previously established under the Industrial

13 Jobs Recovery Law in the Illinois Municipal Code, previously

14 established under the Economic Development Project Area Tax

15 Increment Act of 1995, or previously established under the

16 Economic Development Area Tax Increment Allocation Act, of each

17 taxable lot, block, tract, or parcel of real property in the

18 redevelopment project area over and above the initial equalized

19 assessed value of each property in the redevelopment project

20 area. For the taxes which are extended for the 1997 levy year,

21 the recovered tax increment value for a non-home rule taxing

22 district that first became subject to this Law for the 1995

23 levy year because a majority of its 1994 equalized assessed

24 value was in an affected county or counties shall be increased

25 if a municipality terminated the designation of an area in 1993

26 as a redevelopment project area previously established under

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1 the Tax Increment Allocation Development Act in the Illinois

2 Municipal Code, previously established under the Industrial

3 Jobs Recovery Law in the Illinois Municipal Code, or previously

4 established under the Economic Development Area Tax Increment

5 Allocation Act, by an amount equal to the 1994 equalized

6 assessed value of each taxable lot, block, tract, or parcel of

7 real property in the redevelopment project area over and above

8 the initial equalized assessed value of each property in the

9 redevelopment project area. In the first year after a

10 municipality removes a taxable lot, block, tract, or parcel of

11 real property from a redevelopment project area established

12 under the Tax Increment Allocation Development Act in the

13 Illinois Municipal Code, the Industrial Jobs Recovery Law in

14 the Illinois Municipal Code, or the Economic Development Area

15 Tax Increment Allocation Act, "recovered tax increment value"

16 means the amount of the current year's equalized assessed value

17 of each taxable lot, block, tract, or parcel of real property

18 removed from the redevelopment project area over and above the

19 initial equalized assessed value of that real property before

20 removal from the redevelopment project area.

21 Except as otherwise provided in this Section, "limiting

22 rate" means a fraction the numerator of which is the last

23 preceding aggregate extension base times an amount equal to one

24 plus the extension limitation defined in this Section and the

25 denominator of which is the current year's equalized assessed

26 value of all real property in the territory under the

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1 jurisdiction of the taxing district during the prior levy year.

2 For those taxing districts that reduced their aggregate

3 extension for the last preceding levy year, except for school

4 districts that reduced their extension for educational

5 purposes pursuant to Section 18-206, the highest aggregate

6 extension in any of the last 3 preceding levy years shall be

7 used for the purpose of computing the limiting rate. The

8 denominator shall not include new property or the recovered tax

9 increment value. If a new rate, a rate decrease, or a limiting

10 rate increase has been approved at an election held after March

11 21, 2006, then (i) the otherwise applicable limiting rate shall

12 be increased by the amount of the new rate or shall be reduced

13 by the amount of the rate decrease, as the case may be, or (ii)

14 in the case of a limiting rate increase, the limiting rate

15 shall be equal to the rate set forth in the proposition

16 approved by the voters for each of the years specified in the

17 proposition, after which the limiting rate of the taxing

18 district shall be calculated as otherwise provided. In the case

19 of a taxing district that obtained referendum approval for an

20 increased limiting rate on March 20, 2012, the limiting rate

21 for tax year 2012 shall be the rate that generates the

22 approximate total amount of taxes extendable for that tax year,

23 as set forth in the proposition approved by the voters; this

24 rate shall be the final rate applied by the county clerk for

25 the aggregate of all capped funds of the district for tax year

26 2012.

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1 (Source: P.A. 99-143, eff. 7-27-15; 99-521, eff. 6-1-17;

2 100-465, eff. 8-31-17.)

3 Section 10. The Illinois Pension Code is amended by

4 changing Sections 1-109.3, 1-113.1, 1-113.2, 1-113.3, 1-113.4,

5 1-113.4a, 1-113.5, 1-113.6, 1-113.7, 3-127, 3-132, 3-135,

6 4-120, 4-123, 4-128, 7-175, and 7-175.1 and by adding Sections

7 1-101.6, 1-101.7, 1-113.05, 1-167, 3-132.1, 3-132.2, 3-132.3,

8 3-132.4, 4-128.1, 4-128.2, 4-128.3, 4-128.4, and 7-199.5 as

9 follows:

10 (40 ILCS 5/1-101.6 new)

11 Sec. 1-101.6. Eligible pension fund. "Eligible pension

12 fund" means: (1) a pension fund established under Article 3 of

13 this Code that (A) the governing body of the municipality for

14 which the pension fund was established has required the pension

15 fund to transfer its investment authority under this Code to

16 the Illinois Municipal Retirement Fund under subsection (b) of

17 Section 3-135 of this Code and (B) has net assets in trust that

18 exceed the threshold amount defined in Section 1-101.7 of this

19 Code; or (2) a pension fund established under Article 4 of this

20 Code that (A) the governing body of the municipality or fire

21 protection district for which the pension fund was established

22 has required the pension fund to transfer its investment

23 authority under this Code to the Illinois Municipal Retirement

24 Fund under subsection (b) of Section 4-128 of this Code and (B)

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1 has net assets in trust that exceed the threshold amount

2 defined in Section 1-101.7 of this Code. The status of an

3 "eligible pension fund", once established, continues in effect

4 without regard to subsequent variations in the net assets of

5 the pension fund.

6 (40 ILCS 5/1-101.7 new)

7 Sec. 1-101.7. Threshold amount. "Threshold amount", when

8 used in relation to the financial assets of a pension fund

9 established under Article 3 or Article 4 of this Code, means an

10 amount equal to 3 months of current liabilities of the pension

11 fund, including benefit payments owed to annuitants and

12 beneficiaries of the pension fund and reasonable operational

13 expenses.

14 (40 ILCS 5/1-109.3)

15 Sec. 1-109.3. Training requirement for pension trustees.

16 (a) All elected and appointed trustees under Article 3 and

17 4 of this Code must participate in a mandatory trustee

18 certification training seminar that consists of at least 32

19 hours of initial trustee certification at a training facility

20 that is accredited and affiliated with a State of Illinois

21 certified college or university. This training must include

22 without limitation all of the following:

23 (1) Duties and liabilities of a fiduciary under Article

24 1 of the Illinois Pension Code.

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1 (2) Adjudication of pension claims.

2 (3) Basic accounting and actuarial training.

3 (4) Trustee ethics.

4 (5) The Illinois Open Meetings Act.

5 (6) The Illinois Freedom of Information Act.

6 The training required under this subsection (a) must be

7 completed within the first 2 years after the ~~year that a~~

8 trustee takes office ~~is elected or appointed~~ under an Article 3

9 or 4 pension fund. At least 8 hours of training during the

10 first year of training must cover fiduciary duties and

11 liabilities and trustee ethics. The elected and appointed

12 trustees of an Article 3 or 4 pension fund who are police

13 officers (as defined in Section 3-106 of this Code) or

14 firefighters (as defined in Section 4-106 of this Code) or are

15 employed by the municipality shall be permitted time away from

16 their duties to attend such training without reduction of

17 accrued leave or benefit time. Active or appointed trustees

18 serving on the effective date of this amendatory Act of the

19 96th General Assembly shall not be required to attend the

20 training required under this subsection (a).

21 (b) Upon completion of and in ~~In~~ addition to the initial

22 trustee certification training required under subsection (a),

23 all elected and appointed trustees under Article 3 and 4 of

24 this Code~~, including trustees serving on the effective date of~~

25 ~~this amendatory Act of the 96th General Assembly,~~ shall also

26 complete at least an additional ~~participate in a minimum of~~ 16

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1 hours of continuing trustee education during (i) the 2 years

2 following the date by which the training required under

3 subsection (a) must be completed and (ii) every 2 years

4 thereafter. At least 4 hours of training during each year must

5 be devoted to fiduciary duties and liabilities and trustee

6 ethics. At least 8 hours of the biennial training required

7 under this subsection (b) must be in the form of a live lecture

8 or classroom training forum or, if taken in an online training

9 program, must be in an interactive form with ascertainable

10 verification of participation and learning by the trustee in

11 the online training program. The balance of biennial trustee

12 training may take the form of participation in other training

13 opportunities incident to the functioning of the pension board,

14 such as participation in board hearings on the award of

15 disability or other benefits or training opportunities

16 associated with other organizations or employment that are

17 applicable to the duties of a pension fund trustee ~~each year~~

18 ~~after the first year that the trustee is elected or appointed~~.

19 (c) The training required under this Section shall be paid

20 for by the pension fund.

