Bill Text: IL HB1576 | 2019-2020 | 101st General Assembly | Introduced

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Bill Title: Amends the Illinois Pension Code. Creates the Downstate Police Pension Investment Board and the Downstate Firefighter Pension Investment Board. Moves the investment authority of downstate police and firefighter pension funds to those Investment Boards. Includes provisions relating to the transfer and investment of the affected assets, auditing and reporting requirements, and the operation and administration of the Investment Boards. Reduces the amount of training required for trustees of those pension funds. Changes all downstate police and firefighter pension funds to a fiscal year beginning May 1. Doubles the annual compliance fee paid by the funds to the Department of Insurance. Requires the Department of Insurance to impose penalties of up to $2,000 per day for noncompliance with certain provisions relating to the transfer of investment assets. Makes conforming and other changes. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.

Spectrum: Partisan Bill (Republican 3-0)

Status: (Introduced - Dead) 2019-03-29 - Rule 19(a) / Re-referred to Rules Committee [HB1576 Detail]

Download: Illinois-2019-HB1576-Introduced.html

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101ST GENERAL ASSEMBLY State of Illinois 2019 and 2020 HB1576 Introduced , by Rep. Ryan Spain SYNOPSIS AS INTRODUCED:
See Index
Amends the Illinois Pension Code. Creates the Downstate Police Pension Investment Board and the Downstate Firefighter Pension Investment Board. Moves the investment authority of downstate police and firefighter pension funds to those Investment Boards. Includes provisions relating to the transfer and investment of the affected assets, auditing and reporting requirements, and the operation and administration of the Investment Boards. Reduces the amount of training required for trustees of those pension funds. Changes all downstate police and firefighter pension funds to a fiscal year beginning May 1. Doubles the annual compliance fee paid by the funds to the Department of Insurance. Requires the Department of Insurance to impose penalties of up to $2,000 per day for noncompliance with certain provisions relating to the transfer of investment assets. Makes conforming and other changes. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.
LRB101 05116 RPS 50128 b
FISCAL NOTE ACT MAY APPLY PENSION IMPACT NOTE ACT MAY APPLY STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT
A BILL FOR
HB1576 LRB101 05116 RPS 50128 b
AN ACT concerning public employee benefits.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Pension Code is amended by changing
Sections 1-109.3, 1-113.1, 1-113.2, 1-113.3, 1-113.4,
1-113.4a, 1-113.5, 1-113.6, 1-113.7, 1A-112, 1A-113, 3-125,
3-127, 3-132, 3-135, 4-118, 4-120, 4-123, and 4-128 and by
adding Sections 1-101.6, 1-101.7, 1-113.05, 1-136, 3-135.1,
3-135.2, 4-128.1, and 4-128.2 and Articles 22B and 22C follows:
(40 ILCS 5/1-101.6 new)
Sec. 1-101.6. Eligible pension fund. "Eligible pension
fund" means a pension fund established pursuant to Article 3 or
Article 4 of this Code that has net assets in trust that exceed
the threshold amount defined in Section 1-101.7 of this Code.
The status of "eligible pension fund", once established,
continues in effect without regard to subsequent variations in
the net assets of the pension fund.
(40 ILCS 5/1-101.7 new)
Sec. 1-101.7. Threshold amount. "Threshold amount", when
used in relation to the financial assets of a pension fund
established under Article 3 or Article 4 of this Code, means an
amount equal to 3 months of current liabilities of the pension

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fund, including benefit payments owed to annuitants and
beneficiaries of the pension fund and reasonable operational
expenses.
(40 ILCS 5/1-109.3)
Sec. 1-109.3. Training requirement for Article 3 and
Article 4 pension trustees.
(a) All elected and appointed trustees under Article 3 and
4 of this Code must participate in a mandatory trustee
certification training seminar that consists of at least 8 32
hours of initial trustee certification at a training seminar
facility that is accredited and affiliated with a State of
Illinois certified college or university or approved by the
Department of Insurance. This training must include, without
limitation, both all of the following:
(1) Duties and liabilities of a fiduciary under this
Article 1 of the Illinois Pension Code.
(2) Duties of a pension board trustee under Article 3
or Article 4, as applicable, of this Code. Adjudication of
pension claims.
(3) Basic accounting and actuarial training.
(4) Trustee ethics.
(5) The Illinois Open Meetings Act.
(6) The Illinois Freedom of Information Act.
The training required under this subsection (a) must be
completed within the first year that a trustee is elected or

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appointed under an Article 3 or 4 pension fund. The elected and
appointed trustees of an Article 3 or 4 pension fund who are
police officers (as defined in Section 3-106 of this Code) or
firefighters (as defined in Section 4-106 of this Code) or are
employed by the municipality shall be permitted time away from
their duties to attend such training without reduction of
accrued leave or benefit time. Active or appointed trustees
serving on the effective date of this amendatory Act of the
96th General Assembly shall not be required to attend the
training required under this subsection (a).
(b) In addition to the initial trustee certification
training required under subsection (a), all elected and
appointed trustees under Article 3 and 4 of this Code,
including trustees serving on the effective date of this
amendatory Act of the 101st General Assembly this amendatory
Act of the 96th General Assembly, shall also participate in a
minimum of 4 16 hours of continuing trustee education each year
after the first year that the trustee is elected or appointed.
The continuing trustee education training must include,
without limitation, both of the following:
(1) Duties and liabilities of a fiduciary under this
Article.
(2) Duties of a pension board trustee under Article 3
or Article 4, as applicable, of this Code.
(c) The training required under this Section shall be paid
for by the pension fund.

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(d) Any board member who does not timely complete the
training required under this Section is not eligible to serve
on the board of trustees of an Article 3 or 4 pension fund,
unless the board member completes the missed training within 6
months after the date the member failed to complete the
required training. In the event of a board member's failure to
complete the required training, a successor shall be appointed
or elected, as applicable, for the unexpired term. A successor
who is elected under such circumstances must be elected at a
special election called by the board and conducted in the same
manner as a regular election under Article 3 or 4, as
applicable.
(Source: P.A. 96-429, eff. 8-13-09.)
(40 ILCS 5/1-113.05 new)
Sec. 1-113.05. Transfer of investment authority of certain
pension funds established under Article 3 or 4.
(a) Upon receiving a certified investment asset list from
the Department of Insurance pursuant to Section 3-135.1 of this
Code, the board of trustees of an eligible pension fund
established under Article 3 of this Code shall cease investment
activities and shall transfer all investment assets of the
pension fund to the Downstate Police Pension Investment Board
in the manner prescribed by rules adopted by the Downstate
Police Pension Investment Board. Upon completion of that
transfer, the investment authority of the board of trustees

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shall terminate.
(b) Upon receiving a certified investment asset list from
the Department of Insurance pursuant to Section 4-128.1 of this
Code, the board of trustees of an eligible pension fund
established under Article 4 of this Code shall cease investment
activities and shall transfer all investment assets of the
pension fund to the Downstate Firefighter Pension Investment
Board in the manner prescribed by rules adopted by the
Downstate Firefighter Pension Investment Board. Upon
completion of that transfer, the investment authority of the
board of trustees shall terminate.
(40 ILCS 5/1-113.1)
Sec. 1-113.1. Investment authority of certain pension
funds established under Article 3 or 4.
(a) Beginning 18 months after the effective date of this
amendatory Act of the 101st General Assembly or when the
transfer of investment authority is made pursuant to Section
1-113.05, whichever occurs first, subsection (b) of this
Section does not apply to any pension fund that is an eligible
pension fund as defined in Section 1-101.6.
This Section continues to apply to any pension fund
established under Article 3 or 4 that is not an eligible
pension fund as defined in Section 1-101.6.
(b) The board of trustees of a police pension fund
established under Article 3 of this Code or firefighter pension

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fund established under Article 4 of this Code shall draw
pension funds from the treasurer of the municipality and,
beginning January 1, 1998, invest any part thereof in the name
of the board in the items listed in Sections 1-113.2 through
1-113.4 according to the limitations and requirements of this
Article. These investments shall be made with the care, skill,
prudence, and diligence that a prudent person acting in like
capacity and familiar with such matters would use in the
conduct of an enterprise of like character with like aims.
Interest and any other income from the investments shall be
credited to the pension fund.
For the purposes of Sections 1-113.2 through 1-113.11, the
"net assets" of a pension fund include both the cash and
invested assets of the pension fund.
(Source: P.A. 90-507, eff. 8-22-97.)
(40 ILCS 5/1-113.2)
Sec. 1-113.2. List of permitted investments for certain all
Article 3 or 4 pension funds.
(a) Beginning 18 months after the effective date of this
amendatory Act of the 101st General Assembly or when the
transfer of investment authority is made pursuant to Section
1-113.05, whichever occurs first, subsection (b) of this
Section does not apply to any pension fund that is an eligible
pension fund as defined in Section 1-101.6.
(b) Except as provided in subsection (a), any Any pension

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fund established under Article 3 or 4 may invest in the
following items:
(1) Interest bearing direct obligations of the United
States of America.
(2) Interest bearing obligations to the extent that
they are fully guaranteed or insured as to payment of
principal and interest by the United States of America.
(3) Interest bearing bonds, notes, debentures, or
other similar obligations of agencies of the United States
of America. For the purposes of this Section, "agencies of
the United States of America" includes: (i) the Federal
National Mortgage Association and the Student Loan
Marketing Association; (ii) federal land banks, federal
intermediate credit banks, federal farm credit banks, and
any other entity authorized to issue direct debt
obligations of the United States of America under the Farm
Credit Act of 1971 or amendments to that Act; (iii) federal
home loan banks and the Federal Home Loan Mortgage
Corporation; and (iv) any agency created by Act of Congress
that is authorized to issue direct debt obligations of the
United States of America.
(4) Interest bearing savings accounts or certificates
of deposit, issued by federally chartered banks or savings
and loan associations, to the extent that the deposits are
insured by agencies or instrumentalities of the federal
government.