21 (d) Any board member who does not timely complete the

22 training required under this Section is not eligible to serve

23 on the board of trustees of an Article 3 or 4 pension fund,

24 unless the board member completes the missed training within 6

25 months after the date the member failed to complete the

26 required training. In the event of a board member's failure to

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1 complete the required training, a successor shall be appointed

2 or elected, as applicable, for the unexpired term. A successor

3 who is elected under such circumstances must be elected at a

4 special election called by the board and conducted in the same

5 manner as a regular election under Article 3 or 4, as

6 applicable.

7 (Source: P.A. 96-429, eff. 8-13-09.)

8 (40 ILCS 5/1-113.05 new)

9 Sec. 1-113.05. Transfer of investment authority of

10 eligible pension funds under Article 3 and Article 4.

11 (a) Upon receiving a certified investment asset list from

12 the Department of Insurance in accordance with Section 3-132.1

13 of this Code, the board of trustees of an eligible pension fund

14 established under Article 3 of this Code shall cease investment

15 activities and shall transfer all investment assets of the

16 pension fund to the Board of Trustees of the Illinois Municipal

17 Retirement Fund in the manner prescribed by rules adopted by

18 the Board of Trustees of the Illinois Municipal Retirement

19 Fund. Upon completion of that transfer, the investment

20 authority of the board of trustees of the eligible pension fund

21 shall terminate.

22 (b) Upon receiving a certified investment asset list from

23 the Department of Insurance in accordance with Section 4-128.1

24 of this Code, the board of trustees of an eligible pension fund

25 established under Article 4 of this Code shall cease investment

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1 activities and shall transfer all investment assets of the

2 pension fund to the Board of Trustees of the Illinois Municipal

3 Retirement Fund in the manner prescribed by rules adopted by

4 the Board of Trustees of the Illinois Municipal Retirement

5 Fund. Upon completion of that transfer, the investment

6 authority of the board of trustees of the eligible pension fund

7 shall terminate.

8 (40 ILCS 5/1-113.1)

9 Sec. 1-113.1. Investment authority of certain pension

10 funds established under Article 3 or 4.

11 (a) When the transfer of investment authority of an

12 eligible pension fund, as defined in Section 1-101.6, is made

13 under Section 1-113.05, subsection (b) of this Section does not

14 apply to that eligible pension fund.

15 This Section continues to apply to any pension fund

16 established under Article 3 or Article 4 that is not an

17 eligible pension fund as defined in Section 1-101.6.

18 (b) The board of trustees of a police pension fund

19 established under Article 3 of this Code or firefighter pension

20 fund established under Article 4 of this Code shall draw

21 pension funds from the treasurer of the municipality and,

22 beginning January 1, 1998, invest any part thereof in the name

23 of the board in the items listed in Sections 1-113.2 through

24 1-113.4 according to the limitations and requirements of this

25 Article. These investments shall be made with the care, skill,

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1 prudence, and diligence that a prudent person acting in like

2 capacity and familiar with such matters would use in the

3 conduct of an enterprise of like character with like aims.

4 Interest and any other income from the investments shall be

5 credited to the pension fund.

6 For the purposes of Sections 1-113.2 through 1-113.11, the

7 "net assets" of a pension fund include both the cash and

8 invested assets of the pension fund.

9 (Source: P.A. 90-507, eff. 8-22-97.)

10 (40 ILCS 5/1-113.2)

11 Sec. 1-113.2. List of permitted investments for certain ~~all~~

12 Article 3 or 4 pension funds.

13 (a) When the transfer of investment authority of an

14 eligible pension fund, as defined in Section 1-101.6, is made

15 under Section 1-113.05, subsection (b) of this Section does not

16 apply to that eligible pension fund.

17 (b) Except as provided in subsection (a), any ~~Any~~ pension

18 fund established under Article 3 or 4 may invest in the

19 following items:

20 (1) Interest bearing direct obligations of the United

21 States of America.

22 (2) Interest bearing obligations to the extent that they

23 are fully guaranteed or insured as to payment of principal and

24 interest by the United States of America.

25 (3) Interest bearing bonds, notes, debentures, or other

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1 similar obligations of agencies of the United States of

2 America. For the purposes of this Section, "agencies of the

3 United States of America" includes: (i) the Federal National

4 Mortgage Association and the Student Loan Marketing

5 Association; (ii) federal land banks, federal intermediate

6 credit banks, federal farm credit banks, and any other entity

7 authorized to issue direct debt obligations of the United

8 States of America under the Farm Credit Act of 1971 or

9 amendments to that Act; (iii) federal home loan banks and the

10 Federal Home Loan Mortgage Corporation; and (iv) any agency

11 created by Act of Congress that is authorized to issue direct

12 debt obligations of the United States of America.

13 (4) Interest bearing savings accounts or certificates of

14 deposit, issued by federally chartered banks or savings and

15 loan associations, to the extent that the deposits are insured

16 by agencies or instrumentalities of the federal government.

17 (5) Interest bearing savings accounts or certificates of

18 deposit, issued by State of Illinois chartered banks or savings

19 and loan associations, to the extent that the deposits are

20 insured by agencies or instrumentalities of the federal

21 government.

22 (6) Investments in credit unions, to the extent that the

23 investments are insured by agencies or instrumentalities of the

24 federal government.

25 (7) Interest bearing bonds of the State of Illinois.

26 (8) Pooled interest bearing accounts managed by the

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1 Illinois Public Treasurer's Investment Pool in accordance with

2 the Deposit of State Moneys Act, interest bearing funds or

3 pooled accounts of the Illinois Metropolitan Investment Funds,

4 and interest bearing funds or pooled accounts managed,

5 operated, and administered by banks, subsidiaries of banks, or

6 subsidiaries of bank holding companies in accordance with the

7 laws of the State of Illinois.

8 (9) Interest bearing bonds or tax anticipation warrants of

9 any county, township, or municipal corporation of the State of

10 Illinois.

11 (10) Direct obligations of the State of Israel, subject to

12 the conditions and limitations of item (5.1) of Section 1-113.

13 (11) Money market mutual funds managed by investment

14 companies that are registered under the federal Investment

15 Company Act of 1940 and the Illinois Securities Law of 1953 and

16 are diversified, open-ended management investment companies;

17 provided that the portfolio of the money market mutual fund is

18 limited to the following:

19 (i) bonds, notes, certificates of indebtedness,

20 treasury bills, or other securities that are guaranteed by

21 the full faith and credit of the United States of America

22 as to principal and interest;

23 (ii) bonds, notes, debentures, or other similar

24 obligations of the United States of America or its

25 agencies; and

26 (iii) short term obligations of corporations organized

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1 in the United States with assets exceeding $400,000,000,

2 provided that (A) the obligations mature no later than 180

3 days from the date of purchase, (B) at the time of

4 purchase, the obligations are rated by at least 2 standard

5 national rating services at one of their 3 highest

6 classifications, and (C) the obligations held by the mutual

7 fund do not exceed 10% of the corporation's outstanding

8 obligations.

9 (12) General accounts of life insurance companies

10 authorized to transact business in Illinois.

11 (13) Any combination of the following, not to exceed 10% of

12 the pension fund's net assets:

13 (i) separate accounts that are managed by life

14 insurance companies authorized to transact business in

15 Illinois and are comprised of diversified portfolios

16 consisting of common or preferred stocks, bonds, or money

17 market instruments;

18 (ii) separate accounts that are managed by insurance

19 companies authorized to transact business in Illinois, and

20 are comprised of real estate or loans upon real estate

21 secured by first or second mortgages; and

22 (iii) mutual funds that meet the following

23 requirements:

24 (A) the mutual fund is managed by an investment

25 company as defined and registered under the federal

26 Investment Company Act of 1940 and registered under the

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1 Illinois Securities Law of 1953;

2 (B) the mutual fund has been in operation for at

3 least 5 years;

4 (C) the mutual fund has total net assets of $250

5 million or more; and

6 (D) the mutual fund is comprised of diversified

7 portfolios of common or preferred stocks, bonds, or

8 money market instruments.

9 (14) Corporate bonds managed through an investment advisor

10 must meet all of the following requirements:

11 (1) The bonds must be rated as investment grade by one

12 of the 2 largest rating services at the time of purchase.

13 (2) If subsequently downgraded below investment grade,

14 the bonds must be liquidated from the portfolio within 90

15 days after being downgraded by the manager.

16 (Source: P.A. 96-1495, eff. 1-1-11.)

17 (40 ILCS 5/1-113.3)

18 Sec. 1-113.3. List of additional permitted investments for

19 certain ~~pension~~funds with net assets of $2,500,000 or more.

20 (a) When the transfer of investment authority of an

21 eligible pension fund, as defined in Section 1-101.6, is made

22 under Section 1-113.05, subsection (a-5) of this Section does

23 not apply to that eligible pension fund.

24 (a-5) Except as provided in subsection (a), in ~~(a) In~~

25 addition to the items in Section 3-113.2, a pension fund

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1 established under Article 3 or 4 that has net assets of at

2 least $2,500,000 may invest a portion of its net assets in the

3 following items:

4 (1) Separate accounts that are managed by life

5 insurance companies authorized to transact business in

6 Illinois and are comprised of diversified portfolios

7 consisting of common or preferred stocks, bonds, or money

8 market instruments.

9 (2) Mutual funds that meet the following requirements:

10 (i) the mutual fund is managed by an investment

11 company as defined and registered under the federal

12 Investment Company Act of 1940 and registered under the

13 Illinois Securities Law of 1953;

14 (ii) the mutual fund has been in operation for at

15 least 5 years;

16 (iii) the mutual fund has total net assets of $250

17 million or more; and

18 (iv) the mutual fund is comprised of diversified

19 portfolios of common or preferred stocks, bonds, or

20 money market instruments.

21 (b) A pension fund's total investment in the items

22 authorized under this Section shall not exceed 35% of the

23 market value of the pension fund's net present assets stated in

24 its most recent annual report on file with the Illinois

25 Department of Insurance.

26 (Source: P.A. 90-507, eff. 8-22-97.)

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1 (40 ILCS 5/1-113.4)

2 Sec. 1-113.4. List of additional permitted investments for

3 certainpension funds with net assets of $5,000,000 or more.

4 (a) When the transfer of investment authority of an

5 eligible pension fund, as defined in Section 1-101.6, is made

6 under Section 1-113.05, subsection (a-5) of this Section does

7 not apply to that eligible pension fund.

8 (a-5) Except as provided in subsection (a), in ~~(a) In~~

9 addition to the items in Sections 1-113.2 and 1-113.3, a

10 pension fund established under Article 3 or 4 that has net

11 assets of at least $5,000,000 and has appointed an investment

12 adviser under Section 1-113.5 may, through that investment

13 adviser, invest a portion of its assets in common and preferred

14 stocks authorized for investments of trust funds under the laws

15 of the State of Illinois. The stocks must meet all of the

16 following requirements:

17 (1) The common stocks are listed on a national

18 securities exchange or board of trade (as defined in the

19 federal Securities Exchange Act of 1934 and set forth in

20 subdivision G of Section 3 of the Illinois Securities Law

21 of 1953) or quoted in the National Association of

22 Securities Dealers Automated Quotation System National

23 Market System (NASDAQ NMS).

24 (2) The securities are of a corporation created or

25 existing under the laws of the United States or any state,

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1 district, or territory thereof and the corporation has been

2 in existence for at least 5 years.

3 (3) The corporation has not been in arrears on payment

4 of dividends on its preferred stock during the preceding 5

5 years.

6 (4) The market value of stock in any one corporation

7 does not exceed 5% of the cash and invested assets of the

8 pension fund, and the investments in the stock of any one

9 corporation do not exceed 5% of the total outstanding stock

10 of that corporation.

11 (5) The straight preferred stocks or convertible

12 preferred stocks are issued or guaranteed by a corporation

13 whose common stock qualifies for investment by the board.

14 (6) The issuer of the stocks has been subject to the

15 requirements of Section 12 of the federal Securities

16 Exchange Act of 1934 and has been current with the filing

17 requirements of Sections 13 and 14 of that Act during the

18 preceding 3 years.

19 (b) A pension fund's total investment in the items

20 authorized under this Section and Section 1-113.3 shall not

21 exceed 35% of the market value of the pension fund's net

22 present assets stated in its most recent annual report on file

23 with the Illinois Department of Insurance.

24 (c) A pension fund that invests funds under this Section

25 shall electronically file with the Division any reports of its

26 investment activities that the Division may require, at the

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1 times and in the format required by the Division.

2 (Source: P.A. 100-201, eff. 8-18-17.)

3 (40 ILCS 5/1-113.4a)

4 Sec. 1-113.4a. List of additional permitted investments

5 for certain Article 3 and 4 pension funds with net assets of

6 $10,000,000 or more.

7 (a) When the transfer of investment authority of an

8 eligible pension fund, as defined in Section 1-101.6, is made

9 under Section 1-113.05, subsection (a-5) of this Section does

10 not apply to that eligible pension fund.

11 (a-5) Except as provided in subsection (a), in ~~(a) In~~

12 addition to the items in Sections 1-113.2 and 1-113.3, a

13 pension fund established under Article 3 or 4 that has net

14 assets of at least $10,000,000 and has appointed an investment

15 adviser, as defined under Sections 1-101.4 and 1-113.5, may,

16 through that investment adviser, invest an additional portion

17 of its assets in common and preferred stocks and mutual funds.

18 (b) The stocks must meet all of the following requirements:

19 (1) The common stocks must be listed on a national

20 securities exchange or board of trade (as defined in the

21 Federal Securities Exchange Act of 1934 and set forth in

22 paragraph G of Section 3 of the Illinois Securities Law of

23 1953) or quoted in the National Association of Securities

24 Dealers Automated Quotation System National Market System.

25 (2) The securities must be of a corporation in

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LRB101 06714 RPS 51741 b

1 existence for at least 5 years.

2 (3) The market value of stock in any one corporation

3 may not exceed 5% of the cash and invested assets of the

4 pension fund, and the investments in the stock of any one

5 corporation may not exceed 5% of the total outstanding

6 stock of that corporation.

7 (4) The straight preferred stocks or convertible

8 preferred stocks must be issued or guaranteed by a

9 corporation whose common stock qualifies for investment by

10 the board.

11 (c) The mutual funds must meet the following requirements:

12 (1) The mutual fund must be managed by an investment

13 company registered under the Federal Investment Company

14 Act of 1940 and registered under the Illinois Securities

15 Law of 1953.

16 (2) The mutual fund must have been in operation for at

17 least 5 years.

18 (3) The mutual fund must have total net assets of

19 $250,000,000 or more.

20 (4) The mutual fund must be comprised of a diversified

21 portfolio of common or preferred stocks, bonds, or money

22 market instruments.

23 (d) A pension fund's total investment in the items

24 authorized under this Section and Section 1-113.3 shall not

25 exceed 50% effective July 1, 2011 and 55% effective July 1,

26 2012 of the market value of the pension fund's net present

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LRB101 06714 RPS 51741 b

1 assets stated in its most recent annual report on file with the

2 Department of Insurance.

3 (e) A pension fund that invests funds under this Section

4 shall electronically file with the Division any reports of its

5 investment activities that the Division may require, at the

6 time and in the format required by the Division.

7 (Source: P.A. 96-1495, eff. 1-1-11.)

8 (40 ILCS 5/1-113.5)

9 Sec. 1-113.5. Investment advisers and investment services

10 for certain ~~all~~ Article 3 or 4 pension funds.

11 (a) When the transfer of investment authority of an

12 eligible pension fund, as defined in Section 1-101.6, is made

13 under Section 1-113.05, subsection (a-1) of this Section does

14 not apply to that eligible pension fund.

15 (a-1) Except as provided in subsection (a), the ~~(a) The~~

16 board of trustees of a pension fund established under Article 3

17 or 4 of this Codemay appoint investment advisers as defined in

18 Section 1-101.4. The board of any pension fund investing in

19 common or preferred stock under Section 1-113.4 shall appoint

20 an investment adviser before making such investments.

21 The investment adviser or consultant shall be a fiduciary,

22 as defined in Section 1-101.2, with respect to the pension fund

23 and shall be one of the following:

24 (1) an investment adviser registered under the federal

25 Investment Advisers Act of 1940 and the Illinois Securities

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LRB101 06714 RPS 51741 b

1 Law of 1953;

2 (2) a bank or trust company authorized to conduct a

3 trust business in Illinois;

4 (3) a life insurance company authorized to transact

5 business in Illinois; or

6 (4) an investment company as defined and registered

7 under the federal Investment Company Act of 1940 and

8 registered under the Illinois Securities Law of 1953.