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(5) Interest bearing savings accounts or certificates
of deposit, issued by State of Illinois chartered banks or
savings and loan associations, to the extent that the
deposits are insured by agencies or instrumentalities of
the federal government.
(6) Investments in credit unions, to the extent that
the investments are insured by agencies or
instrumentalities of the federal government.
(7) Interest bearing bonds of the State of Illinois.
(8) Pooled interest bearing accounts managed by the
Illinois Public Treasurer's Investment Pool in accordance
with the Deposit of State Moneys Act, interest bearing
funds or pooled accounts of the Illinois Metropolitan
Investment Funds, and interest bearing funds or pooled
accounts managed, operated, and administered by banks,
subsidiaries of banks, or subsidiaries of bank holding
companies in accordance with the laws of the State of
Illinois.
(9) Interest bearing bonds or tax anticipation
warrants of any county, township, or municipal corporation
of the State of Illinois.
(10) Direct obligations of the State of Israel, subject
to the conditions and limitations of item (5.1) of Section
1-113.
(11) Money market mutual funds managed by investment
companies that are registered under the federal Investment

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Company Act of 1940 and the Illinois Securities Law of 1953
and are diversified, open-ended management investment
companies; provided that the portfolio of the money market
mutual fund is limited to the following:
(i) bonds, notes, certificates of indebtedness,
treasury bills, or other securities that are
guaranteed by the full faith and credit of the United
States of America as to principal and interest;
(ii) bonds, notes, debentures, or other similar
obligations of the United States of America or its
agencies; and
(iii) short term obligations of corporations
organized in the United States with assets exceeding
$400,000,000, provided that (A) the obligations mature
no later than 180 days from the date of purchase, (B)
at the time of purchase, the obligations are rated by
at least 2 standard national rating services at one of
their 3 highest classifications, and (C) the
obligations held by the mutual fund do not exceed 10%
of the corporation's outstanding obligations.
(12) General accounts of life insurance companies
authorized to transact business in Illinois.
(13) Any combination of the following, not to exceed
10% of the pension fund's net assets:
(i) separate accounts that are managed by life
insurance companies authorized to transact business in

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Illinois and are comprised of diversified portfolios
consisting of common or preferred stocks, bonds, or
money market instruments;
(ii) separate accounts that are managed by
insurance companies authorized to transact business in
Illinois, and are comprised of real estate or loans
upon real estate secured by first or second mortgages;
and
(iii) mutual funds that meet the following
requirements:
(A) the mutual fund is managed by an investment
company as defined and registered under the
federal Investment Company Act of 1940 and
registered under the Illinois Securities Law of
1953;
(B) the mutual fund has been in operation for
at least 5 years;
(C) the mutual fund has total net assets of
$250 million or more; and
(D) the mutual fund is comprised of
diversified portfolios of common or preferred
stocks, bonds, or money market instruments.
(14) Corporate bonds managed through an investment
advisor must meet all of the following requirements:
(1) The bonds must be rated as investment grade by
one of the 2 largest rating services at the time of

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purchase.
(2) If subsequently downgraded below investment
grade, the bonds must be liquidated from the portfolio
within 90 days after being downgraded by the manager.
(Source: P.A. 96-1495, eff. 1-1-11.)
(40 ILCS 5/1-113.3)
Sec. 1-113.3. List of additional permitted investments for
certain pension funds with net assets of $2,500,000 or more.
(a) Beginning 18 months after the effective date of this
amendatory Act of the 101st General Assembly or when the
transfer of investment authority is made pursuant to Section
1-113.05, whichever occurs first, subsection (a-5) of this
Section does not apply to any pension fund that is an eligible
pension fund as defined in Section 1-101.6.
(a-5) Except as provided in subsection (a), in (a) In
addition to the items in Section 3-113.2, a pension fund
established under Article 3 or 4 that has net assets of at
least $2,500,000 may invest a portion of its net assets in the
following items:
(1) Separate accounts that are managed by life
insurance companies authorized to transact business in
Illinois and are comprised of diversified portfolios
consisting of common or preferred stocks, bonds, or money
market instruments.
(2) Mutual funds that meet the following requirements:

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(i) the mutual fund is managed by an investment
company as defined and registered under the federal
Investment Company Act of 1940 and registered under the
Illinois Securities Law of 1953;
(ii) the mutual fund has been in operation for at
least 5 years;
(iii) the mutual fund has total net assets of $250
million or more; and
(iv) the mutual fund is comprised of diversified
portfolios of common or preferred stocks, bonds, or
money market instruments.
(b) A pension fund's total investment in the items
authorized under this Section shall not exceed 35% of the
market value of the pension fund's net present assets stated in
its most recent annual report on file with the Illinois
Department of Insurance.
(Source: P.A. 90-507, eff. 8-22-97.)
(40 ILCS 5/1-113.4)
Sec. 1-113.4. List of additional permitted investments for
certain pension funds with net assets of $5,000,000 or more.
(a) Beginning 18 months after the effective date of this
amendatory Act of the 101st General Assembly or when the
transfer of investment authority is made pursuant to Section
1-113.05, whichever occurs first, subsection (a-5) of this
Section does not apply to any pension fund that is an eligible

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pension fund as defined in Section 1-101.6.
(a-5) Except as provided in subsection (a), in (a) In
addition to the items in Sections 1-113.2 and 1-113.3, a
pension fund established under Article 3 or 4 that has net
assets of at least $5,000,000 and has appointed an investment
adviser under Section 1-113.5 may, through that investment
adviser, invest a portion of its assets in common and preferred
stocks authorized for investments of trust funds under the laws
of the State of Illinois. The stocks must meet all of the
following requirements:
(1) The common stocks are listed on a national
securities exchange or board of trade (as defined in the
federal Securities Exchange Act of 1934 and set forth in
subdivision G of Section 3 of the Illinois Securities Law
of 1953) or quoted in the National Association of
Securities Dealers Automated Quotation System National
Market System (NASDAQ NMS).
(2) The securities are of a corporation created or
existing under the laws of the United States or any state,
district, or territory thereof and the corporation has been
in existence for at least 5 years.
(3) The corporation has not been in arrears on payment
of dividends on its preferred stock during the preceding 5
years.
(4) The market value of stock in any one corporation
does not exceed 5% of the cash and invested assets of the

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pension fund, and the investments in the stock of any one
corporation do not exceed 5% of the total outstanding stock
of that corporation.
(5) The straight preferred stocks or convertible
preferred stocks are issued or guaranteed by a corporation
whose common stock qualifies for investment by the board.
(6) The issuer of the stocks has been subject to the
requirements of Section 12 of the federal Securities
Exchange Act of 1934 and has been current with the filing
requirements of Sections 13 and 14 of that Act during the
preceding 3 years.
(b) A pension fund's total investment in the items
authorized under this Section and Section 1-113.3 shall not
exceed 35% of the market value of the pension fund's net
present assets stated in its most recent annual report on file
with the Illinois Department of Insurance.
(c) A pension fund that invests funds under this Section
shall electronically file with the Division any reports of its
investment activities that the Division may require, at the
times and in the format required by the Division.
(Source: P.A. 100-201, eff. 8-18-17.)
(40 ILCS 5/1-113.4a)
Sec. 1-113.4a. List of additional permitted investments
for certain Article 3 and 4 pension funds with net assets of
$10,000,000 or more.

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(a) Beginning 18 months after the effective date of this
amendatory Act of the 101st General Assembly or when the
transfer of investment authority is made pursuant to Section
1-113.05, whichever occurs first, subsection (a-5) of this
Section does not apply to any pension fund that is an eligible
pension fund as defined in Section 1-101.6.
(a-5) Except as provided in subsection (a), in (a) In
addition to the items in Sections 1-113.2 and 1-113.3, a
pension fund established under Article 3 or 4 that has net
assets of at least $10,000,000 and has appointed an investment
adviser, as defined under Sections 1-101.4 and 1-113.5, may,
through that investment adviser, invest an additional portion
of its assets in common and preferred stocks and mutual funds.
(b) The stocks must meet all of the following requirements:
(1) The common stocks must be listed on a national
securities exchange or board of trade (as defined in the
Federal Securities Exchange Act of 1934 and set forth in
paragraph G of Section 3 of the Illinois Securities Law of
1953) or quoted in the National Association of Securities
Dealers Automated Quotation System National Market System.
(2) The securities must be of a corporation in
existence for at least 5 years.
(3) The market value of stock in any one corporation
may not exceed 5% of the cash and invested assets of the
pension fund, and the investments in the stock of any one
corporation may not exceed 5% of the total outstanding

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stock of that corporation.
(4) The straight preferred stocks or convertible
preferred stocks must be issued or guaranteed by a
corporation whose common stock qualifies for investment by
the board.
(c) The mutual funds must meet the following requirements:
(1) The mutual fund must be managed by an investment
company registered under the Federal Investment Company
Act of 1940 and registered under the Illinois Securities
Law of 1953.
(2) The mutual fund must have been in operation for at
least 5 years.
(3) The mutual fund must have total net assets of
$250,000,000 or more.
(4) The mutual fund must be comprised of a diversified
portfolio of common or preferred stocks, bonds, or money
market instruments.
(d) A pension fund's total investment in the items
authorized under this Section and Section 1-113.3 shall not
exceed 50% effective July 1, 2011 and 55% effective July 1,
2012 of the market value of the pension fund's net present
assets stated in its most recent annual report on file with the
Department of Insurance.
(e) A pension fund that invests funds under this Section
shall electronically file with the Division any reports of its
investment activities that the Division may require, at the

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time and in the format required by the Division.
(Source: P.A. 96-1495, eff. 1-1-11.)
(40 ILCS 5/1-113.5)
Sec. 1-113.5. Investment advisers and investment services
for certain all Article 3 or 4 pension funds.
(a) Beginning 18 months after the effective date of this
amendatory Act of the 101st General Assembly or when the
transfer of investment authority is made pursuant to Section
1-113.05, whichever occurs first, subsection (a-1) of this
Section does not apply to any pension fund that is an eligible
pension fund as defined in Section 1-101.6.
(a-1) Except as provided in subsection (a), the (a) The
board of trustees of a pension fund established under Article 3
or 4 of this Code may appoint investment advisers as defined in
Section 1-101.4. The board of any pension fund investing in
common or preferred stock under Section 1-113.4 shall appoint
an investment adviser before making such investments.
The investment adviser or consultant shall be a fiduciary,
as defined in Section 1-101.2, with respect to the pension fund
and shall be one of the following:
(1) an investment adviser registered under the federal
Investment Advisers Act of 1940 and the Illinois Securities
Law of 1953;
(2) a bank or trust company authorized to conduct a
trust business in Illinois;

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(3) a life insurance company authorized to transact
business in Illinois; or
(4) an investment company as defined and registered
under the federal Investment Company Act of 1940 and
registered under the Illinois Securities Law of 1953.
(a-5) Notwithstanding any other provision of law, a person
or entity that provides consulting services (referred to as a
"consultant" in this Section) to a pension fund with respect to
the selection of fiduciaries may not be awarded a contract to
provide those consulting services that is more than 5 years in
duration. No contract to provide such consulting services may
be renewed or extended. At the end of the term of a contract,
however, the contractor is eligible to compete for a new
contract. No person shall attempt to avoid or contravene the
restrictions of this subsection by any means. All offers from
responsive offerors shall be accompanied by disclosure of the
names and addresses of the following:
(1) The offeror.
(2) Any entity that is a parent of, or owns a
controlling interest in, the offeror.
(3) Any entity that is a subsidiary of, or in which a
controlling interest is owned by, the offeror.
Beginning on July 1, 2008, a person, other than a trustee
or an employee of a pension fund or retirement system, may not
act as a consultant under this Section unless that person is at
least one of the following: (i) registered as an investment

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adviser under the federal Investment Advisers Act of 1940 (15
U.S.C. 80b-1, et seq.); (ii) registered as an investment
adviser under the Illinois Securities Law of 1953; (iii) a
bank, as defined in the Investment Advisers Act of 1940; or
(iv) an insurance company authorized to transact business in
this State.
(b) All investment advice and services provided by an
investment adviser or a consultant appointed under this Section
shall be rendered pursuant to a written contract between the
investment adviser and the board, and in accordance with the
board's investment policy.
The contract shall include all of the following:
(1) acknowledgement in writing by the investment
adviser that he or she is a fiduciary with respect to the
pension fund;
(2) the board's investment policy;
(3) full disclosure of direct and indirect fees,
commissions, penalties, and any other compensation that
may be received by the investment adviser, including
reimbursement for expenses; and
(4) a requirement that the investment adviser submit
periodic written reports, on at least a quarterly basis,
for the board's review at its regularly scheduled meetings.
All returns on investment shall be reported as net returns
after payment of all fees, commissions, and any other
compensation.

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(b-5) Each contract described in subsection (b) shall also
include (i) full disclosure of direct and indirect fees,
commissions, penalties, and other compensation, including
reimbursement for expenses, that may be paid by or on behalf of
the investment adviser or consultant in connection with the
provision of services to the pension fund and (ii) a
requirement that the investment adviser or consultant update
the disclosure promptly after a modification of those payments
or an additional payment.
Within 30 days after the effective date of this amendatory
Act of the 95th General Assembly, each investment adviser and
consultant providing services on the effective date or subject
to an existing contract for the provision of services must
disclose to the board of trustees all direct and indirect fees,
commissions, penalties, and other compensation paid by or on
behalf of the investment adviser or consultant in connection
with the provision of those services and shall update that
disclosure promptly after a modification of those payments or
an additional payment.
A person required to make a disclosure under subsection (d)
is also required to disclose direct and indirect fees,
commissions, penalties, or other compensation that shall or may
be paid by or on behalf of the person in connection with the
rendering of those services. The person shall update the
disclosure promptly after a modification of those payments or
an additional payment.

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The disclosures required by this subsection shall be in
writing and shall include the date and amount of each payment
and the name and address of each recipient of a payment.
(c) Within 30 days after appointing an investment adviser
or consultant, the board shall submit a copy of the contract to
the Division of Insurance of the Department of Financial and
Professional Regulation.
(d) Investment services provided by a person other than an
investment adviser appointed under this Section, including but
not limited to services provided by the kinds of persons listed
in items (1) through (4) of subsection (a), shall be rendered
only after full written disclosure of direct and indirect fees,
commissions, penalties, and any other compensation that shall
or may be received by the person rendering those services.
(e) The board of trustees of each pension fund shall retain
records of investment transactions in accordance with the rules
of the Department of Financial and Professional Regulation.
(f) Upon the initial transfer of assets and investment
authority of an eligible pension fund under subsection (b) of
Section 3-135, and thereafter in perpetuity, the Downstate
Police Pension Investment Board shall provide all investment
services for that eligible pension fund.
The Downstate Police Pension Investment Board shall not be
held liable by or indemnify any individual annuitant or
beneficiary of any eligible pension fund established under
Article 3 for nonpayment of benefits by the eligible pension

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fund.
(g) Upon the initial transfer of assets and investment
authority of an eligible pension fund under subsection (b) of
Section 4-128, and thereafter in perpetuity, the Downstate
Firefighter Pension Investment Board shall provide all
investment services for that eligible pension fund.
The Downstate Firefighter Pension Investment Board shall
not be held liable by or indemnify any individual annuitant or
beneficiary of any eligible pension fund established under
Article 4 for nonpayment of benefits by the eligible pension
fund.
(Source: P.A. 95-950, eff. 8-29-08; 96-6, eff. 4-3-09.)
(40 ILCS 5/1-113.6)
Sec. 1-113.6. Investment policies.
(a) Except as provided in subsection (b), every Every board
of trustees of a pension fund shall adopt a written investment
policy and file a copy of that policy with the Department of
Insurance within 30 days after its adoption. Whenever a board
changes its investment policy, it shall file a copy of the new
policy with the Department within 30 days.
(b) Beginning 18 months after the effective date of this
amendatory Act of the 101st General Assembly or when the
transfer of its investment authority under Section 1-113.05,
whichever occurs first, the requirement to maintain and file an
investment policy under subsection (a) ceases to apply to the

HB1576 - 23 - LRB101 05116 RPS 50128 b
board of trustees of an eligible pension fund established under
Article 3 or Article 4 of this Code.
(Source: P.A. 90-507, eff. 8-22-97.)
(40 ILCS 5/1-113.7)
Sec. 1-113.7. Registration of investments; custody and
safekeeping.
This Section does not apply to investments that have been
transferred under Section 1-113.05.
The board of trustees may register the investments of its
pension fund in the name of the pension fund, in the nominee
name of a bank or trust company authorized to conduct a trust
business in Illinois, or in the nominee name of the Illinois
Public Treasurer's Investment Pool.
The assets of the pension fund and ownership of its
investments shall be protected through third-party custodial
safekeeping. The board of trustees may appoint as custodian of
the investments of its pension fund the treasurer of the
municipality, a bank or trust company authorized to conduct a
trust business in Illinois, or the Illinois Public Treasurer's
Investment Pool.
A dealer may not maintain possession of or control over
securities of a pension fund subject to the provisions of this
Section unless it is registered as a broker-dealer with the
U.S. Securities and Exchange Commission and is a member in good
standing of the National Association of Securities Dealers, and

HB1576 - 24 - LRB101 05116 RPS 50128 b
(1) with respect to securities that are not issued only in
book-entry form, (A) all such securities of each fund are
either held in safekeeping in a place reasonably free from risk
of destruction or held in custody by a securities depository
that is a "clearing agency" registered with the U.S. Securities
and Exchange Commission, (B) the dealer is a member of the
Securities Investor Protection Corporation, (C) the dealer
sends to each fund, no less frequently than each calendar
quarter, an itemized statement showing the moneys and
securities in the custody or possession of the dealer at the
end of such period, and (D) an independent certified public
accountant conducts an audit, no less frequently than each
calendar year, that reviews the dealer's internal accounting
controls and procedures for safeguarding securities; and (2)
with respect to securities that are issued only in book-entry
form, (A) all such securities of each fund are held either in a
securities depository that is a "clearing agency" registered
with the U.S. Securities and Exchange Commission or in a bank
that is a member of the Federal Reserve System, (B) the dealer
records the ownership interest of the funds in such securities
on the dealer's books and records, (C) the dealer is a member
of the Securities Investor Protection Corporation, (D) the
dealer sends to each fund, no less frequently than each
calendar quarter, an itemized statement showing the moneys and
securities in the custody or possession of the dealer at the
end of such period, and (E) the dealer's financial statement

HB1576 - 25 - LRB101 05116 RPS 50128 b
(which shall contain among other things a statement of the
dealer's net capital and its required net capital computed in
accordance with Rule 15c3-1 under the Securities Exchange Act
of 1934) is audited annually by an independent certified public
accountant, and the dealer's most recent audited financial
statement is furnished to the fund. No broker-dealer serving as
a custodian for any public pension fund as provided by this Act
shall be authorized to serve as an investment advisor for that
same public pension fund as described in Section 1-101.4 of
this Code, to the extent that the investment advisor acquires
or disposes of any asset of that same public pension fund.
Notwithstanding the foregoing, in no event may a broker or
dealer that is a natural person maintain possession of or
control over securities or other assets of a pension fund
subject to the provisions of this Section. In maintaining
securities of a pension fund subject to the provisions of this
Section, each dealer must maintain those securities in
conformity with the provisions of Rule 15c3-3(b) of the
Securities Exchange Act of 1934 (Physical Possession or Control
of Securities). The Director of the Department of Insurance may
adopt such rules and regulations as shall be necessary and
appropriate in his or her judgment to effectuate the purposes
of this Section.
A bank or trust company authorized to conduct a trust
business in Illinois shall register, deposit, or hold
investments for safekeeping, all in accordance with the

HB1576 - 26 - LRB101 05116 RPS 50128 b
obligations and subject to the limitations of the Securities in
Fiduciary Accounts Act.
(Source: P.A. 92-651, eff. 7-11-02.)
(40 ILCS 5/1-136 new)
Sec. 1-136. Fiscal year for Article 3 and Article 4 pension
funds. For every pension fund established under Article 3 or
Article 4 of this Code, by April 30, 2020, the fiscal year of
the fund shall be transitioned to a fiscal year ending April
30, 2020, so that the fund thereafter operates on a May 1 to
April 30 fiscal year.
(40 ILCS 5/1A-112)
Sec. 1A-112. Fees.
(a) Every pension fund that is required to file an annual
statement under Section 1A-109 shall pay to the Department an
annual compliance fee. In the case of a pension fund under
Article 3 or 4 of this Code, the annual compliance fee shall be
0.04% 0.02% (4 2 basis points) of the total assets of the
pension fund, as reported in the most current annual statement
of the fund, but not more than $16,000 $8,000. In the case of
all other pension funds and retirement systems, the annual
compliance fee shall be $16,000 $8,000.
(b) The annual compliance fee shall be due on June 30 for
the following State fiscal year, except that the fee payable in
1997 for fiscal year 1998 shall be due no earlier than 30 days

HB1576 - 27 - LRB101 05116 RPS 50128 b
following the effective date of this amendatory Act of 1997.
(c) Any information obtained by the Division that is
available to the public under the Freedom of Information Act
and is either compiled in published form or maintained on a
computer processible medium shall be furnished upon the written
request of any applicant and the payment of a reasonable
information services fee established by the Director,
sufficient to cover the total cost to the Division of
compiling, processing, maintaining, and generating the
information. The information may be furnished by means of
published copy or on a computer processed or computer
processible medium.
No fee may be charged to any person for information that
the Division is required by law to furnish to that person.
(d) Except as otherwise provided in this Section, all fees
and penalties collected by the Department under this Code shall
be deposited into the Public Pension Regulation Fund.
(e) Fees collected under subsection (c) of this Section and
money collected under Section 1A-107 shall be deposited into
the Technology Management Revolving Fund and credited to the
account of the Department's Public Pension Division. This
income shall be used exclusively for the purposes set forth in
Section 1A-107. Notwithstanding the provisions of Section
408.2 of the Illinois Insurance Code, no surplus funds
remaining in this account shall be deposited in the Insurance
Financial Regulation Fund. All money in this account that the

HB1576 - 28 - LRB101 05116 RPS 50128 b
Director certifies is not needed for the purposes set forth in
Section 1A-107 of this Code shall be transferred to the Public
Pension Regulation Fund.
(f) Nothing in this Code prohibits the General Assembly
from appropriating funds from the General Revenue Fund to the
Department for the purpose of administering or enforcing this
Code.
(Source: P.A. 100-23, eff. 7-6-17.)
(40 ILCS 5/1A-113)
Sec. 1A-113. Penalties.
(a) A pension fund that fails, without just cause, to file
its annual statement within the time prescribed under Section
1A-109 shall pay to the Department a penalty to be determined
by the Department, which shall not exceed $100 for each day's
delay.
(b) A pension fund that fails, without just cause, to file
its actuarial statement within the time prescribed under
Section 1A-110 or 1A-111 shall pay to the Department a penalty
to be determined by the Department, which shall not exceed $100
for each day's delay.
(c) A pension fund that fails to pay a fee within the time
prescribed under Section 1A-112 shall pay to the Department a
penalty of 5% of the amount of the fee for each month or part of
a month that the fee is late. The entire penalty shall not
exceed 25% of the fee due.