9 (a-5) Notwithstanding any other provision of law, a person

10 or entity that provides consulting services (referred to as a

11 "consultant" in this Section) to a pension fund with respect to

12 the selection of fiduciaries may not be awarded a contract to

13 provide those consulting services that is more than 5 years in

14 duration. No contract to provide such consulting services may

15 be renewed or extended. At the end of the term of a contract,

16 however, the contractor is eligible to compete for a new

17 contract. No person shall attempt to avoid or contravene the

18 restrictions of this subsection by any means. All offers from

19 responsive offerors shall be accompanied by disclosure of the

20 names and addresses of the following:

21 (1) The offeror.

22 (2) Any entity that is a parent of, or owns a

23 controlling interest in, the offeror.

24 (3) Any entity that is a subsidiary of, or in which a

25 controlling interest is owned by, the offeror.

26 Beginning on July 1, 2008, a person, other than a trustee

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LRB101 06714 RPS 51741 b

1 or an employee of a pension fund or retirement system, may not

2 act as a consultant under this Section unless that person is at

3 least one of the following: (i) registered as an investment

4 adviser under the federal Investment Advisers Act of 1940 (15

5 U.S.C. 80b-1, et seq.); (ii) registered as an investment

6 adviser under the Illinois Securities Law of 1953; (iii) a

7 bank, as defined in the Investment Advisers Act of 1940; or

8 (iv) an insurance company authorized to transact business in

9 this State.

10 (b) All investment advice and services provided by an

11 investment adviser or a consultant appointed under this Section

12 shall be rendered pursuant to a written contract between the

13 investment adviser and the board, and in accordance with the

14 board's investment policy.

15 The contract shall include all of the following:

16 (1) acknowledgement in writing by the investment

17 adviser that he or she is a fiduciary with respect to the

18 pension fund;

19 (2) the board's investment policy;

20 (3) full disclosure of direct and indirect fees,

21 commissions, penalties, and any other compensation that

22 may be received by the investment adviser, including

23 reimbursement for expenses; and

24 (4) a requirement that the investment adviser submit

25 periodic written reports, on at least a quarterly basis,

26 for the board's review at its regularly scheduled meetings.

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1 All returns on investment shall be reported as net returns

2 after payment of all fees, commissions, and any other

3 compensation.

4 (b-5) Each contract described in subsection (b) shall also

5 include (i) full disclosure of direct and indirect fees,

6 commissions, penalties, and other compensation, including

7 reimbursement for expenses, that may be paid by or on behalf of

8 the investment adviser or consultant in connection with the

9 provision of services to the pension fund and (ii) a

10 requirement that the investment adviser or consultant update

11 the disclosure promptly after a modification of those payments

12 or an additional payment.

13 Within 30 days after the effective date of this amendatory

14 Act of the 95th General Assembly, each investment adviser and

15 consultant providing services on the effective date or subject

16 to an existing contract for the provision of services must

17 disclose to the board of trustees all direct and indirect fees,

18 commissions, penalties, and other compensation paid by or on

19 behalf of the investment adviser or consultant in connection

20 with the provision of those services and shall update that

21 disclosure promptly after a modification of those payments or

22 an additional payment.

23 A person required to make a disclosure under subsection (d)

24 is also required to disclose direct and indirect fees,

25 commissions, penalties, or other compensation that shall or may

26 be paid by or on behalf of the person in connection with the

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LRB101 06714 RPS 51741 b

1 rendering of those services. The person shall update the

2 disclosure promptly after a modification of those payments or

3 an additional payment.

4 The disclosures required by this subsection shall be in

5 writing and shall include the date and amount of each payment

6 and the name and address of each recipient of a payment.

7 (c) Within 30 days after appointing an investment adviser

8 or consultant, the board shall submit a copy of the contract to

9 the Division of Insurance of the Department of Financial and

10 Professional Regulation.

11 (d) Investment services provided by a person other than an

12 investment adviser appointed under this Section, including but

13 not limited to services provided by the kinds of persons listed

14 in items (1) through (4) of subsection (a), shall be rendered

15 only after full written disclosure of direct and indirect fees,

16 commissions, penalties, and any other compensation that shall

17 or may be received by the person rendering those services.

18 (e) The board of trustees of each pension fund shall retain

19 records of investment transactions in accordance with the rules

20 of the Department of Financial and Professional Regulation.

21 (f) Upon the initial transfer of assets and investment

22 authority of an eligible pension fund under subsection (b) of

23 Section 4-128 of this Code, and thereafter in perpetuity, the

24 Board of Trustees of the Illinois Municipal Retirement Fund

25 shall provide all investment services for that eligible pension

26 fund. Any fees for these services shall be paid from the

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1 respective pension funds.

2 The Board of Trustees of the Illinois Municipal Retirement

3 Fund shall not be held liable by or indemnify any individual

4 annuitant or beneficiary of any eligible pension fund

5 established under Article 4 of this Code for nonpayment of

6 benefits by the eligible pension fund.

7 (g) Upon the initial transfer of assets and investment

8 authority of an eligible pension fund under subsection (b) of

9 Section 3-135 of this Code, and thereafter in perpetuity, the

10 Board of Trustees of the Illinois Municipal Retirement Fund

11 shall provide all investment services for that eligible pension

12 fund. Any fees for these services shall be paid from the

13 respective pension funds.

14 The Board of Trustees of the Illinois Municipal Retirement

15 Fund shall not be held liable by or indemnify any individual

16 annuitant or beneficiary of any eligible pension fund

17 established under Article 3 of this Code for nonpayment of

18 benefits by the eligible pension fund.

19 (Source: P.A. 95-950, eff. 8-29-08; 96-6, eff. 4-3-09.)

20 (40 ILCS 5/1-113.6)

21 Sec. 1-113.6. Investment policies.

22 (a) Except as provided in subsection (b), every ~~Every~~ board

23 of trustees of a pension fund shall adopt a written investment

24 policy and file a copy of that policy with the Department of

25 Insurance within 30 days after its adoption. Whenever a board

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1 changes its investment policy, it shall file a copy of the new

2 policy with the Department within 30 days.

3 (b) Upon the transfer of its investment authority under

4 Section 1-113.05, the requirement to maintain and file an

5 investment policy under subsection (a) ceases to apply to the

6 board of trustees of an eligible pension fund.

7 (Source: P.A. 90-507, eff. 8-22-97.)

8 (40 ILCS 5/1-113.7)

9 Sec. 1-113.7. Registration of investments; custody and

10 safekeeping.

11 This Section does not apply to investments that have been

12 transferred under Section 1-113.05.

13 The board of trustees may register the investments of its

14 pension fund in the name of the pension fund, in the nominee

15 name of a bank or trust company authorized to conduct a trust

16 business in Illinois, or in the nominee name of the Illinois

17 Public Treasurer's Investment Pool.

18 The assets of the pension fund and ownership of its

19 investments shall be protected through third-party custodial

20 safekeeping. The board of trustees may appoint as custodian of

21 the investments of its pension fund the treasurer of the

22 municipality, a bank or trust company authorized to conduct a

23 trust business in Illinois, or the Illinois Public Treasurer's

24 Investment Pool.

25 A dealer may not maintain possession of or control over

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1 securities of a pension fund subject to the provisions of this

2 Section unless it is registered as a broker-dealer with the

3 U.S. Securities and Exchange Commission and is a member in good

4 standing of the National Association of Securities Dealers, and

5 (1) with respect to securities that are not issued only in

6 book-entry form, (A) all such securities of each fund are

7 either held in safekeeping in a place reasonably free from risk

8 of destruction or held in custody by a securities depository

9 that is a "clearing agency" registered with the U.S. Securities

10 and Exchange Commission, (B) the dealer is a member of the

11 Securities Investor Protection Corporation, (C) the dealer

12 sends to each fund, no less frequently than each calendar

13 quarter, an itemized statement showing the moneys and

14 securities in the custody or possession of the dealer at the

15 end of such period, and (D) an independent certified public

16 accountant conducts an audit, no less frequently than each

17 calendar year, that reviews the dealer's internal accounting

18 controls and procedures for safeguarding securities; and (2)

19 with respect to securities that are issued only in book-entry

20 form, (A) all such securities of each fund are held either in a

21 securities depository that is a "clearing agency" registered

22 with the U.S. Securities and Exchange Commission or in a bank

23 that is a member of the Federal Reserve System, (B) the dealer

24 records the ownership interest of the funds in such securities

25 on the dealer's books and records, (C) the dealer is a member

26 of the Securities Investor Protection Corporation, (D) the

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1 dealer sends to each fund, no less frequently than each

2 calendar quarter, an itemized statement showing the moneys and

3 securities in the custody or possession of the dealer at the

4 end of such period, and (E) the dealer's financial statement

5 (which shall contain among other things a statement of the

6 dealer's net capital and its required net capital computed in

7 accordance with Rule 15c3-1 under the Securities Exchange Act

8 of 1934) is audited annually by an independent certified public

9 accountant, and the dealer's most recent audited financial

10 statement is furnished to the fund. No broker-dealer serving as

11 a custodian for any public pension fund as provided by this Act

12 shall be authorized to serve as an investment advisor for that

13 same public pension fund as described in Section 1-101.4 of

14 this Code, to the extent that the investment advisor acquires

15 or disposes of any asset of that same public pension fund.