HB1576 - 29 - LRB101 05116 RPS 50128 b
(c-5) Whenever the Director of Insurance determines that a
pension fund is not in compliance with Section 3-132, 3-135,
3-135.1, 3-135.2, 4-123, 4-128, 4-128.1, or 4-128.2 of this
Code:
(1) The Director of Insurance shall notify the pension
fund board of trustees in writing of the noncompliance.
(2) The board of trustees of the pension fund shall
take immediate steps to come into compliance with the
applicable provisions of this Code within 15 days after the
date of the notice of noncompliance.
(3) If the pension fund does not come into compliance
with the applicable provisions of this Code within 15 days
after the date of the notice, the Department of Insurance
shall assess a penalty of up to $2,000 per day of
noncompliance, to be paid by the fund within 21 days after
the date of the order assessing the penalty.
(4) A board so notified and assessed may request a
hearing on the noncompliance alleged in the notice within
15 days after the date of the notice.
Any hearing held under this subsection (c-5) shall be held
in accordance with the rules of the Department of Insurance.
(d) This subsection applies to any governmental unit or
pension fund, as defined in Section 1A-102, that is subject to
any law establishing a pension fund or retirement system for
the benefit of employees of the governmental unit.
Whenever the Division determines by examination,

HB1576 - 30 - LRB101 05116 RPS 50128 b
investigation, or in any other manner that the governing body
or any elected or appointed officer or official of a
governmental unit has failed to comply with any provision of
this Code that law:
(1) The Director shall notify in writing the governing
body, officer, or official of the specific provision or
provisions of the law with which the person has failed to
comply.
(2) Upon receipt of the notice, the person notified
shall take immediate steps to comply with the provisions of
law specified in the notice.
(3) If the person notified fails to comply within a
reasonable time after receiving the notice, the Director
may hold a hearing at which the person notified may show
cause for noncompliance with the law.
(4) If upon hearing the Director determines that good
and sufficient cause for noncompliance has not been shown,
the Director may order the person to submit evidence of
compliance within a specified period of not less than 30
days.
(5) If evidence of compliance has not been submitted to
the Director within the period of time prescribed in the
order and no administrative appeal from the order has been
initiated, the Director may assess a civil penalty of up to
$2,000 against the governing body, officer, or official for
each noncompliance with an order of the Director.

HB1576 - 31 - LRB101 05116 RPS 50128 b
The Director shall develop by rule, with as much
specificity as practicable, the standards and criteria to be
used in assessing penalties and their amounts. The standards
and criteria shall include, but need not be limited to,
consideration of evidence of efforts made in good faith to
comply with applicable legal requirements. This rulemaking is
subject to the provisions of the Illinois Administrative
Procedure Act.
If a penalty is not paid within 30 days of the date of
assessment, the Director without further notice shall report
the act of noncompliance to the Attorney General of this State.
It shall be the duty of the Attorney General or, if the
Attorney General so designates, the State's Attorney of the
county in which the governmental unit is located to apply
promptly by complaint on relation of the Director of Insurance
in the name of the people of the State of Illinois, as
plaintiff, to the circuit court of the county in which the
governmental unit is located for enforcement of the penalty
prescribed in this subsection or for such additional relief as
the nature of the case and the interest of the employees of the
governmental unit or the public may require.
(e) Whoever knowingly makes a false certificate, entry, or
memorandum upon any of the books or papers pertaining to any
pension fund or upon any statement, report, or exhibit filed or
offered for file with the Division or the Director of Insurance
in the course of any examination, inquiry, or investigation,

HB1576 - 32 - LRB101 05116 RPS 50128 b
with intent to deceive the Director, the Division, or any of
its employees is guilty of a Class A misdemeanor.
(Source: P.A. 90-507, eff. 8-22-97.)
(40 ILCS 5/3-125) (from Ch. 108 1/2, par. 3-125)
Sec. 3-125. Financing.
(a) The city council or the board of trustees of the
municipality shall annually levy a tax upon all the taxable
property of the municipality at the rate on the dollar which
will produce an amount which, when added to the deductions from
the salaries or wages of police officers, and revenues
available from other sources, will equal a sum sufficient to
meet the annual requirements of the police pension fund. The
annual requirements to be provided by such tax levy are equal
to (1) the normal cost of the pension fund for the year
involved, plus (2) an amount sufficient to bring the total
assets of the pension fund up to 90% of the total actuarial
liabilities of the pension fund by the end of municipal fiscal
year 2040, as annually updated and determined by an enrolled
actuary employed by the Illinois Department of Insurance or by
an enrolled actuary retained by the pension fund or the
municipality. In making these determinations, the required
minimum employer contribution shall be calculated each year as
a level percentage of payroll over the years remaining up to
and including fiscal year 2040 and shall be determined under
the projected unit credit actuarial cost method and utilizing

HB1576 - 33 - LRB101 05116 RPS 50128 b
the rate of return and asset total determined under Article 22B
of this Code. The tax shall be levied and collected in the same
manner as the general taxes of the municipality, and in
addition to all other taxes now or hereafter authorized to be
levied upon all property within the municipality, and shall be
in addition to the amount authorized to be levied for general
purposes as provided by Section 8-3-1 of the Illinois Municipal
Code, approved May 29, 1961, as amended. The tax shall be
forwarded directly to the treasurer of the board within 30
business days after receipt by the county.
(b) For purposes of determining the required employer
contribution to a pension fund, the value of the pension fund's
assets shall be equal to the actuarial value of the pension
fund's assets, which shall be calculated as follows:
(1) On March 30, 2011, the actuarial value of a pension
fund's assets shall be equal to the market value of the
assets as of that date.
(2) In determining the actuarial value of the System's
assets for fiscal years after March 30, 2011, any actuarial
gains or losses from investment return incurred in a fiscal
year shall be recognized in equal annual amounts over the
5-year period following that fiscal year.
(c) If a participating municipality fails to transmit to
the fund contributions required of it under this Article for
more than 90 days after the payment of those contributions is
due, the fund may, after giving notice to the municipality,

HB1576 - 34 - LRB101 05116 RPS 50128 b
apply to the Director of Insurance for intercept. The
Department of Insurance shall certify to the State Comptroller
the amounts of the delinquent payments in accordance with any
applicable rules of the Department of Insurance Comptroller,
and the Comptroller must, beginning in fiscal year 2016, deduct
and remit to the fund the certified amounts or a portion of
those amounts from the following proportions of payments of
State funds to the municipality:
(1) in fiscal year 2016, one-third of the total amount
of any payments of State funds to the municipality;
(2) in fiscal year 2017, two-thirds of the total amount
of any payments of State funds to the municipality; and
(3) in fiscal year 2018 and each fiscal year
thereafter, the total amount of any payments of State funds
to the municipality.
The State Comptroller may not deduct from any payments of
State funds to the municipality more than the amount of
delinquent payments certified to the State Comptroller by the
fund.
(d) The police pension fund shall consist of the following
moneys which shall be set apart by the treasurer of the
municipality:
(1) All moneys derived from the taxes levied hereunder;
(2) Contributions by police officers under Section
3-125.1;
(3) All moneys accumulated by the municipality under

HB1576 - 35 - LRB101 05116 RPS 50128 b
any previous legislation establishing a fund for the
benefit of disabled or retired police officers;
(4) Donations, gifts or other transfers authorized by
this Article.
(e) The Commission on Government Forecasting and
Accountability shall conduct a study of all funds established
under this Article and shall report its findings to the General
Assembly on or before January 1, 2013. To the fullest extent
possible, the study shall include, but not be limited to, the
following:
(1) fund balances;
(2) historical employer contribution rates for each
fund;
(3) the actuarial formulas used as a basis for employer
contributions, including the actual assumed rate of return
for each year, for each fund;
(4) available contribution funding sources;
(5) the impact of any revenue limitations caused by
PTELL and employer home rule or non-home rule status; and
(6) existing statutory funding compliance procedures
and funding enforcement mechanisms for all municipal
pension funds.
(Source: P.A. 99-8, eff. 7-9-15.)
(40 ILCS 5/3-127) (from Ch. 108 1/2, par. 3-127)
Sec. 3-127. Reserves.

HB1576 - 36 - LRB101 05116 RPS 50128 b
(a) The board shall establish and maintain a reserve to
insure the payment of all obligations incurred under this
Article excluding retirement annuities established under
Section 3-109.3. The reserve to be accumulated shall be equal
to the estimated total actuarial requirements of the fund.
(b) In the case of an eligible pension fund that has
transferred its investment authority to the Downstate Police
Pension Investment Board under Section 1-113.05 of this Code,
the assets invested by the Downstate Police Pension Investment
Board on behalf of the pension fund, and the dividends and
other investment earnings attributable thereto, shall be
considered as part of the reserve for the purposes of this
Section.
The Downstate Police Pension Investment Board shall report
to the board of each such fund at least annually the financial
information on the invested assets and earnings attributable to
that pension fund so that the board may make the determinations
required under this Article.
(c) If a pension fund has a reserve of less than the
accrued liabilities of the fund, the board of the pension fund,
in making its annual report to the city council or board of
trustees of the municipality, shall designate the amount,
calculated as a level percentage of payroll, needed annually to
insure the accumulation of the reserve to the level of the
fund's accrued liabilities over a period of 40 years from July
1, 1993 for pension funds then in operation, or from the date

HB1576 - 37 - LRB101 05116 RPS 50128 b
of establishment in the case of a fund created thereafter, so
that the necessary reserves will be attained over such a
period.
(Source: P.A. 91-939, eff. 2-1-01.)
(40 ILCS 5/3-132) (from Ch. 108 1/2, par. 3-132)
Sec. 3-132. To control and manage the Pension Fund.
(a) In accordance with the applicable provisions of
Articles 1 and 1A and this Article, the board of trustees of
the pension fund shall have the authority to control and
manage, exclusively, the following:
(1) the pension fund, and
(2) investment expenditures and income, including
interest dividends, capital gains and other distributions
on the investments, and
(2) (3) all money donated, paid, assessed, or provided
by law for the pensioning of disabled and retired police
officers, their surviving spouses, minor children, and
dependent parents. All such money received or collected
shall be credited by the treasurer of the municipality to
the custodian's account of the pension fund and held by the
custodian for purposes of investment pursuant to Article
22B of this Code.
(b) Pursuant to rules adopted under Article 22B of this
Code, the board of trustees of an eligible pension fund shall
make periodic written application to the Downstate Police

HB1576 - 38 - LRB101 05116 RPS 50128 b
Pension Investment Board for receipt and deposit of reserves
into the pension fund. Reserves in the amount of 3 months'
current liabilities, including annuity and benefit payments
and operational expenses owed by the fund, shall be held by the
treasurer of the municipality subject to the order and control
of the board. The treasurer of the municipality shall maintain
a record of all money received, transferred, and held for the
account of the board.
(c) In case of any dispute that may arise between the board
of trustees of the eligible pension fund and the Downstate
Police Pension Investment Board pursuant to subsection (b) of
this Section, the board of trustees of the eligible pension
fund shall appeal the dispute to the Director of Insurance. If
the Director finds that there exists a good faith dispute
between the parties, the Director may hold a hearing in
accordance with the rules of the Department of Insurance.
(Source: P.A. 90-507, eff. 8-22-97.)
(40 ILCS 5/3-135) (from Ch. 108 1/2, par. 3-135)
Sec. 3-135. To invest, manage, and transfer funds.
(a) Except as provided in subsection (b), Beginning January
1, 1998, the board shall invest funds in accordance with
Sections 1-113.1 through 1-113.10 of this Code.
Any pension fund that is not an eligible pension fund as
defined in Section 1-101.6 of this Code shall retain the
authority to control and manage investment expenditures and

HB1576 - 39 - LRB101 05116 RPS 50128 b
income, including interest, dividends, capital gains, and
other distributions on the investments.
(b) The board of an eligible pension fund that receives a
certified investment asset list under Section 3-135.1 shall
cease investment activities upon receiving the certified
investment asset list and shall transfer all investment assets,
minus assets needed to comply with subsection (b) of Section
3-132, to the Downstate Police Pension Investment Board in the
manner prescribed by rules adopted by the Downstate Police
Pension Investment Board under Article 22B. Upon completion of
the transfer described in this subsection, the investment
authority of the board shall terminate.
(Source: P.A. 90-507, eff. 8-22-97.)
(40 ILCS 5/3-135.1 new)
Sec. 3-135.1. Certified investment asset list.
(a) Within 18 months of the effective date of this
amendatory Act of the 101st General Assembly, the Department of
Insurance shall audit the investment assets of each eligible
pension fund established under this Article to determine a
certified investment asset list. The audit shall be performed
by a certified public accountant. The board of the pension fund
shall defray the expense of the audit.
(b) Upon completion of the audit, the Department of
Insurance shall provide the certified investment asset list to
the eligible pension fund and the Downstate Police Pension

HB1576 - 40 - LRB101 05116 RPS 50128 b
Investment Board. The Department of Insurance may adopt rules
governing the creation and distribution of the certified
investment asset list.
(40 ILCS 5/3-135.2 new)
Sec. 3-135.2. To transfer investment funds. At each
quarterly meeting of the board, the board of trustees of any
eligible pension fund shall transfer any available funds for
investment to the Downstate Police Pension Investment Board in
accordance with provisions of Article 22B of this Code. Each
transfer shall be made within 30 days after the end of the
fiscal year quarter and written notice of the transfer shall be
given to the Downstate Police Pension Investment Board.
(40 ILCS 5/4-118) (from Ch. 108 1/2, par. 4-118)
Sec. 4-118. Financing.
(a) The city council or the board of trustees of the
municipality shall annually levy a tax upon all the taxable
property of the municipality at the rate on the dollar which
will produce an amount which, when added to the deductions from
the salaries or wages of firefighters and revenues available
from other sources, will equal a sum sufficient to meet the
annual actuarial requirements of the pension fund, as
determined by an enrolled actuary employed by the Illinois
Department of Insurance or by an enrolled actuary retained by
the pension fund or municipality. For the purposes of this

HB1576 - 41 - LRB101 05116 RPS 50128 b
Section, the annual actuarial requirements of the pension fund
are equal to (1) the normal cost of the pension fund, or 17.5%
of the salaries and wages to be paid to firefighters for the
year involved, whichever is greater, plus (2) an annual amount
sufficient to bring the total assets of the pension fund up to
90% of the total actuarial liabilities of the pension fund by
the end of municipal fiscal year 2040, as annually updated and
determined by an enrolled actuary employed by the Illinois
Department of Insurance or by an enrolled actuary retained by
the pension fund or the municipality. In making these
determinations, the required minimum employer contribution
shall be calculated each year as a level percentage of payroll
over the years remaining up to and including fiscal year 2040
and shall be determined under the projected unit credit
actuarial cost method and utilizing the rate of return and
asset total determined under Article 22C of this Code. The
amount to be applied towards the amortization of the unfunded
accrued liability in any year shall not be less than the annual
amount required to amortize the unfunded accrued liability,
including interest, as a level percentage of payroll over the
number of years remaining in the 40 year amortization period.
(a-5) For purposes of determining the required employer
contribution to a pension fund, the value of the pension fund's
assets shall be equal to the actuarial value of the pension
fund's assets, which shall be calculated as follows:
(1) On March 30, 2011, the actuarial value of a pension

HB1576 - 42 - LRB101 05116 RPS 50128 b
fund's assets shall be equal to the market value of the
assets as of that date.
(2) In determining the actuarial value of the pension
fund's assets for fiscal years after March 30, 2011, any
actuarial gains or losses from investment return incurred
in a fiscal year shall be recognized in equal annual
amounts over the 5-year period following that fiscal year.
(b) The tax shall be levied and collected in the same
manner as the general taxes of the municipality, and shall be
in addition to all other taxes now or hereafter authorized to
be levied upon all property within the municipality, and in
addition to the amount authorized to be levied for general
purposes, under Section 8-3-1 of the Illinois Municipal Code or
under Section 14 of the Fire Protection District Act. The tax
shall be forwarded directly to the treasurer of the board
within 30 business days of receipt by the county (or, in the
case of amounts added to the tax levy under subsection (f),
used by the municipality to pay the employer contributions
required under subsection (b-1) of Section 15-155 of this
Code).
(b-5) If a participating municipality fails to transmit to
the fund contributions required of it under this Article for
more than 90 days after the payment of those contributions is
due, the fund may, after giving notice to the municipality,
apply to the Director of Insurance for intercept. The
Department of Insurance shall certify to the State Comptroller

HB1576 - 43 - LRB101 05116 RPS 50128 b
the amounts of the delinquent payments in accordance with any
applicable rules of the Department of Insurance Comptroller,
and the Comptroller must, beginning in fiscal year 2016, deduct
and remit to the fund the certified amounts or a portion of
those amounts from the following proportions of payments of
State funds to the municipality:
(1) in fiscal year 2016, one-third of the total amount
of any payments of State funds to the municipality;
(2) in fiscal year 2017, two-thirds of the total amount
of any payments of State funds to the municipality; and
(3) in fiscal year 2018 and each fiscal year
thereafter, the total amount of any payments of State funds
to the municipality.
The State Comptroller may not deduct from any payments of
State funds to the municipality more than the amount of
delinquent payments certified to the State Comptroller by the
fund.
(c) The board shall make available to the membership and
the general public for inspection and copying at reasonable
times the most recent Actuarial Valuation Balance Sheet and Tax
Levy Requirement issued to the fund by the Department of
Insurance.
(d) The firefighters' pension fund shall consist of the
following moneys which shall be set apart by the treasurer of
the municipality: (1) all moneys derived from the taxes levied
hereunder; (2) contributions by firefighters as provided under

HB1576 - 44 - LRB101 05116 RPS 50128 b
Section 4-118.1; (3) all rewards in money, fees, gifts, and
emoluments that may be paid or given for or on account of
extraordinary service by the fire department or any member
thereof, except when allowed to be retained by competitive
awards; and (4) any money, real estate or personal property
received by the board.
(e) For the purposes of this Section, "enrolled actuary"
means an actuary: (1) who is a member of the Society of
Actuaries or the American Academy of Actuaries; and (2) who is
enrolled under Subtitle C of Title III of the Employee
Retirement Income Security Act of 1974, or who has been engaged
in providing actuarial services to one or more public
retirement systems for a period of at least 3 years as of July
1, 1983.
(f) The corporate authorities of a municipality that
employs a person who is described in subdivision (d) of Section
4-106 may add to the tax levy otherwise provided for in this
Section an amount equal to the projected cost of the employer
contributions required to be paid by the municipality to the
State Universities Retirement System under subsection (b-1) of
Section 15-155 of this Code.
(g) The Commission on Government Forecasting and
Accountability shall conduct a study of all funds established
under this Article and shall report its findings to the General
Assembly on or before January 1, 2013. To the fullest extent
possible, the study shall include, but not be limited to, the

HB1576 - 45 - LRB101 05116 RPS 50128 b
following:
(1) fund balances;
(2) historical employer contribution rates for each
fund;
(3) the actuarial formulas used as a basis for employer
contributions, including the actual assumed rate of return
for each year, for each fund;
(4) available contribution funding sources;
(5) the impact of any revenue limitations caused by
PTELL and employer home rule or non-home rule status; and
(6) existing statutory funding compliance procedures
and funding enforcement mechanisms for all municipal
pension funds.
(Source: P.A. 99-8, eff. 7-9-15.)
(40 ILCS 5/4-120) (from Ch. 108 1/2, par. 4-120)
Sec. 4-120. Reserves.
(a) The board shall establish and maintain a reserve to
insure the payment of all obligations incurred under this
Article. The reserve to be accumulated shall be equal to the
estimated total actuarial requirements of the Fund.
(b) In the case of an eligible pension fund that has
transferred its investment authority to the Downstate
Firefighter Pension Investment Board under Section 1-113.05 of
this Code, the assets invested by the Downstate Firefighter
Pension Investment Board on behalf of the pension fund, and the

HB1576 - 46 - LRB101 05116 RPS 50128 b
dividends and other investment earnings attributable thereto,
shall be considered as part of the reserve for the purposes of
this Section.
The Downstate Firefighter Pension Investment Board shall
report to the board of each such fund at least annually the
financial information on the invested assets and earnings to
that pension fund so that the board may make the determinations
required under this Article.
(Source: P.A. 83-1440.)
(40 ILCS 5/4-123) (from Ch. 108 1/2, par. 4-123)
Sec. 4-123. To control and manage the Pension Fund.
(a) In accordance with the applicable provisions of
Articles 1 and 1A and this Article the board of trustees of the
pension fund shall have the authority, to control and manage,
exclusively, the following:
(1) the pension fund, and
(2) investment expenditures and income, including
interest dividends, capital gains, and other distributions
on the investments, and
(2) (3) all money donated, paid, assessed, or provided
by law for the pensioning of disabled and retired
firefighters, their surviving spouses, minor children, and
dependent parents. All such money received or collected
shall be credited by the treasurer of the municipality to
the custodian's account of the pension fund and held by the

HB1576 - 47 - LRB101 05116 RPS 50128 b
custodian for purposes of investment pursuant to Article
22C of this Code.
(b) Pursuant to rules adopted under Article 22C of this
Code, the board of trustees of an eligible pension fund shall
make periodic written application to the Downstate Firefighter
Pension Investment Board for receipt and deposit of reserves
into the pension fund. Reserves in the amount of 3 months'
current liabilities, including annuity and benefit payments
and operational expenses owed by the fund, shall be held by the
treasurer of the municipality subject to the order and control
of the board. The treasurer of the municipality shall maintain
a record of all money received, transferred, and held for the
account of the board.
(c) In case of any dispute that may arise between the board
of trustees of any eligible pension fund and the Downstate
Firefighter Pension Investment Board pursuant to subsection
(b) of this Section, the board of trustees of the pension fund
shall appeal the dispute to the Director of Insurance. If the
Director finds good faith dispute between the parties, the
Director may hold a hearing in accordance with the rules of the
Department of Insurance.
(Source: P.A. 90-507, eff. 8-22-97.)
(40 ILCS 5/4-128) (from Ch. 108 1/2, par. 4-128)
Sec. 4-128. To invest and transfer funds.
(a) Except as provided in subsection (b), Beginning January

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1, 1998, the board shall invest funds in accordance with
Sections 1-113.1 through 1-113.10 of this Code.
Any pension fund that is not an eligible pension fund as
defined in Section 1-101.6 of this Code shall retain the
authority to control and manage investment expenditures and
income, including interest, dividends, capital gains, and
other distributions on the investments.
(b) The board of an eligible pension fund that receives a
certified investment asset list under Section 4-128.1 shall
cease investment activities upon receiving the certified
investment asset list and shall transfer all investment assets,
minus assets needed to comply with subsection (b) of Section
4-123, to the Downstate Firefighter Pension Investment Board in
the manner prescribed by rules adopted by the Downstate
Firefighter Pension Investment Board under Article 22C. Upon
completion of the transfer described in this subsection, the
investment authority of the board shall terminate.
(Source: P.A. 90-507, eff. 8-22-97.)
(40 ILCS 5/4-128.1 new)
Sec. 4-128.1. Certified investment asset list.
(a) Within 18 months of the effective date of this
amendatory Act of the 101st General Assembly, the Department of
Insurance shall audit the investment assets of each eligible
pension fund established under this Article to determine a
certified investment asset list. The audit shall be performed