16 Notwithstanding the foregoing, in no event may a broker or

17 dealer that is a natural person maintain possession of or

18 control over securities or other assets of a pension fund

19 subject to the provisions of this Section. In maintaining

20 securities of a pension fund subject to the provisions of this

21 Section, each dealer must maintain those securities in

22 conformity with the provisions of Rule 15c3-3(b) of the

23 Securities Exchange Act of 1934 (Physical Possession or Control

24 of Securities). The Director of the Department of Insurance may

25 adopt such rules and regulations as shall be necessary and

26 appropriate in his or her judgment to effectuate the purposes

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1 of this Section.

2 A bank or trust company authorized to conduct a trust

3 business in Illinois shall register, deposit, or hold

4 investments for safekeeping, all in accordance with the

5 obligations and subject to the limitations of the Securities in

6 Fiduciary Accounts Act.

7 (Source: P.A. 92-651, eff. 7-11-02.)

8 (40 ILCS 5/1-167 new)

9 Sec. 1-167. Commission on Government Forecasting and

10 Accountability study.

11 (a) The Commission on Government Forecasting and

12 Accountability shall conduct an analysis of the merits and

13 feasibility of:

14 (1) transitioning the investment authority of all

15 downstate boards of trustees of police pension funds

16 organized under Article 3 to the Illinois Municipal

17 Retirement Fund; the analysis shall include any cost or

18 cost savings associated with establishing the

19 administrative systems and transferring assets for

20 investment management under the Illinois Municipal

21 Retirement Fund; the analysis shall include an examination

22 of the impact of the investment pool, the expected future

23 fund performance of the Illinois Municipal Retirement Fund

24 under the prudent investor rule, the expected future total

25 expense ratio and expenses of the Illinois Municipal

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1 Retirement Fund, and any other issues of costs and savings

2 of transition unique to the Illinois Municipal Retirement

3 Fund; the analysis should evaluate the time period in which

4 the transition could reasonably occur, recommend a

5 reasonable transition period, and maintain the present

6 funding requirements of 90% funding by 2040; and

7 (2) transitioning the investment authority of all

8 downstate boards of trustees of firefighters pension funds

9 organized under Article 4 to the Illinois Municipal

10 Retirement Fund; the analysis shall include any cost or

11 cost savings associated with establishing the

12 administrative systems and transferring assets for

13 investment management under the Illinois Municipal

14 Retirement Fund; the analysis shall include an examination

15 of the impact of the investment pool, the expected future

16 fund performance of the Illinois Municipal Retirement Fund

17 under the prudent investor rule, the expected future total

18 expense ratio and expenses of the Illinois Municipal

19 Retirement Fund, and any other issues of costs and savings

20 of transition unique to the Illinois Municipal Retirement

21 Fund; the analysis should evaluate the time period in which

22 the transition could reasonably occur, recommend a

23 reasonable transition period, and maintain the present

24 funding requirements of 90% funding by 2040.

25 (b) As part of the analysis under subsection (a), the

26 Commission shall also:

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1 (1) identify which Article 3 and Article 4 pension

2 funds receive employer contributions from home rule or

3 non-home rule units of local government;

4 (2) identify those pension funds, as of the most recent

5 fiscal year, with funded ratios of 20% or below, above 20%

6 but below 30%, above 30% but below 40%, above 40% but below

7 50%, and 50% and above;

8 (3) identity when each Article 3 and Article 4 pension

9 fund was most recently examined and investigated by the

10 Public Pension Division of the Department of Insurance in

11 accordance with Section 1A-104; and

12 (4) identify which Article 3 and Article 4 pension

13 funds are not in compliance with Sections 1A-109, 1A-110,

14 and 1A-111 of this Code.

15 (c) The Commission shall issue a report containing its

16 analysis on or before December 31, 2020.

17 (40 ILCS 5/3-127) (from Ch. 108 1/2, par. 3-127)

18 Sec. 3-127. Reserves.

19 (a)The board shall establish and maintain a reserve to

20 insure the payment of all obligations incurred under this

21 Article excluding retirement annuities established under

22 Section 3-109.3. The reserve to be accumulated shall be equal

23 to the estimated total actuarial requirements of the fund.

24 If a pension fund has a reserve of less than the accrued

25 liabilities of the fund, the board of the pension fund, in

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1 making its annual report to the city council or board of

2 trustees of the municipality, shall designate the amount,

3 calculated as a level percentage of payroll, needed annually to

4 insure the accumulation of the reserve to the level of the

5 fund's accrued liabilities over a period of 40 years from July

6 1, 1993 for pension funds then in operation, or from the date

7 of establishment in the case of a fund created thereafter, so

8 that the necessary reserves will be attained over such a

9 period.

10 (b) In the case of an eligible pension fund under this

11 Article that has transferred its investment authority to the

12 Board of Trustees of the Illinois Municipal Retirement Fund

13 under Section 1-113.05 of this Code, the assets invested by the

14 Board of Trustees of the Illinois Municipal Retirement Fund on

15 behalf of the pension fund, and the dividends and other

16 investment earnings attributable thereto, shall be considered

17 as part of the reserve for the purposes of this Section.

18 The Board of Trustees of the Illinois Municipal Retirement

19 Fund shall report to the board of each such fund, at least

20 annually and upon the reasonable request of an eligible pension

21 fund, the financial information on the invested assets and

22 earnings attributable to that pension fund so that the board

23 may make the determinations required under this Article.

24 (Source: P.A. 91-939, eff. 2-1-01.)

25 (40 ILCS 5/3-132) (from Ch. 108 1/2, par. 3-132)

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1 Sec. 3-132. To control and manage the Pension Fund.

2 (a) Except as provided in subsection (a-5), in ~~In~~

3 accordance with the applicable provisions of Articles 1 and 1A

4 and this Article, to control and manage, exclusively, the

5 following:

6 (1) the pension fund,

7 (2) investment expenditures and income, including

8 interest dividends, capital gains and other distributions

9 on the investments, and

10 (3) all money donated, paid, assessed, or provided by

11 law for the pensioning of disabled and retired police

12 officers, their surviving spouses, minor children, and

13 dependent parents.

14 All money received or collected shall be credited by the

15 treasurer of the municipality to the account of the pension

16 fund and held by the treasurer of the municipality subject to

17 the order and control of the board. The treasurer of the

18 municipality shall maintain a record of all money received,

19 transferred, and held for the account of the board.

20 (a-5) In accordance with the applicable provisions of

21 Article 1, Article 1A, and this Article, the board of trustees

22 of an eligible pension fund under this Article shall have the

23 authority to control and manage, exclusively, the following:

24 (1) the pension fund, and

25 (2) all money donated, paid, assessed, or provided by

26 law for the pensioning of disabled and retired police

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1 officers, their surviving spouses, minor children, and

2 dependent parents.

3 All money received or collected shall be credited by the

4 treasurer of the municipality to the Illinois Municipal

5 Retirement Fund's account of the pension fund and held by the

6 Illinois Municipal Retirement Fund for purposes of investment

7 in accordance with this Article and Article 7 of this Code.

8 (b) In accordance with rules adopted under Article 7 of

9 this Code, the board of trustees of an eligible pension fund

10 under this Article shall make periodic written application to

11 the Illinois Municipal Retirement Fund for receipt and deposit

12 of reserves into the pension fund. Reserves in the amount of 3

13 months' current liabilities, including annuity and benefit

14 payments and operational expenses owed by the fund, shall be

15 held by the treasurer of the municipality subject to the order

16 and control of the board. The treasurer of the municipality

17 shall maintain a record of all money received, transferred, and

18 held for the account of the board.