HB1576 - 49 - LRB101 05116 RPS 50128 b
by a certified public accountant. The board of the pension fund
shall defray the expense of the audit.
(b) Upon completion of the audit, the Department of
Insurance shall provide the certified investment asset list to
the eligible pension fund and the Downstate Firefighter Pension
Investment Board. The Department of Insurance may adopt rules
governing the creation and distribution of the certified
investment asset list.
(40 ILCS 5/4-128.2 new)
Sec. 4-128.2. To transfer investment funds. At each
quarterly meeting of the board, the board of trustees of any
eligible pension fund shall transfer any available funds for
investment to the Downstate Firefighter Pension Investment
Board in accordance with provisions of Article 22C of this
Code. Each transfer shall be made within 30 days of the end of
the fiscal year quarter and written notice of the transfer
shall be given to the Downstate Firefighter Pension Investment
Board.
(40 ILCS 5/Art. 22B heading new)
ARTICLE 22B. DOWNSTATE POLICE PENSION INVESTMENT BOARD
(40 ILCS 5/22B-101 new)
Sec. 22B-101. Establishment. The Downstate Police Pension
Investment Board is created with authority to manage, invest,

HB1576 - 50 - LRB101 05116 RPS 50128 b
and reinvest the reserves, funds, assets, securities, and
moneys of any pension fund, as provided in this Article, and to
perform such other duties as may from time to time be
authorized by the General Assembly.
(40 ILCS 5/22B-102 new)
Sec. 22B-102. Definitions. For the purposes of this
Article, the following words and phrases shall have the meaning
ascribed to them unless the context requires otherwise.
(40 ILCS 5/22B-103 new)
Sec. 22B-103. Board. "Board": The Downstate Police Pension
Investment Board.
(40 ILCS 5/22B-105 new)
Sec. 22B-105. Pension fund. "Pension fund": A pension fund
established under Article 3 of this Code, including the
reserves, funds, assets, securities, moneys, and property of
the pension fund.
(40 ILCS 5/22B-106 new)
Sec. 22B-106. Manage. "Manage": To invest, reinvest,
exchange, and perform all investment functions with regard to
reserves, funds, assets, securities, and moneys that the board
is authorized to invest; and to preserve and protect such
reserves, funds, assets, securities, and moneys, including,

HB1576 - 51 - LRB101 05116 RPS 50128 b
but not limited to, authority to vote any stocks, bonds, or
other securities and to give general or special proxies or
powers of attorney with or without power of substitution.
"Manage" does not include any functions, duties, or
responsibilities incident to the operation and administration
of pension funds other than that of investments.
(40 ILCS 5/22B-107 new)
Sec. 22B-107. Invest. "Invest": To acquire, invest,
reinvest, exchange, or retain property held for a pension fund
and to sell and manage the reserves, funds, securities, moneys,
or assets of any pension fund in accordance with this Article.
(40 ILCS 5/22B-108 new)
Sec. 22B-108. Investment. "Investment": Any property
acquired by the board for a pension fund.
(40 ILCS 5/22B-108.1 new)
Sec. 22B-108.1. Investment advisor. "Investment advisor":
Any person or business entity that provides investment advice
to the board on a personalized basis and with an understanding
of the policies and goals of the board. "Investment advisor"
does not include any person or business entity that provides
statistical or general market research data available for
purchase or use by others.

HB1576 - 52 - LRB101 05116 RPS 50128 b
(40 ILCS 5/22B-109 new)
Sec. 22B-109. Membership of board. The board shall consist
of the following members:
(1) Two trustees who are active participants of a
police pension fund under Article 3, elected by the active
participants of the police pension funds.
(2) Two trustees who are beneficiaries of a police
pension fund under Article 3, elected by the beneficiaries
of the police pension funds.
(3) Four trustees who are mayors or presidents of
boards of trustees of municipalities, as defined in Section
3-103, elected by the mayors and presidents of boards of
trustees of municipalities.
The members shall serve for terms of 4 years, except that
the terms of office of the original members pursuant to this
amendatory Act of the 101st General Assembly shall be as
follows: 2 members, determined by lot, for a term of 1 year; 2
members, determined by lot, for a term of 2 years; 2 members,
determined by lot, for a term of 3 years; and 2 members,
determined by lot, for a term of 4 years. If there is a vacancy
among the members, the vacancy shall be filled for the
remainder of the unexpired term by a special election, to be
called by the board and conducted in the same manner as the
regular election.
The active police pension fund participants shall be
entitled to vote only for the members of the board who are

HB1576 - 53 - LRB101 05116 RPS 50128 b
active police pension fund participants. Beneficiaries of
legal age may vote only for the members of the board who are
police pension fund beneficiaries. No person shall be entitled
to cast more than one ballot at such election.
Mayors and presidents of boards of trustees of
municipalities shall be entitled to vote only for the members
who are mayors or presidents of boards of trustees of
municipalities.
Each person elected to membership shall qualify by taking
an oath of office before the Secretary of State stating that he
or she will diligently and honestly administer the affairs of
the board and will not violate or knowingly permit the
violation of any provisions of this Article.
Members of the board shall receive no salary for service on
the board, but shall be reimbursed for travel expenses incurred
while on business for the board according to the standards in
effect for members of the Illinois Legislative Research Unit.
A majority of the members of the board shall constitute a
quorum. The board shall elect from its membership, biennially,
a chairperson, vice chairperson, and a recording secretary.
These officers, together with one other member elected by the
board, shall constitute the executive committee. During the
interim between regular meetings of the board, the executive
committee shall have authority to conduct all business of the
board and shall report such business conducted at the next
following meeting of the board for ratification.

HB1576 - 54 - LRB101 05116 RPS 50128 b
No member of the board shall have any interest in any
brokerage fee, commission, or other profit or gain arising out
of any investment made by the board. This paragraph does not
preclude ownership by any member of any minority interest in
any common stock or any corporate obligation in which
investment is made by the board.
The board shall contract for a blanket fidelity bond in the
penal sum of not less than $1,000,000 to cover members of the
board, the director, and all other employees of the board
conditioned for the faithful performance of the duties of their
respective offices, the premium on which shall be paid by the
board.
(40 ILCS 5/22B-110 new)
Sec. 22B-110. Administration.
(a) The board shall appoint a director to administer the
affairs of the board subject to and under its supervision and
fix his or her compensation. The board may appoint investment
officers and fix their compensation. With the approval of the
board, the director may employ such personnel, professional or
clerical, as may be desirable and fix their compensation. The
appointment and compensation of the personnel other than the
director and investment officers shall be subject to the
Personnel Code.
(b) The board may adopt such rules and regulations (not
inconsistent with this Article) as in its judgment are

HB1576 - 55 - LRB101 05116 RPS 50128 b
desirable to implement and properly administer this Article. A
copy thereof shall be filed with the Secretary of State.
(c) The board may exercise any of the powers granted to
boards of trustees of pension funds under Sections 1-107 or
1-108 and may by resolution provide for the indemnification of
its members and any of its directors, officers, advisors, or
employees in a manner consistent with those Sections.
(d) An office for meetings of the board and for
administrative personnel shall be established at any suitable
place within the State as may be selected by the board. All
books and records of the board shall be kept in such office.
(40 ILCS 5/22B-111 new)
Sec. 22B-111. Management of investments.
(a) The board shall manage the investments of each pension
fund for the purpose of obtaining a total return on investments
for the long term. The Board also shall perform such other
functions as may be assigned or directed by the General
Assembly.
(b) The authority of the board to manage pension fund
investments and the liability of the board shall begin when
there has been a physical transfer of the pension fund
investments to the board and placed in the custody of the
board's custodian.
(c) The board may not delegate its management functions,
but it may, but is not required to, arrange to compensate for

HB1576 - 56 - LRB101 05116 RPS 50128 b
personalized investment advisory service for any or all
investments under its control with any national or state bank
or trust company authorized to do a trust business and
domiciled in Illinois, other financial institution organized
under the laws of Illinois, or an investment advisor who is
qualified under the Federal Investment Advisers Act of 1940 and
is registered under the Illinois Securities Law of 1953.
Nothing contained in this Article shall prevent the board from
subscribing to general investment research services available
for purchase or use by others. The board shall also have the
authority to compensate for accounting services.
(d) This Section does not prohibit the board from directly
investing pension assets in public market investments, private
investments, real estate investments, or other investments
authorized by this Code.
(40 ILCS 5/22B-112 new)
Sec. 22B-112. Investment authority. The board shall have
the authority to invest funds, subject to the requirements and
restrictions set forth in Sections 1-109, 1-109.1, 1-109.2,
1-110, 1-111, 1-114, and 1-115 of this Code.
No bank or savings and loan association shall receive
investment funds as permitted by this Section, unless it has
complied with the requirements established pursuant to Section
6 of the Public Funds Investment Act. The limitations set forth
in that Section 6 shall be applicable only at the time of

HB1576 - 57 - LRB101 05116 RPS 50128 b
investment and shall not require the liquidation of any
investment at any time.
The board shall have the authority to enter into such
agreements and to execute such documents as it determines to be
necessary to complete any investment transaction.
All investments shall be clearly held and accounted for to
indicate ownership by the board. The board may direct the
registration of securities in its own name or in the name of a
nominee created for the express purpose of registration of
securities by a national or state bank or trust company
authorized to conduct a trust business in the State of
Illinois.
Investments shall be carried at cost or at a value
determined in accordance with generally accepted accounting
principles and accounting procedures approved by the board.
The value of investments held by any pension fund in one or
more commingled investment accounts shall be determined in
accordance with generally accepted accounting principles.
(40 ILCS 5/22B-113 new)
Sec. 22B-113. Transfer of securities and investment
functions.
(a) As soon as practicable following the receipt of a
certified investment asset list provided under Section
3-135.1, the trustees of each pension fund shall transfer to
the Downstate Police Pension Investment Board for management

HB1576 - 58 - LRB101 05116 RPS 50128 b
and investment all of their securities, including those for
which commitments have been made, and all funds, assets, or
moneys representing permanent or temporary investments, or
cash reserves maintained for the purpose of obtaining income
thereon.
(b) Prior to the transfer, the trustees of each pension
fund shall provide for completion of an audit by a certified
public accountant of the securities and other assets of the
pension fund, as directed and approved by the Downstate Police
Pension Investment Board, the expense of which shall be assumed
by the pension fund. Upon such transfer, the authority of the
Downstate Police Pension Investment Board with respect to the
pension fund is effective. These transfers shall be receipted
for in detail by the chairperson and director of the board.
(40 ILCS 5/22B-113.1 new)
Sec. 22B-113.1. Report of investable funds. Each pension
fund shall report to the board from time to time the amounts of
funds available for investment. These amounts shall be
transferred as soon as practical to the board's custodian or
the custodian's authorized agent for the account of the board
to be applied for investment by the board. Notice of each
transfer shall be given by the pension fund as the transfer
occurs.
(40 ILCS 5/22B-113.2 new)

HB1576 - 59 - LRB101 05116 RPS 50128 b
Sec. 22B-113.2. Custodian.
(a) The securities, funds, and other assets transferred to
the Downstate Police Pension Investment Board or otherwise
acquired by the board shall be placed in the custody of the
board's custodian. The custodian shall provide adequate safe
deposit facilities therefor and hold all such securities,
funds, and other assets subject to the order of the board.
(b) As soon as may be practicable, the board shall appoint
and retain a qualified custodian. Until a custodian has been
appointed by the board, the State Treasurer shall serve as
official custodian of the board.
(c) The custodian shall furnish a corporate surety bond of
such amount as the board designates. The bond shall indemnify
the board against any loss that may result from any action or
failure to act by the custodian or any of the custodian's
agents. All charges incidental to the procuring and giving of
such bond shall be paid by the board. The bond shall be in the
custody of the board.
(40 ILCS 5/22B-113.3 new)
Sec. 22B-113.3. Transfer from eligible pension funds.
(a) Upon receipt of a certified investment asset list
provided under Section 3-135.1 of this Code for an eligible
pension fund, the Downstate Police Pension Investment Board
shall, as soon as practicable, initiate the transfer of assets
from the board of trustees of that fund, and the board of that