19 (c) In case of any dispute that may arise between the board

20 of trustees of any eligible pension fund under this Article and

21 the Illinois Municipal Retirement Fund under subsection (b) of

22 this Section, the board of trustees of the pension fund shall

23 appeal the dispute to the Director of Insurance. If the

24 Director of Insurance finds there exists a good faith dispute

25 between the parties, then the Director of Insurance may hold a

26 hearing in accordance with the rules of the Department of

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1 Insurance.

2 (Source: P.A. 90-507, eff. 8-22-97.)

3 (40 ILCS 5/3-132.1 new)

4 Sec. 3-132.1. Certified investment asset list.

5 (a) Within 6 months after the Department of Insurance

6 receives the adopting resolution described in subsection (b) of

7 Section 3-135, the Department shall audit the investment assets

8 of the eligible pension fund established under this Article to

9 determine a certified investment asset list. The audit shall be

10 performed by a certified public accountant. The board of

11 trustees of the eligible pension fund shall defray the expense

12 of the audit.

13 (b) Upon completion of the audit, the Department shall

14 provide the certified investment asset list to the eligible

15 pension fund and the Illinois Municipal Retirement Fund. The

16 Department may adopt rules governing the creation and

17 distribution of the certified investment asset list.

18 (40 ILCS 5/3-132.2 new)

19 Sec. 3-132.2. To transfer investment funds. After the

20 initial transfer of assets in accordance with Section 3-132.3

21 of this Code, at each quarterly meeting of the board of

22 trustees of an eligible pension fund under this Article, the

23 board of trustees of the eligible pension fund shall transfer

24 any available funds for investment to the Illinois Municipal

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1 Retirement Fund subject to and in accordance with the

2 provisions of this Article and Article 7 of this Code. Each

3 transfer shall be made within 30 days of the end of the fiscal

4 year quarter, and written notice of the transfer shall be given

5 to the Illinois Municipal Retirement Fund subject to and in

6 accordance with the provisions of this Article and Article 7 of

7 this Code.

8 (40 ILCS 5/3-132.3 new)

9 Sec. 3-132.3. Transfer of assets to the Illinois Municipal

10 Retirement Fund.

11 (a) Upon receipt of a certified investment asset list

12 provided under Section 3-132.1 of this Code from an eligible

13 pension fund under this Article, the Illinois Municipal

14 Retirement Fund shall, as soon as practicable, initiate the

15 transfer of assets from the board of trustees of the eligible

16 fund, and the board of trustees of the eligible fund shall

17 transfer to the Illinois Municipal Retirement Fund for

18 management and investment all of its securities, including

19 securities for which commitments have been made, and all funds,

20 assets, or money representing permanent or temporary

21 investments, and cash reserves maintained for the purpose of

22 obtaining income thereon. The Illinois Municipal Retirement

23 Fund shall initiate the transfer of assets by issuing and

24 delivering to the board of trustees of an eligible pension fund

25 an order that sets forth the schedule the eligible pension fund

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1 shall follow to effectuate the transfer of assets.

2 (b) Upon the transfer of assets from a board of trustees

3 under this Section, the custody and control of the Illinois

4 Municipal Retirement Fund over the present and future

5 investment assets of the pension fund shall take effect. The

6 transfer shall be receipted for in detail by the chairperson

7 and executive director of the Illinois Municipal Retirement

8 Fund and the receipt shall be provided to the board of trustees

9 of the eligible pension fund within 30 days after the effective

10 date of the transfer.

11 (c) Each board of trustees of an eligible pension fund

12 under this Article shall report to the Illinois Municipal

13 Retirement Fund, at the end of each quarter of the pension

14 fund's fiscal year, the amount of funds available for

15 investment. These amounts shall be transferred within 30 days

16 of the end of the quarter to the Illinois Municipal Retirement

17 Fund in a manner prescribed by the Illinois Municipal

18 Retirement Fund. Notice to the Illinois Municipal Retirement

19 Fund of each transfer shall be given by the eligible pension

20 fund as the transfer occurs.

21 (40 ILCS 5/3-132.4 new)

22 Sec. 3-132.4. Audit of transition. Within 6 months of the

23 completion of the transfer of investment assets from an

24 eligible pension fund in accordance with Section 3-132.3 of

25 this Code to the control of the Illinois Municipal Retirement

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1 Fund, the books, records, accounts, and securities of the board

2 shall be audited by a certified public accountant designated by

3 the Auditor General. The audit shall include, but not be

4 limited to, the following: (1) a full description of the

5 investments acquired, showing average costs; (2) a full

6 description of the securities sold or exchanged, showing

7 average proceeds or other conditions of exchange; (3) gains or

8 losses realized during the period; (4) income from investments;

9 (5) administrative expenses of the Illinois Municipal

10 Retirement Fund; and (6) the proportion of administrative

11 expense allocable to each pension fund. The audit shall be

12 published on the Illinois Municipal Retirement Fund's website

13 and filed with the Department of Insurance.

14 (40 ILCS 5/3-135) (from Ch. 108 1/2, par. 3-135)

15 Sec. 3-135. To invest funds and transfer funds.

16 (a) Except as provided in subsection (b), ~~Beginning January~~

17 ~~1, 1998,~~the board shall invest funds in accordance with

18 Sections 1-113.1 through 1-113.10 of this Code.Any pension

19 fund under this Article that does not meet the definition of an

20 eligible pension fund under Section 1-101.6 of this Code shall

21 retain the authority to control and manage investment

22 expenditures and income, including interest, dividends,

23 capital gains, and other distributions on the investments.

24 (b) Beginning January 1, 2020, the governing body of a

25 municipality that has a pension fund established under this

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1 Article having assets in trust that exceed the threshold amount

2 defined in Section 1-101.7 of this Code may require that

3 pension fund to become an eligible pension fund as defined in

4 Section 1-101.6 of this Code. To require the pension fund to

5 become an eligible pension fund, the governing body of the

6 municipality must adopt a resolution that irrevocably

7 transfers the investment authority under this Code to the Board

8 of Trustees of the Illinois Municipal Retirement Fund. The

9 board of trustees, or its designee, shall provide and deliver

10 to the Department of Insurance, Treasurer, Auditor General, and

11 Illinois Municipal Retirement Fund a copy of the duly adopted

12 resolution within 5 business days after its adoption. The

13 Department of Insurance shall provide and deliver to the board

14 of trustees of the eligible pension fund, Auditor General, and

15 Illinois Municipal Retirement Fund a written acknowledgment of

16 its receipt of the duly adopted resolution and the date that it

17 was received by the Department. A pension fund may become an

18 eligible pension fund only upon the direction of the

19 municipality or fire protection district, as applicable.

20 (c) The board of trustees of an eligible pension fund under

21 this Article that receives a certified investment asset list

22 under Section 3-132.1 shall cease investment activities upon

23 receiving the certified investment asset list and shall

24 transfer all investment assets, minus assets needed to comply

25 with subsection (b) of Section 3-132, to the Illinois Municipal

26 Retirement Fund in the manner prescribed by the rules adopted

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1 by the Illinois Municipal Retirement Fund. Upon completion of

2 the transfer described in this subsection, the investment

3 authority of the board of trustees of the eligible pension fund

4 shall terminate under this Article.

5 (Source: P.A. 90-507, eff. 8-22-97.)

6 (40 ILCS 5/4-120) (from Ch. 108 1/2, par. 4-120)

7 Sec. 4-120. Reserves.

8 (a) The board shall establish and maintain a reserve to

9 insure the payment of all obligations incurred under this

10 Article. The reserve to be accumulated shall be equal to the

11 estimated total actuarial requirements of the Fund.

12 (b) In the case of an eligible pension fund under this

13 Article that has transferred its investment authority to the

14 Board of Trustees of the Illinois Municipal Retirement Fund,

15 the assets invested by the Board of Trustees of the Illinois

16 Municipal Retirement Fund on behalf of the pension fund, and

17 the dividends and other investment earnings attributable

18 thereto, shall be considered as part of the reserve for the

19 purposes of this Section.

20 The Board of Trustees of the Illinois Municipal Retirement

21 Fund shall report to the board of each such fund, at least

22 annually and upon the reasonable request of an eligible pension

23 fund, the financial information on the invested assets and

24 earnings attributable to that pension fund so that the board

25 may make the determinations required under this Article.

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1 (Source: P.A. 83-1440.)

2 (40 ILCS 5/4-123) (from Ch. 108 1/2, par. 4-123)

3 Sec. 4-123. To control and manage the Pension Fund.

4 (a) Except as provided in subsection (a-5), in ~~In~~

5 accordance with the applicable provisions of Articles 1 and 1A

6 and this Article, the board of trustees of the pension fund

7 shall have the authorityto control and manage, exclusively,

8 the following:

9 (1) the pension fund,

10 (2) investment expenditures and income, including

11 interest dividends, capital gains, and other distributions

12 on the investments, and

13 (3) all money donated, paid, assessed, or provided by

14 law for the pensioning of disabled and retired

15 firefighters, their surviving spouses, minor children, and

16 dependent parents.

17 All money received or collected shall be credited by the

18 treasurer of the municipality to the account of the pension

19 fund and held by the treasurer of the municipality subject to

20 the order and control of the board. The treasurer of the

21 municipality shall maintain a record of all money received,

22 transferred, and held for the account of the board.

23 (a-5) In accordance with the applicable provisions of

24 Article 1, 1A, and this Article, the board of trustees of an

25 eligible pension fund under this Article shall have the

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1 authority to control and manage, exclusively, the following:

2 (1) the pension fund, and

3 (2) all money donated, paid, assessed, or provided by

4 law for the pensioning of disabled and retired

5 firefighters, their surviving spouses, minor children, and

6 dependent parents.

7 All money received or collected shall be credited by the

8 treasurer of the municipality to the Illinois Municipal

9 Retirement Fund's account of the pension fund and held by the

10 Illinois Municipal Retirement Fund for purposes of investment

11 in accordance with this Article and Article 7 of this Code.

12 (b) In accordance with rules adopted by the Illinois

13 Municipal Retirement Fund, the board of trustees of an eligible

14 pension fund under this Article shall make periodic written

15 application to the Illinois Municipal Retirement Fund for

16 receipt and deposit of reserves into the pension fund. Reserves

17 in the amount of 3 months' current liabilities, including

18 annuity and benefit payments and operational expenses owed by

19 the fund, shall be held by the treasurer of the municipality

20 subject to the order and control of the board. The treasurer of

21 the municipality shall maintain a record of all money received,

22 transferred, and held for the account of the board.

23 (c) In case of any dispute that may arise between the board

24 of trustees of any eligible pension fund under this Article and

25 the Illinois Municipal Retirement Fund under subsection (b) of

26 this Section, the board of trustees of the pension fund shall

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1 appeal the dispute to the Director of Insurance. If the

2 Director of Insurance finds there exists a good faith dispute

3 between the parties, then the Director of Insurance may hold a

4 hearing in accordance with the rules of the Department of

5 Insurance.

6 (Source: P.A. 90-507, eff. 8-22-97.)

7 (40 ILCS 5/4-128) (from Ch. 108 1/2, par. 4-128)

8 Sec. 4-128. To invest funds and transfer funds.

9 (a) Except as provided in subsection (b), ~~Beginning January~~

10 ~~1, 1998,~~ the board shall invest funds in accordance with

11 Sections 1-113.1 through 1-113.10 of this Code.Any pension

12 fund under this Article that does not meet the definition of an

13 eligible pension fund under Section 1-101.6 of this Code shall

14 retain the authority to control and manage investment

15 expenditures and income, including interest, dividends,

16 capital gains, and other distributions on the investments.

17 (b) Beginning January 1, 2020, the governing body of a

18 municipality or fire protection district that has a board of

19 trustees of a pension fund established under this Article

20 having assets in trust that exceed the threshold amount defined

21 in Section 1-101.7 of this Code may require the pension fund to

22 become an eligible pension fund as defined in Section 1-101.6

23 of this Code. To require the pension fund to become an eligible

24 pension fund, the governing body of a municipality or fire

25 protection district must adopt a resolution that irrevocably

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1 transfers the investment authority under this Code to the Board

2 of Trustees of the Illinois Municipal Retirement Fund. The

3 board of trustees, or its designee, shall provide and deliver

4 to the Department of Insurance, Treasurer, Auditor General, and

5 Illinois Municipal Retirement Fund a copy of the duly adopted

6 resolution within 5 business days after its adoption. The

7 Department of Insurance shall provide and deliver to the board

8 of trustees of the eligible pension fund, Auditor General, and

9 Illinois Municipal Retirement Fund a written acknowledgment of

10 its receipt of the duly adopted resolution and the date that it

11 was received by the Department. A pension fund may become an

12 eligible pension fund only upon the direction of the

13 municipality.

14 (c) The board of trustees of an eligible pension fund under

15 this Article that receives a certified investment asset list

16 under Section 4-128.1 shall cease investment activities upon

17 receiving the certified investment asset list and shall

18 transfer all investment assets, minus assets needed to comply

19 with subsection (b) of Section 4-123, to the Illinois Municipal

20 Retirement Fund in the manner prescribed by the rules adopted

21 by the Illinois Municipal Retirement Fund. Upon completion of

22 the transfer described in this subsection, the investment

23 authority of the board of trustees of the eligible pension fund

24 shall terminate under this Article.

25 (Source: P.A. 90-507, eff. 8-22-97.)

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1 (40 ILCS 5/4-128.1 new)

2 Sec. 4-128.1. Certified investment asset list.

3 (a) Within 6 months after the Department of Insurance

4 receives the adopting resolution described in subsection (b) of

5 Section 4-128, the Department shall audit the investment assets

6 of the eligible pension fund established under this Article to

7 determine a certified investment asset list. The audit shall be

8 performed by a certified public accountant. The board of

9 trustees of the eligible pension fund shall defray the expense

10 of the audit.

11 (b) Upon completion of the audit, the Department shall

12 provide the certified investment asset list to the eligible

13 pension fund and the Illinois Municipal Retirement Fund. The

14 Department may adopt rules governing the creation and

15 distribution of the certified investment asset list.

16 (40 ILCS 5/4-128.2 new)

17 Sec. 4-128.2. To transfer investment funds. After the

18 initial transfer of assets in accordance with Section 4-128.3

19 of this Code, at each quarterly meeting of the board of

20 trustees of an eligible pension fund under this Article, the

21 board of trustees of the eligible pension fund shall transfer

22 any available funds for investment to the Illinois Municipal

23 Retirement Fund subject to and in accordance with the

24 provisions of this Article and Article 7 of this Code. Each

25 transfer shall be made within 30 days of the end of the fiscal

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1 year quarter, and written notice of the transfer shall be given

2 to the Illinois Municipal Retirement Fund subject to and in

3 accordance with the provisions of this Article and Article 7 of

4 this Code.

5 (40 ILCS 5/4-128.3 new)

6 Sec. 4-128.3. Transfer of assets to the Illinois Municipal

7 Retirement Fund.

8 (a) Upon receipt of a certified investment asset list

9 provided under Section 4-128.1 of this Code from an eligible

10 pension fund under this Article, the Illinois Municipal

11 Retirement Fund shall, as soon as practicable, initiate the

12 transfer of assets from the board of trustees of the eligible

13 fund, and the board of trustees of the eligible fund shall

14 transfer to the Illinois Municipal Retirement Fund for

15 management and investment all of its securities, including

16 securities for which commitments have been made, and all funds,

17 assets, or money representing permanent or temporary

18 investments, and cash reserves maintained for the purpose of

19 obtaining income thereon. The Illinois Municipal Retirement

20 Fund shall initiate the transfer of assets by issuing and

21 delivering to the board of trustees of an eligible pension fund

22 an order that sets forth the schedule the eligible pension fund

23 shall follow to effectuate the transfer of assets.

24 (b) Upon the transfer of assets from a board of trustees

25 under this Section, the custody and control of the Illinois

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1 Municipal Retirement Fund over the present and future

2 investment assets of the pension fund shall take effect. The

3 transfer shall be receipted for in detail by the chairperson

4 and executive director of the Illinois Municipal Retirement

5 Fund and the receipt shall be provided to the board of trustees

6 of the eligible pension fund within 30 days after the effective

7 date of the transfer.

8 (c) Each board of trustees of an eligible pension fund

9 under this Article shall report to the Illinois Municipal

10 Retirement Fund, at the end of each quarter of the pension

11 fund's fiscal year, the amount of funds available for

12 investment. These amounts shall be transferred within 30 days

13 of the end of the quarter to the Illinois Municipal Retirement

14 Fund in a manner prescribed by the Illinois Municipal

15 Retirement Fund. Notice to the Illinois Municipal Retirement

16 Fund of each transfer shall be given by the eligible pension

17 fund as the transfer occurs.