HB1576 - 60 - LRB101 05116 RPS 50128 b
fund shall transfer to the Downstate Police Pension Investment
Board for management and investment all of its securities
including securities for which commitments have been made, and
all funds, assets, moneys representing permanent or temporary
investments, and cash reserves maintained for the purpose of
obtaining income thereon.
(b) Upon the transfer of securities and assets from a board
of trustees under this Section, the custody and control of the
Downstate Police Pension Investment Board over the present and
future assets of the pension fund shall take effect. The
transfer shall be receipted for in detail by the Downstate
Police Pension Investment Board and the receipt shall be
provided to the board of trustees of the pension fund within 30
days of the effective date of the transfer.
(40 ILCS 5/22B-114 new)
Sec. 22B-114. Accounting. In the management of pension fund
investments, the board:
(1) may, for investment purposes, commingle all or a
part of the invested assets of one or more pension funds
under its jurisdiction and authority;
(2) shall carry assets of all funds at cost or a value
determined in accordance with generally accepted
accounting principles and accounting procedures approved
by the board. Each investment initially transferred to the
board by a pension fund shall be similarly valued except

HB1576 - 61 - LRB101 05116 RPS 50128 b
that the board may elect to place such value on any
investment conditionally in which case the amount of any
later realization of such asset in cash that is in excess
of or is less than the amount so credited shall be credited
or charged to the fund that made the transfer;
(3) shall keep proper books of account which shall
reflect at all times the value of all investments held by
the board for a pension fund whether for the separate
account of the fund or in a commingled fund;
(4) shall charge each pension fund with its share of
all expenses of the board at quarter-yearly periods pro
rata according to the value of the investments held for the
respective funds at the beginning of the quarter or any
other equitable formula; and
(5) shall charge all distributions made by the board to
or for a pension fund to the account maintained for that
fund.
(40 ILCS 5/22B-115 new)
Sec. 22B-115. Audits and reports.
(a) At least annually, the books, records, accounts, and
securities of the board shall be audited by a certified public
accountant designated by the Auditor General of the State. The
audit opinion shall be published as a part of the annual report
of the board.
(b) For the quarterly periods ending September 30, December

HB1576 - 62 - LRB101 05116 RPS 50128 b
31, and March 31, the board shall submit to each pension fund
under its jurisdiction a report containing, among other things,
the following information:
(1) a full description of the investments acquired,
showing average costs;
(2) a full description of the securities sold or
exchanged, showing average proceeds or other conditions of
an exchange;
(3) gains or losses realized during the period;
(4) income from investments;
(5) administrative expenses of the board; and
(6) the proportion of administrative expenses
allocable to each pension fund.
(c) An annual report shall be prepared by the board for
submission to each pension fund under its jurisdiction within 6
months after the close of each fiscal year. A fiscal year shall
date from July 1 of one year to June 30 of the year next
following. This report shall contain full information
concerning the results of investment operations of the board
for the year, the information required under subsections (a)
and (b), and the following information:
(1) a listing of the investments held by the board as
at the end of the year showing their book values and market
values and their income yields on market values;
(2) the amounts as determined under item (1) of
subsection (b) allocable to each pension fund managed by

HB1576 - 63 - LRB101 05116 RPS 50128 b
the board;
(3) comments on the pertinent factors affecting the
operations of the board for the year;
(4) a review of the policies maintained by the board
and any changes therein that occurred during the year;
(5) a copy of the audited financial statements for the
year;
(6) recommendations for possible changes in the law
governing the operations of the board; and
(7) a listing of the names of securities brokers and
dealers dealt with during the year showing the total amount
of commissions received by each on transactions with the
board.
(40 ILCS 5/22B-115.5 new)
Sec. 22B-115.5. Audit of transition. Within 6 months after
the transfer of investment assets from an eligible pension fund
established under Article 3 of this Code to the control of the
Board, the books, records, accounts, and securities of the
board shall be audited by a certified public accountant
designated by the Illinois Auditor General. The audit shall
include, but is not limited to, the following:
(i) a full description of the investments acquired,
showing average costs;
(ii) a full description of the securities sold or
exchanged, showing average proceeds or other conditions of

HB1576 - 64 - LRB101 05116 RPS 50128 b
an exchange;
(iii) gains or losses realized during the period;
(iv) income from investments;
(v) administrative expenses of the board; and
(vi) the proportion of administrative expenses
allocable to each pension fund.
The audit report shall be published on the board's website
and filed with the Department of Insurance.
(40 ILCS 5/Art. 22C heading new)
ARTICLE 22C. DOWNSTATE FIREFIGHTER PENSION INVESTMENT BOARD
(40 ILCS 5/22C-101 new)
Sec. 22C-101. Establishment. The Downstate Firefighter
Pension Investment Board is created with authority to manage,
invest, and reinvest the reserves, funds, assets, securities,
and moneys of any pension fund, as provided in this Article and
to perform such other duties as may from time to time be
authorized by the General Assembly.
(40 ILCS 5/22C-102 new)
Sec. 22C-102. Definitions. For the purposes of this
Article, the following words and phrases shall have the meaning
ascribed to them unless the context requires otherwise.
(40 ILCS 5/22C-103 new)

HB1576 - 65 - LRB101 05116 RPS 50128 b
Sec. 22C-103. Board. "Board": The Downstate Firefighter
Pension Investment Board.
(40 ILCS 5/22C-105 new)
Sec. 22C-105. Pension fund. "Pension fund": A pension fund
established under Article 4 of this Code, including the
reserves, funds, assets, securities, moneys, and property of
any pension fund or retirement system.
(40 ILCS 5/22C-106 new)
Sec. 22C-106. Manage. "Manage": To invest, reinvest,
exchange, and perform all investment functions with regard to
reserves, funds, assets, securities, and moneys that the board
is authorized to invest; and to preserve and protect such
reserves, funds, assets, securities, and moneys, including,
but not limited to, authority to vote any stocks, bonds, or
other securities and to give general or special proxies or
powers of attorney with or without power of substitution.
"Manage" does not include any functions, duties, or
responsibilities incident to the operation and administration
of pension funds other than that of investments.
(40 ILCS 5/22C-107 new)
Sec. 22C-107. Invest. "Invest": To acquire, invest,
reinvest, exchange, or retain property held for a pension fund
and to sell and manage the reserves, funds, securities, moneys,

HB1576 - 66 - LRB101 05116 RPS 50128 b
or assets of any pension fund in accordance with this Article.
(40 ILCS 5/22C-108 new)
Sec. 22C-108. Investment. "Investment": Any property
acquired by the board for a pension fund.
(40 ILCS 5/22C-108.1 new)
Sec. 22C-108.1. Investment advisor. "Investment advisor":
Any person or business entity that provides investment advice
to the board on a personalized basis and with an understanding
of the policies and goals of the board. "Investment advisor"
does not include any person or business entity that provides
statistical or general market research data available for
purchase or use by others.
(40 ILCS 5/22C-109 new)
Sec. 22C-109. Membership of board. The board shall consist
of the following members:
(1) Two trustees who are active participants of a
firefighter pension fund under Article 4, elected by the
active participants of the firefighter pension funds.
(2) Two trustees who are beneficiaries of a firefighter
pension fund under Article 4, elected by the beneficiaries
of the firefighter pension funds.
(3) Four trustees who are mayors or presidents of
boards of trustees of municipalities, as defined in Section

HB1576 - 67 - LRB101 05116 RPS 50128 b
4-103, elected by the mayors and presidents of boards of
trustees of municipalities.
The members shall serve for terms of 4 years, except that
the terms of office of the original members pursuant to this
amendatory Act of the 101st General Assembly shall be as
follows: 2 members, determined by lot, for a term of 1 year; 2
members, determined by lot, for a term of 2 years; 2 members,
determined by lot, for a term of 3 years; and 2 members,
determined by lot, for a term of 4 years. If there is a vacancy
among the members, the vacancy shall be filled for the
remainder of the unexpired term by a special election, to be
called by the board and conducted in the same manner as the
regular election.
The active firefighter pension fund participants shall be
entitled to vote only for the members of the board who are
active firefighter pension fund participants. Beneficiaries of
legal age may vote only for the members of the board who are
firefighter pension fund beneficiaries. No person shall be
entitled to cast more than one ballot at such election.
Mayors and presidents of boards of trustees of
municipalities shall be entitled to vote only for the members
who are mayors or presidents of boards of trustees of
municipalities.
Each person elected to membership shall qualify by taking
an oath of office before the Secretary of State stating that he
or she will diligently and honestly administer the affairs of

HB1576 - 68 - LRB101 05116 RPS 50128 b
the board and will not violate or knowingly permit the
violation of any provisions of this Article.
Members of the board shall receive no salary for service on
the board but shall be reimbursed for travel expenses incurred
while on business for the board according to the standards in
effect for members of the Illinois Legislative Research Unit.
A majority of the members of the board shall constitute a
quorum. The board shall elect from its membership, biennially,
a chairperson, vice chairperson, and a recording secretary.
These officers, together with one other member elected by the
board, shall constitute the executive committee. During the
interim between regular meetings of the board, the executive
committee shall have authority to conduct all business of the
board and shall report such business conducted at the next
following meeting of the board for ratification.
No member of the board shall have any interest in any
brokerage fee, commission, or other profit or gain arising out
of any investment made by the board. This paragraph does not
preclude ownership by any member of any minority interest in
any common stock or any corporate obligation in which
investment is made by the board.
The board shall contract for a blanket fidelity bond in the
penal sum of not less than $1,000,000 to cover members of the
board, the director, and all other employees of the board
conditioned for the faithful performance of the duties of their
respective offices, the premium on which shall be paid by the

HB1576 - 69 - LRB101 05116 RPS 50128 b
board.
(40 ILCS 5/22C-110 new)
Sec. 22C-110. Administration.
(a) The board shall appoint a director to administer the
affairs of the board subject to and under its supervision and
fix his or her compensation. The board may appoint investment
officers and fix their compensation. With the approval of the
board, the director may employ such personnel, professional or
clerical, as may be desirable and fix their compensation. The
appointment and compensation of the personnel other than the
director and investment officers shall be subject to the
Personnel Code.
(b) The board may adopt such rules and regulations (not
inconsistent with this Article) as in its judgment are
desirable to implement and properly administer this Article. A
copy thereof shall be filed with the Secretary of State.
(c) The board may exercise any of the powers granted to
boards of trustees of pension funds under Sections 1-107 or
1-108 and may by resolution provide for the indemnification of
its members and any of its directors, officers, advisors, or
employees in a manner consistent with those Sections.
(d) An office for meetings of the board and for
administrative personnel shall be established at any suitable
place within the State as may be selected by the board. All
books and records of the board shall be kept in such office.