18 (40 ILCS 5/4-128.4 new)

19 Sec. 4-128.4. Audit of transition. Within 6 months of the

20 completion of the transfer of investment assets from an

21 eligible pension fund in accordance with Section 4-128.3 of

22 this Code to the control of the Illinois Municipal Retirement

23 Fund, the books, records, accounts, and securities of the board

24 shall be audited by a certified public accountant designated by

25 the Auditor General. The audit shall include, but not be

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1 limited to, the following: (1) a full description of the

2 investments acquired, showing average costs; (2) a full

3 description of the securities sold or exchanged, showing

4 average proceeds or other conditions of exchange; (3) gains or

5 losses realized during the period; (4) income from investments;

6 (5) administrative expenses of the Illinois Municipal

7 Retirement Fund; and (6) the proportion of administrative

8 expense allocable to each pension fund. The audit shall be

9 published on the Illinois Municipal Retirement Fund's website

10 and filed with the Department of Insurance.

11 (40 ILCS 5/7-175) (from Ch. 108 1/2, par. 7-175)

12 Sec. 7-175. Board elections.

13 (a) During the period beginning on August 1 and ending on

14 September 15 of each year the board shall accept nominations of

15 candidates for election to the trusteeships for terms beginning

16 the next January 1, new trusteeships or vacancies to be filled

17 by election.

18 (b) All nominations shall be by petition. Three petitions

19 for an executive trustee shall be signed by governing bodies of

20 contributing participating municipalities or

21 instrumentalities.

22 A petition for an employee trustee shall be signed by at

23 least 350 participating employees who were participants during

24 July of the current year and who, if their employment status

25 remained unchanged, would be eligible to vote for such

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1 candidate at the following election.

2 A petition for an annuitant trustee shall be signed by at

3 least 100 persons who were annuitants of the Fund during July

4 of the current year and who, if their annuitant status remains

5 unchanged, would be eligible to vote for the candidate at the

6 following election.

7 (c) A separate ballot shall be used for each class of

8 trustee and the names of all candidates properly nominated in

9 petitions received by the board shall be placed in alphabetical

10 order upon the proper ballot. Where two employee trustees are

11 elected to a full term in the same year, there shall be one

12 election for the two trusteeships and the two candidates

13 getting the highest number of votes shall be elected.

14 (d) At any election, each contributing participating

15 municipality and participating instrumentality and each

16 contributing participating employee employed by such

17 participating municipality or participating instrumentality

18 during September of any year, shall be entitled to vote as

19 follows:

20 1. The governing body of each such participating

21 municipality and participating instrumentality shall have

22 one vote at any election in which an executive trustee is

23 to be elected, and may cast such vote for any candidate on

24 the executive trustee ballot.

25 2. Each participating employee shall have one vote at

26 any election in which an employee trustee is to be elected,

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1 and may cast such vote for any candidate on the employee

2 trustee ballot.

3 3. Each annuitant of the Fund shall have one vote at

4 any election in which an annuitant trustee is to be

5 elected, and may cast that vote for any candidate on the

6 annuitant trustee ballot.

7 4. A vote may be cast for a person not on the ballot by

8 writing in his or her name.

9 (e) The election shall be by ballot pursuant to the rules

10 and regulations established by the board and shall be completed

11 by December 31 of the year. The results shall be entered in the

12 minutes of the meeting of the board following the tally of

13 votes.

14 (f) In case of a tie vote, the candidate employed by or

15 retired from the participating municipality or participating

16 instrumentality having the greatest number of participating

17 employees at the time shall be elected.

18 (g) Notwithstanding any other provision of this Article, if

19 only one candidate is properly nominated in petitions received

20 by the Board, that candidate shall be deemed the winner. In the

21 case of 2 employee trustees elected to a full term in the same

22 year, if only 2 candidates are properly nominated in petitions

23 received by the Board, those 2 candidates shall both be deemed

24 winners. If a candidate is deemed a winner under this

25 paragraph, no election under this Section or Section 7-175.1

26 shall be required.

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1 (h) For the purposes of this Section, "annuitant" includes

2 a person who receives an annuity pursuant to Article 3 or 4

3 from an eligible pension fund, as defined in Section 1-101.6.

4 For the purposes of this Section, "contributing

5 participating municipality" includes a municipality that

6 participates under Article 3 or 4 in an eligible pension fund,

7 as defined in Section 1-101.6.

8 For the purposes of this Section, "participating employee"

9 includes a police officer in an eligible pension fund, as

10 defined in Section 1-101.6, under Article 3 or a firefighter in

11 an eligible pension fund, as defined in Section 1-101.6, under

12 Article 4.

13 (Source: P.A. 98-932, eff. 8-15-14.)

14 (40 ILCS 5/7-175.1) (from Ch. 108 1/2, par. 7-175.1)

15 Sec. 7-175.1. Election of employee and annuitant trustees.

16 (a) The board shall prepare and send ballots and ballot

17 envelopes to the employees, including police officers in

18 eligible pension funds, as defined in Section 1-101.6, under

19 Article 3 and firefighters in eligible pension funds, as

20 defined in Section 1-101.6, under Article 4, and annuitants

21 eligible to vote as of September of that year. The ballots

22 shall contain the names of all candidates in alphabetical order

23 and an appropriate place where a name may be written in on the

24 ballot. The ballot envelope shall have on the outside a form of

25 certificate stating that the person voting the ballot is a

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1 participating employee or annuitant entitled to vote.

2 (b) Employees and annuitants, upon receipt of the ballot,

3 shall vote the ballot and place it in the ballot envelope, seal

4 the envelope, execute the certificate thereon and return the

5 ballot to the Fund.

6 (c) The board shall set a final date for ballot return, and

7 ballots received prior to that date in a ballot envelope with a

8 properly executed certificate and properly voted, shall be

9 valid ballots.

10 (d) The board shall set a day for counting the ballots and

11 name judges and clerks of election to conduct the count of

12 ballots, and shall make any rules and regulations necessary for

13 the conduct of the count.

14 (e) No election under this Section shall be required if a

15 candidate is deemed the winner under subsection (g) of Section

16 7-175.

17 (f) Nothing in this Section shall preclude the Board from

18 adopting rules that provide for Internet balloting or phone

19 balloting in addition to election by mail under this Section.

20 An Internet or phone ballot cast in accordance with rules

21 adopted under this subsection shall be a valid ballot.

22 (Source: P.A. 100-935, eff. 1-1-19.)

23 (40 ILCS 5/7-199.5 new)

24 Sec. 7-199.5. To control and manage investments of Article

25 3 and Article 4 pension funds. To control and manage the

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1 investment expenditures and income, including interest

2 dividends, capital gains, and other distributions on the

3 investments of an eligible pension fund, as defined in Section

4 1-101.6 of this Code, that transferred its investment authority

5 under this Code in accordance with subsection (b) of Section

6 3-135 of this Code or subsection (b) of Section 4-128 of this

7 Code. The Board may adopt rules for the transfer of investment

8 authority and assets and for the control and management of

9 investment expenditures and income.

10 Section 90. The State Mandates Act is amended by adding

11 Section 8.43 as follows:

12 (30 ILCS 805/8.43 new)

13 Sec. 8.43. Exempt mandate. Notwithstanding Sections 6 and 8

14 of this Act, no reimbursement by the State is required for the

15 implementation of any mandate created by this amendatory Act of

16 the 101st General Assembly.

17 Section 99. Effective date. This Act takes effect upon

18 becoming law.

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1 INDEX

2 Statutes amended in order of appearance

3 35 ILCS 200/18-185

4 40 ILCS 5/1-101.6 new

5 40 ILCS 5/1-101.7 new

6 40 ILCS 5/1-109.3

7 40 ILCS 5/1-113.05 new

8 40 ILCS 5/1-113.1

9 40 ILCS 5/1-113.2

10 40 ILCS 5/1-113.3

11 40 ILCS 5/1-113.4

12 40 ILCS 5/1-113.4a

13 40 ILCS 5/1-113.5

14 40 ILCS 5/1-113.6

15 40 ILCS 5/1-113.7

16 40 ILCS 5/1-167 new

17 40 ILCS 5/3-127 from Ch. 108 1/2, par. 3-127

18 40 ILCS 5/3-132 from Ch. 108 1/2, par. 3-132

19 40 ILCS 5/3-132.1 new

20 40 ILCS 5/3-132.2 new

21 40 ILCS 5/3-132.3 new

22 40 ILCS 5/3-132.4 new

23 40 ILCS 5/3-135 from Ch. 108 1/2, par. 3-135

24 40 ILCS 5/4-120 from Ch. 108 1/2, par. 4-120

25 40 ILCS 5/4-123 from Ch. 108 1/2, par. 4-123

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