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(40 ILCS 5/22C-111 new)
Sec. 22C-111. Management of investments.
(a) The board shall manage the investments of each pension
fund for the purpose of obtaining a total return on investments
for the long term. The board also shall perform such other
functions as may be assigned or directed by the General
Assembly.
(b) The authority of the board to manage pension fund
investments and the liability of the board shall begin when
there has been a physical transfer of the pension fund
investments to the board and placed in the custody of the
board's custodian.
(c) The board may not delegate its management functions,
but it may, but is not required to, arrange to compensate for
personalized investment advisory service for any or all
investments under its control with any national or state bank
or trust company authorized to do a trust business and
domiciled in Illinois, other financial institution organized
under the laws of Illinois, or an investment advisor who is
qualified under the Federal Investment Advisers Act of 1940 and
is registered under the Illinois Securities Law of 1953.
Nothing contained in this Article shall prevent the board from
subscribing to general investment research services available
for purchase or use by others. The board shall also have the
authority to compensate for accounting services.

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(d) This Section does not prohibit the board from directly
investing pension assets in public market investments, private
investments, real estate investments, or other investments
authorized by this Code.
(40 ILCS 5/22C-112 new)
Sec. 22C-112. Investment authority. The board shall have
the authority to invest funds, subject to the requirements and
restrictions set forth in Sections 1-109, 1-109.1, 1-109.2,
1-110, 1-111, 1-114, and 1-115 of this Code.
No bank or savings and loan association shall receive
investment funds as permitted by this Section, unless it has
complied with the requirements established pursuant to Section
6 of the Public Funds Investment Act. The limitations set forth
in that Section 6 shall be applicable only at the time of
investment and shall not require the liquidation of any
investment at any time.
The board shall have the authority to enter into such
agreements and to execute such documents as it determines to be
necessary to complete any investment transaction.
All investments shall be clearly held and accounted for to
indicate ownership by the board. The board may direct the
registration of securities in its own name or in the name of a
nominee created for the express purpose of registration of
securities by a national or state bank or trust company
authorized to conduct a trust business in the State of

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Illinois.
Investments shall be carried at cost or at a value
determined in accordance with generally accepted accounting
principles and accounting procedures approved by the board.
The value of investments held by any pension fund in one or
more commingled investment accounts shall be determined in
accordance with generally accepted accounting principles.
(40 ILCS 5/22C-113 new)
Sec. 22C-113. Transfer of securities and investment
functions.
(a) As soon as practicable following the receipt of a
certified investment asset list provided under Section
4-128.1, the trustees of each pension fund shall transfer to
the Downstate Firefighter Pension Investment Board for
management and investment all of their securities, including
those for which commitments have been made, and all funds,
assets, or moneys representing permanent or temporary
investments, or cash reserves maintained for the purpose of
obtaining income thereon.
(b) Prior to the transfer, the trustees of each pension
fund shall provide for completion of an audit by a certified
public accountant of the securities and other assets of the
pension fund, as directed and approved by the Downstate
Firefighter Pension Investment Board, the expense of which
shall be assumed by the pension fund. Upon such transfer, the

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authority of the Downstate Firefighter Pension Investment
Board with respect to the pension fund is effective. These
transfers shall be receipted for in detail by the chairperson
and director of the board.
(40 ILCS 5/22C-113.1 new)
Sec. 22C-113.1. Report of investable funds. Each pension
fund shall report to the board from time to time the amounts of
funds available for investment. These amounts shall be
transferred as soon as practical to the board's custodian or
the custodian's authorized agent for the account of the board
to be applied for investment by the board. Notice of each
transfer shall be given by the pension fund as the transfer
occurs.
(40 ILCS 5/22C-113.2 new)
Sec. 22C-113.2. Custodian.
(a) The securities, funds, and other assets transferred to
the Downstate Firefighter Pension Investment Board or
otherwise acquired by the board shall be placed in the custody
of the board's custodian. The custodian shall provide adequate
safe deposit facilities therefor and hold all such securities,
funds, and other assets subject to the order of the board.
(b) As soon as may be practicable, the board shall appoint
and retain a qualified custodian. Until a custodian has been
appointed by the board, the State Treasurer shall serve as

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official custodian of the board.
(c) The custodian shall furnish a corporate surety bond of
such amount as the board designates. The bond shall indemnify
the board against any loss that may result from any action or
failure to act by the custodian or any of the custodian's
agents. All charges incidental to the procuring and giving of
such bond shall be paid by the board. The bond shall be in the
custody of the board.
(40 ILCS 5/22C-113.3 new)
Sec. 22C-113.3. Transfer from eligible pension funds.
(a) Upon receipt of a certified investment asset list
provided under Section 4-128.1 of this Code for an eligible
pension fund, the Downstate Firefighter Pension Investment
Board shall, as soon as practicable, initiate the transfer of
assets from the board of trustees of that fund, and the board
of that fund shall transfer to the Downstate Firefighter
Pension Investment Board for management and investment all of
its securities including securities for which commitments have
been made, and all funds, assets, moneys representing permanent
or temporary investments, and cash reserves maintained for the
purpose of obtaining income thereon.
(b) Upon the transfer of securities and assets from a board
of trustees under this Section, the custody and control of the
Downstate Firefighter Pension Investment Board over the
present and future assets of the pension fund shall take

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effect. The transfer shall be receipted for in detail by the
Downstate Firefighter Pension Investment Board and the receipt
shall be provided to the board of trustees of the pension fund
within 30 days of the effective date of the transfer.
(40 ILCS 5/22C-114 new)
Sec. 22C-114. Accounting. In the management of pension fund
investments, the board:
(1) may, for investment purposes, commingle all or a
part of the invested assets of one or more pension funds
under its jurisdiction and authority;
(2) shall carry assets of all funds at cost or a value
determined in accordance with generally accepted
accounting principles and accounting procedures approved
by the board. Each investment initially transferred to the
board by a pension fund shall be similarly valued except
that the board may elect to place such value on any
investment conditionally in which case the amount of any
later realization of such asset in cash that is in excess
of or is less than the amount so credited shall be credited
or charged to the fund that made the transfer;
(3) shall keep proper books of account which shall
reflect at all times the value of all investments held by
the board for a pension fund whether for the separate
account of the fund or in a commingled fund;
(4) shall charge each pension fund with its share of

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all expenses of the board at quarter-yearly periods pro
rata according to the value of the investments held for the
respective funds at the beginning of the quarter or any
other equitable formula; and
(5) shall charge all distributions made by the board to
or for a pension fund to the account maintained for that
fund.
(40 ILCS 5/22C-115 new)
Sec. 22C-115. Audits and reports.
(a) At least annually, the books, records, accounts, and
securities of the board shall be audited by a certified public
accountant designated by the Auditor General of the State. The
audit opinion shall be published as a part of the annual report
of the board.
(b) For the quarterly periods ending September 30, December
31, and March 31, the board shall submit to each pension fund
under its jurisdiction a report containing, among other things,
the following information:
(1) a full description of the investments acquired,
showing average costs;
(2) a full description of the securities sold or
exchanged, showing average proceeds or other conditions of
an exchange;
(3) gains or losses realized during the period;
(4) income from investments;

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(5) administrative expenses of the board; and
(6) the proportion of administrative expenses
allocable to each pension fund.
(c) An annual report shall be prepared by the board for
submission to each pension fund under its jurisdiction within 6
months after the close of each fiscal year. A fiscal year shall
date from July 1 of one year to June 30 of the year next
following. This report shall contain full information
concerning the results of investment operations of the board
for the year, the information required under subsections (a)
and (b), and the following information:
(1) a listing of the investments held by the board as
at the end of the year showing their book values and market
values and their income yields on market values;
(2) the amounts as determined under item (1) of
subsection (b) allocable to each pension fund managed by
the board;
(3) comments on the pertinent factors affecting the
operations of the board for the year;
(4) a review of the policies maintained by the board
and any changes therein that occurred during the year;
(5) a copy of the audited financial statements for the
year;
(6) recommendations for possible changes in the law
governing the operations of the board; and
(7) a listing of the names of securities brokers and

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dealers dealt with during the year showing the total amount
of commissions received by each on transactions with the
board.
(40 ILCS 5/22C-115.5 new)
Sec. 22C-115.5. Audit of transition. Within 6 months after
the transfer of investment assets from an eligible pension fund
established under Article 4 of this Code to the control of the
Board, the books, records, accounts, and securities of the
board shall be audited by a certified public accountant
designated by the Illinois Auditor General. The audit shall
include, but is not limited to, the following:
(i) a full description of the investments acquired,
showing average costs;
(ii) a full description of the securities sold or
exchanged, showing average proceeds or other conditions of
an exchange;
(iii) gains or losses realized during the period;
(iv) income from investments;
(v) administrative expenses of the board; and
(vi) the proportion of administrative expenses
allocable to each pension fund.
The audit report shall be published on the board's website
and filed with the Department of Insurance.
Section 90. The State Mandates Act is amended by adding

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Section 8.43 as follows:
(30 ILCS 805/8.43 new)
Sec. 8.43. Exempt mandate. Notwithstanding Sections 6 and 8
of this Act, no reimbursement by the State is required for the
implementation of any mandate created by this amendatory Act of
the 101st General Assembly.
Section 999. Effective date. This Act takes effect upon
becoming law.
HB1576 - 80 - LRB101 05116 RPS 50128 b
INDEX
Statutes amended in order of appearance
40 ILCS 5/1-101.6 new
40 ILCS 5/1-101.7 new
40 ILCS 5/1-109.3
40 ILCS 5/1-113.05 new
40 ILCS 5/1-113.1
40 ILCS 5/1-113.2
40 ILCS 5/1-113.3
40 ILCS 5/1-113.4
40 ILCS 5/1-113.4a
40 ILCS 5/1-113.5
40 ILCS 5/1-113.6
40 ILCS 5/1-113.7
40 ILCS 5/1-136 new
40 ILCS 5/1A-112
40 ILCS 5/1A-113
40 ILCS 5/3-125 from Ch. 108 1/2, par. 3-125
40 ILCS 5/3-127 from Ch. 108 1/2, par. 3-127
40 ILCS 5/3-132 from Ch. 108 1/2, par. 3-132
40 ILCS 5/3-135 from Ch. 108 1/2, par. 3-135
40 ILCS 5/3-135.1 new
40 ILCS 5/3-135.2 new
40 ILCS 5/4-118 from Ch. 108 1/2, par. 4-118
40 ILCS 5/4-120 from Ch. 108 1/2, par. 4-120
HB1576 - 81 - LRB101 05116 RPS 50128 b
40 ILCS 5/4-123 from Ch. 108 1/2, par. 4-123
40 ILCS 5/4-128 from Ch. 108 1/2, par. 4-128
40 ILCS 5/4-128.1 new
40 ILCS 5/4-128.2 new
40 ILCS 5/Art. 22B heading
new
40 ILCS 5/22B-101 new
40 ILCS 5/22B-102 new
40 ILCS 5/22B-103 new
40 ILCS 5/22B-105 new
40 ILCS 5/22B-106 new
40 ILCS 5/22B-107 new
40 ILCS 5/22B-108 new
40 ILCS 5/22B-108.1 new
40 ILCS 5/22B-109 new
40 ILCS 5/22B-110 new
40 ILCS 5/22B-111 new
40 ILCS 5/22B-112 new
40 ILCS 5/22B-113 new
40 ILCS 5/22B-113.1 new
40 ILCS 5/22B-113.2 new
40 ILCS 5/22B-113.3 new
40 ILCS 5/22B-114 new
40 ILCS 5/22B-115 new
40 ILCS 5/22B-115.5 new
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